As I See It - Employee Share Ownership

The Smartest Investment You Can Make: Selling Your Firm To The Right People

Imagine if every employee acted like an owner. Not due to a motivational poster—but because they are an owner. Employee share ownership (ESO) schemes—such as share option plans, direct share purchases, or employee ownership trusts—enable staff to hold a genuine stake in their company.

When people have a real stake, something remarkable happens: productivity rises, loyalty deepens, and innovation flourishes. ESO aligns employees’ interests with the long-term success of the business. The Esop Centre spells it out - overall, employee-owned businesses outperform their peers, weather economic storms better, and build stronger workplace cultures.

For London’s SMEs, ESO can also solve a pressing challenge: succession. Instead of selling out, why not sell in—to the team that already knows and believes in the business? It’s succession planning with soul. Yes, it takes a bit of work - valuations, legalities, tax, and good governance – but it’s worth it.

The national social dividend of widespread employee ownership is powerful. Employee ownership spreads wealth more evenly, narrows the gap between the boardroom and the watercooler, and strengthens communities. In an age of widening inequality, ESO should be a quiet levelling up — ownership with purpose.

One could argue that trendy unicorns demonstrate the motivational power of ESO. In the UK we seem to ignore that ESO could ignite SME growth too, particularly if we make it broader and less complicated. PISCES (Private Intermittent Securities and Capital Exchange System) is a new government-backed trading platform that allows employees and shareholders in private companies to buy and sell shares on an intermittent basis. It aims to create liquidity in private company shares. The Esop Centre points out that recent HMRC guidance accepts PISCES transaction prices as fair market value, and not in conflict with Enterprise Management Incentives (EMI), Company Share Option Plans (CSOP), Save As You Earn (SAYE), or Share Incentive Plans (SIP).

To unlock ESO’s potential, coordinated support in four areas is essential:

• Education — raising awareness among employees, management, and advisors;
• Tax incentives — structuring simple, favourable reliefs and regimes;
• Legislation — simplifying regulatory environments and removing barriers;
• Research — gathering longitudinal evidence and benchmarking best practice.

LCCI does its bit, but I’d call on others, particularly government, to lean in more strongly. The policy roadmap is clear: educate, incentivise, simplify, and support.

So here’s the takeaway for London’s business leaders: employee ownership isn’t a fringe idea, it’s a competitive advantage. When employees own a share of the business, they don’t just turn up for work—they show up for mutual success.