Hampshire-based consultancy Intec Systems has been sold into an Employee Ownership Trust. The deal was assisted by business advisory firm Quantuma, whose corporate finance team helped deliver the transaction.
Employee ownership is the fastest growing form of business ownership in the UK – with companies in multiple sectors working to join famous examples like John Lewis in the practice, or recently, British home entertainment retailer Richer Sounds. Over the last decade, the number of employee-owned businesses has grown to 1,030, with a record 285 businesses choosing employee ownership in 2021 alone.
In recent years, a number of consulting firms are making moves to take up the structure too. In the last 12 months for example, change consultancy Curium Solutions and digital advisory dxw both published plans to become a majority employee-owned company.
The latest firm to transition to this model is Intec Systems – an IT consultancy which creates custom business applications and development technology, helping clients utilise business management software to deliver market and performance insight. Founded 35 years ago, the company’s co-founders Stephen Joseph and Timothy Malone had helmed the business for the duration of that – but were seeking an exit to pursue new opportunities.
In order to give the business the best opportunity to continue independently after such a major change, the pair ultimately settled on transferring it to employee ownership. This meant Intec would be sold into an Employee Ownership Trust (EOT) structure – but this was a complicated process. It included delivering a valuation of the business, structuring the transaction, forecasting to validate the structure, as well as tax and compliance support, as well as the structuring of a new Board of Trustees.
To see the company through this transition, Intec turned to Quantuma’s corporate finance team to deliver the transaction. This included Managing Director, Ian Barton and Director, Adrian Howells, with support from Managing Director, Holly Bedford from Quantuma’s sister company K3 Tax Advisory.
Speaking on the process, Stephen Joseph explained, “There were a number of complex matters that needed resolving and their friendly and professional approach meant we felt confident when making choices. Holly, Adrian, and Ian worked with us from start to finish on this project. Quantuma has a fully integrated approach to EOTs, and were able to sort everything from structuring, valuation and HMRC clearance, working closely with our lawyer throughout the process. Their advice has been invaluable and they were clear at every stage helping us understand the decisions we needed to make.”
Quantuma provided communication to the staff throughout, including full transparency on how the company would function as an employee-owned business once the transaction was completed. Ultimately this helped the process complete ahead of schedule.
Adrian Howells noted, “It has been a pleasure working with Tim and Steve to allow them to realise the value they created in their business over many years. Selling into an EOT structure preserves the business in its current form for the staff and ensures the legacy of Intec continues. I’m delighted that Steve and Tim were happy with the result, and the team and I wish them all the best in their future projects.”
The EOT transaction was delivered in partnership with Stuart Mullins, partner at Clarks Legal, to ensure that all compliance and criteria for becoming an EOT were met, helping to mitigate any inherent risks.