Employee-owned companies could become more widespread in the food and drink sector if a trust set up to encourage them proves successful.
Baxi Partnership, a trust-owned investment company led by md David Erdal, is seeking firms employing between 50 and 200 people which could be ripe for employee ownership as family principals or venture capitalists seek to exit the businesses.
Baxi was instrumental in the £3.88m employee buyout of Scotland's fresh and smoked seafood specialist Loch Fyne Oyster Company in March 2003, putting up a £2m loan, while another £1.5m came from the Royal Bank of Scotland and the rest was funded by managers.
Baxi does not have any equity in the business, but receives interest on its loan and will share in future profits to help fund similar deals.
"The biggest deal we've done is £5m and we never put in more than £2m," said Erdal, adding that employee-owned companies tended to stay independent, increased productivity and competitiveness and left managers and employees in charge, rather than hand them to competitors. Unlike other venture capital firms, Baxi was not looking for a quick return, he said.
Since the buyout, Loch Fyne Oysters, which has a turnover of around £8m, has increased productivity and now supports 205 full-time equivalent staff.
"We backed the employee buyout of Loch Fyne Oyster Company knowing that if the bid failed, jobs would be lost through the relocation of fish processing to an industrial food park," said Erdal. "More importantly, the ability of that business to spread wealth locally would have been lost forever."
Erdal claimed there are around 150 companies in the UK owned by employees, which have a combined turnover of £13bn. The largest is John Lewis.