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#EOAConference
Welcome to
Employee Ownership Association
Annual Conference 2018
Where employee ownership meets
#EOAConference
EO Lens - Growth and acquisition
for an employee owned business
Facilitated by Adam Campbell, Telos Partners
Presented by: Russell Brown, Shaw Healthcare &
Zoe Burgess, Bridges Fund Management
3 ǀ Strictly Private and Confidential
What we will cover today
• Shaw healthcare – EO, growth and Bridges
• Bridges – why EO and Shaw?
• Key learnings
• Q&A
4 ǀ Strictly Private and Confidential
Shaw healthcare – A business overview
• Turnover: £95M
• EBITDA: £11M
• Care Beds: 2,098
• Employees: 3,490
71.5%
16.2%
10.0%2.3%
Ownership Distribution
Employees and EBT
Ex Employees
Shaw Foundation
Bridges
8 ǀ Strictly Private and Confidential
Finance
Turnover
CompanyS.H.A.W. Registered
Secondary
Housing
Association
Shaw
HomesCharity
Financial
Crisis
NHS Grants
(Charitable
status)
Debt
Finance
(Public
Sector
Contract)
Equity
Finance(Bridges)
Shaw
healthcare
Group (MBO)
£10M £21M £73M £95M
Minority
Interest(Bridges)
Employee
Ownership
Founders
/ EBTSIPs
CSOPs
Maiden
Dividend
Scale Services
Employees
6
348241027
51
3490
49
2907
Shaw healthcare – A History
9 ǀ Strictly Private and Confidential
• Care is a people business. In 2006 the Founder’s vision was to create an EOB
• Benefits:
• A sense of belonging – Family feel
• Shared ownership of company mission
• A unique relationship between the company and its employees
Why did we set up an EOB?
10 ǀ Strictly Private and Confidential
• Initially a small number of employee founder shareholders
• 2010 onwards – employee ownership widened through offers of free shares (SIP) and executive options (CSOP) for senior managers
• Lessons learnt from introducing EO
• Communication – legal jargon vs lay-person terms
• Bringing share ownership “alive”
• First dividend (12 years after EOB set up)• Internal share market not yet introduced
• Next Steps – Internal market, Roadshow, Repatriate ex-employee shares
How did EO evolve at Shaw
11 ǀ Strictly Private and Confidential
• In 2017 the Shaw board agrees to allow up to 20% of its equity to be offered to external
parties to raise funds to support the business development of the Group.
• Bridges share our ethos and values and were prepared to provide long-term finance through
both preference share and ordinary share capital. Both organisations have a strong moral
ethic and strive to make a long term and a sustainable difference in society.
• Not just long term finance, but also a network of business, commercial and advisor
relationships that Shaw can utilise to support its strategic objectives. They also have
considerable investment expertise and can assist us in the evaluation of new projects.
Partnership with Bridges
12 ǀ Strictly Private and Confidential
Bridges is a 16-year-old specialist sustainable and impact investor in the UK and USInvesting to address the Sustainable Development Goals. Over £950m raised and >125 investments made since 2002
13 ǀ Strictly Private and Confidential
Industry Leadership
How we think about
impact
Does impact and commercial value go hand-in-hand?
What quantity and quality of outcomes are we seeking, and for whom?
How can we add value?
Is this organisation a leader in it’s field?
Target Outcomes
Impact Scorecard
Alignment
Bridges approach to ImpactWe have a systemic approach to analysing impact across all our platform
Bridges’ Value-Added
14 ǀ Strictly Private and Confidential
Our interest in EOB and Why?Employee-Owned Businesses have characteristics of ‘better’ and more sustainable business
• Long-term vision and business strategy
• Ambition to share value with employees and other stakeholders
• Overlap with Bridges thematic areas
• In-built accountability
• Transparency of data and decision-making
• More engaged and motivated employees
• Improved performance and productivity
• Lower absenteeism and improved well-being
• Improved levels of service to customers and clients
• More resilient to market shocks
• A greater propensity to innovate
Source: The Ownership Dividend 2018 (EOA)
15 ǀ Strictly Private and Confidential
A top 10 employee-owned business in the UK providing residential and nursing care for the elderly
Challenge: undersupply of quality, affordable care
2,000 beds, 3,200 staff, £94m sales, £11m EBITDA
Ethos of “care you would want for your loved ones”
Growth capital including material investment in front-line staff and activation of EO model
Structured primarily as convertible and non-convertible preference shares. Minority stake
£10m
16 ǀ Strictly Private and Confidential
Focus on operations, growth and activation of the EO model
Talent recruitment and retention, voids and quality
We have introduced a NED to the Board
Reviewing share ownership structure
Payment of maiden dividend this year
2 new contracts won – Poole and Liverpool
Refinanced expensive sub-debt
£10m
17 ǀ Strictly Private and Confidential
What makes an EOB investment ready?
• ‘EO’ drives social and commercial value proposition
• Income diversification
• Quality and sustainability of earnings
• Appetite for step change in growth
• Buy-in from Board and senior management team
• Openness to external scrutiny, support and challenge
• Manageable debt levels
• Absence of material DB pensions
• Quality of management information
#EOAConference
Thank you.
Questions?
#EOAConference
Thank you. Please make your way to the
Sovereign Suite for our final key note speech.
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