Workers now own a manufacturing company after its founder transferred his entire shareholding in the parent company to an employee ownership trust (EOT).
Key-Tech International Group’s subsidiary NEL Technologies Limited is a manufacturer of flexible heater assemblies and started out in 1984 in Consett before relocating to Newcastle, where its product development and innovation has led to it enlisted global blue-chip companies as clients. The firm, which sees the majority of sales going to export markets, was moved to become an EOT as it preserves the independence of the group and protects employment in the North East.
EOTs were introduced by the Government in 2014 to facilitate wider employee ownership, with the aim to encourage more shareholders to set up a corporate structure similar to the John Lewis Partnership model. Patrick Ferguson, the founder, said: “I knew I couldn’t continue to own the group forever, however, I was worried that a trade buyer might at some stage shut down the North East operations and move production out of the area.
Read more: North East deals of the week - key contracts, investments and acquisitions
“The EOT became an obvious strategy as the group is now owned by a trust which has been established for the long-term benefit of the employees. This will not only protect employment, but it will also ensure the quality of employment is maintained and improved.
“The EOT route provides me and the team with a legacy and ensures that the interests of the loyal NEL Technologies customers are continued to be met. Importantly, it also gives our valued employees a stake in the future of the business and the chance to become owners supporting the day-to-day company activities.”
Mr Ferguson added: “There is a lot of noise in relation to EOTs and lots of people who claim to know how they work. It was very reassuring to be expertly guided through the whole process by a team with significant experience of working with employee-owned businesses. They were able to cut through the noise and arrive at practical and detailed arrangements which work for the business and employees.”
James de le Vingne, chief executive of the Employee Ownership Association, said: “We congratulate our member Key-Tech on its transition to employee ownership; securing the ethos, values and culture of the business, as well as rooting jobs in the North East.
“Businesses that give employees a stake and a say build trust and shared responsibility, uniting leaders and employees behind a common purpose, and leaving businesses in a better position to flex and adapt.
“Employee ownership is one of the fastest growing business succession solutions in the UK, where there are now more than 800 employee-owned businesses – with more than 300 of those having transitioned since 2020. Key-Tech joins a network of EOTs in the UK that include Richer Sounds and Go Ape.”
The transaction was advised on by the corporate finance and tax teams at UNW LLP and the legal team at Womble Bond Dickinson (UK) LLP. Steve Lant, tax partner at UNW, said: “We are delighted to have supported Patrick and Key-Tech in achieving a smooth transition to ownership by an EOT.
“Patrick has dedicated over 25 years to running the business and the EOT preserves his legacy in addition to giving a great opportunity for the employees and continuity for customers.”
Jeremy Smith, partner at Womble Bond Dickinson, added: “I am delighted to have supported the Key-Tech team through the employee ownership process and wish them a successful future.”
