Readie founder and chairman Stuart Read and managing director Paul Stephens have agreed to take payments for their share from future profits of the business. This means that the business is being sold without any external debt or finance.
By selling to an employee ownership trust (EOT), they do not have to pay capital gains tax on the sale money.
The Essex-based regional contractor, with 2020 turnover of approximately £200m, becomes the 11th largest employee owned business in the UK, it said, and the largest employee owned construction contractor.
The main board of directors and senior management team remains unchanged. The EOT board includes two directors, and independent trustee and two employee representatives.
Financial and tax advice for the sale was provided by FRP Advisory and legal advice was provided by Birketts.
Readie Construction was set up by Stuart Read in 2008 with a senior management team comprising former colleagues from VolkerFitzpatrick. In the year to 31st March 2020, it posted pre-tax profit of £7.3m on revenue up 13% to £196m (2019: £173m).
As our article here explains, business owners exiting by selling to an EOT are exempt from paying capital gains tax under legislation passed in 2014. It has therefore become an increasingly popular exit route for business owners. Other companies that have recently been sold, either wholly or partially, to employee ownership trusts since the abolition of CGT include Clifford Devlin, McGee Group, Triton Construction, Tonic Construction, Horizon Platforms and, just earlier this month, Falco Construction.
Triton Construction managing director Paul Clarkson gave an insight into how employee owned companies operate in an exclusive interview with the Re:Construction podcast last year (Episode 34, 31st October 2020), available from all podcast outlets or at www.theconstructionindex.co.uk/podcast (scroll down to find Ep34).