Case study of an ESOP done well - winner of 2012 ESOP of the Year award - by Craig West, CEO & Founder of Succession Plus - www.successionplus.com.au

1. business ADVICE
Craig West, M. Tax Law, M. Bus (Acct / Fin) , B. Bus (Mgmt) Partner, CPA - Succession Plus
SME Engineering Firm Bucks Trend
with an Employee Share Ownership
Plan for Business Succession
Locally grown and owned engineering 38% had a lack of awareness of employee from all staff. Our meetings are open for
plant C-Mac in Girraween, in Western buyout as an option for succession, with a discussion with great ideas from all staff to
Sydney, NSW, has bucked the growing further 44% considering employee buyout improve efficiency. As a manager with job
national SME trend to wind up on owner as unlikely or very unlikely. security and a share in the business it’s a
retirement (‘The Exit Generation Needs great pleasure to manage a team who want
Help’ - Featherstone T, The Venture The Australian Employee Buyout Centre you to lead with ideas”.
blog, SHM.com.au 19 September) with facilitated the ESOP implementation and
the introduction of an employee share funded all the advisors’ costs for C-Mac The company’s founding family members
ownership plan (ESOP) offered to all Industries. The funding was provided are the principal shareholders but see
its employees. The engagement of through a Federal Government Grant under the benefits of a gradual sale of shares to
employees as owners has already seen an the now completed Rudd government employees based on profit share as well
18 % hike in productivity at the plant. initiative, the Jobs That We Own program. as the increased involvement of key staff
within the management team.
ESOP designer Craig West of Succession
More than 80% of Australian small and Plus stated “this plan has been a great The plan – a Peak Performance Trust
medium business owners aged over 55 are example of the combination of enthusiastic designed by Succession Plus specifically
trapped in their businesses – struggling to employees (who have now elected two for small to medium privately held
work out how to escape and at the same employees to represent the new group of businesses that are looking to attract,
time extract their wealth from the companies owners on the company board) and owners retain and motivate key staff by involving
they have worked so hard to create. who can see the benefits of increased them in both the equity and control aspects
participation and who are prepared to of succession planning – has been used
Recent surveys by a number of the Big create a win-win environment for all successfully by a growing number of
Four banks and several accounting firms stakeholders. It is unusual to see such a business owners throughout Australia
identified succession planning as the high take up rate amongst employees and looking for an innovative approach to
number one issue among business owners it’s encouraging to see the improvements in succession planning. G
as they approach the end of their careers. performance even at this early stage.”
But like so many management buzz
words coined to capture complex trends Steve Grlyak, manufacturing manager for
in simple phrases, “succession planning” C-Mac said that since the introduction of
fails to address so many of the problems the employee share plan, “People are now
the owners of SMEs are grappling with. saying ‘us’ instead of ‘me’ and asking, Succession Plus Pty Limited
For example, those in the manufacturing ‘what do you want us to do?’. Job security Level 3, 50 York Street, Sydney
sector find themselves looking for a is a key motivator at C-Mac and we do NSW 2000
viable exit from their businesses at a not want to lose employees with skills.
time when markets for their products There are now charts in the lunch room p | 1300 665 473
and services are disappearing offshore. so everyone can see how the business w | www.successionplus.com.au
Unable to find buyers prepared to pay a is doing. The change has been truly
fair price for the value they have created or unbelievable from all staff. I have directions
family members willing to take over the and targets from the elected board (the
reins, more and more face the terrible plan involved the members electing two
alternative of simply turning out the lights employees to represent them on the C-Mac
and walking away. board) and I have all the support I need
34 GWP Magazines | Issue 39 | November / December 2011
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