Owners of popular high street toy retailer, The Entertainer, have decided to hand over the reins of the business to its employees.
The 44-year-old business is about to be sold to an employee ownership trust which will effectively allow its staff greater power over the company’s direction. Employees will also be eligible for tax-free profit payments.
An employee ownership trust will take control of The Entertainer’s 160 stores and many more concessions within retailers such as Marks and Spencer and Tesco, after agreeing a buy-out that will be funded by the company’s future profits.
“The right time”
Chairman, Gary Grant, founded the business back in 1981 as a solitary store in Amersham. The store quickly took off and ballooned into the UK’s biggest toy shop chain.
As news of the sale spread, Grant looked back on the company’s humble beginnings and remarked that both he and his wife Catherine “could only have dreamed what heights the business would reach.”
He added that “over the last 44 years, we have invested our working lives into this business. All our children are shareholders, and our two oldest sons joined to work alongside us 20 years ago, so it’s truly a family business.
“This is a significant decision for the family, and one we haven’t taken lightly, but it feels like the right time to transfer our entire shareholding into an employee ownership trust.”
The grant family pass the business on in fair shape after paying themselves a £15.6m dividend after 2023’s trading. Sales and pre-tax profits have dipped slightly however, at 3.7% and 18% respectively, although reported sales still hit a relatively healthy £238.3m.
Why sell to its employees?
M&A expert at Forbes Burton, Rick Smith, commented that “selling to an employee ownership trust is becoming increasingly popular. While there’s often more money to be made by a sale to a private investor or rival firm, it can often be difficult to find the right buyer.
“An employee ownership trust makes the selling process far quicker, easier, and ensures a fair price for the business too, even if it might not be the biggest fee you could achieve.
“As employee ownership trusts generally pay the seller out of the company’s future profits, it’s not recommended for those that want a flat cash sum for their business. If you’re happy receiving the money in instalments, however, it can be an attractive option.”
“The future of the high street is employee ownership”
Chief Executive of the Employee Ownership Association, James de la Vingne, is predictably effusive about The Entertainer’s sale. Commenting on the deal, he said that “I have no doubt that other familiar brands will follow The Entertainer’s example of what’s possible. The future of the high street is employee ownership.”
Indeed, The Entertainer isn’t the first to hand the reins to its staff. The toy retailer follows other big brands such as Go Ape, richer Sounds and John Lewis as an employee-led business.
De la Vingne went on to say that selling to employees is a way to “futureproof beloved brands, root jobs in local communities and inject wealth into regional economies.”
Why it works for The Entertainer
Employee ownership trusts don’t make sense for every business, and like most things, there are pros and cons to be considered.
For The Entertainer, though, it makes perfect sense. The Grant family had built the business in their Christian values (their stores didn’t open on Sundays as a result of this), and their current CEO is the former head of John Lewis (another employee-owned business). As a result, a staff buyout would have not only fitted in with the brand’s values, but could also be guided by a CEO with experience of working within such ownership structures.
Considering selling your own business?
We’ve helped countless companies to find the perfect buyer for their business.
Give one of our specialist advisers a call on 0800 975 0380 or email advice@forbesburton.com to find out how we can tailor the perfect sale solution for your business from our range of options and active investors.
