Employee ownership for Edinburgh product design consultancy

Business Equilibrium, a chartered accountancy firm based in the capital, provided the financial advice and oversight for the takeover at i4 Product Design Ltd.

The firm, based on the south side of Edinburgh, is an ambitious company formed in 2003 by four founding directors, Brian Combe, Ewan Maxwell, Gordon Miller and Jim Ward, who went on to build a successful business with an excellent track record.

Three of the four founders, Brian, Ewan and Gordon, remain with the business and form the current board of directors.

i4 has a mix of designers, innovators and engineers that collaborate as one team to deliver eye-catching and well-engineered products. Specific services include project management, industrial design, mechanical engineering, electronics and systems engineering, prototyping and manufacturing support.

The business has designed some well-known home and garden products for brands such as Flymo and Bosch as well as medical diagnostics and prosthetics products for world-leading vision device manufacturer Optos (part of the Nikon group) and Touch Bionics (an Össur Company).

Brian Combe, i4’s managing director, commented on the decision to become employee-owned: “The main objective of establishing an employee ownership structure was to provide a stable platform for growth by allowing our employees to feel more engaged, informed and integrated into the company.

“Many exit options had been considered over the years, even employee ownership which at the time we wrongly assumed would be too complicated for us. However it soon became clear that employee ownership was an ideal fit for the aspirations of the directors, for leaving a legacy of a sustainable and profitable company.

“Since the company’s inception we have always strived to do the right thing by our employees, and so once we understood the principles of employee ownership, we knew it was the perfect vehicle for us to begin the process of engaging our team for the next chapter of our company’s development.”

An Employee Ownership Trust (EOT) has been formed and currently holds 75 per cent of the shares on behalf of the employees; the co-founders have an equal share of the remaining 25 per cent but it is envisaged the EOT will eventually hold 100 per cent.

The transition to employee ownership was supported by Co-operative Development Scotland (CDS), with legal advice from Anderson Strathern and financial advice from Business Equilibrium.

Brian continued: “We were extremely satisfied with the support we received from CDS and our legal and financial teams on implementation. Although there is a lot of hard work still to complete to make employee ownership work for us, we firmly believe that this will be good in the long-term for everyone involved.

“All employees were kept in the loop from the start of the process. We held off-site strategy days where a wide selection of our employees attended and contributed to discussions on many points including succession and various models of ownership. Once the employee ownership model was debated in more detail and identified as the preferred option, a wholesale engagement with the employees was undertaken on a regular basis as the company stepped through the process. Keeping the lines of communication open proved to be very useful as feedback from the employees during the sessions ultimately shaped the finer details of the EOT.

“Time will tell how it might help the business but the hope is that transferring ownership to the employees is recognised as a genuine commitment and display of confidence by the co-founders in the employees being able to take the company to the next level. We hope that the process will encourage the staff to bring new ideas, add real energy and drive to take the business forward and importantly make them feel part of something exciting and have a real sense of pride working for i4.”

Sarah Deas, director at Co-operative Development Scotland, the arm of Scotland’s enterprise agencies which promotes employee ownership, added: “It is fantastic news that i4 Product Design has joined the long and fast-growing list of Scottish-based employee-owned businesses. It is a very successful company and the owners wanted to ensure that continued before exiting the business sometime in the future, as well as engaging the employees and giving them a meaningful stake in the business.

“By becoming employee-owned, the company is also safeguarding highly-skilled jobs. Employee ownership is a succession option that should be explored by businesses of all sizes and sectors.”

Statistics consistently demonstrate that employee-owned businesses outperform their non EO counterparts in terms of higher levels of profitability; improved business resilience during times of recession; increased productivity brought about by higher levels of engagement and enhanced employee wellbeing.

There are around 100 employee-owned companies operating in Scotland, with approximately 7,000 employee-owners generating a combined turnover of around £940 million.