An audio manufacturer that has been running in the North East for more than 40 years will soon be owned by the company’s employees.
Washington’s Canford Audio is to be transferred to an Employee Ownership Trust, meaning it will be owned by its 136 staff members who will be paid a share of its profits each year.
The ownership scheme is famously used by the John Lewis Partnership but has also recently been adopted by Wallace and Gromit creators Aardman and hi-fi retailer Richer Sounds.
Iain Elliott, Canford Audio’s founder and CEO, said: “I am 66 and the other shareholders are my age or older. When you have your own business you know you have to do something to make an exit. I didn’t want to do a trade sale as heavens knows what would happen to my lifetime’s work.
“We have built a great culture, customers love working with us, and we have a lot of very long serving people who have been here from school and college.”
Rather than sell the company to a larger corporation, Mr Elliott wanted to explore other exit options and was considering a management buyout until an advisor suggested an Employee Ownership Trust. After finding out more about the proposal, Mr Elliott said it sounded “too good to be true”.
“If all goes well in five years, the employees will share the profits. We pay a bonus already but that will get a whole lot bigger in five years,” he added.
“If you sell the business to a bigger company they might decide to close us. I don’t want those 40 years of building up a good business wasted. We have removed the possibility of doing that.”
Most Read
During the transition period Mr Elliott and the other shareholders will be bought out using money from the company’s dividends. The process is expected to take between five and nine years, depending on the economy and the company’s performance.
Once that has finished, the dividend payment will then be shared amongst Canford Audio’s staff, who will be eligible for up to £3,000 a year tax free.
Canford was originally founded in 1974 while Mr Elliott was working at Metro Radio. He worked at the station for five years but began selling radio equipment as a side business after seeing the potential growth the industry could achieve.
More than four decades later, Canford is best known for manufacturing CD recorders as well as HD cables used by television companies to broadcast 4K TV programmes.
Although businesses controlled by Employee Ownership Trusts are unusual, Mr Elliott believes more directors should consider using them.
“It is something I want to champion as the staff are very good,” he said. “More business owners should be talking about this sort of approach.”