For the most discerning yacht and private jet owners of the world, there are only a handful of companies you would trust for bespoke design. Winch Design is one of them. Today, it boasts over 150 designers, but in the beginning it was just two people: Andrew Winch, a trained 3D designer, and his wife Jane, a former nurse with a knack for business management.
When Andrew and Jane embarked on the journey to transition their company to employee ownership, they did so with a clear vision and a strategic blueprint. What drove the structure of their shareholder loan agreement was their deep sense of responsibility not only to the business but to their employees.
Andrew saw the stark difference between selling to an external buyer and transitioning to an EOT. He felt that with an external buyer, “they will take 100% of the dividend profit and all of the employees will get their salary and maybe a bonus, but they will not profit from the success of the business.” The EOT, on the other hand, aligned more with their vision.
When we spoke with Andrew, he was three years into a seven-year shareholder loan to the company. Andrew and his team structured the loan to prioritize the financial strength of the business, with Andrew emphasizing the importance of avoiding premature payments that could leave the company struggling: "Rather than pay it all today, day one, and then you'll be bankrupt in two years time because you haven't got that capital to work with. So we set it up to be a fair exit.”
Another primary concern for the founders was ensuring immediate benefits for the employees, so that they didn’t have to wait years to see the upside of their ownership. A loan that is structured to eat up all of the annual profitability leaves nothing for employees. Instead, they structured the loan to share the profits between debt repayments, bonuses, and profitability for the employee right from the first year. In this way, employees who see profitability early on are instilled with a sense of ownership from the get-go.
