How Valloop is having a positive social impact on SMEs and their employees
January 13, 2021
Impact investing is a growing trend for investors who want to generate positive, measurable, social and environmental impact alongside a financial return. Valloop has created an innovative Social Purpose Buy-Out model to support SMEs to adopt employee ownership, with the right support and funding for growth. This approach offers strong benefits for the employees, the business and investors.
Employee ownership has been shown to provide long term benefits for employees and the communities they are operating in. It offers an opportunity to company owners who want to sell to retire, or pursue other opportunities, but who want to preserve their legacy and protect their employees and the local community. When employees have a stake in the company, the business remains rooted in the community and this gives the business a competitive advantage, as well as safeguarding jobs and encouraging more local business opportunities. Company-supplier relationships are maintained and service for customers can often improve, once employees know they have a stake, feel involved in the company’s success and will be rewarded for it. According to the Employee Ownership Association, “employee owned businesses achieve higher productivity and greater levels of innovation and are more resilient to economic turbulence. They also have more engaged, more fulfilled and less stressed workforces.”
“Everything is pointing to the value of this model – be it investor interest in ESG, opportunity in employment, increased relevance of community and localism resulting from COVID or the levelling up agenda. The fantastic thing is being able to serve these needs and at the same time investors doing as well or better.”Baroness Bowles of Berkhamsted, OBE, Member of Valloop Advisory Council.
Inspired by the success of the employee ownership model and a desire to create an impact investing strategy which really made a difference, Valloop created their intelligent investment fund. Central to this is their “Social Purpose Buy Out” model, an innovative and well-developed model with a proven track record. The team identified an opportunity caused by the need for baby boomer company owners retiring and needing to sell and the interest of employees in stepping up into leadership roles. They have made it easier for companies by combining Valloop’s skills and funding, a strong employee leadership team and an Employee Ownership Trust to allow for growth and a quicker and more stable transitions. This provides the opportunity for impact focussed investors to play a role in creating stable communities, increased productivity and long-term employee participation, backed by Valloop’s experience, history of success and participation in the transition to reducing the common uncertainties and issues involved in traditional employee ownership transitions.
“Having made my money from a mature SME, when I tried to sell the business there wasn’t a market, and having found a buyer, the purchaser couldn’t raise the finance from banks, merchant banks, etc. as we were too small.
I therefore immediately understood the validity and practical purpose of the Valloop Fund. The returns are going to be very attractive because there is nothing else like the Valloop Fund, so the demand from SME owners wishing to sell will be huge, allowing Valloop to select the best SME’s in which to invest.”High Net Worth Individual
Here’s how Valloop is positioned to create long-term positive impacts through their commitment to incorporate a robust employee ownership into all their SME acquisitions –
- Employee ownership benefits workers and communities by avoiding the asset-stripping and layoffs that is often associated with acquisition.
- Employee owned enterprises ground wealth locally, stabilising communities and are resilient in times of economic turmoil.
- Employee ownership sustains success of the company and promotes and supports the well-being of employees.
- It creates more competitive businesses through meaningful employee participation.
- It enables more resilient businesses in times of economic turmoil, meaning less likelihood of unemployment, income reduction or closure.
- Employees and businesses are less likely to move out of the community. When businesses become a key part of the community, this benefits that community and generates more jobs and stability.
- Broader ownership of company stock distributes wealth more widely.
- Expanding employee ownership may work to meaningfully decrease income inequality.
Valloop’s approach eases the complexities of employee ownership transitions and accelerates the process, facilitating these benefits for the company, employees and the wider community. They support and promote the development of strong management teams to set the companies up for long-term success. They are leading the way with strategies which promote inclusivity and pay equality, and intelligent buyout models which put employees at the centre of the solutions to the issues generated by the sale of mature SMEs, resulting in socially inclusive employee ownership.
“I have worked here for nearly 30 years as an employee. Now, since the iBO, I am a Director, a Shareholder and collaborating with all employees. Together we are in control of our own financial future and the long term future of the business with support from Valloop.”New business owner from the Valloop Portfolio
Valloop is partnering with Innovest Advisory, a specialist impact investing consultancy, who are supporting the development of a set of social indicators and which will enable the fund to measure and report back to investors and other stakeholders the true difference of the Valloop model versus other buy out approaches.
Together Valloop and Innovest aim to increase awareness of employee ownership as an emerging and powerful impact investing thematic. The fund will act as a demonstration of these benefits, and seeks to amplify its impact through sharing impact data and the learnings derived to benefit employees, owners and management teams of SMEs more broadly as well as the communities in which they operate.
To find out more visit www.valloop.com