Staff to share in Kinetic as firm becomes employee-owned

Recruitment and payroll services firm Kinetic has become employee-owned.

Managing director Neil Smith (pictured) expects the move will preserve the company’s culture and independence while also ensuring its staff share in its success.

Smith had been the majority shareholder of the company with 75% of its shares, while the family of the firm’s late founder Terry Maunder held the remaining stake.

While the firm’s shares have now been transferred to an employee-ownership trust, Smith said it is “business as usual” for the organisation, with current directors and managers remaining in charge of the day-to-day running of the group.

Smith revealed he had been looking for a way of structuring the business for a number of years that would preserve its culture and independence without having to sell it on to a third party. 

He added the employee-ownership trust model is an ideal fit for the business, while the trust’s board would not set the group’s business strategy.

“The shares will be held by the trust for the benefit of all employees, but it is business as usual,” he said.

“Although the ownership structure has changed, the directors and managers continue to run the company. Salaries, contracts and reward structures remain the same.”

In addition, a third of the company’s annual distributable profits will be divided equally between the staff, he said.

“This ensures the staff share in the overall success of the business and are truly respected as the company’s greatest asset,” Smith said.

According to Smith, Kinetic’s staff received the news positively at a series of roadshows about the new structure.

And Smith urged other business owners who are weighing up their options to consider the employee-ownership trust model.

“It’s definitely an alternative that should be taken seriously alongside a management buyout or trade sale,” he said.

The Kinetic group of companies comprises staffing divisions Kinetic Recruitment Services and Kinetic Nursing, along with Pay Partners, which provides outsourced payroll services to small and medium-sized businesses. Manufacturing and engineering recruitment specialist Kinetic Recruitment Services is the group’s largest division.

The group has its headquarters in Stretford, Greater Manchester, and operates from eight other offices nationwide. It employs 62 staff and generated revenues of £22m in its latest financial year.

Nigel Barratt, the head of HURST Corporate Finance, and Liz Gallagher an associate partner in HURST’s tax team, advised Kinetic on the creation of the employee ownership trust. Mike Blood of JMW Solicitors and Stephen Hadlow of Turner Parkinson provided legal advice.

Financial terms of the transaction have not been disclosed.

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