business ADVICE                           Craig West, M. Tax Law, M. Bus (Acct / Fin) , B. Bus (Mgmt) Partner, CPA - Succe...
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CMAC Case Study - winner of 2012 ESOP of year


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Case study of an ESOP done well - winner of 2012 ESOP of the Year award - by Craig West, CEO & Founder of Succession Plus -

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CMAC Case Study - winner of 2012 ESOP of year

  1. 1. business ADVICE Craig West, M. Tax Law, M. Bus (Acct / Fin) , B. Bus (Mgmt) Partner, CPA - Succession Plus SME Engineering Firm Bucks Trend with an Employee Share Ownership Plan for Business Succession Locally grown and owned engineering 38% had a lack of awareness of employee from all staff. Our meetings are open for plant C-Mac in Girraween, in Western buyout as an option for succession, with a discussion with great ideas from all staff to Sydney, NSW, has bucked the growing further 44% considering employee buyout improve efficiency. As a manager with job national SME trend to wind up on owner as unlikely or very unlikely. security and a share in the business it’s a retirement (‘The Exit Generation Needs great pleasure to manage a team who want Help’ - Featherstone T, The Venture The Australian Employee Buyout Centre you to lead with ideas”. blog, 19 September) with facilitated the ESOP implementation and the introduction of an employee share funded all the advisors’ costs for C-Mac The company’s founding family members ownership plan (ESOP) offered to all Industries. The funding was provided are the principal shareholders but see its employees. The engagement of through a Federal Government Grant under the benefits of a gradual sale of shares to employees as owners has already seen an the now completed Rudd government employees based on profit share as well 18 % hike in productivity at the plant. initiative, the Jobs That We Own program. as the increased involvement of key staff within the management team. ESOP designer Craig West of Succession More than 80% of Australian small and Plus stated “this plan has been a great The plan – a Peak Performance Trust medium business owners aged over 55 are example of the combination of enthusiastic designed by Succession Plus specifically trapped in their businesses – struggling to employees (who have now elected two for small to medium privately held work out how to escape and at the same employees to represent the new group of businesses that are looking to attract, time extract their wealth from the companies owners on the company board) and owners retain and motivate key staff by involving they have worked so hard to create. who can see the benefits of increased them in both the equity and control aspects participation and who are prepared to of succession planning – has been used Recent surveys by a number of the Big create a win-win environment for all successfully by a growing number of Four banks and several accounting firms stakeholders. It is unusual to see such a business owners throughout Australia identified succession planning as the high take up rate amongst employees and looking for an innovative approach to number one issue among business owners it’s encouraging to see the improvements in succession planning. G as they approach the end of their careers. performance even at this early stage.” But like so many management buzz words coined to capture complex trends Steve Grlyak, manufacturing manager for in simple phrases, “succession planning” C-Mac said that since the introduction of fails to address so many of the problems the employee share plan, “People are now the owners of SMEs are grappling with. saying ‘us’ instead of ‘me’ and asking, Succession Plus Pty Limited For example, those in the manufacturing ‘what do you want us to do?’. Job security Level 3, 50 York Street, Sydney sector find themselves looking for a is a key motivator at C-Mac and we do NSW 2000 viable exit from their businesses at a not want to lose employees with skills. time when markets for their products There are now charts in the lunch room p | 1300 665 473 and services are disappearing offshore. so everyone can see how the business w | Unable to find buyers prepared to pay a is doing. The change has been truly fair price for the value they have created or unbelievable from all staff. I have directions family members willing to take over the and targets from the elected board (the reins, more and more face the terrible plan involved the members electing two alternative of simply turning out the lights employees to represent them on the C-Mac and walking away. board) and I have all the support I need34 GWP Magazines | Issue 39 | November / December 2011 ®