Galloway & Macleod, an agricultural merchant established in 1872, transitioned to employee ownership in 2010 to ensure continuity and community ties after facing succession challenges. A feasibility study revealed that an employee ownership structure aligned with both the family's exit goals and the employees' interests, resulting in a hybrid ownership model with an employee benefit trust. The transition increased employee engagement and business stability, enabling growth while maintaining the company's core values.

1. Galloway & MacLeod
Galloway & MacLeod, Grain Millers and Agricultural Merchants
has served the rural community since 1872. In 2010 with no obvious
succession, the family considered the exit options, including a MBO.
Inspired by a Co-operative Development Scotland (CDS) business
succession event recommended to him by his Scottish Enterprise
account manager, Managing Director Ralph MacLeod considered
selling the business to the employees.
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2. Co-operative Development Scotland is the arm of Scottish
Enterprise working in partnership with Highlands and
Islands Enterprise that supports company growth through
collaborative and employee ownership business models.
For more information or advice on employee ownership,
email info@cdscotland.co.uk or call us on 0141 951 3055.
Follow us on Twitter @cdscotland
Co-operative
Development Scotland
27 Causeyside Street
Paisley PA1 1UL
www.cdscotland.co.uk
Scottish Enterprise
Atrium Court
50 Waterloo Street
Glasgow G2 6HQ
www.scottish-enterprise.comSE/3984/Mar14
Ralph MacLeod, Chairman, Galloway & MacLeod Ltd
“The issue of succession for each new generation of a family business is gone.
Personal development and progression is entirely on merit, all staff are accountable and
performance measured. The employees now have a real stake in the business while being
masters of their own destiny. There is an independent spirit and a mind-set of ‘can-do’.”
MAIN BUSINESS
Grain millers
and agricultural
merchants
ANNUAL
TURNOVER
£15m
NUMBER OF
EMPLOYEES
34
THE CHALLENGE
The agricultural supplies sector is fiercely
competitive, dominated by large international
organisations. Acquisition by a competitor or
merger with another firm could have been
easily achieved but would have resulted in
rationalisation and job losses. The company
has strong roots in the local community and is
an important employer in the area. Moreover,
there was a young, talented management team
in place and a desire to keep the business
local. A takeover or merger was unlikely to
achieve this.
They also wanted to ensure continuity and
to secure the business for the long term. An
exit was sought that would allow Galloway &
MacLeod to benefit from a phased family exit
and would work for both the individuals within
the business and the corporate entity. The
desired solution would deliver acceptable value
for the family, and a tax efficient investment for
the employees.
THE SOLUTION
Internal consultations with key staff and a
feasibility study funded by CDS concluded that
the business objectives would be best met via
an employee ownership structure. A proposal
was formally tabled which was unanimously
accepted. With further support from Baxendale,
the company became employee-owned in
December 2010. Employee ownership provided
an exit route which met the family’s objectives,
and provided the company with a stable platform
for growth.
DEAL STRUCTURE & OWNERSHIP
The company opted to implement a hybrid
ownership model combining trust and individual
shareholding. An Employee Benefit Trust (EBT)
was set up to buy shares from the MacLeod family
using company profits. The deal was set up over
15 years with the vendor’s investment protected
by an option agreement. Ultimately the EBT will
own a controlling share with the balance of shares
being available to employees via a tax effective
Share Incentive Plan (SIP). Initial take up of the
share scheme was around 25% but within three
years 90% of employees had bought shares.
GOVERNANCE &
EMPLOYEE ENGAGEMENT
Ralph MacLeod became chairman on
announcement of the deal and the former
Sales Manager Donald Harvey was appointed
Managing Director. Trustees are responsible to
the employees to ensure the business operates in
compliance with the Scheme Rules and maintains
the ethos of the founding family. There are three
trustees; an employee trustee, an external,
professional trustee (a solicitor) and Ralph
MacLeod. Trustee meetings are held twice a year.
THE IMPACT
The transition was smooth with no interruption
to the day to day operations of the business.
Decisions continue to be made for the long term.
The business is growing locally and nationally.
Good staff retention and quality recruitment
provide a firm platform for expansion. To date,
sales and the share price have made good
progress. The business has an ambitious and
sustainable growth plan and most importantly
continues to prosper while maintaining a strong
ethos of integrity, personal development and
social responsibility.
Galloway & MacLeod Ltd
King Street
Stonehouse
South Lanarkshire
Scotland ML9 3EH
Tel: +44 1698 791919
Fax: +44 1698 792710
www.galloway-
macleod.co.uk
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