Hundreds of staff of a leading independent hospital group are enjoying the benefits of a multi-million pound buyout, through employee share schemes involving Surrey accountants TWP Accounting LLP.
A £340m management buy-out of Cygnet Health Care, which provides outpatient and inpatient psychiatric services for private and NHS-funded patients through 16 centres across the UK, has brought a windfall to the 450 managers and staff who owned 11% of the company’s equity through share option schemes, set up with the help of TWP private client tax partner Mike Dawes.
Employee share options are tax and national insurance-efficient ways to offer employees shares in a business and are regarded as an effective tool to build the commitment of staff to the company and an incentive to make it successful.
Under the scheme that Cygnet introduced in the early 2000s, an employee who had taken advantage of all the options to buy shares since the start – which have included the opportunity to buy one share at a discount and get another free – would have made almost £30,000, virtually tax-free from the buy-out. In total, staff shared around £8 million from the transaction, which followed 18 months of negotiations with HM Revenue & Customs on tax issues arising from it.
Ken Wilson, Cygnet chairman, said: “An essential part of the process was making it easy for employees to find out how much their proceeds would be and to provide clear advice on the tax consequences and their best strategy for selling or retaining the shares. Mike provided a helpline to handle that task, which was critical to the entire transaction.”
As well as working with Cygnet directors to set up the employee share scheme originally, Mike has also prepared and agreed regular share valuations with HM Revenue & Customs and acted as an external trustee of the employee incentive scheme, an integral part of the company’s business strategy, which it intends to expand in future.
Mike said: “It is rewarding to know that not only are hundreds of Cygnet employees better off as a result of this deal, but that Cygnet is ideally placed to develop and grow still further. It is also pleasing that the Cygnet management see the very real benefits that share ownership schemes offer and intend to expand these incentives as they move forward.”
For further, information please contact TWP on 01932 704 700 or visit www.twpwealthmanagement.co.uk