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Expert advice on EMIs

Aspire magazine: If you want your business to be successful then build a winning team


By: Shaun Lowthorpe Date: 16 January 2017
Category: Future50

Partner Murray Graham recently spoke with Shaun Lowthorpe for the Aspire magazine - "the magazine for entrepreneurs and innovators" - bought to you by the team behind Future50.

Your business is up and running, but how do you hang on to your winning team? An enterprise Management Investment scheme (EMI) can help retain your best people, and also convince investors your business is dancing to the right tune too.

Your company is growing and gaining traction in the market, your team is storming ahead you are almost certain that you have a hit on your hands. Then a cold thought occurs - what happens if they walk away?

Or you need investors, and brows furrow as your would-be backers ask the same question? Not only that, but they make it a condition of their investment that you can show them what you are going to do to keep your star performers in the business. What are you going to do?

It is a question that's particularly relevant to fast-growing businesses, so it's likely to be an issue that you have given some thought to. EMIs might give you a solution.

An EMI share option is an agreement between a 'key employee' and the company that lets them buy an agreed number of shares, at an agreed price.

According to Murray Graham, partner at Lovewell Blake, newer companies are often much more switched on to thinking about share options at an early business stage.

"Many of these companies are tech businesses and their way of thinking is quite often influences by the performance culture and ethos more typical of traditional Silicon Valley-type companies.

"It's about retaining key people and ensuring there is a route for them to be retained. Share options and EMIs in particular are relevant to fast growth companies where people are absolutely key.

"Sometimes there is a divorce between the owners and someone undertaking the important activity, and that's where share options become particularly relevant.

"The beauty of an EMI is that you can identify people in the organisation - it doesn't have to be available to everyone. It's about creating the right culture and saying we want these people to be a part of our success.

"The person might be a recent graduate, or someone who has been in the organisation for a short period of time. You wouldn't necessarily expect them to be a shareholder straight away, but nevertheless, for a prospective employee deciding between companies, or for a business looking to attract people, then EMIs can be a clincher.

"Having an EMI in place early on can be a significant statement of your intent about your ambitions for your company, and a tipping point for attracting investment. You've pooled the investors together, they are attracted to the project and can see you have an exciting concept but, at the same time, they also want to be reassured that the business is able to retain its key people.

"Investors will look at this organisation and see this is a good management team with a good organisational structure, is well organised and thinking about these things.

"It is also why some businesses are using EMI to attract and incentivise the talent they bring on board and want to hold on to. If your organisation can offer share options and your competitor doesn't, you know where the whizz kid is going to end up.

"Forward thinking firms are also building incentives into their KPIs. They can form growth targets for your business and also help your team buy into the culture you are trying to create around your business.

"KPIs can actually help install a sence of achievement and contribute to growth."

If you are interested in more articles like this, the full Aspire magazine can be found here.
 
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