Co-operative buyouts can prevent the loss of a vital community business
(From Jackson Smith Solicitors Newsletter, June 2005, Volume 8, Issue 5)

"Buyouts are common in the United States and various European countries. In Spain for example, not only are such buyout co-operatives common, but there is a strong support network to assist them." Peter Jackson

In 2004 the residents of the town of Kaniva in Victoria found themselves about to lose their only petrol station. Without the petrol station residents of the town would have had a 90 km round trip to buy fuel.

The community banded together and formed a co-operative, with community members investing amounts ranging from $500.00 to $10,000.00, to purchase the petrol station. The community saw this as a way of saving jobs, maintaining the value of their property in the town, and helping to secure their future.

In the United Kingdom in late 2003 the directors of a company that made double-glazed windows were looking to retire and sell their business. One of the directors saw a newspaper article on employee buyouts, and it was arranged that the 90 employees of the company raise sufficient money to buy the business from the old shareholders.

In the same way as the petrol station example, a co-operative was formed and it was the co-operative that purchased the business, with the employees as members of the co-operative and purchasing shares.

Peter Jackson, Partner, Jackson Smith Solicitors

Buyouts such as those described above are common in the United States and various European countries. In Spain for example, not only are such buyout co-operatives common, but there is a strong support network to assist them.

In Australia only 38 percent of small business owners have a succession plan although the average family business owner in Australia is 55 years old, and 40 percent of business owners plan to leave their businesses within the next five years. A further 66 percent of these people are dependent on their business to fund their retirement.

Jackson Smith has joined a group of business people and academics committed to assisting communities and groups of employees purchase businesses through a co-operative structure, where there is a community need, the owners of the business wish to retire, or the business is insolvent.
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