Shaping a new future at Coolings
An employee ownership trust at Coolings Nurseries is securing its future for the next generation and giving staff a chance to share its financial success
Coolings Nurseries, with four garden centres in Kent and East Sussex, has joined the likes of Riverford Organic Farms, Aardman and John Lewis & Partners and is now managed through an Employee Ownership Trust (EOT). Announced in March along with a new management structure, it means 75% of the company’s ownership is held by a Trust on behalf of its 200 employees with Paul Cooling holding the remaining 25% to continue the family’s interest and legacy in perpetuity.
Paul has been considering the future of the business for some time and in the last decade it has been transitioning from a ‘family owned and family managed’ business to being ‘family owned and professionally managed’ . In the last two years he has spoken to and taken advice from many people in the industry and beyond from solicitors to accountants. The two most obvious options were selling up, something which did not appeal, or keeping the majority of ownership in the family. However a relatively new and third business model option called an Employee Ownership Trust appeared to be a good fit allowing the business to continue to thrive while benefitting employees and the loyal customer base.
“I’m the third generation in the business, and the fourth generation is my son and daughter, ” says Paul Cooling, Vice Chairman, adding that they are both forging their own careers. “If you look at all the successful businesses in our world, most of the people running them have grown up with them.
Staff working on the nursery at the Coolings site at Rushmoor Hill, Sevenoaks, keep the garden centre stocked with fresh bedding and perennial plants
We are keeping the business running in the way it has been run in the past so until staff start seeing the dividend payments come through, I hope that is really going to be the only significant difference they will notice.
Although my children have awareness they have no idea what will be involved with running a business with 200 people and a £12 million turnover. It’s not the same thing as when you are living above the shop floor and it would be selfish of me to expect my children to give up their chosen career paths to take on the responsibility of owning Coolings Nurseries.”
Formally shares in the business were owned by Paul, his brother David, and the company’s Managing Director Gary Carvosso. Although David has offered sound financial and business advice as an ‘unseen director’ for many years, he has no children so doesn’t have a long-term interest in the future of the business. “It was suggested that an Employee Ownership Trust might be a route to bring David to the negotiating table and I thought actually he might be ok with that. He was and it was brilliant.” This opened the doors to begin investigating the possibilities of an EOT which eventually took around a year to put into motion.
EOT’s have only been around since 2014 so are still a relatively new business model. However today more than 600 companies are run in this way and in 2021, one in 20 company sales were to employees through a trust. New Hopetoun Gardens in West Lothian moved to an EOT in 2019 giving control of the business to its team of more than 35 staff. Dougal Philip and Lesley Watson, who established the business more than 40 years ago, now have the opportunity to begin stepping back from its day-to-day running while knowing the business is in safe and caring hands.
Trusts established for employees must always hold the majority share and in the case of Coolings, it has a 75% stake. The Government is currently looking favourably on the formation of EOT’s and is calculating businesses to have relatively modest values which are approved by HMRC. This enabled the Trust to buy the shares from Paul, David and Gary (with Paul retaining 25%) on behalf of Coolings employees with money from within the company. Paul and Gary will be paid for their shares from profits over the next 10 years, or sooner. “So it’s in our interest to make sure the company performs well, ” says Paul.
Although the EOT is a significant change in ownership, it’s not a dramatic shift in management and communicating this to staff is key. Breaking the news to the employees and telling them they all own a bit of Coolings Nurseries Ltd resulted in some very interesting reactions. “Many of them were pleasantly surprised but you could see by the expression on some faces they are thinking ‘what’s the catch?’, and some cynics are thinking it must be to do with tax. Indeed there are some tax benefits but it works both ways and the benefits are certainly more weighted in favour of the employees,” explains Paul. “We are keeping the business running in the way it has been run in the past so until staff start seeing the dividend payments come through, I hope that is really going to be the only significant difference they will notice.”
To ensure all business interests are represented within the Trust, it has its own board of directors which includes Paul as Family Trustee Director, Ian Hazon as Board Appointed Trustee Director, Dale Evans as Empolyee Trustee Director and Nick Brooker a former banker who is the Independent Trustee Director. Meeting up throughout the year they act on behalf of the employees including arranging for the dividend, if profits are made, to be paid to all staff who have worked at Coolings for more than 12 months.
Paul Cooling believes an Employee Ownership Trust is the best way to continue the business in the coming years
At the moment each can receive a dividend of up to £3,600 before having to pay tax. “But we’ve had to be very clear with the staff – just because you can earn it, doesn’t mean you will. It would have to be a very, very good year to get that much!” says Paul. This then gives each employee a stake in the business and a real reason to help the company be a success.
Another important point is that employees are given a certain amount of job security which is particularly pertinent in a world where smaller, family run garden centre businesses are in the eye of larger companies looking to add to their portfolio. Paul explains this was bought home to him following a recent substantial offer for the company way over the current market value and what he describes as ‘phenomenal’ . “We had a discussion but I went back and said ‘no’ . If we had gone down this route I wouldn’t have been able to look any of the employees in the eye. I would have to move because a lot of people live locally [and rely on Coolings for their livelihood]. It became very emotional. Within six months there would have been a chunk of people without a job. For example the accounts department would be gone and our garden maintenance section wouldn’t fit in. Just the thought of what we’ve done and achieved in all those years being disassembled - it hadn’t really dawned on me how significant a change that would be.”
The EOT covers four sites including Wych Cross Garden Centre in Forest Row, East Sussex, a former Wyevale Garden Centre site, which became part of the Coolings family as recently at 2019.
Now refurbished, and even considering the turmoil of national lockdowns, turnover has more than doubled. Its former nursery growing roses is now back up and running, seating in the café has been doubled and the stock selection adjusted to better fit its horticultural customer base.
“If you’d seen it the week we took over and compared it with what it looks like now, you wouldn’t say it was the same business, ” says Paul. “The staff are loving it as it’s more like the garden centre it used to be and I’ve done a number of talks to WI and local horticultural groups letting them know the business is now back in family hands and with people who care about plants. We’ve got quite a few customers returning who haven’t visited in years. ”
As Coolings is known for its plants it’s important they are the first thing customers see when they visit. “When people come in, you’re straight into houseplants, so you’ve got a bit of a horticultural feel.” There is still a lot do at Wych Cross and more investment to be made but Paul is excited about its future.
Wych Cross Garden Centre, where horticulture and plants are now firmly back on the agenda
Celebrating the new business model with some of the team at an event at the Houses of Parliament
Coolings has been in the nursery business since 1913 and this new chapter will add to its history as the ‘gardeners garden centre’ . The EOT has given Paul the opportunity to become its Vice Chairman and take on a less active dayto-day role in the company while Gary Carvosso becomes Chairman, with Dyane Ross as its Managing Director and Ian Hazon becoming Ops and Production Director. It has also ensured the family ethos of growing and selling high quality plants and sundries, offering sound gardening advice and looking after its staff and customers is protected for the future. Indeed the company continues to develop with the possibility of investing in new sites and the creation of a separate share scheme on the table.
“It’s been a roller coaster and certainly we have been out of our comfort zone because it’s all been a bit of an unknow,” says Paul. “But it’s reassuring that some quite big, well-known family names are already EOT’s and it will give far greater stability to the business than for it to remain in the hands of one or two individuals. And it gives me a good feelgood factor as an owner too.”