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ESOP COMPANIES OUTPERFORM

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ESOP COMPANIES OUTPERFORM

By , April 1, 2011

Employee owned companies outperformed the FTSE All-Share in 2010, according to the UK Employee Ownership Index (EOI) published by Centre member law firm Field Fisher Waterhouse LLP. Employee owned companies’ share prices were up 16.3 percent, performing better than the FTSE All Share companies’ share prices, which went up by 11.3 percent over the year. The EOI, compiled by the firm’s equity incentives team, monitors the share price performance of listed companies, comparing the performance of 4 FTSE All-Share companies with companies that are more than ten percent owned by employees. Analysis of 2010 shows that in the final quarter employee owned companies also outperformed the FTSE All-Share, with shares up 11.5 percent compared to FTSE All-Share company share prices, which were up 6.8 percent.

The EOI shows that over 18 years, employee owned companies have outperformed FTSE All-Share companies each year by, on average, 11 percent. Over successive three-year periods they have outperformed by 38 percent and over five-year periods by 74 percent. An investment of £100 in the EOI in 1992 would have been worth £860 at the end of December 2010 whilst the same investment in the FTSE All-Share Index would be worth £249.

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.