Price Bailey advised on the sale of an educational psychology business to an Employee Ownership Trust.
The Strategic Corporate Finance team at Price Bailey LLP have recently advised on the sale of an educational psychology business to an Employee Ownership Trust. The company was founded by Dr. Jonny Laber-Craig and Dr. David Lamb after they developed a business plan whilst studying to become educational psychologists at Nottingham University in 2009. Later evolving into what is, today, Applied Psychologies.
The company employs a mixed team of 30 employees and associates, which allows Applied Psychologies to offer a wide range of services from assessment and intervention for individual children to training for school staff. Educational services are provided in the North of England, with a focus on servicing the educational needs of children from around 170 schools.
The company works closely with schools to understand the needs of staff, families and children, and formulates a hypothesis and subsequent plan to aid an individual and the people around them.
David and Jonny were first introduced to Price Bailey in April 2021, by Christian Wilson, a specialist lawyer advising on EOTs, when they were considering options around employee ownership. Following a number of conversations internally, in early 2022, they determined that an Employee Ownership Trust (EOT) was the best mechanism to allow them to realise some value out of the business they have created, and to incentivise employees to see their joint vision of how Applied Psychologies can continue to evolve in the future.
Subsequently, in February 2022, the Strategic Corporate Finance (SCF) team at Price Bailey, led by Simon Blake, were engaged to assist in the EOT transition process. Initially this involved determining a valuation for the company and outlining the structure for the proportion of shares to be sold to the EOT. Working in conjunction with our tax team and Christian, the clearance application was submitted to HMRC and work continued in preparation for the transaction which included presenting to the business’ management team about the change to employee-ownership. Price Bailey worked closely with Applied Psychologies to review forecasts and determine a suitable repayment structure based on the expected future profitability, ensuring sufficient headroom was available for those repayments. The final parts came together over the summer and the transaction successfully completed in September 2022.
The sale of 80% of the shares to the EOT enables David and Jonny to gradually step back from the running of the business while simultaneously supporting their team to step forward and drive the future direction of the business. In doing so, their Trustees and employees will be able to actively participate in key strategic decisions, as well as sharing in the financial success of the company.
David Lamb , of Applied Psychologies, said about Price Bailey’s role in the transaction:
We believe that exiting the business via EOT will make the company more resilient, bring employees closer together, strengthen our shared ethos, and allow a group vision. Having just celebrated the 10th birthday of the company, the EOT marks the start of a new chapter and Jonny and I are very excited to see what the future has in store. We want to thank Eleanor, Simon and the team at Price Bailey in supporting us in this exciting development for the business.
Eleanor Lothian, Strategic Corporate Finance Manager said:
It was a pleasure working with Jonny and David as they usher in the next chapter for Applied Psychologies as an employee-owned company. I’m sure we will continue to see great things as the business grows from strength to strength.
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