Restructuring the business

A product design company incentivises its employees

Our biggest cashflow loan helped Cambridge Design Partnership become employee-owned.

When product design company Cambridge Design Partnership (CDP) decided to follow a new business model and become fully employee-owned, it needed significant funding to support its cashflow.

Mike Beadman co-founded CDP in 1996. It designs products and services for clients to market as their own, has 130 members of staff and several blue-chip clients. The successful company had a turnover of £14m last year.  

In 2017, Mike and his co-founders looked to the recently introduced legislation that allowed companies to transform into an Employee Ownership Trust (EOT), and approached Barclays to enable them to sell 100% of the company to a newly formed EOT. 

The idea was for Barclays to provide cashflow support to enable continued expansion of the company over the long term and for the resulting employee ownership to help motivate the workforce.

“In our business, the value is the people,” says Mike. “And if the asset of the business is the people, then what you want is to incentivise them to grow the company. Becoming an EOT can really support the long-term future of the company, firing up the employees to run the business and drive it forward – as evidenced by 20% growth in the first year.” 

EOT expertise

The EOT seemed a perfect way to motivate staff, and Mike sought the advice of an employee ownership expert to help put the structure in place.

As part of the process, the directors had to sell all their shares in the company to the new trust. The trust needed to pay  £36m for the shares, with £11m up-front and the remainder deferred.

Rather than erode the company’s working capital to fund the purchase, the directors’ solicitors suggested taking out a loan for the amount it needed.

A loan of £4.5 million from Barclays – our biggest-ever cashflow loan – helped enable the new trust to buy 100% of the shares from CDP’s existing three shareholders, while leaving the company in a strong financial position. 

Under the new structure, the trust holds the shares for the long-term benefit of the employees as a whole, who also meet regularly to help decide how the company is run.

Long-standing relationship

CDP decided to go for Barclays as it has banked with it since 1998 and has a strong relationship with Barclays relationship director Mark Bamforth. “If we ever have problems, Mark is our first port of call – he’s always been there whenever we’ve needed him, and that’s important to us,” says Mike.

As well as supporting cashflow, securing the EOT funding from Barclays has helped the business in many other ways. 

“Having somebody to answer to outside the business has really focused the whole team,” explains Mike. “Also, now that we’re in a situation of reporting key business information to Barclays on a monthly basis, it puts us in a much better position to move quickly if opportunities appear.” 

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