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Workers Buy Out (WBO)
Published on 01 July 2020
Italy
Emilia-Romagna
This is the good practice's implementation level. It can be national, regional or local.
About this good practice
The Workers Buy Out is an innovative national, regional and local instrument whereby workers acquire ownership and control of a company which is facing closure. By creating a cooperative, the employees wear the clothes of cooperative entrepreneurs, going from simple employees to company managers. Successful WBOs help avoid unemployment and create new jobs; they preserve wealth, professionalism and skills. The business stays on the territory. The cooperative is a form of company based on distinctive procedures, features and values.
Legacoop Emilia Ovest is the reference association of cooperatives in Reggio Emilia, Parma and Piacenza. It supports workers in the process and provides for business analysis and risks analysis, it informs about the financial support instruments, it evaluates innovation needs, it offers reskilling and upskilling for employees, and it develops a new business plan.
The WBO can be implemented:
1. In case of company crisis: a crisis situation usually leads to a “guided” liquidation procedure of the production facility. The workers of the company decide to protect their job by investing their unemployment benefit and establishing a cooperative that could continue the activity with new strategic objectives and corporate governance.
2. In case of generational turnover: in family-run businesses, the company is sold to its employees who have acquired specific competences over years of employment rather than competing companies or multinationals.
Legacoop Emilia Ovest is the reference association of cooperatives in Reggio Emilia, Parma and Piacenza. It supports workers in the process and provides for business analysis and risks analysis, it informs about the financial support instruments, it evaluates innovation needs, it offers reskilling and upskilling for employees, and it develops a new business plan.
The WBO can be implemented:
1. In case of company crisis: a crisis situation usually leads to a “guided” liquidation procedure of the production facility. The workers of the company decide to protect their job by investing their unemployment benefit and establishing a cooperative that could continue the activity with new strategic objectives and corporate governance.
2. In case of generational turnover: in family-run businesses, the company is sold to its employees who have acquired specific competences over years of employment rather than competing companies or multinationals.
Expert opinion
The Workes Buy Out mechanism is a very good example of a well thought out process and support scheme that ensures that businesses don´t fail during crisis or transfer situations.
Highlighting practices such as this is important on the EU level. In most EU regions support systems for transfers are under developed despite being on the EU agenda since the 90s. Many viable companies close due to hindering because of the insufficient attention dedicated to the business transfer process.
What stands out from the Workers Buy Out is that a dedicated association (the Legacoop Emilia Ovest) has been set up to support workers, e.g. the new owners, in the transfer process by providing a wide set of services: business and risk analysis, informing about support instruments and developing a new business plan.
It is also good to see that the practice addresses both transfers in case of extraordinary situations as well as generational transfers. In the case of the former, it is noteworthy that workers are guided in investing their unemployment benefits in establishing the cooperative that could continue the activities of the initial business.
As the evidence of success in terms of jobs saved and turnover preserved are impressive, we recommend other regions interested in developing their business transfer services to learn from this good practice. It has high replicability value.
Highlighting practices such as this is important on the EU level. In most EU regions support systems for transfers are under developed despite being on the EU agenda since the 90s. Many viable companies close due to hindering because of the insufficient attention dedicated to the business transfer process.
What stands out from the Workers Buy Out is that a dedicated association (the Legacoop Emilia Ovest) has been set up to support workers, e.g. the new owners, in the transfer process by providing a wide set of services: business and risk analysis, informing about support instruments and developing a new business plan.
It is also good to see that the practice addresses both transfers in case of extraordinary situations as well as generational transfers. In the case of the former, it is noteworthy that workers are guided in investing their unemployment benefits in establishing the cooperative that could continue the activities of the initial business.
As the evidence of success in terms of jobs saved and turnover preserved are impressive, we recommend other regions interested in developing their business transfer services to learn from this good practice. It has high replicability value.
Works at
Interreg Europe Policy Learning Platform
Resources needed
• Advances of social shocks-absorbers and unemployment benefits;
• Coopfund resources, a mutual fund for the development and promotion of cooperation of Legacoop;
• Resources from Law Marcora 49/85 which finances the CFI, a cooperative society that supports cooperative enterprises.
• Coopfund resources, a mutual fund for the development and promotion of cooperation of Legacoop;
• Resources from Law Marcora 49/85 which finances the CFI, a cooperative society that supports cooperative enterprises.
Evidence of success
The ideal target group is represented by companies with:
- 8/9 employees and 1/2 million turnover;
- 80/90 employees and 20 million turnover.
On the territory of Legacoop Emilia Ovest, a dozen of WBOs have been tested, 300 jobs saved, and 50 million turnover preserved; In Emilia-Romagna Region, the WBO concerned 25 new cooperatives, 600 jobs in the following sectors: 64% in the manufacturing sector, 12% in the construction sector, 16% in the services, and 8% in the retail sector.
- 8/9 employees and 1/2 million turnover;
- 80/90 employees and 20 million turnover.
On the territory of Legacoop Emilia Ovest, a dozen of WBOs have been tested, 300 jobs saved, and 50 million turnover preserved; In Emilia-Romagna Region, the WBO concerned 25 new cooperatives, 600 jobs in the following sectors: 64% in the manufacturing sector, 12% in the construction sector, 16% in the services, and 8% in the retail sector.
Potential for learning or transfer
Every single aspect of a WBO program can be replicated both in case of corporate crisis and generational change. However, a context of adequate “support” is needed, which is built through the assistance of business associations, financial institutions and cooperatives, public authorities, and mostly the determination and conviction of the employees of these companies.
Further information
Website
Good practice owner
You can contact the good practice owner below for more detailed information.
Organisation
Legacoop Emilia Ovest
Italy
Emilia-Romagna
Contact
Innovation and Economic Development Unit Coordinator