Thomson Snell & Passmore and castle corporate finance advise eighth-generation family funeral director on transition to employee ownership

Thomson Snell & Passmore

Deal type: Aquisition
Industry Sector: Finance
Completion date: 13th March 2024
Adviser(s): Thomson Snell & Passmore

Thomson Snell & Passmore and castle corporate finance advise eighth-generation family funeral director on transition to employee ownership.

Thomson Snell & Passmore and Castle Corporate Finance Limited (Castle) have advised the shareholders of family-owned funeral directors Lodge Brothers Funerals Limited (Lodge Brothers/the Group) in relation to the Group’s multi-million pound transition to employee ownership through an Employee Ownership Trust (EOT).

The move to employee ownership marks a significant milestone in the Group’s history. Now fully owned by its dedicated workforce, Lodge Brothers stands as the pioneering funeral directors in the UK to embark on this transformative journey.

Established in 1780 by the Lodge family, Lodge Brothers has earned acclaim for its compassionate funeral support, legal services, funeral plans and memorials. With 48 funeral offices spanning Surrey, Middlesex, Hillingdon, Berkshire, and West London, the Group has remained steadfast in its commitment to serving communities.

A robust senior management structure has been implemented, with the existing Board of Directors retaining responsibility for steering the Group’s strategic vision. Additionally, an inaugural Board of Trustees has been appointed to oversee the EOT, ensuring that the Group’s operations align with the best interests of its employees.

The decision to embrace employee ownership stems from Lodge Brothers’ commitment to maintain independence, uphold its values, and recognise the contributions of the workforce.

The legal team was led by M&A Partner and Head of Corporate at Thomson Snell & Passmore, Joanne Gallagher, supported by corporate lawyers Faye Cook, Daniel Gorringe and Rachel Macmillan. The team led on the legal aspects of the sale to the EOT including dealing with the complex process of obtaining regulatory change of control approvals from the Financial Conduct Authority (FCA) and the Solicitors Regulation Authority (SRA).

Joanne Wright and Pheobe Sneddon in Real Estate, Katya Batchelor in Banking & Finance, Ben Stepney in Employment, Mathew Boyle in Pensions and a specialist regulatory lawyer also supported the Corporate team with the EOT transaction.

Joanne Gallagher at Thomson Snell & Passmore commented: “This was a great transaction to have advised on in terms of legal and regulatory complexity. We are increasingly seeing more EOT transactions in the market, as an alternative and more flexible exit strategy for sellers. We were able to harness our previous EOT experience and work closely with Lodge Brothers and Castle Corporate Finance to achieve a successful completion. We have no doubt Lodge Brothers will continue to flourish under this new structure.”

Michael Lodge of Lodge Brothers added:: “I would like to thank Jo and her team at Thomson Snell & Passmore for their hard work; dedication and expertise in getting this deal over the line. The transaction turned out to be more complicated than I first anticipated but the Thomson Snell & Passmore team took the various obstacles in their stride and delivered the deal on time and with smiles on the way.”

Robert Lodge, Chairman at Lodge Brothers, commented: “Our employees are the heart of our service to clients. By entrusting Lodge Brothers to those who drive its success each day, we are safeguarding the longevity and prosperity of our business.”

Paul Bye, Senior Commercial Manager at Lodge Brothers, added: “Becoming the UK’s first employee-owned funeral directors signifies a genuine opportunity for Lodge Brothers, fostering a culture of collaboration and empowering our team members. Our longstanding family enterprise embraces modernity and forward-thinking, and I am thrilled to contribute to its evolution in the next 200 years.”

The Castle team led by director, Victoria Ansell, and assisted by Senior Manager, Alex Nursey, explored exit options for the shareholders, and worked closely with them to find a suitable outcome for all.

Victoria Ansell and Alex Nursey at Castle acted as lead adviser on the transaction. Funding was provided by Barclays Bank plc, with valuation and tax advice from Menzies. Outset Legal advised the Board of Trustees. Castle also introduced J. Gadd Associates to support Lodge Brothers’ transition to employee ownership.

Victoria Ansell of Castle concluded: “It has been a real privilege to work with Michael, Robert, and the Lodge family throughout this process. Transition to an EOT is not to be undertaken lightly, but can provide a unique succession strategy for the right business, and for shareholders who wish to see legacy and values preserved – which was exactly the case here. It was a complex transaction involving FCA and SRA consents, as well as a competitive funding process, on top of the usual valuation, tax, and legal workstreams. The whole team pulled together to make it happen and I wish Lodge Brother