Community buyouts

This section gives you an overview of community buyouts, including:

  • What a community buyout is
  • The benefits of a community buyout
  • The types of community buyout
  • The key features of community buyouts

What is a Community Buyout?

A community buyout is when a community group comes together to take on an existing business or asset. This is in contrast to when a community establishes an enterprise to take ownership of a new business or asset, such as purchasing a new solar array to generate renewable energy.

Community buyouts are increasingly common in the UK, with groups having purchased and taken on the running of existing shops, pubs, football clubs, piers and transport services. Most of which are delivered through setting up a community co-operative. They mainly arise when a community is driven to rescuing a local business threatened with closure or, in exceptional circumstances, where the community feels poorly served by the business.

Compared with a new-start enterprises, the advantage of acquisitions and buy-outs is that the business in question has a track record, which provides a benchmark for planning performance improvements.

Overall, community buyouts require the same features and qualities that any community or co-operative enterprises needs to consider – from business planning to governance. However, there are a few unique opportunities and issues associated with a community buyout that are all explained in this section. 

The benefits of a community buyout

Community co-ownership

The major benefit of a community buyout is the principle that giving the community ownership of a business with a greater influence in how the organisation operates, in turn leads to superior business performance. 

The community are no longer passive customers, but co-own the business, which can mean:

  1. improved customer loyalty,  
  2. members of the community will often volunteer to help in ways which they would not do for a privately owned business.

More sustainable

Community owned businesses tend to be more sustainable (less likely to fail than traditionally owned businesses) and are able to take a longer-term view as there are no external shareholders requiring short-term returns.

Of the 300 community shops taken over in the last decade, only a handful have failed. Every one of the community co-operative pubs in the UK is still trading.

Community benefits

They also benefit the communities they operate in because the rewards are shared amongst the people who work within the business rather than going to a single owner or external shareholder as is the case in more traditional structures.
Updated: 21/03/2016