How Elixirr builds a ‘firm of entrepreneurs’ with an equity model for all

11 October 2021 Consultancy.uk 4 min. read
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Since its inception in 2009, international consultancy Elixirr has pledged to build a firm of entrepreneurs through a model which gives part ownership to members of the organisation. Founder and CEO Stephen Newton explains what this means for the firm.

In consulting, everything comes down to talent. And while most firms remain privately-held and partner-owned, Elixirr – a fast-growing international consultancy – has taken a different route. With entrepreneurialism at the heart of the business, the firm, which listed on the London Stock Exchange last year, ensures every member of its team is wholly invested in its success.

How does Elixirr do this? By making all employees, from entry-level Analysts to the most seasoned principals, true owners of the business. By challenging the concept of employment and instead shifting to a model of mutual ownership, Elixirr has built the ‘firm of entrepreneurs’ the company has always strived towards.

Elixirr’s approach creates an equity participation opportunity for all team members. This attracts talent from the likes of start-ups, investment banks, venture capital and private equity firms, who are willing to take financial risk to see significant returns from their organisations’ success. Through this model, Elixirr is creating a team driven by one shared goal: to generate value for clients and as a result, the firm.

“We’re building the best consulting firm in the world,” said Stephen Newton, “A firm of entrepreneurs, not just employees. It is crucial to what makes us different. We seek people who’re driven by this; those who are prepared to take risks and share in the benefits as their investment pays off.”

At the same time, in a heated labour market, an ‘equity for all’ model helps keep top talent on board. Elixirr’s offering enables it to tap into a pool of candidates that may not otherwise choose the consulting route, adding to the already-diverse selection of ‘entrepreneurs’ that make up the firm.

On the other side, Elixirr also offers more seasoned consultants the chance to move away from the constraints of larger, more slow-moving consulting firms that have little to no equity scheme, to a firm that still provide as many client opportunities whilst giving them a stake in a high-growth scale up. Team members all play a role in shaping the success of the firm, and that success will be mutually celebrated by everyone in the business.

The firm’s CEO went on, “Offering our people an equity stake is deeply rooted in our firm’s entrepreneurial culture. It gives our people a taste of the risk-reward of entrepreneurship. We’re building and scaling a firm of people who have an ownership mindset, both for our clients and our own business. We’re building a team who think and act like shareholders, seeing tangible return for the work they put in every day.”

Two ways to earn equity

Elixirr offers its employee different routes to equity participation: a Share Options Scheme and an Employee Share Purchase Plan (ESPP).

The Share Options Scheme gives employees the right to buy shares in the business in the future, at the current market price. The ownership of the shares is realised after a vesting period – but assuming the share price follows a similar growth trajectory that it has over the past year, this can generate substantial wealth for those who stay with the firm.

According to Newton, the return on this option has already been proved effective. One year on from the date of the IPO, Elixirr’s shares had grown by 164%; significantly faster than the 20% average growth of the FTSE over the same period, or the broader AIM market – where Elixirr went public on July 9th 2020 – at 42%. The firm’s share price has now grown by over 200% since listing following the release of another strong set of results in September 2021.

Some employees can choose to go further, though. Newton added, “Our people wanted the opportunity to gain more equity and hold a greater stake in the business they’re building. So, alongside this industry-leading options plan, we also launched one of the most generous share purchase plans in the market.”

In this case, staff can buy into a second equity participation scheme, the ESPP. This sees the company give its employees the option to invest a percentage of their salary to purchase shares in the business. On top of this, the business grants the employee one share, for every share they purchase. The granted shares follow a similar vesting period to the options scheme, creating an even greater wealth creation opportunity for those who stay with the firm.

“Junior employees can choose to invest up to 10% of their salary into Elixirr’s ESPP,” Newton explained. “Managers and above can choose up to 20%.”

While share schemes aren’t rare, especially in the world of start-ups, Elixirr’s offers a point of differentiation from the standards set by competitors. According to Newton, by continuing to commit to building a firm of entrepreneurs, Elixirr demonstrates just how serious they are about building “the best consulting firm in the world.”

He concluded, “This plan is 100% matched, as employees earn the shares over a five-year vesting period. At other firms, the maximum salary contribution to ESPP is normally 10% and only one share is matched for every two-to-three purchased.”