Exclusive: A survivor from Scotland�s Victorian engineering glory days is being sold to its employees after its owner spurned the prospect of a lucrative overseas sale in order to protect his staff.

A survivor from Scotland's Victorian engineering glory days is being sold to its employees after its owner spurned the prospect of a lucrative overseas sale in order to protect his staff.

Frank Phair has agreed to sell Stewart Buchanan group, the valves-to-gauges maker, to its 156 employees in a deal that is expected to ensure the firm will remain in north Lanarkshire for years to come.

With at least three other owner-managers in the process of selling their firms to their employees in Scotland, the disposal comes at a time when employee buyouts seem to be enjoying a marked increase in popularity.

This may reflect a growing willingness on the part of owners like Phair to prioritise the interests of employees in light of the recession.

A 75-year-old veteran of the engineering business, Phair is in line to generate around £1m from the sale to help fund his retirement.

With potential bidders in Asia and Europe lining up to buy the company, he could have received much more had he put the firm up for auction. However, Phair said: "I have a responsibility for 150 people. I had to make sure of their continuation in the business and I decided the best way of doing that was an employee buy-out."

Confirmation yesterday of the proposed sale came around a year after Phair realised he needed to find a successor to take control of a business he bought from the Bennie family in the early 1970s.

"I'm 75 years old and succes- sion was becoming more and more important. I had to face up to the reality that I was not immortal."

With none of his four grown-up children interested in taking on the business, which makes precision components for industries like oil and gas and food production, Phair knew he would have to look outside the family.

However, after leading a growth push which resulted in the number of employees surging from five to 156 and the company developing a presence in 50 export markets, Phair was determined that the company should remain in Kilsyth.

This partly reflected the awareness that Stewart Buchanan, which was founded in 1870, is a special case.

"It's a success story. There's very few of them left."

He also wanted to look after the employees, many of whom had been with the firm for more than 20 years.

With a foreign buyer likely to shift work overseas, Phair said he decided quite quickly that the best way of achieving what he wanted was by selling the company to its employees.

He felt these would be more likely to run the business with a focus on the long term than external buyers who wanted to make a quick return.

As the purchase price will be loaned by Phair to the company, the new owners will not be saddled with costly debts.

Confident that the future of the company should be secure, Phair appeared unconcerned that he may end up paying a high price to achieve that aim.

With shares in listed engineering firms like Glasgow-based Weir Group trading on multiples of around eight times earnings, Phair could have sold the company for much more than £1m.

In the year to December 2007, the company recorded pre-tax profits of £302,000 on sales of £7m.

However, Phair said: "I am not pushing for any more than that (£1m). It depends how successful the company is."

The sale will result in an employee benefit trust acquiring a majority stake. The loan from Phair will be repayable by the company over 15 years.

Individual employees will be able to subscribe for shares in their own right. Some shares will be reserved for distribution to new employees in future.

The parties received advice from the new consultancy arm of the Baxi Partnership, which controls a £20m fund that can be used to help firms move into employee onwership.

Carole Leslie, head of the consultancy operation, said it was advising 20 owner-managers across the UK on selling their firms to employees. Three are in Scotland.

Founded by Philip Baxendale of Baxi boiler fame, the Partnership has provided funding for nine employee buy-outs to date.