For many owners there is another option to a traditional sale method, selling to a willing buyer, a trust for the benefit of those who know the business better than anyone – the existing staff. This is known as an employee ownership trust (EOT).
What is an EOT?
An EOT is a trust established on behalf of, and for the long-term benefit of the employees which acquires the majority of shares (minimum 51%) in a company. A sale to an EOT not only gives employees a significant financial interest and often a voice in the business but also provides business owners with various transactional advantages over traditional exit routes, including staying in control of the sale process and selling their business tax-free.
With employees benefiting from the future value of the company, they have a greater interest and incentive to ensure the ongoing success of the business and this mechanism is often cited to promote greater business resilience, employee satisfaction and profitability.
EOTs can provide a practical and viable exit solution which should be investigated by business owners actively looking ahead at their options. The advantageous tax benefits, smooth process and fixed selling price are particular incentives for owners, together with knowing that their legacy is secured into the future.
A guide to employee ownership trusts
We’ve created a practical guide to provide you with an overview of how EOTs operate in practice, whilst considering the realities of implementing this model in your business. Whether you’re a business owner or adviser, our expert insight, robust advice, and balanced viewpoint will ensure you have a well-rounded understanding of how EOTs can be utilised as an alternative option to realise value from your business.
The guide covers many of the key areas including:
- Pitfalls of a traditional exit route for business owners
- Advantages and disadvantages of using EOTs
- The transaction process
Please complete the form below to receive your copy of the guide.
How we can help
Our expert Corporate Finance team and Tax Advisory team can guide you and your business through each step of an EOT transaction. We pride ourselves on our practical and hands on approach and roll our sleeves up and get stuck in to make even the most challenging of transactions happen.
- We will help you with each stage of the transaction, including producing your valuation, structuring the deal and the composition of the Trust.
- Our dedicated tax experts will ensure at each stage that your transaction is compliant with EOT rules and will obtain advance clearance from HMRC – giving you the confidence you need to proceed.
- We have extensive contacts with funders and so if third-party debt is the right path for you, we will secure you the best package available.
- We will manage and oversee the entire process, ensuring that all parties deliver what they need to, when they need to, creating for you the smoothest transaction process possible.
Watch our latest on-demand webinar
We recently hosted a joint webinar with Clarkslegal and Clydesdale Bank providing a comprehensive overview of the EOT sale process from a legal and funding perspective. Our panellists discussed how EOTs can be used as a method to sell a business on an owner’s terms whilst reviewing the legalities surrounding the structure of an EOT and the appetite for lending.