An Employee Ownership Trust (EOT) is a trust established specifically to hold the shares in a company for the ultimate benefit of all eligible employees.
EOTs are an established route for business owners to sell their interests in their business and can make for a compelling alternative to selling via traditional routes, such as a trade sale, sale to private equity or a management buy out.
An EOT will acquire between 51% and 100% of the company shares and must have legal control over the business. Acquisitions are typically funded by a combination of cash on the balance sheet, bank debt (where suitable) and a deferred balance paid out of future company profits. The sellers can retain some shares and employees can own some shares directly alongside the EOT.
By selling to an EOT, company owners can preserve their business “as is” and ensure their legacy by leaving the business in the hands of its staff.
If done correctly, the sale to an EOT will be tax-free.
If you would like more information, please contact our EOT specialists:
Adrian Howells Managing Director adrian.howells@quantuma.com |
Holly Bedford Managing Director holly.bedford@quantuma.com |
Can I sell my business to an EOT?
Most owner-managed businesses would suit an EOT sale.
Benefits to business owners of selling to an EOT
Confidential and more straightforward sales process, which is tax-free.
Benefits to employees
Confidential and more straightforward sales process, which is tax-free.
Back
A free guide to employee ownership trusts
We have created a free and practical guide to provide you with an overview of how EOTs operate in practice, highlighting the realities of implementing this model in your business. Whether you are a business owner or an advisor, our expert insight, robust advice, and balanced viewpoint will ensure you have a well-rounded understanding of how EOTs can be utilised as a straightforward option to realise value from your business.
The guide covers many key areas business owners ask us about, including:
- Advantages and disadvantages of using EOTs
- The transaction process
- Pitfalls of a traditional exit route for business owners
04 September 2023
What is the current bank appetite for lending to employee ownership trusts?
When discussing Employee Ownership Trust (EOT) transactions with advisers and business owners, one of the more frequent topics we are asked about is the level of appetite banks have for funding a sale. Questions on this topic have become even more frequent with the current disruption in the lending markets.