EOTs

An Employee Ownership Trust (EOT) is a model where a business is sold to a trust owned on behalf of its employees, allowing them to collectively become the owners of the company. This approach, famously exemplified by John Lewis, is ideal for business owners looking to exit while ensuring the legacy and continuity of their business, rewarding loyal employees, and fostering a culture of shared ownership and collaboration.

EOTs offer a unique win-win scenario: the owner achieves a tax-efficient exit, while employees gain a tangible stake in the business they help to grow. This model can boost morale, enhance productivity, and align the interests of the team with the long-term success of the company. Additionally, EOTs often come with significant tax advantages for both the seller and the employees, making them an attractive option for many businesses.

Why Consider an EOT?

• It provides a seamless way to sell the business, often well-received by staff, customers, and other stakeholders.
• The outgoing owner can remain in a senior operational role, remunerated at a market rate, ensuring a smooth transition.
• Under the right circumstances, there is no capital gains tax to pay.
• Evidence suggests that EOT ownership can drive positive employee behaviour, with staff benefiting from tax breaks and a genuine sense of ownership.

However, transitioning to an EOT requires careful planning and execution. Challenges include ensuring the business is financially viable for the trust, communicating the change effectively to employees, and structuring the deal to meet legal and regulatory requirements.

How We’ll Help with EOTs

We start by assessing whether an EOT is the right fit for your business and goals. From there, we will provide a fair valuation that reflects the business’s true worth, help tostructure the trust and navigate the legal and financial requirements.

We’ll also support you in communicating the transition to your employees, ensuring they understand the benefits and responsibilities of ownership. Our goal is to make the process as smooth and transparent as possible, fostering a positive and collaborative environment for the future.