Employee ownership trusts

Deciding on a business succession strategy is a complex process. Employee ownership trusts have become a popular alternative to a traditional sale and can help businesses achieve long-term success.

The John Lewis model, where the company is employee owned, is often held up as a shining example of how employee ownership can lead to long-term success. Indirect share ownership by a specially created Employee Ownership Trust (EOT) can help businesses to:

Facilitate smooth transition of ownership
Preserve culture and strategy
Maintain values
Improve workforce engagement and productivity

Who do we help?

Individuals looking to sell to an EOT: helping explore if an EOT will work for your business and then guiding you through the transition.
EOT trustees, directors, trust companies. Also banks financing transactions, reviewing EOT related documents and advising on the structure of the deal and the implications of the documents and the roles of the parties.
EOTs: answering queries about the running of the trust including qualifying conditions to enable the EOT-owned company to pay income tax-free bonuses and to ensure compliance with legislative requirements.

Our clients

In the last 6 months, we’ve advised, or are in the process of advising, on four EOT transactions. We’ve also provided advice to prospective trustees on technical EOT questions. We’ve helped business owners sell to a qualifying EOT, which has the following benefits:

Selling at a fair value
100% relief from capital gains tax on the sale proceeds (a tax-free sale for most shareholders)
Smooth transition of ownership
Continuity of firm culture, allowing the business to be taken forward by employees they trust will preserve the ethos of the company, and who as beneficiaries will be highly motivated to succeed