Employee ownership trusts

Deciding on a business succession strategy is a complex process. Employee ownership trusts have become an increasingly 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 EOT can help businesses to:

  • facilitate smooth transition of ownership
  • preserve culture and strategy
  • maintain values
  • improve workforce engagement and productivity

We work with you to explore whether an EOT will work for your business. Where there is a strong existing management group and good prospects for profitability, selling shareholders may be able to reap the benefits of a tax-free sale of shares to employees.

Our lawyers

Our team work together to offer clear advice to owner managed businesses and family run businesses. We help you navigate the often-complex legislation surrounding succession and employee ownership trusts.

Our experience

When you are ready to start succession planning for your business, we are here to offer advice on creating lasting benefits for business owners, their employees and for the future of the business itself.

We have experience in working for a wide variety of businesses where share incentives were a key part of the longer-term exit strategy.

We have worked on helping the owners of a business:

  • sell at a fair value
  • benefit from no capital gains tax on the sale proceeds
  • ensured a smooth transition of ownership and implemented a succession strategy
  • retained a minority stake, allowing some involvement in the business in the longer term and the comfort of knowing the business will be taken forward by people they know and trust, and who (as beneficiaries of the EOT) will be highly motivated to succeed

After the trust was set up, the employees of the business:

  • felt more engaged and shared a collective goal to succeed
  • received tax free bonuses (up to a limit per year), as well as participating more widely in the profits
  • benefited from decisions being taken by the EOT being in the best interests of the employees

Legal resources you may find useful

  • Success = successful succession  This article looks at succession planning for business owners, including the advantages of planning ahead to ensure consistency.
  • Employee share incentives We will work with you to create incentives that will help grow your business, and allow your employees to share in that success in the most tax effective way.
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