Mergers and acquisitions 2

Employee Ownership Trusts

An increasing number of business owners considering their retirement are opting to sell their company to their employees using an Employee Ownership Trust (EOT). The EOT can be a tax effective route which allows the owner to set the pace of their exit, provides continuity to employees and customers, and delivers a fair market value on the sale of the company.

Our Corporate Team has specialist expertise in this area and has advised on a number of significant EOTs.

There is no one form of employee ownership. There are a number of key attractions of the EOT structure:

  • it can be shaped to fit the aspirations of the company’s shareholders
  • sellers can sell all or a percentage of the shareholding (although the EOT’s tax advantages only apply when a controlling stake is held by the Trust)
  • opting for the simplicity of a Trust only model; or
  • some form of share scheme to allow employees to invest directly in the business.

There are so many possibilities and every company is different.

What we do

We start off by getting a full understanding of what the sellers want to achieve, and how that fits with the plans for the business. Working together, we then look at all the available options and decide on the best model. We can spend time with employees, explaining how the new ownership structure impacts on them. As part of a full service law firm, we can call on all areas of our business to help with any ancillary legal matters.

Tax advantages

The tax advantages make the EOT an attractive option for the employee owned company but there are other ways to share ownership with employees. Some companies are using employee ownership not for exit, but as a means to more closely engage and incentivise their employees in the business. Anderson Strathern can advise on identifying the most tax-effective and appropriate means to attract, retain and motivate your employees.

We're here to help

Have questions on Employee Ownership Trusts? Contact us here.

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