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Chartered Accountants since 1919
We can use our experience to help explain the transition and, if right for you, guide you through the process of selling your business to an employee ownership trust (EOT).
If legacy is the key driver when you are considering the succession plan for your company, it is worthwhile considering the possibility of selling or gifting your shares to an EOT. Our team can assist your company through the process and help support the new employee owners moving forward.
The employee ownership trust (EOT), introduced in 2014, has revitalised the idea of employee ownership.
An EOT is a trust that holds a company’s shares for the benefit of its employees. Provided various requirements are met, the transition to an EOT can provide generous tax incentives.
If you sell your company to a qualifying EOT, you can benefit from capital gains tax relief on the disposal of your shares and the company’s employees can benefit from income tax free bonuses of up to £3,600 per employee each tax year.
The transition to employee ownership will involve significant changes for you, the business, and your employees. As the transition to employee ownership is a journey that you will embark on together, it is vital that everyone is onboard. So, whilst tax can be a factor in thinking about selling to an EOT, we think it is essential that the EOT model is the right cultural and commercial fit for your business.
We support the EOT approach, but it’s not suitable for every business. We advise our clients to consider all succession options, like selling to another business or a management buy-out. If an EOT seems like a good match after careful thought, it can greatly benefit your company.
We can support your business in its transition to an EOT model by providing specialist tax and corporate finance services. Working closely with your lawyers, we can help ensure that the transaction completes smoothly and that you understand the key tax and commercial implications of the transaction.
It has become increasingly common for external funders to be receptive to providing debt funding to help fund a sale of a company to an EOT. We can help the company identify optimal debt capacity, structure, and determine the most appropriate funding solution/s both for the transaction and for the business moving forward.
We help ensure that your employees understand what the transition means for them and how they can benefit from the new employee–owned structure. Having engaged employees is key to the success of any employee owned business.
We provide specialist tax advice to help you understand the tax implications of the transaction for the selling shareholders, the business, and the employees. There is some complex tax legislation to work through and, where applicable, we’ll seek HMRC clearance for aspects of the transition.
We can assist you in placing a value on your business in connection with the sale to the EOT. Integrated with the valuation work is high level financial modelling. It has a dual purpose; substantiating the value and assessing how any deferred consideration (and/or external debt) can be financed through future cash flow.
Find out moreIt has become increasingly common for external funders to be receptive to providing debt funding to help fund a sale of a company to an EOT. We can help the company identify optimal debt capacity, structure, and determine the most appropriate funding solution/s both for the transaction and for the business moving forward.
Once you have sold to an EOT you may benefit from financial advice. Francis Clark Financial Planning can provide you with bespoke financial planning and can assist with strategic wealth advice.
Find out moreMoving to an employee ownership model will present unique tax and accountancy implications for the business. The business will need support from an accountancy firm which understands these unique challenges.
As a full-service accountancy firm with many employee-owned clients, we can help meet the future tax, accountancy, and payroll needs of the employee-owned business.
Contact us to begin your journey to employee ownership.
