Employee Ownership Trusts
Helping you to incentivise staff and ensure smooth succession planning
Employee Ownership Trusts (EOTs) offer business owners the opportunity to sell the controlling stake of their company into a trust for the benefit of their employees.
This approach gives employees a vested interest in the future of the business they work for, whilst ensuring a smooth succession plan for business owners, which can extend over a period of time, providing business continuity and certainty.
Why consider an EOT?
You might consider an EOT if you are a founder looking for an exit strategy, the owner of a new business seeking to attract and retain talent, or a business owner simply seeking to reward its people with a stake in the company.
What are the benefits?
There are many more advantages to setting up an EOT, and we will discuss these with you, to help you make an informed business decision.
By giving your employees a stake in the business they work for, this can translate into better productivity, engagement and impact on your business’ bottom line.
Provided the right conditions are met, this structure also carries significant capital gains tax (CGT) advantages for you as the seller, as well as acting as an attractive succession plan for all involved.
If you are interested in selling your business to your employees using the Employee Ownership Trust model, Jurit can help.
Contact usAdditional benefits might include:
- Tax advantages for shareholders
- Tax advantages for employees
- Fair market value provides more certainty for selling shareholders
- Ability to retain expertise of outgoing owner
- Ability to ensure a smooth business transition
- Relatively low risk transaction with low level business disruption
- Greater employee engagement and commitment
Our people, your team
Jurit is a market leader within the EOT sector and has advised over 50 clients on EOT transactions with an aggregate value of over £500 million.
We have helped businesses to set up EOTs across a broad spectrum of sectors, from retail and transport and medical companies, to IT, construction and engineering, where we have worked with both vendors and third party financing entities, including banks and their legal teams.
How we help
Working closely with you, we will work to understand your strategic business aims, and help you to establish whether an EOT is the right route for you.
We will talk through the various stages of the EOT process, helping you to understand what the qualifying conditions of an EOT are, as well as establishing whether these can be met.
Key considerations
To qualify for available tax incentives, the following conditions must be met by the selling shareholders:
- Shareholders of the trading company must be selling over 50% of the total value of the shares in the company
- The sale must be for the benefit of the employees of the company
- The trust must treat all the employees on an equitable basis
The structuring of the transaction will depend on whether the sale is financed by you, the seller, or whether third party financing is needed to support the change of control.
If you are funding the sale of the business to the EOT, these requirements must be met, and we can help to achieve them:
- Employee Ownership Trust established, and the Trustee Company incorporated
- Independent valuation of the business to determine fair market value
- A “transaction in securities” clearance with HMRC
- Shareholders to sell their shares under the share purchase agreement to the Trustee Company
If you would like an informal chat about your business and whether an EOT is best-suited to meet your strategic business needs, contact EOT expert, Jeremy Glover, for more information.
What our clients say:
Jeremy provided us with consistent reassurance and wise counsel throughout the process of setting up our EOT. His knowledge of the process is comprehensive, and he helped us set up our EOT quickly and efficiently.
Marcus Lillington - Headscape
