What are the benefits of an EOT?
The benefits of a business becoming employee-owned are:
- A relatively undisruptive sale process
- A tax-efficient sale for the original owner
- Goal congruence for all those involved in the business
- Stronger performance generally, and
- Employee incentivisation and retention
How popular are EOTs?
The last few years have seen a dramatic increase in the number of businesses owned by Employee Ownership Trusts (EOTs) to the point where as at July 2023 there were over 1000employee-owned businesses in the UK.
Is a sale the right thing?
What becomes clear very quickly in the deal process is that Employee Ownership Trusts (EOTs) are not designed as vehicles for onward sales. They work wholly on the principle that they benefit all eligible employees on the same terms, and while you are “on that bus”, you can participate in tax-free bonuses and dividends. If an employee leaves employment, then the bus simply carries on its way.
Have a question?
Are you thinking of making your business an EOT? Speak to a team member today to find out how best to proceed.
Look at our recent blog for more benefits and possible tax requirements of becoming an Employee Ownership Trust (EOT).