EOT businesses are not new – John Lewis is probably the oldest example. Many owners are now choosing to sell their businesses to their employees via employee trusts because of the many advantages. In particular:
- EOT sales are highly attractive because subject to HMRC clearance, they are 100% tax-free; the Government is incentivising such sales as there is significant evidence that EOT’s are sustainable and lead to greater productivity.
- There are benefits for the employees: tax-free bonuses, better job security, and a feeling of inclusiveness.
- The process can be vendor-led and employees are not required to drive the approach as would be the case in a Management Buy-Out (MBO).
- They are more immediate and require less due diligence than trade sales.