Why do some advisors insist on using all the legal terms when discussing Employee Ownership Trusts structures (“EOTs”)? Are they wanting to make these transactions seem complex and expensive? Why do they only seek owners who are ‘altruistic’ or team-driven? This approach simply puts people off Employee Ownership Trusts and yet, with nearly one business being sold each day to employee ownership the exit strategy and sale is now a well-trodden path.
The complexities are hygiene points and advisors, trustees, and lawyers would do better to use plain, clear language and focus on the advantages of these structures. This is a new business model with benefits for all. Why?
- Great tax benefits for sellers.
- Alignment with team and management.
- Full commercial value can be achieved – sometimes more.
- Whilst initially providing tax breaks, they are great for the wider economy as EOTs provide more local investment and post-sale growth.
- They are straightforward – the company buys itself for the benefit of the employees. This does involve an element of structuring but what business sale deal does not have a structure?
Employee Ownership Trusts are often presented as highly complex and technical transactions by advisors, who tend to focus on the “how” rather than the “why ” thus putting people off. However, just like private equity firms and strategic buyers are versed in avoiding the complexities of making deals happen, so should Employee Ownership Trust advisors.
We do not have to pretend that selling a business through an Employee Ownership Trust is plain sailing, nor does it always result in getting a “top dollar” price. Nevertheless, it is crucial for Employee Ownership Trust advisors to communicate the trade-offs involved in any exit strategy planning so that the best option can be chosen.
An Employee Ownership Trust sale should always be high on the list of options as they are not highly complex to structure and they result in a market value outcome for the sellers, create an amazing potential for businesses post-sale, establish a clear succession and legacy going forward, and, most importantly, recognise the commitment of your team on an ongoing basis.
Last week, the Financial Times published an article titled “Would you sell your business to your staff?” which echoed some of our perspectives on employee ownership trusts. We were thrilled to see that our client, Carlton Bingo, was featured as a successful case study in the article. A year ago, Carlton Bingo transitioned to an Employee Ownership Trust with our help and guidance.
Contact Avondale Corporate
As a leading business advisor, Avondale Corporate specialises in facilitating vendor-led sales that help ambitious owners realise the full value of their business while empowering their team through employee ownership. We provide a turn-key solution that covers all aspects of the transition, including legal, financial, trusteeship, and consulting. Our approach ensures that the new structure delivers maximum benefits to both the business and its employees while minimizing the tax burden (with 0% Capital Gains Tax).
Our team consists of skilled and experienced partners who are dedicated to delivering your success. We have been serving dynamic entrepreneurs and companies domestically and internationally for nearly 30 years. If you are looking to transition your business to employee ownership, please contact Avondale Corporate to learn more about how we can help you achieve your goals at +44 (0)1737 240888, our Contact Us page, or email av@avondale.co.uk.
