No buyer? No problem.
Employee Ownership Trusts (EOTs) are an innovative solution if you’re looking to sell your business but are unable to find a suitable buyer.
A Government initiative, an EOT transfers the ownership of a company to its employees. This allows business owners to sell their company without finding an external buyer. It can also help reduce their tax burden and empower the existing workforce.
When structured correctly, it’s a solution that can have huge benefits for both the outgoing owner(s) and the employees of the business.
How do EOTs work?
It’s not always a straightforward task to find a suitable buyer for an SME – particularly when the previous owner is keen to preserve the future of their company. And when you’re unable to find a buyer, using an EOT is often the next best option.
An EOT works by the business owner selling their shares in the business to an employee-owned trust. The owner can still retain a share of the business if they wish. This unique structure can have a number of short-term and long-term benefits for both the outgoing owner and the employees.
What are the benefits of using an EOT?
Sell your business without finding a buyer
It sounds counterintuitive, but EOTs make it possible to sell your business without finding a buyer. Whether there are none available or none suitable, it’s an innovative solution that even allows the outgoing owners to retain a share of their business if they wish.
Empower current employees
Handing over majority control of the business to existing employees is a great way of motivating, engaging and incentivising the current workforce. This in turn could improve the future performance of the business.
Reduce your tax burden
Using an EOT to sell your business also has a number of potential tax benefits. It can leave the owner free of capital gains or inheritance tax from the sale, employees can receive tax-free bonuses and the company can benefit from corporate tax reductions. All of these are actioned with the full approval of HMRC.
How Berkeley can help
EOTs can be an innovative and beneficial way of selling your business, but we also know they’re not for everyone. That’s why we’ll work closely with you to understand your situation and help you decide whether an EOT is right for your business. If we don’t think it is, we’ll tell you so.
If you do decide to use an EOT to sell your business, we’ll handle the entire process from start to finish. It’s part of our commitment to offering business owners a seamless service that includes everything they need to sell their business.