What is an employee ownership trust?

How does it work?

In broad terms: a trust is set up for the employees. The trust buys your shares. Because employees rarely have the money up front, you’re usually paid partly at the start and the rest over time, out of the profits the business makes. The employees share in the business without having to buy shares themselves.

Some countries give tax advantages to owners who sell this way. The rules are detailed and change from place to place, so your tax advisor and lawyer are the people to ask about your situation.

Why do owners choose it?

• They want the business to stay independent and keep its name.
• They want to reward the people who helped build it.
• They want to stay in their community rather than sell to an outsider.
• There may be a tax benefit, depending on where they are.

What has to be true first?

The business has to run without you. Your people will be running it, and your payments depend on its profits. If everything still runs through you when you leave, the business can falter, and your payments with it.

That means the handover has to happen before the sale, not after. Customers need to deal with the team. Someone else needs to be qualified for the licences. The numbers need to be understood by more than one person.

Is it right for my business?

It can suit a steady, profitable business with a loyal team and an owner willing to be paid over time. Whether it suits yours is a question for your advisors. Our part is making sure the business can run without you, so the option is really open to you. See your options.