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An increasing number of business owners considering their retirement are opting to sell their company to their employees using an Employee Ownership Trust (EOT). An EOT can be a tax effective route which allows the owner to set the pace of their exit, provides continuity to employees and customers, and delivers a fair market value on the sale of the company.
At Anderson Strathern, we regularly assist businesses in Scotland with the formation of Employee Ownership Trusts. Our team can help to make important decisions regarding the terms of the sale and the transfer of ownership, as well as the additional tax advantages and opportunities that come with such a transaction. Our Corporate Team has specialist expertise in this area and has previously advised on a number of significant EOTs.
Our Corporate Team has established a comprehensive understanding of what sellers want to achieve, and how that fits with the plans for the business. Working together, we then look at all the available options and decide on the best model. We can spend time with employees, explaining how the new ownership structure impacts on them.
As part of a full service law firm, we can also call on all areas of our business to help with any ancillary legal matters.
There is no one form of employee ownership. There are a number of key attractions of the EOT structure, based on the respective business:
There are so many possibilities with regards to EOTs and every company is different. This means that we use our wealth of experience and expertise to provide carefully tailored advice that is suited to the short and long-term objectives for all of our clients.
To discuss your requirements regarding EOTs with a member of our expert commercial law team, please get in touch today.
Contact us on 0131 270 7700, visit our offices in Edinburgh, Glasgow, East Lothian, Shetland or Orkney, or fill in our enquiry form to request a call back.
An Employee Ownership Trust, or EOT, is a business ownership model where a trust owns a controlling stake in a company on behalf of its employees. EOTs were first introduced by the UK government in 2014 and are actively encouraged as a viable business exit strategy for existing shareholders.
There are certain requirements which must be fulfilled for an Employee Ownership Trust to be set up. These are:
It’s important to note that EOTs don’t involve direct share ownership by employees, as may be the case with other types of ownership models. Instead, the controlling interest is transferred into an all-employee trust which is held for the benefit of the employees.
There are a wide range of potential benefits to EOTs, all of which should be considered by business owners who are thinking about this approach. These benefits include:
Having developed substantial expertise in the process of forming Employee Ownership Trusts, our Corporate Law Solicitors in Scotland are perfectly positioned to support your business if you are considering taking this approach.
We have previously supported a wide range of businesses, both large and small, and who operate across a variety of sectors
We will be able to carefully review your situation, assess the most suitable approach for your business and advise you on all of the relevant processes that need to be taken to ensure that a transaction is both swift and seamless.
Working closely with your business, we can assess your commercial priorities and values. These can then guide us in determining the most appropriate EOT decisions, whether or not any percentage of company shares should be made available for direct ownership and what governance structure should be used for operational control of the business moving forwards.
The tax advantages and opportunities that come with EOTs make them an attractive option for the employee owned company, but there are other ways to share ownership with employees. Some companies are using employee ownership not for exit, but as a means to more closely engage and incentivise their employees in the business. For example, selling to an EOT can mean that employees are able to receive bonuses of up to £3,600 per annum tax-free.
Anderson Strathern can advise on identifying the most tax-effective and appropriate means to attract, retain and motivate your employees.
Given how significant the formation of an Employee Ownership Trusts is for a business, it stands to reason that there will be a range of additional matters that need to be carefully reviewed to ensure that everything goes ahead as smoothly as possible.
As a full service law firm, we can advise on various associated matters, including employment law and commercial litigation. Taking this approach ensures that any issues can be addressed efficiently and effectively, reducing the potential for disruptive and costly disputes to arise.
Our highly experienced team of dedicated corporate law specialists in Scotland have developed substantial expertise in Employee Ownership Trusts, having previously supported a wide range of clients, both big and small, and who operate in a variety of sectors. Using this experience and expertise, we are perfectly positioned to support you if you are considering an EOT, either as a business exit strategy or a way to incentivise your employees.
Our corporate team comprises of members who have been recognised for their skills and expertise. This includes rankings in independent legal directories the Legal 500 and Chambers & Partners, as well as various professional memberships.
We also have various other corporate specialities, including corporate restructuring, private equity, joint ventures, mergers and acquisitions, and venture capital. To find out more about our corporate law expertise, please click here.
To discuss your requirements regarding EOTs with a member of our expert commercial law team, please get in touch today.
Contact us on 0131 270 7700, visit our offices in Edinburgh, Glasgow, East Lothian, Shetland or Orkney, or fill in our enquiry form to request a call back.
"Every query, no matter how trivial, is dealt with efficiently, and the team seem to genuinely care about their clients and take an interest in their business."
