Employee Ownership Trusts (EOT)

Price Bailey, there to advise from the start

Employee Ownership Trusts (EOTs) continue to grow in popularity with more completing now than ever before. Their popularity is driven by the fantastic benefits to both the company and the employees that work within.

EOTs are a mechanism to transfer part, or all, of a company’s ownership and control over to the employees. They can be used as a mechanism for exit by existing shareholders, but possibly more importantly, are a brilliant tool to empower and incentivise a workforce.

Help to structure your EOT

The first question, is often the easiest, is an EOT suitable for our business? The more in-depth and lengthy discussion is constructing the EOT structure and formalising the trust agreement.

We have been involved in many transfer of ownerships, and are well rehearsed in the concerns and options for both sides. Price Bailey support these discussions and add value by helping to answer all the key questions:

• What is the commercial purpose of an EOT?
• Is it suitable for my business?
• Who will be the controlling party?
• Who will manage the EOT?
• What is the market value of the company and what are the value of shares to be sold?
• How will the share purchase be funded? And if the company is going to fund it, over how many years?

Formalising the agreement

Once the questions are answered and the approach agreed by both parties, Price Bailey continues to manage the process through to completion; providing advice along the way.

There are a number of moving parts to a transfer of ownership; we provide you with an independent valuation to help establish the market value of the company, engage our tax specialists to avoid any complications on the sale of the shares for the shareholders; we complete your HMRC tax clearance application to ensure the structure is proven compliant prior to completion; and we will review or build a robust financial model that is commercially viable in reporting the financial obligations entered into by the EOT. We assist your lawyers who will draft the necessary legal agreements required for implementation of an EOT.

If you are considering taking a step back from your business, are looking at ways to incentivise your team or attract and retain talent then an EOT could a suitable option.

Our team are aware that a little knowledge is required to consider your options and are happy to support you with this from the outset.

For information on our regulatory status see www.pricebailey.co.uk/legal.