Employee Ownership Trusts

An Employee Owned Company is one where the controlling stake is held by its employees, directly or indirectly. Employee Ownership is an exit strategy or a succession plan that allows the owner to sell its shares in the trading company to an employee ownership trust (EOT) for full market value without incurring any capital gains tax liability. The increasingly popular structure has its advantages and has shown to yield higher productivity, more engaged workforce and more resilience towards economic turbulence.

Currently, UK has about 470 employee owned businesses and has recorded a 28% growth since 2019. (Data from the White Rose Centre for Employee Ownership survey published in June 2020).

Employee ownership is a viable option for you if you are current owner who is looking to sell; current owner who is looking to retire; employees who believe that they can run the business successfully and wants a stake in the future.

There are three types of Employee Owned Businesses:

  • Direct Employee Ownership: Each employee becomes a shareholder, personally holding a specified number of shares.
  • Indirect Employee Ownership: Shares are held collectively on behalf of employees, usually through an Employee Ownership Trust (EOT).
  • Hybrid Employee Ownership: Combination of individual ownership with ownership of a shares in a trust.

How Verde can help:

Verde has helped many owners successfully sell their companies, so we have considerable experience in preparing businesses for sale.

Finding funding for a Company that is transitioning to Employee Ownership can be a little daunting. We would not just help you to identify the appropriate funders but would also review your business and carry out an extensive research exercise into the market in order to reach a fair valuation for the business. We would approach with the appropriate funders, create detailed pitch & related documents, follow up and negotiate to achieve the desired outcome.