Employee Ownership Trusts
Kate Clarke - Xero Certified
Helps Scaling Founders professionalise their finance teams || Goldman Sachs 10KSB Alumni || Qualified Accountant || CFO & Finance Director Headhunter
In one of our recent blogs?(link here)?we looked at the six most common exit strategies for owners of SMEs. This month we are going to take a closer look at one of them, Employee Ownership Trusts.
Employee Ownership Trusts (EOTs) have been around since 2014, when they were introduced by the government in order to encourage company owners to sell a majority stake in their companies to employees. They are becoming more common due to the various benefits for the exiting shareholder and the employees.
The benefits of an EOT can be significant, including:
Guaranteeing a sale price
Making a business sale tax-efficient
Ensuring a smooth succession
Retaining the outgoing owners’ experience and expertise?– The selling owners will often retain a minority percentage of the ownership of the business and take a reduced role, rather than exiting the business entirely. This can help facilitate a stable transition.
Boosting employee engagement
Keeping your company independent
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Allowing employees to receive some remuneration free of tax
In order to obtain these advantages, an EOT must:
The basic process for setting up an EOT is:
What it means for your business
However you chose to sell your business it can be a busy and difficult time. Having the appropriate senior management team in place can help ensure that not only does a sale process happen more efficiently and the value of business maximised, but also that your business doesn’t suffer as a result.
Artemis Clarke helps business owners find finance directors that have the experience to support them. Not just to help them survive, but to help them thrive – whatever their business goals.
Speak to us about how the right financial help could make a difference to your business. Call 0117 244 1891 today.