An Employee Ownership Trust (EOT) holds a company’s shares on behalf of its employees.
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A sale to an EOT delivers value and certainty for owners, whilst providing an engaging, rewarding and resilient environment for employees.
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The sector, employs more than 200,000 people and generates more than £30bn of UK GDP.
READ MOREFocusing on Employee Ownership yet being experienced across the wider corporate finance deal spectrum, RVE are ideally qualified to advise on whether a sale to an employee ownership trust makes sense for your business.
Value determined by RVE’s independent valuation at market price
No external third parties involved
Cash flow from the business used to finance the transaction
Sometimes practically or emotionally difficult to sell to competition or third party
Significantly lower professional fees than other exit routes
In-house process that you control
Structure the deal in a way that makes sense both for you and your employees
No external third parties with possibly conflicting interests
Selling to an employee ownership trust is exempt from CGT
“When I started to examine the options to realise value for my business, it became clear that the traditional exit route of a sale to a competitor or a financial buyer would not achieve my goals. Since becoming employee owned the business has continued to thrive. Gerry gave excellent advice, structured the transaction effectively, and was extremely professional and efficient at managing the whole process.”
Unlike a trade sale where a third party will control the business
Employee progression into senior management roles can be planned over the longer-term
Because they’re co-owners, staff tend to be more driven to succeed.
Candidates like companies where they feel they matter and are rewarded appropriately
Having a stake in the business improves staff loyalty
Employees can receive tax-free bonuses from the profits of employee-owned businesses
Led by collaborative managers who consult and share, employees want to co-operate..
Employees are more driven working in an environment where they see the benefits.
The Employee Owned sector has enjoyed faster growth and more stability.
The owners of the business sell their shares (at least 50.1%) in the company to a trust (the EOT) at a fair value – determined by an independent valuation. The purchase price is paid by the EOT over time (typically 2-7 years) from the after-tax profits of the company, effectively an ‘earn-out’ structure. The EOT becomes the owner of the company and is administered by trustees on behalf of the employees. The trustees typically include the previous business owners, an independent chairman plus employee representatives.
Employee Ownership is proving a highly successful business model. It builds on the existing strengths of the business and people that helped build it and work within it. The business owners realise a fair price whilst ensuring the business continues to grow and prosper for the sake of employees and clients. The business owners can plan to phase out their involvement to suit personal circumstances, remaining involved for a time and in a capacity that makes sense for all involved.
What are the qualifying Conditions?
For more information on how an EOT transaction works, see “Frequently Asked Questions”.
John Lewis is the best known and most quoted, employee owned example but the number of smaller, employee-owned businesses in the UK, across a wide range of sectors, is also steadily growing with the SME sector growing much faster than large enterprises.
The Employee Ownership Association (EOA) represents organisations which are employee owned or transitioning to employee ownership across the UK. Most businesses that are moving into employee ownership become members of the EOA.
RVE is a full Supporter Member of the EOA
RVE is a corporate finance advisory firm which focuses on advising owners of small and medium sized companies (“SMEs”) on the sale of their business.
What makes RVE different is that it specialises in advising on and structuring employee buyouts, where the owners sell the business to a newly formed employee ownership trust (“EOT”). RVE has considerable experience of EOT transactions and with RVE’s in-house legal capabilities it can provide clients with a full-service advisory team from inception to completion of any EOT transaction.
RVE was founded in response to the growing number of EOT transactions and the need for specialist advice. RVE expects this growth in transactions to continue as business owners become better aware of the significant tax and commercial advantages that an EOT transaction offers, as well as the benefits and incentives that becoming employee-owned bring to the business and its employees.
The team at RVE includes experienced chartered accountants and corporate finance advisers who have previously worked together at PwC Corporate Finance.
When RVE is appointed it works with the business owners to understand the business and their goals and helps determine the most suitable exit route. If the most suitable route is not an EOT transaction then RVE has the experience to advise the business owners on alternatives, whether for example a trade sale, private equity funded management buyout or vendor funded management buyout.
RVE is a member of the Employee Ownership Association.
If you would like further information on RVE, how we operate and work together with our clients, contact us via phone or email or submit an enquiry on the form below.
