RVE is continuing to complete Employee Ownership Trust (EOT) deals during this difficult lockdown period. Whilst we had been working on these deals for some time before the current COVID-19 crisis, the fact these deals are still completing demonstrates the resilience of EOT transactions compared with trade sales or sales to financial buyers.
As long as the terms of the transaction are based on market terms (including a fair market valuation) and there is confidence in the business and its ability ultimately to pay back the purchase consideration out of future profits, deals are unlikely to be subject to last minute negotiation on price or other terms.
The seller also has the added comfort that the structure of the transaction has been pre-cleared by HMRC (as RVE seeks clearance for all of the EOT transactions on which it advises, in advance of completion).
By contrast, deals of a more ‘traditional’ nature may now be at risk due to buyers’ impending reappraisal of the business’s prospects in the current climate.
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