Employee ownership trusts

Employee Ownership Trusts

Since the government introduced some new and relatively generous tax reliefs for employee-owned companies in 2014, Employee Ownership Trusts (“EOT”) have become an increasingly popular exit route for owners of trading companies.

Hawsons Corporate Finance is a dedicated team of experienced Corporate Finance specialists who have provided lead advisory, finance raising and tax services to clients establishing employee ownership structures through Employee Ownership Trusts. Case studies include the sale of PA Jewellery, a well-known retail business in Sheffield, to an EOT in October 2018.

What is an EOT?

An EOT is a form of indirect employee ownership which consists of the sale of a controlling interest[1] in a trading company to an EOT which is owned for the long-term benefit of the employees as a whole.

The EOT becomes the owner of the company and is administered by trustees on behalf of the employees, the trustees can consist of the exiting owners of the company, an independent chairperson and employee representatives.

[1] An EOT can hold a minority interest but would not qualify to benefit from some of the tax reliefs available.

Structuring an EOT

A qualifying EOT will be established and to adhere to qualifying criteria, the exiting shareholders will sell at least 50.1% of their shares in the company to the EOT. A fair market value of the shares will be determined through an independent valuation.

Typically, the sale of a company to an EOT is funded by a mixture of existing cash and external loan instruments. The diagram below details how an EOT transaction is structured through a combination of funds.

How we can help

Hawsons Corporate Finance are experienced and qualified to advise on whether an EOT transaction makes sense for you and your business. We can advise on and project manage the whole process from tax advice, valuation of the business, sourcing funders, through to legal completion of the sale.

To find out more about how one of the leading firms of accountants in Sheffield, Doncaster and Northampton can help you, please contact one of our specialists. We believe in long-term client relationships and understand the importance of meeting to establish that you like us and we like you. This is why we offer all new clients a free initial meeting which will enable you to have a discussion about you and your business issues.


To book your free initial meeting, please click here.


We look forward to hearing from you

Free initial consultation

Pete Wilmer partner

Pete Wilmer

Partner, Sheffield

0114 266 7141

[email protected]

Jack Ware

Corporate Finance Manager

0114 266 7141

[email protected]

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