EOT Case Study – Essential Recruitment

Oct 24, 2022
Author: Pete Wilmer
Pete leads the Corporate Finance offering at Hawsons, Pete specialises in advising business acquisitions and disposals, raising finance, business valuations and employee ownership trusts (EOT).

The Hawsons Corporate Finance team acted as lead advisors for Essential Recruitment’s move to employee ownership.

Essential Recruitment specialise in the supply of temporary and permanent staff to industry and commence. The company was founded in 2006 and now operates out of six separate branches.

When considering succession planning, the directors and selling shareholders decided on a move to employee ownership, selling 100% of the share capital to an Employee Ownership Trust (“EOT”). This decision was driven by the directors’ desire to reward the loyalty and dedication of long-standing employees and embrace the enthusiasm and optimism of newer staff members. They strongly believe the move to employee ownership will open a world of opportunities to future employees of the company.

Following the move to employee ownership, the directors will remain with the business and work with the EOT to help drive growth and ensure a smooth transition into the employee ownership model.

Hawsons Corporate Finance role during the process was to project manage the entire process, this included the following:

  • Suitability of employee ownership – We engaged in open discussions with the shareholders detailing various succession routes, including the suitability of an EOT.
  • Independent valuation – We prepared an expert valuation of the company determining fair market value.
  • Deal Structuring – We assisted in structuring the deal, including the use of financial forecasts to determine a suitable repayment period for any deferred consideration.
  • Tax clearance – We obtained advance tax clearance from HMRC to gain comfort on specific tax areas of the transaction.
  • Sourcing Finance – With the funding market for EOT transactions still in its relative infancy, a thorough process was undertaken to raise bank funding for the transaction.
  • Legal Process – Working in tandem with the chosen lawyers to provide a seamless service, we assisted in reviewing the legal documentation, ensuring the tax position was not compromised.

Pete Wilmer

Corporate Finance Partner

Jack Ware, Corporate Finance Director

Jack Ware

Corporate Finance Director, Sheffield