Employee Ownership Trust

[9005rpm]

Hi,

I’m looking at selling my business to an EOT set up for that purpose. I’ve read plenty of theory online, but has anyone here been involved in doing this in the real world? If so, how was your experience?

Thanks!

[orbit123]

Bump for this one. Did you ever find out more in practical terms? Looking at same and surprised at the professional fees estimates given limited due diligence it seems like cost more than a commercial sale.

[wattsm666]

There are pros and cons of an EOT compared to either a MBO or an exit.

Pro’s - easier than a trade sale and more confidential, tax obviously. There is research that states an employee owned company is more productive. Can be the only exit route.

con’s - may not be so attractive to the mgt team, may not give as much cash at Day 1 as a trade sale.

There is much more to consider, but that is a starting point. We advise on them.

[22]

I run a small Employee-Owned business although I was an employee who pitched this to founders after a botched private sale. Some of my waffle on this thread and happy to answer questions if useful.

https://www.pistonheads.com/gassing/topic.asp?h=0&f=92&t=1940244

[dirky dirk]

Weve done this at work
Made it sound great and we all knew about it
In reality it was done without any approval
There are tax advantages i think the company just buys owners shares

We got a couple of brochures saying how good it was for us.
Lots of new cars appeared and nothing changed

[22]

dirky dirk said:

Weve done this at work
Made it sound great and we all knew about it
In reality it was done without any approval
There are tax advantages i think the company just buys owners shares

We got a couple of brochures saying how good it was for us.
Lots of new cars appeared and nothing changed

Sounds like poor/weak management rather than anything to do with employee ownership. Do you have an Employee Council who could bring about some changes at the top? An employee ownership trust exists solely so the company is run for the benefit of all employees.

[GingerMunky]

22 said:

Sounds like poor/weak management rather than anything to do with employee ownership. Do you have an Employee Council who could bring about some changes at the top? An employee ownership trust exists solely so the company is run for the benefit of all employees.

Exactly this, there should be representation of the workforce on the EOT board of trustees and an employee council to support than representative with a clear mandate.

Sounds like some people got a pay out from perhaps an existing share incentive scheme, and some EOTs are unfortunately the product of this motivation rather than 'employee ownership'. When done correctly with a engaged work force an EOT is a good empowering process.