Inform Magazine

ADVANTAGES OF AN EOT FOR THE COMPANY’S WORKFORCE • Employees do not require their own funding – The employees will not directly become shareholders themselves. Instead, the Trust becomes the shareholder. Thus, the staff do not take on any personal debt and it becomes a very low-risk venture for them. • Staff are working in their own interests first and foremost – Employees will now have a significant financial interest, as well as a voice, in the company and they will benefit from its future value. Therefore, they have greater motivation to ensure the ongoing success of the business, thereby increasing job satisfaction and productivity. • Significant tax-related benefits – Employees are able to receive £3,600 in tax-free annual bonuses, further encouraging high levels of commitment and engagement. Funding – As the employees do not buy shares or con tribute funds into the Trust, you may be wondering where your sale proceeds would come from. Some of it may be from the company’s cash reserves, the remainder bridged by debt – either raised externally or in the form of loan notes paid out from the company’s future earnings, usually at a preferable interest rate. But there are risks if the performance of the business suffers. WHAT OTHER ASPECTS OF EOTS SHOULD BE CONSIDERED?

Control – For an EOT to work, the seller(s) must lose ultimate control of the business, which means the Trust has to own 51% or more of the shareholding. The board of directors will make decisions in the best interests of the employees, with no requirement to involve the employees in their decision-making processes.

How we can help?

We offer a holistic service for sales to an EOT, with resources in all aspects of the transaction process - corporate finance, tax advisory and partner law firms who will provide the legal services to formulate and implement the sale.

Speak to us confidentially on 0161 258 0118 .

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