Preserve Your Legacy and Empower Your Employees: The Benefits of an Employee Ownership Trust (EOT)

24 Jul 2023

We understand that the past few years have been challenging for many business owners, leaving them feeling exhausted and uncertain about the future. If you find yourself contemplating retirement and passing on the reins of your hard-earned business, you’re not alone. Selling to a competitor or a larger company might not appeal to you, especially if you wish to preserve your business’s independence and see it continue to thrive in the long run.

In such a scenario, an Employee Ownership Trust (EOT) might be the perfect solution. This structure, which has gained significant momentum in recent years, allows you to cash in on your business’s value while still preserving your legacy and ensuring your business remains independent.

Putting Your Employees First

An EOT is created for the benefit of your company’s employees (note that this structure works for companies rather than partnerships or sole traders). A trust is created that obtains funding to purchase the shares in your company from the current owner/s. Importantly, the employees don’t directly own the business; instead, the trust holds the shares on their behalf. The trustees of the trust have a duty to hold the shares for the benefit of all employees.

Empowering Your Workforce

Although employees may not technically own the business, the EOT gives them a sense of ownership and involvement. Research shows that businesses owned through an EOT tend to flourish due to the increased dedication and motivation of the employees. This sense of empowerment drives the business forward, leading to growth and success.

Tax Benefits: An Added Bonus

Many business owners first hear about an EOT due to its tax advantages. When structured correctly, you can indeed sell your business without paying any tax on the gain. However, focusing solely on the tax benefits misses the true value of an EOT.

Preserving Your Legacy

If you have a company with a devoted and loyal employee base and a genuine desire to preserve your legacy, the EOT structure is worth serious consideration. The government created this incentive to encourage employee participation, but the real advantage lies in securing the future of your business and empowering your team.

A Genuine Win-Win

Implementing an EOT is not a walk in the park, as it involves complexities and professional fees. However, with the right mindset and expert guidance, it can become a genuine win-win scenario. By choosing an EOT, you can retire gracefully, knowing that your legacy is preserved, and your employees are empowered to continue the success of your business.

If you’re considering the next steps for your business and its future, we encourage you to explore the potential of an EOT. At WR Partners we are here to provide you with the caring, knowledgeable, and professional support you need to make the best decision for you and your business.

Embrace the future with confidence and make a lasting impact on your employees and your business with an Employee Ownership Trust. Contact us today on the form below to learn more about this exciting opportunity or call us on 0800 066 4664.

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