If you’re a business owner starting to think about the future—your exit, succession planning, or simply how to lock in your company’s values—you might find yourself circling the idea of an Employee Ownership Trust (EOT). It’s increasingly popular, and with good reason.
Let’s be honest: not every business owner wants to go through the song and dance of selling to a third party, especially when there’s a strong team already in place who know the business inside-out and have helped build it. If you’re someone who wants to see that team looked after—and see your business culture protected—then EOTs are worth more than a casual glance.
What is an EOT?
An EOT is a structure that allows a company to become owned (indirectly) by its employees. It was introduced in 2014 by the UK government to encourage wider employee ownership and create longer-term, sustainable businesses. The trust becomes the majority owner (51% or more), and the employees are beneficiaries of the trust.
This doesn’t mean every employee suddenly gets shares and voting rights. It means they become part of something built to benefit them collectively—profit-wise and future-wise. Think John Lewis, but without the Christmas ads.
Why Would You Want To?
There are a few reasons why a company might go down this path:
- Succession with heart: EOTs offer a way for founders to step back (or out) without selling to a competitor or private equity firm.
- Culture preservation: If you’ve built something with a particular ethos, an EOT helps protect it.
- Tax reliefs: The government incentivises EOTs. Sellers can benefit from capital gains tax relief, and the company can pay tax-free bonuses to employees (subject to limits).
- Staff motivation and retention: People tend to stick around when they feel invested—literally and emotionally—in the business.
What Do the In-House Conversations Look Like?
This isn’t a casual Friday idea to spring over coffee. Moving to employee ownership is a serious structural change, and it starts with grown-up conversations:
- What’s our real motivation? Is this about legacy? Exit? Culture? Tax planning? (Spoiler: it can be all of the above.)
- Are our financials solid enough to fund a trust-based buyout? You don’t need to be a mega-corp, but you do need a healthy business.
- Is our team ready for this kind of ownership? It’s not about everyone becoming a mini-CEO, but it is about openness, trust, and shared success.
- Who’s going to manage the trust? Typically, a board of trustees will be appointed—some internal, some independent.
- Do we have the right legal and financial advice? (If you’re reading this, you’re already halfway there.)
What should I do next?
An Employee Ownership Trust isn’t a quick fix or a vanity project. Done well, it can be a brilliant, grown-up solution that rewards loyalty, preserves culture, and delivers long-term resilience for your business.
If you’d like to talk about what setting up an EOT would involve—or just want to get a clearer sense of whether it might suit your business—we’re here to have that conversation.
As always, at TS Partners, we deal in practical advice, not sugar-coated theory.