By now, you’ve read about what an Employee Ownership Trust (EOT) is, why you might want one, and what some common misconceptions look like. But let’s say you’re seriously considering it. What does the actual process feel like?
Because, for all the talk of structure and tax reliefs, there’s a very human element to this: you’re passing on something you’ve built.
Here’s what happens when you sell your business to an EOT—without the corporate waffle.
1. You Agree a Price:
Sounds simple. It’s not always.
The sale price has to be fair and justifiable—both for HMRC (to meet the EOT criteria) and for the business itself (because usually, the purchase is funded by the company’s own profits over time).
You’ll need a proper valuation, and this is where having a calm, practical accountant and solicitor really helps. It’s not about inflating numbers; it’s about what the business can genuinely support.
2. You Set Up the Trust:
You’ll create a legal trust that will hold the shares on behalf of the employees. This includes:
- A trust deed that sets out the rules and purpose.
- Appointing trustees (usually a mix of directors, employees, and one independent person).
- Making sure the trust holds at least 51% of the shares.
From this point on, the trust is the majority owner of the business.
3. You Finalise the Sale:
This involves a sale agreement (just like any share sale) and a payment structure. In most cases, the business doesn’t pay you the whole value up front. It repays you over time out of profits.
Some business owners choose to forgive part of the price as a gift to the staff. Others don’t. Both are valid choices—this is your call.
4. You Tell the Team:
Handled well, this can be one of the most powerful, positive moments in your business journey.
You’re not selling to a competitor. You’re putting the business into the hands of the people who’ve helped shape it.
You’re also giving them:
- The potential for future bonuses (tax-free up to £3,600/year).
- A say in how the business moves forward.
- A clear sign that you trust them with the future.
5. You Stay On—Or Step Back:
Many sellers stay on as directors or consultants for a few years. Others step away entirely. There’s no one-size-fits-all here, and it depends on what your goals are.
What matters is that this isn’t a handbrake turn. It’s a structured, thoughtful transition.
So, Is It All Worth It?
Only you can answer that—but here’s what we know: for business owners who want a meaningful exit, a protected legacy, and a way to reward their team without throwing everything into the hands of outsiders, the EOT is often the best solution they didn’t know existed.