EOTs for Family-Owned Businesses: Protecting the Legacy Without the Drama
How employee ownership can offer a graceful solution to the question of “what next?”
If you run a family-owned business, you’ve probably had the conversation. Or avoided it.
“What happens when you want to step back?”
“Is anyone ready—or willing—to take it on?”
“Should we sell?”
“Do we really want to hand this over to a stranger?”
For many family business owners, these aren’t just practical questions—they’re emotional ones.
You’ve built something with care. You’ve woven your values into the way the business runs. And you may have people—family and employees alike—who are relying on what happens next.
An Employee Ownership Trust (EOT) offers a solution that’s increasingly attractive to families trying to navigate succession with honesty and heart.
Why Consider an EOT?
Most family businesses face one or more of the following:
- Some family members work in the business. Some don’t.
- There’s no obvious successor. Or there is, but the thought of handing it all over is… complicated.
- You’ve got long-standing employees who feel like part of the family.
- The idea of selling to a competitor or private equity firm doesn’t sit right.
An EOT gives you a different option. You sell your shares to a trust that holds them on behalf of the employees. The business continues under its own steam, guided by a board and trustees. The culture is preserved. The team is rewarded. And you get a tax-efficient exit.
What Happens to the Family?
That depends on how you structure it. An EOT doesn’t have to mean cutting ties:
- Family members can still work in the business—in leadership or operational roles.
- You can remain on the board during the transition, or for the long term if that suits everyone.
- If appropriate, family trustees can be appointed to the EOT board (although you’ll need independent oversight too).
- If some family members want to stay involved and others don’t, the EOT can be a way to exit fairly—without family fallout over money, control, or direction.
And because the EOT pays you over time (typically from profits), the business doesn’t have to take on excessive debt to make it happen.
What About the Employees?
They benefit from:
- Stability—because the company isn’t being absorbed, flipped, or broken up
- A sense of inclusion—they’re beneficiaries of the trust
- Tax-free bonuses (up to £3,600 per year) if the business chooses to distribute profits
- A voice—via employee trustees or representative roles
For many family-owned businesses, that feels like the right kind of legacy.
What You’ll Need
If you’re exploring this route, you’ll need to:
- Have a realistic business valuation and repayment plan
- Choose trustees carefully (including whether any family members should be involved)
- Be honest with your family and your team about the vision
- Work with a solicitor and tax advisor who understand the balance of structure, sentiment, and succession
We’ve helped family businesses do exactly that—with care, discretion, and clarity.