EOT vs Private Equity vs Trade Sale: Which Exit Route Is Right for You?
Three options. Three very different outcomes.
If you’re starting to think about your business exit, you’ve probably realised this already:
There’s no single “right” way to hand over the reins. But the choice you make will shape your legacy, your finances, and your team’s future.
At TS Partners, we talk to business owners weighing up the big three:
1. Selling to an Employee Ownership Trust (EOT)
2. Selling to Private Equity
3. Selling via a Trade Sale
Each comes with advantages. And trade-offs. Here’s what you need to know to make a well-informed decision.
1. Employee Ownership Trust (EOT)
What it is
You sell a majority of your company’s shares to a trust that holds them on behalf of the employees. You get paid (usually over time), and the business is run for the long-term benefit of the team.
Why people choose it
- Preserves the company’s values and independence
- Offers 0% Capital Gains Tax on the qualifying sale
- Avoids outside buyers with different agendas
- Leaves a real legacy for your team
What to think about
- You may not receive the full sale price upfront
- You’ll need a clear internal leadership plan
- It must be properly structured with legal and tax support
2. Private Equity Sale
What it is
You sell all or part of your company to a private equity investor usually in exchange for a large lump sum, with the aim of growth and resale within a few years.
Why people choose it
- Potential for a high initial payout
- Access to capital and strategic expertise
- A defined exit strategy for shareholders
What to think about
- Business direction may shift toward investor priorities
- Internal culture may change rapidly
- You may be required to stay on under new conditions
- You’ll have limited control after completion
3. Trade Sale
What it is
You sell your business to another company often a competitor or strategic buyer in your sector.
Why people choose it
- Can deliver a clean exit
- May be relatively quick
- Often includes brand, IP, and client transfer
What to think about
- Your team may face job uncertainty
- Business identity and autonomy may be lost
- Client relationships may be disrupted
- You have little say in what happens after the sale
Which One Is Right for You?
It depends on your goals. Ask yourself:
- Do I want to maximise my payout, or protect my company’s legacy?
- How much influence do I want after the sale?
- What do I want for my team once I’ve stepped away?
- What would make me proud to hand over?
There’s no right or wrong just the model that fits your business and your values best.
Still Deciding? Let’s Talk It Through.
We offer a free 15-minute consultation with a senior solicitor at TS Partners to help you explore your options including whether an EOT is a viable alternative to a third-party sale.