Dave McKeon from Charnwood Accountants LLP sets out a new style of exit to add new and exciting business opportunities to owner managed business. This “John Lewis” style of exit offers a wealth of opportunity to businesses to move forward in a new and exciting style of ownership that suits modern business. Utilising an Employee Ownership Trust can add real value to the business and it’s potential for growth.

The main points are set out below:-


• Employee engagement
• Potentially stronger growth in difficult markets
• Longevity of the business
• Ability of the current owners (and their successors) to maintain
shareholding after sale of the majority to the Trustees
• Highly effective exit route
• Highly tax effective exit (0% tax)
• Ongoing ownership incentives for employees
• Ongoing tax incentives for employees

Identifying Traits to Assess Suitability

• A desire to leave the business as a lasting legacy
• Employee retention and motivation
• Responsible capitalism
• Attraction of future talent
• Stronger growth
• Competitor differentiation

Initial Questions to Ask

• What percentage of current owner(s) shares will ultimately be sold
(and/or initial tranches)? (Must be more than 50%)
• Over what period of time do the current owners wish to sell/gift their
shares to the EOT and receive proceeds?
• Are there any special conditions that are required in the Trust Deed to
protect the future of the business?
• How will the Trust fund the purchase of the shares?
• Will the employees feel a sense of real ownership of the business in
the absence of direct ownership?
• The tax implications of this model of ownership for the company?
• The tax implications of this model of ownership for the employees?
• What form of hybrid ownership (mix of current ownership, new direct
ownership and employees via the Trust) best serves commercial requirements now and in the future?

Potential sources of finance

• Funding from the company
• Funding by the employees
• Vendor finance
• Loan finance (including peer to peer loans)
• Mezzanine finance
• Equity finance
• Crowd funding

Dave McKeon is happy to meet and discuss the potential of this idea with any forward thinking local businesses.