The decision to step away from your business is sometimes difficult. This might be because you can't find a safe pair of hands or you want to make sure to sell at the right price.
Traditional routes to market often involve working with corporate finance advisers, approaching competitors or colleagues in the industry or passing on the business to a family member or management. There are pros and cons to each route and each business will be different.
One approach which has not yet reached the prominence we feel it deserves, is giving or selling your business to an Employee Ownership Trust.
Employee Ownership Trusts were introduced by the government to encourage employee ownership of business. They must meets certain requirements:
The trustees, as shareholders, have a certain degree of control of the business and need to conduct themselves in the best interest of the employees.
This is therefore attractive both to those looking to create a business owned for the employees and those looking to sell in a tax efficient way.
The price is usually funded over time by the company itself, although it is possible to enter into more complex financing arrangements involving lenders (particularly with larger businesses).
Your Limited is on the market for £10m but no one has expressed an interest in it. If you sold it to an Employee Ownership Trust for £9m, you would be able to achieve a simpler sale to trustees, and walk away with the same amount of money since there is no tax to pay.
You could rest assured that the trustees (which might even include you) will manage the company in a prudent way, and with the best interest of all the employees in mind.
The operational management of the business will usually remain with current management team although the trustees of the Employee Ownership Trust may require an employee representative on the board.
With expertise in tax, corporate law, family business and trust management, our multi-disciplinary team of lawyers will work together to find the right solution for the owners, the company and the employees.
We will guide you through the entire process, including:
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