The recent surge in employee ownership
Research shows that in recent times employee ownership trusts (EOTs) have risen significantly by 250% or more since the pandemic in 2019, more so in the Midlands and West Yorkshire.
Last year alone shows 75 transactions completed, compared to less than five in 2012. This research is confident that the trend is expected to continue in years to come.
What is employee ownership? Learn more
Hundreds of progressive SMEs across the UK are now employee owned. In fact, it’s the fastest growing ownership structure for private businesses in the UK.
Employee ownership isn’t anything new – our team has been helping companies to put shares into trust for employees since the 1990s. But it’s become significantly more popular in recent years thanks to Employee Ownership Trusts.
Tax Benefits
The introduction by the UK government of Employee Ownership Trusts (EOT) in 2014 came with legislation offering capital gains tax (CGT) relief for shareholders selling to employee-owned trusts. Meaning that businesses can sell their company to their employees, without incurring any capital gains tax.
This handed companies of all sizes a compelling financial incentive to sell a controlling stake of their business to their people.
Since 2014, we’ve seen a surge in businesses transitioning to this business model. In fact, in 2022 alone, Legal Clarity structured 13 Employee Ownership Trusts for a wide range of businesses, with deals ranging in value from less than £1m to more than £100m.
Why is it so popular?
No doubt EOTs can improve job satisfaction and retention of talent and they are often more resilient during turbulent economic and financial times.
Indeed, some of the pivotal driving forces for most EOTs lie in the value placed on employees by empowering and rewarding them for their commitment and dedication to the business.
Since EOTs are owned ultimately by the employees, they are often given autonomy to become greatly involved; thus, encouraging stronger commitment to the success of the business.
This improves employee motivation and a drive to innovate and reduce work absences.
Employee Ownership is a service offered by Legal Clarity. Our experience is backed by over a decade of completing more than 45 EOT deals and we currently have another 8 in progress.
Read a recent client experience here.
Gary Davie, a partner at Legal Clarity, is noted by The Legal 500 for his ‘outstanding’ expertise in EOTs. He is ‘reputed’ for his capabilities in employee buyouts cited by The Legal 500 UK 2023.
Gary acts as lead adviser on our EOT transactions, and as a trustee director including chairing the trust board of The 1:1 Diet Business (winner of Employee Ownership Business of the Year).
Drawing upon his experience in a whole range of approaches to employee ownership –MBOs, trusts and hybrid models – Gary will guide you to the right employee ownership structure for your business.
"Gary was highly professional and very personable which made the whole process very straightforward. If Employee Ownership is right for your company, I would have no hesitation in recommending Gary to arrange it for you"
Legal Clarity is thrilled to have helped many businesses transition to employee ownership with tremendous success and will continue to work with entrepreneurs to create sustainable businesses.
With our depth of experience and expertise in EOTs, please feel free to get in touch for legal advice and we will take you through a smooth transition.
Alternatively, drop an email to eot@legalclarity.co.uk to arrange an initial conversation
about how employee ownership could work for you and your business.
More insights
Why sell a company to employees?
In-depth guide to employee ownership