A tax-efficient way to sell your business to your employees.

Selling to an employee ownership trust is a genuine business sale. Instead of selling to a trade buyer or private equity, the shares are sold to a trust that holds the business on behalf of its employees.

As with most exits, the consideration is linked to the future performance of the business. Trade and private equity sales commonly involve earn-outs, deferred consideration, warranty exposure and post-completion price adjustments. In an employee ownership sale, careful planning and the use of third-party finance can often deliver a substantial upfront payment, with the balance funded over time from future profits. How the deal is structured matters, because it affects risk, incentives and outcomes for everyone involved.

Where the statutory conditions are met, selling to an employee ownership trust is the most financially generous and commercially flexible tax relief available to UK business owners. It is deliberately designed to encourage this form of ownership, and for many owners it provides a way to realise value, pay significantly lower tax, and pass the business on to the people who have helped build it.

Employee ownership trusts are funded from the future success of the business. That means there is a practical limit to what can be paid, when it can be paid, and how much risk each party takes along the way.

We start with financial modelling to help owners understand those constraints and make informed decisions before committing. The aim is not to maximise one outcome at the expense of others, but to strike a balance that rewards sellers fairly, keeps management motivated, and allows employees to benefit as the business grows.

In an employee ownership sale, everyone ultimately shares in the same outcome. But incentives drive behaviour, and behaviour drives performance.

Get the balance right and the business is well-funded, well-led and motivated to grow — increasing the value available to sellers and employees alike. Get it wrong and the opposite happens. That is why structure, funding and incentives need to be thought through carefully, using evidence rather than assumptions.