Employee Ownership Trusts ("EOT")
The 5 Step Process
Dains supports businesses contemplating employee ownership through a five step process.
We work with clients to consider alternative ownership structures, which may include, trade buyers, private equity, management buy outs and employee ownership. Employee Ownership is not appropriate for every business and it is sensible to consider all alternatives before committing to a transaction, despite the generous tax treatment for outgoing shareholders. We strongly advise against the creation of an EOT structure, simply to create a tax efficient exit for shareholders.
2. Deal Design
We work with clients to create a management and financial structure that works, long into the future.
It is important that all stakeholders are confident that the business has been valued fairly, before a change of ownership. We produce detailed valuations, where appropriate and also provide a commentary on third party valuations to build understanding amongst outgoing shareholders and new trustees of the EOT.
4. Cashflow Modelling
Successful transactions are achieved when the trading entity is not cash constrained, following a transaction. Working alongside our clients, we will produce a financial model containing the proposed deal structure and a range of trading scenarios, depending upon the client requirements.
We work alongside legal advisors, funders, and tax advisors to complete the transaction. In most transactions, Dains tax team will liaise with HMRC to ensure the transaction has received HMRC clearance well ahead of completion.
Dains are members of the Employee Ownership Association and can share a wide range of resources for businesses considering a change of ownership.