Employee Ownership Trusts (EOTs) offer a transformative succession option for small and medium-sized businesses. By selling a majority share to a trust for the benefit of employees, business owners can exit gradually, preserve their culture, and reward their team - all while benefiting from 0% Capital Gains Tax. This guide is tailored for SME owners who want to exit with purpose.
Exit with purpose, not pressure. Discover how EOTs can support your legacy.
What is an EOT?
An EOT is a government-recognised structure that enables a business owner to sell 51% or more of their company to a trust set up for the benefit of all employees.
Map your company’s ownership and sketch what a 51% transfer would look like — who would lead, and how governance might shift.
Riverford Organic Farmers became employee-owned via an EOT in 2018. Founder Guy Singh-Watson cited values, legacy, and fair reward as key motivators.
Why EOTs suit SMEs
EOTs are highly suited to SME founders who wish to avoid trade sales or private equity exits, but still want a financially fair return.
List your top 3 exit concerns — e.g. cultural dilution, staff layoffs, loss of brand — and assess whether an EOT structure would mitigate those.
Union Industries, a Leeds-based SME, became employee-owned to retain jobs and manufacturing identity.
Steps to transition to an EOT
A structured seven-step process helps ensure a successful EOT transition:
Feasibility Review
Independent Valuation
Trust Setup & Legal Framework
Share Purchase Agreement
Funding & Repayment Plan
Trustee Appointment
Staff Communication & Onboarding
Use a readiness checklist to score your business across key areas: governance, finances, communication, succession.
Gripple, a manufacturing firm in Sheffield, adopted a trust-based structure as part of its long-term ownership planning.
Governance and Culture post EOT
After transitioning to EOT, governance includes a board of trustees (often with a mix of internal and independent members), while operational leadership typically remains in place.
Create a draft governance map showing how the current leadership team would work alongside or within the new trustee structure.
Alfa Travel, one of the UK’s largest employee-owned travel companies, combines strong operational management with active trustee oversight.
Measuring Success
Key KPIs to track post-EOT:
Employee retention rates
Annual profit share distribution
Staff satisfaction/engagement surveys
Performance of board/trustees (reviewed annually)
Debt repayment timeline (if applicable)
Cambridge Weight Plan transitioned to employee ownership to protect its ethos and staff. The change improved engagement and ensured business continuity.
Measuring Success
Key KPIs to track post-EOT:
Employee retention rates
Annual profit share distribution
Staff satisfaction/engagement surveys
Performance of board/trustees (reviewed annually)
Debt repayment timeline (if applicable)
Cambridge Weight Plan transitioned to employee ownership to protect its ethos and staff. The change improved engagement and ensured business continuity.
Governance and Culture post EOT
After transitioning to EOT, governance includes a board of trustees (often with a mix of internal and independent members), while operational leadership typically remains in place.
Create a draft governance map showing how the current leadership team would work alongside or within the new trustee structure.
Alfa Travel, one of the UK’s largest employee-owned travel companies, combines strong operational management with active trustee oversight.
Steps to transition to an EOT
A structured seven-step process helps ensure a successful EOT transition:
Feasibility Review
Independent Valuation
Trust Setup & Legal Framework
Share Purchase Agreement
Funding & Repayment Plan
Trustee Appointment
Staff Communication & Onboarding
Use a readiness checklist to score your business across key areas: governance, finances, communication, succession.
Gripple, a manufacturing firm in Sheffield, adopted a trust-based structure as part of its long-term ownership planning.
Why EOTs suit SMEs
EOTs are highly suited to SME founders who wish to avoid trade sales or private equity exits, but still want a financially fair return.
List your top 3 exit concerns — e.g. cultural dilution, staff layoffs, loss of brand — and assess whether an EOT structure would mitigate those.
Union Industries, a Leeds-based SME, became employee-owned to retain jobs and manufacturing identity.
What is an EOT?
An EOT is a government-recognised structure that enables a business owner to sell 51% or more of their company to a trust set up for the benefit of all employees.
Map your company’s ownership and sketch what a 51% transfer would look like — who would lead, and how governance might shift.
Riverford Organic Farmers became employee-owned via an EOT in 2018. Founder Guy Singh-Watson cited values, legacy, and fair reward as key motivators.