Selling an EOT-owned business: when a third-party sale is in employees’ best interests
An Employee Ownership Trust (EOT) is usually established as a long-term ownership model, designed to protect a company’s independence, preserve its culture and ensure the business is run for the benefit of its employees.
However, circumstances can change. In some cases, a third-party sale of an EOT-owned business may actually deliver the best outcome for employees.
We recently advised an EOT-owned company where the trustees concluded that an offer from an overseas buyer was too compelling to refuse, resulting in a significant financial benefit for employees while protecting the company’s future.
The company
The business was UK-based and founded by a husband-and-wife team in the early 1990s.
The founders had built a successful company with a strong culture and a loyal team of ten employees. In 2022, we advised the business on its transition to employee ownership through an EOT.
The EOT structure allowed the founders to step back while preserving the company’s legacy and giving employees a meaningful stake in the future success of the business.
Why the business considered a sale after becoming employee owned
Before converting to an EOT, the company had received several third-party approaches from potential buyers.
While these offers were attractive, the founders’ priority was to protect the team, culture and future of the business. The EOT route provided a way to achieve this while allowing employees to benefit from the company’s success.
Three years after the transition, the company was performing strongly under employee ownership and new management. The founders had already stepped away from day-to-day involvement, and the business continued to thrive.
The company had also maintained payments due to the founders under the original EOT transaction, with approximately 65% of the purchase price repaid.
In 2025, a US-based company looking to expand into the UK market approached the business. They were impressed not only by the company’s performance, but also by its employee ownership culture and level of employee engagement.
They made an offer.
The sale of the EOT-owned business
The proposed transaction was structured to provide a significant financial benefit to employees.
The deal included:
- A lump sum payment that allowed the founders to be fully repaid
- Around £100,000 for each employee
- A further potential earn-out of approximately £50,000–£75,000 over two years, subject to employees remaining with the business or qualifying as good leavers
The trustees also negotiated assurances around the future of the team and the continued employment of employees following the sale.
The EOT trustees presented the deal to employees and asked for approval. The team voted unanimously in favour of the transaction.
Postlethwaite's role in the EOT sale
We acted for the EOT trustees on the third-party sale, providing commercial and tax advice to maximise the value available for employees and ensuring that the trustees’ duties were properly considered throughout the process.
Expert advice on selling an EOT-owned company
An EOT is designed as a long-term ownership solution, but it does not prevent a company from considering a future sale where that is genuinely in employees’ interests.
A sale of an EOT-owned business requires careful consideration of:
- the trustees’ duties
- employee interests
- valuation
- transaction structure
- protections for employees
- the company’s long-term future
- the tax position of staff, EOT trustees and the Company
Postlethwaite Solicitors advises business owners, trustees and employee-owned companies on EOT transactions, governance and exit strategies.
Visit our Selling a company owned by an EOT page for more information.
Frequently asked questions on selling an EOT-owned company
Can an EOT-owned business be sold?
Yes. Although EOTs are intended as a long-term ownership model, trustees can consider a sale where it is in the best interests of employees.
Who decides whether an EOT business should be sold?
The EOT trustees must consider the interests of employees and their duties under the trust structure before approving any transaction.
Do employees benefit if an EOT company is sold?
Potentially yes. A sale can provide employees with financial benefits and future opportunities, depending on the terms of the transaction.
Contact us if you would like to discuss selling your EO-owned company on info@postlethwaiteco.com or call 020 38189420
