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Case Study: EOT Created Following Owner’s Goal to Sell

Why did the client want to pursue an Employee Ownership Trust (EOT)?

The company’s owner was looking to pursue a trade sale for around three years. He couldn’t find a trustworthy buyer or one that would match the price he was after. He also looked at selling to a venture capitalist, but this wasn’t right for the business. The company had a good management team but it was unrealistic to expect them to commit to a management buy-out at the price the owner was hoping to achieve. 

In the end, he decided to sell 80% of the company’s share capital to the employees by way of an EOT, which allowed him, his wife and two of the company’s senior directors to retain 20%, collectively, of the company’s shareholding. While the owner was effectively looking to stand down from the day-to-day management of the company, he felt that it was right to keep some shares to prove to his employees his continued commitment to the business. 

How did the client find Ramsdens? 

The client was a longstanding client of Baxter Caulfield before it merged with Ramsdens in 2015, and was therefore confident in our ability to see the transaction through to a successful conclusion.  

What work did Ramsdens carry out?

Our scope of work involved the preparation of a share purchase agreement in respect of the shares to be sold to the EOT (this is the major commercial document of the transaction).   Because an EOT requires a trustee to hold the shares on trust for the employees, we were instructed to incorporate a limited liability company (to act as trustee), which entered into the share purchase agreement with the owner to buy the shares. 

We were also required to produce Articles of Association for the trustee and a trust deed setting out the terms of the EOT.  We also prepared service agreements for the owner, his wife and two of the company’s senior directors.  

What was Ramsdens’ approach to the case?

Our approach was to investigate the options available to the client at the outset of the transaction and to advise which option was the best route to take having regard to what the client was looking to achieve. Throughout the transaction, we managed the client’s expectations in terms of timescales, approached any concerns raised by the client honestly and thoroughly, and advised as to the terms on which the transaction might best be implemented having regard to the client’s wishes and interests. 

Why was this the best course of action to take? 

An EOT was the best course of action due to the owner’s desire to retain an involvement in the company’s business going forward and his desire to benefit the employees of the business (on whose hard work the business depends for its success) rather than a bank or the competitors of the business.  

What challenges arose, and how did Ramsdens overcome these? 

A transaction of this size and complexity has many challenges, some legal, some commercial and some that were accountancy or tax-related. Ramsdens dealt with all of the legal issues and advised where necessary or appropriate on commercial or tax issues.  

One challenge from the company’s perspective was that of how best to inform its employees of the fact that the company was now in employee ownership. At the time, the company had 140 employees, with 60 working away from the company’s head office in Rochdale in various parts of the UK.  

Our client wanted to announce the transfer to employee ownership to all employees at the same time. With that in mind, the papers were signed on a Thursday morning and then a video was recorded for broadcast to the employees on YouTube at 2pm on Thursday making the announcement. A questions and answers session was organised on Teams for the following afternoon, and then our client and Stephen Newman from Ramsdens (who is an independent director of the trustee) took the Rochdale-based employees down the pub!

What was the outcome and what difference did Ramsdens’ involvement make? 

The transaction took around 18 months to complete due to its complexity. Press coverage was organised by Azets Accountants to spread the word on the company’s move to being employee-owned, but equally importantly, to demonstrate the significance of the transaction to the company’s trade.  

Due to the application of our specialist skill set and experience, the owner was able to realise a significant proportion of his shares in the company, secure in the belief that it would continue to grow under employee ownership.

Contact us

To discuss whether your business might be suitable for sale to an EOT, please call our corporate team on 01484 821 500, email us at, or fill out our online enquiry form and we will be in touch at a convenient time for you.