2021 saw a record growth, with an increase of 285 businesses transitioning to employee ownership. 2022 saw another consecutive record for yearly growth, with 332 new employee-owned businesses. In June 2023, there were a total of *1,418 employee-owned businesses in the UK, a 37% growth in the previous 12 months.
Whilst many business owners may associate employee ownership with larger corporations, due to high-profile examples such as John Lewis, this can also be an appealing option to SMEs. In fact, in a 2017 report on The Employee Ownership Effect, evidence showed a stronger positive influence from employee ownership in smaller firms.
In this guide, we will aim to explain the rationale behind the increasing popularity of EOTs and answer some of the key questions that a business owner may have about EOTs, such as:
- Why choose employee ownership?
- How does an EOT work?
- What are the tax benefits (and implications)?
- How are EOTs implemented?
- What is the role of the Trust and Board?
- How do EOTs compare to alternative exits?
- What’s an EMI scheme and why are they often used in conjunction with an EOT?
Of course, there’s only so much we can answer in a generic guide, so professional advice should be sought that is tailored to your situation. At the end of the guide, you’ll find the contact details of our expert EOT team should you have any questions.
