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Funding for Employee Ownership Trusts

Whether you want to introduce an employee ownership scheme to improve engagement, provide added benefits for your staff or exit the business, we can help you achieve this transfer of ownership.

 

Our experienced team arrange funding for a wide range of scenarios, including acquisitions, buy-outs and restructures. We work with advisors, accountants,  SMEs, sponsors and trusts to create bespoke solutions to support businesses that provide financial stability as they transition to Employee Ownership Trusts (EOT).

 

What is an Employee Ownership Trust?

An Employee Ownership Trust (EOT) enables exiting owners to transition ownership of a business to their employees, leaving it in experienced hands while also rewarding and motivating the employees who become co-owners.

Eligible employees will indirectly own the business, and will collectively be beneficiaries of the trust, receiving financial benefits that would typically be given to shareholders.

The exiting owners can remain involved with the business (continuing to own up to 49% of the share capital), enabling them to help plan for the future without making any immediate or dramatic changes in management.

Since their introduction by the government in September 2014, EOTs have become an increasingly popular option for exiting owners given the wide range of benefits these can provide to the business, the exiting owner and the employees also.

What are the key benefits of EOTs?

Our funding is available for UK based limited companies with experienced management and employee teams.

  • Enable eligible employees to indirectly hold shares in the company whilst providing tax benefits and assisting with succession planning for business owners
  • Greater employee engagement and commitment
  • Directors can remain in the business, receiving market competitive remuneration post-sale
  • Potential for improved business performance and reduced staff absenteeism
  • Tax (capital gains tax) relief for sellers with no inheritance tax liabilities
  • Original shareholders can retain an interest in the business with only a majority stake transferred to EOT
  • Tax free bonuses (up to £3.6k pa.) allowed for employees

How do Employee Ownership Trusts work?

EOT buy-outs are often funded through deferred consideration based on future profitability. This means that shares are sold by the shareholders on a deferred payment basis, with instalments being paid over a period of time. By using external finance, it is possible to speed up access to these funds for the selling shareholders and therefore fast-tracking the EOT.

Employee Ownership Trusts

About Shawbrook

  • EOT buy-outs are often funded through deferred consideration based on future profitability. Our facilities speed up the access to these funds for the selling shareholders
  • Support from a team experienced in business transitions with industry experience and understanding of EOT principles and related market factors
  • Fast-track ownership transition with upfront funding for the EOT whilst maintaining stability and cashflow in the business
  • Quick decisions with short lines of communication direct to decision-makers
  • Our solutions can combine funding for the EOT buy-out as well as the next stage of growth in the business

Funding at a glance

Our funding is available for UK based limited companies with experienced management and employee teams.

  • Commercial loan facility, with term typically 3-5 years
  • Capability to provide funding to the trust, the operating company or a combination of both
  • Repayment: amortising and bullet profile with initial capital holidays available
  • Security: senior all assets debenture, additional security may be required
  • Corporate structure must meet Employee Ownership Trust requirements
  • EOT must acquire and retain a controlling shareholding in the company
  • Company must be a trading company or holding company of a trading group
  • EOT must be set up for the benefit of all eligible employees on the same terms
  • Number of people who are directors or employees, and who continue to hold at least 5% of the company’s shares after the transition, must not exceed 40% of the total number of employees

Releasing value on your assets

Unlock the value tied up in paper and hard assets

For businesses with substantial capital tied up in their balance sheet, our Asset Based Lending proposition can unlock that value to provide both strategic capital and on-going financial headroom to support pivotal events.

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Working with capital

Utilising cashflow to fund significant business milestones

A senior debt product designed for established businesses requiring funding for growth, an acquisition, change of ownership or other general corporate purpose. Loan size is determined by a multiple of EBITDA (Earnings Before Interest Tax Depreciation and Amortisation)  or vacant possession value of an owner-occupied commercial property, with repayments coming from future cashflows of the business.

Hybrid Solutions

Bespoke senior debt solutions

For businesses we can deliver a holistic financing package combining the best of event driven term debt with the flexibility of working capital solutions.

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Supporting the businesses you support

Explore our funding solutions for Private Equity investors supporting UK mid-market SMEs.

Employee Ownership Trust case studies

At Shawbrook we have worked with a number of businesses as they transition to an EOT.

Thinkprint logo
Case Study

Thinkprint UK transfers to an Employee Ownership Trust

Print marketing solutions provider, Thinkprint UK, has transferred to an Employee Ownership Trust (EOT), enabling a partial exit by its founder and giving employees a voice in the business. Shawbrook’s funding fast-tracked the transition and supported Thinkprint’s technology expansion plans.

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Case Study

Specialist VW Campervan conversion company moves into partial Employee Ownership

Denby Campervans Limited has changed ownership via a sale of equity to an Employee Ownership Trust, in a transaction advised by Yorkshire-based specialist Corporate Finance firm, Castle Square Corporate Finance and funded by Shawbrook.

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Case Study

Staff take ownership of award-winning tax practice

Award-winning tax practice, YesTax has successfully transitioned to an employee ownership trust (EOT) with funding support from Shawbrook. The business has become 100% employee-owned supported by a multi-million-pound Commercial Loan facility.

Adviser or Business Introducer?

We work with a range of corporate debt advisers, accountants, lawyers, and other knowledge based introducers to find solutions for their clients. 

If your business is introducing clients to the right partners and we haven't spoken before, we understand that a conversation is just the start.

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