Sellers often want to ensure that the business that they have built continues with the same underlying principles as it had when they were running the business.
The use of an EOT allows for continuity of the business’s underlying principles with a less adversarial sale process and allows an owner to pass the company to its employees in a tax effective manner.
Key benefits can include:
- if the necessary conditions are met, the sale of the shares should not incur any capital gains tax or inheritance tax liabilities;
- employees can receive a tax free bonus;
- sellers avoid the time and expense of marketing the business to third parties;
- employees can (indirectly) buy the company without having to fund the purchase themselves;
- given the nature of the sale, the owners are not usually required to give extensive warranties and indemnities under the share sale agreement or to deal with substantial due diligence enquiries from the buyer;
- a workforce which is incentivised by having a vested interest in the success of the business;
- a quicker sale process.
We guide business owners through the process, prepare the necessary transaction documents and work closely with your tax advisers, to help you achieve your desired exit.
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Get in touch
For further information or advice please contact our corporate solicitors on 01753 889995 or email enquiries@bpcollins.co.uk.
