The EOT has become a popular vehicle amongst retiring shareholders, who implement it to allow their company to become “employee owned”, at the same time as facilitating their own exit or retirement. As well as the potential benefits to the business of incentivising the workforce for the future, the EOT as a method of exit can be beneficial for the vendor by enabling them to drive the transaction much more themselves than in a more conventional exit such as a trade sale or MBO. In addition, there is the opportunity for various tax breaks. This might make it an even more popular structure in a post-Covid Britain, if other forms of exit prove more challenging, and where we brace ourselves for potential rising tax rates.
