Employee Ownership Trusts

An Employee Ownership Trust (EOT) is a trust that holds some or all of the shares of a company on behalf of the employees. An EOT ensures employees have a share in profits, a voice in governance and that the mission of the business—and its jobs—can be preserved for generations to come.

EOTs have been the favored path to employee ownership in the United Kingdom for decades. The EOT structure in the United States uses a Perpetual Purpose Trust to establish an EOT, which is an innovation of trust law that is becoming more commonplace.

With an EOT, there is no required buy-in. EOTs have lower setup costs and modest ongoing maintenance costs, but they are not eligible for the potentially significant tax benefits of an ESOP. An invaluable feature of EOTs is that they can be crafted to be protected from a future sale, with a flexible structure that can be designed to fit the specific goals of each business.

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Employee Ownership Trusts

Perpetual

Safeguards the ownership of the business over the long term.

Typical transaction value

$3-20M; typical workforce size: 10+ employees

Universal

Appropriate for companies of all sizes

Lower cost

Lower setup and administration costs.

Flexible and simple

Offers the ability to design the trust structure to meet the goals and needs of the selling owner, company and its employees

Free to employees

Employees don’t pay for their ownership benefits

Discover why Charlie Tilt sold his manufacturing company, Hummingbird Wholesale, to an EOT as a way to continue to create good jobs in the community for years to come.

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