What is an Employee Ownership Trust?
Employee Ownership Trusts (EOTs) are trusts that exists for a long term social purpose. The trust holds company shares on behalf of employees collectively and can distribute annual profits to employees.
Company shares are valued on a yearly basis by an external appraiser. When the employee retires or exits, shares are repurchased by the company and proceeds are paid to the employee.
clegg’s auto, Employee ownership trust
Who it’s for
EOTs are best for:
Owners seeking mission continuity
Companies prioritizing long-term independence and protection from mission change
Owners willing to sell 20% or more of the business to employees
How it works
Trust holds some or all of the company stock to preserve the purpose of the business for employee benefit
Employees do not directly hold shares
Employees receive a portion of the company’s annual profits
The Benefits
OWNER Benefits
Preserves business purpose and values long term
Owner exits at fair market value without a traditional sale process
Employee Benefits
Employees receive profit share
Optional employee voting rights
Dive deeper into Employee Ownership Trusts
COST
$50k- $75k set-up
Minor yearly costs
tax perks
No special tax perks for owner
No special tax perks for company
mISCONCEPTIONS
While EOT’s can be extremely flexible in how they look, understand that employees do not directly hold shares
EOTs are overseen by both a Board of Directors and Trustees, an additional layer of governance which can be burdensome for smaller companies or confusing for employees
Interested in transitioning to an EOT?
Fill out the form to get on the waitlist for our next cohort