There comes a time when every business owner begins to think about their exit options. Considering that succession planning lays the foundations for a strong exit strategy, identifying and developing qualified individuals to fill crucial business roles allows for efficiency when the time comes to enter the next chapter.
An employee-ownership trust effectively ensures smooth business continuity, due to its nature as a stable and long-term ownership structure. Positioning the company as owned by its employees, who already understand the mission, vision and values of the company, moves the business towards its future by setting short and long-term goals with the business strategy in mind.
What is an Employee Ownership Trust?
An Employee Ownership Trust (EOT) can provide a way for a business owner to exit the company while ensuring its continued success under employee ownership. The EOT allows you to sell your business to your employees without them having to personally invest any money into the business, therefore making them indirect owners of the company.
An employee ownership trust is structured to ensure long-lasting ownership that is designed to keep the business in the hands of its employees over the long term and provide stability and continued success to the business. Transitioning to an EOT can also provide a smart solution for companies that wish for the values and company DNA to remain with the business post-exit.
fds’ Journey Transitioning to Employee Ownership
2020 saw fds’ founder Jo Haigh pass ownership of the business to our team, as part of fds’ own succession planning, via an EOT. When considering succession planning options, Jo considered the exit options available and ultimately passed on the opportunity to exit the business via a traditional trade sale, instead favouring an EOT. This was to preserve the unique values, culture and positioning of the business, which had been built over 30 years. It also allowed Jo to reward the team, which she believed had a hand in building the business over the years, and as such, should be rewarded for their efforts.
Rewarding Your Employees Through an EOT
An EOT also adds another level of value for employees; it is a reward for the team who have helped build the business and will, sooner or later, be the next generation of the company. Therefore, rewarding the workforce within the company’s succession planning strategy only strengthens a capable and impressive team, which can act as a springboard for promotions, enhancing job satisfaction, and improving business operations. Employees, of course, feel valued when their skills and responsibilities are appreciated and acknowledged.
How fds Can Help You
fds’ own experience as an EOT benefits both our team and our clients as we can offer a unique perspective to business owners and businesses as a whole, especially as we can compare our current position as employee-owned to our previous placement, an owner-managed SME.
If you are interested in discussing succession planning options further, please do not hesitate to contact us for a confidential discussion.