Funding for Employee Ownership Trusts

Whether you want to introduce an employee ownership scheme to improve engagement, provide added benefits for your staff or exit the business, we can help you achieve this transfer of ownership.

Our experienced team arrange funding for a wide range of scenarios, including acquisitions, buy-outs and restructures. We work with advisors, accountants, SMEs, sponsors and trusts to create bespoke solutions to support businesses that provide financial stability as they transition to Employee Ownership Trusts (EOT).

What is an Employee Ownership Trust?

An Employee Ownership Trust (EOT) enables exiting owners to transition ownership of a business to their employees, leaving it in experienced hands while also rewarding and motivating the employees who become co-owners.

Eligible employees will indirectly own the business, and will collectively be beneficiaries of the trust, receiving financial benefits that would typically be given to shareholders.

The exiting owners can remain involved with the business (continuing to own up to 49% of the share capital), enabling them to help plan for the future without making any immediate or dramatic changes in management.

Since their introduction by the government in September 2014, EOTs have become an increasingly popular option for exiting owners given the wide range of benefits these can provide to the business, the exiting owner and the employees also.

What are the key benefits of EOTs?

Our funding is available for UK based limited companies with experienced management and employee teams.

Enable eligible employees to indirectly hold shares in the company whilst providing tax benefits and assisting with succession planning for business owners
Greater employee engagement and commitment
Directors can remain in the business, receiving market competitive remuneration post-sale
Potential for improved business performance and reduced staff absenteeism
Tax (capital gains tax) relief for sellers with no inheritance tax liabilities
Original shareholders can retain an interest in the business with only a majority stake transferred to EOT
Tax free bonuses (up to £3.6k pa.) allowed for employees

How do Employee Ownership Trusts work?

EOT buy-outs are often funded through deferred consideration based on future profitability. This means that shares are sold by the shareholders on a deferred payment basis, with instalments being paid over a period of time. By using external finance, it is possible to speed up access to these funds for the selling shareholders and therefore fast-tracking the EOT.

Employee Ownership Trusts

About Shawbrook

EOT buy-outs are often funded through deferred consideration based on future profitability. Our facilities speed up the access to these funds for the selling shareholders
Support from a team experienced in business transitions with industry experience and understanding of EOT principles and related market factors
Fast-track ownership transition with upfront funding for the EOT whilst maintaining stability and cashflow in the business
Quick decisions with short lines of communication direct to decision-makers
Our solutions can combine funding for the EOT buy-out as well as the next stage of growth in the business

Funding at a glance

Our funding is available for UK based limited companies with experienced management and employee teams.

Commercial loan facility, with term typically 3-5 years
Capability to provide funding to the trust, the operating company or a combination of both
Repayment: amortising and bullet profile with initial capital holidays available
Security: senior all assets debenture, additional security may be required
Corporate structure must meet Employee Ownership Trust requirements
EOT must acquire and retain a controlling shareholding in the company
Company must be a trading company or holding company of a trading group
EOT must be set up for the benefit of all eligible employees on the same terms
Number of people who are directors or employees, and who continue to hold at least 5% of the company’s shares after the transition, must not exceed 40% of the total number of employees

Releasing value on your assets

Unlock the value tied up in paper and hard assets

For businesses with substantial capital tied up in their balance sheet, our Asset Based Lending proposition can unlock that value to provide both strategic capital and on-going financial headroom to support pivotal events.

Explore Asset Based Lending Submit an enquiry for Asset Based Lending

Quality Control Engineer Examines The Surface Of The Sheet

Working with capital

Utilising cashflow to fund significant business milestones

A senior debt product designed for established businesses requiring funding for growth, an acquisition, change of ownership or other general corporate purpose. Loan size is determined by a multiple of EBITDA (Earnings Before Interest Tax Depreciation and Amortisation) or vacant possession value of an owner-occupied commercial property, with repayments coming from future cashflows of the business.

Explore our Leveraged Finance facilities Submit an enquiry for Leveraged Finance

Hybrid Solutions

Bespoke senior debt solutions

For businesses we can deliver a holistic financing package combining the best of event driven term debt with the flexibility of working capital solutions.

Submit an enquiry for Hybrid Funding Solutions