September Help Mail

Working Knowledge Help Mail for Small Businesses

This September Help Mail includes:
  • a guest blog from Chris Budd, author of The Eternal Business, on Employee Ownership Trusts - would it work for your business?
  • a look at modern apprenticeships - what are they?
  • a conversation with new digital marketing apprentice recruit Chris Neophytou
I hope you find it useful.
MD, Working Knowledge

What Does Your Ideal Exit Look Like?

The Employee Ownership Trust (EOT) has been gaining a lot of press coverage over the last few years. Since its birth in 2014, this innovative way of selling a business is fast becoming one of the favourite exit routes for small business owners (as well as big organisations like John Lewis). 

 Chris Budd sold a majority stake in his business, Ovation Finance Ltd, to an EOT in 2018. He wrote a book we’re big fans of, The Eternal Business, to help others to follow in his footsteps, and is now one of the UKs experts in employee ownership for small businesses.

Selling a business can be one of the most stressful transactions we might ever make. You started the business, it has your sweat and tears all over it, and now you are going to hand it over to someone else – and hope that they pay you! 

Exiting a business is complicated, and the options are often not particularly palatable, especially if you’d like to see the business continue beyond you.  

The most common route is the management buyout – but do your team actually want to take over the responsibilities of running your business? Do they have the finances to fund the purchase? There is also the problem that those who do have the money to buy out the owner are not necessarily the ones that you might choose to run the company.  

The payment for the shares will come from future profits, and yet the business might be stuck with a management team made up only of those who could afford to buy in.

The Employee Ownership Trust (EOT) is a way of selling your business which can provide everyone with what they want.

How The Employee Ownership Trust Works

With an EOT, the shares are owned by a trust fund. The beneficiaries of the EOT are the employees (think John Lewis Partnership). 

 In order to get to this position, the owner sets up the EOT, then sells their shares, at an independently assessed market value. The EOT then uses the future profits of the business to pay the owner for the shares, with any profit over and above the set payments going to the employees.

Once the owner is paid out, then all profit goes to the employees. Up to £3,600 p.a. per employee is free from income tax. 

A couple of other rules – the EOT must own a majority of the company to be classified as an EOT. It doesn’t, however, need to purchase 100%. If this and a few other criteria are met, the payments to the owners will then be exempt from Capital Gains Tax. 

Creating An Eternal Business

This structure means that the owner is paid out of future profits from a company that they no longer control. This may seem a little scary. 

One of the advantages of the EOT, however, is that you can prepare the business before the sale, and still be involved after (for example, I am still Chair of Ovation, but not involved day to day). 

In many ways, the main focus of any owner should be to make themselves the least important person in their business. It can take some time – years – to make the changes that might allow an owner to properly let go

This involves giving the employees a genuine voice in the business – something that employees of EOT owned businesses value as much if not more than the profit share. 

The Eternal Business Process

The Eternal Business Programme is an online tool with consultancy support. It provides a pathway for companies to prepare for the day when the ownership changes. It provides a pathway to building the company in a way that engages employees, creates genuine purpose, and gives the employees a voice. 

This process allows the owner to control their exit and manage the cultural transition that is needed for life in employee ownership. Remember – the owner needs to feel comfortable that they are able to walk away and yet the company thrives without them. 

If you are an owner who is thinking about your clear succession plan, I strongly recommend you investigate the EOT. 

A word of warning, however – don’t tell your team of your plan! Speak to us first. Getting specialist EOT advice (not just tax or legal advice) is crucial before you take any firm steps.

If you would like more information about the EOT, you can visit the Eternal Business website or contact Chris directly at

What are modern apprenticeships?

For employers, modern apprenticeships help develop a workforce with relevant skills by training new staff or upskilling existing employees of any age. We look at:

  • How are modern apprenticeships different?
  • Who is eligible? (Most!)
  • What do they cost? (Not much!)
  • What funding is available? (Quite a bit!)


Read the article here

In focus...

Chris Neophytou, digital marketing apprentice at AAG Wealth Management

Chris recently took the leap from retail manager to marketing associate at a Mayfair-based financial services firm. He went through our recruitment process twice to find the right fit. We chat to Chris about that experience and how it’s going so far.

Read the article here


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