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Employee Ownership Trusts – excellent presentations followed by interesting Q&A at Truro breakfast briefing

Employee Ownership Trusts (EOTs) were the topic for this month’s breakfast briefing held at our Truro office, attended by 20 business people from across the county.

Themes

The main presentations were by Christian Wilson of Stephens Sown and our own Martin Brown – their slides can be found here.

I have enjoyed most of the breakfast briefings over the years, but this one stands out for me primarily due to the passion with which the presentations were delivered and the level of questions raised by the delegates.  This was, as Andrew James had written in the event invite – a hot topic.

To me the themes of the presentations and the Q&A were:

  • EOTs can be an alternative to Trade Sale or Management Buy Out as part of “exit planning”
  • EOTs can be used as a part of a company’s growth strategy
  • BUT tax should NOT be the driver for using an EOT
  • Values (as opposed to value) should be the driver the using an EOT i.e., the driver for considering an EOT should be a desire to embed a culture which places employees at the core of the business

Some myths dispelled

Some examples of organisations who have used EOT were mentioned in the presentations, (and some are on the slides) as were some of the positive impacts on company performance. A book recommendation for further in depth reading was ‘Beyond the Corporation: Humanity Working’ written by David Erdal.

The presentations also covered how the EOTs are structured and funding and tax implications (for both the founder and the employees) of adopting the structure.  A number of misconceptions were also raised and dealt with including:

  • EOTs involve the Founder “gifting” the company to the employees; and
  • EOTs result in the company being run by the employees

Some of the limitations on the use of EOTs were also touched on in the presentations and fleshed out in the Q&A that followed.

Thank you

All in all, one of the most enjoyable breakfast briefings I have been to.  Thank you to the presenters, the attendees and the PKF Francis Clark team who make these events happen, including Andrew, Devon and Alison.  I would also like to thank them all, and Linda, for the help with the events across the last two to three years – as I now bow out of the organisation due to “artistic differences” on the subject matter that the breakfast briefings should cover.

Back to EOTs…

I am now about to start working on my first valuation in the context of an EOT – so the event could not have been more-timely for me.  I understand that the national level of interest in EOTs is translating to a pipeline of enquires for potential work in this area – so this may be not be last valuation for an EOT…

Final comment – I would so like to have entitled this blog “EOT – go home” but I just could not make it fit with material covered!

FEATURING: Richard Wadman
Richard qualified as a Chartered Accountant with KPMG in 1993. Since 2006 he has worked in Corporate Finance, firstly with the predecessor firm in Truro… read more
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