Employee Ownership Trust (EOT)
A new form of employee ownership is the Employee Ownership Trust (EOT). These companies are owned by a perpetual trust, established by the selling owner, with the requirement that all profits above those needed for reinvestment in the business go to the employees.
An EOT succession allows a business owner to sell their company and
- ensure that it will never be acquired by a larger company that closes the company, forfeiting all the local jobs, and takes technology they want or
- ensure that the profits will not be siphoned off to satisfy shareholders; profits will be shared with employees and to finance the growth of the company.
EOTs lack the tax benefits of ESOPs but are also significantly less expensive to create and administer.
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