In the changing landscape of business ownership, becoming employee owned has emerged as a compelling alternative for agencies and businesses alike. But what exactly are EOTs, and how do they work? What are the benefits of the structure? Does it have any pitfalls? And where do you need to be as a business to truly embrace it?

In our podcast, we discuss the increasing popularity of becoming an Employee Ownership Trust (EOT). We've included a snippet below but you can listen to the full podcast on our website.

When is an employee ownership trust a good fit for a business?

It can be suitable for all sorts of businesses and one of the ingredients that we often see that goes into this decision, is that you've got a combination of an ownership or leadership team that's looking to sell, but they also want help with a succession plan and an EOT, as we will come on to, can help support succession planning. 

There's also normally another ingredient which any business could if they wanted to go down a much more conventional route of a trade sale. A sale to a larger business in the same sector or a sale to private equity. 

Normally there's a reason why businesses are looking at employee ownership rather than those more conventional routes, and it tends to be to do with the sort of mindset or culture within the business. Very often those businesses have a bit more of an independent mindset or culture and they don't want that to be lost. In the course of a sale to an outside investor, they want to retain that degree of independence and in those circumstances EOT’s can be a good fit.

Employee ownership can help support a succession plan, it doesn't create it so the owners and managers of the business still need to think about what the business is going to look like a post-employee ownership, who are going to be the managers of the future because all businesses whether they’re employee owned or not need some kind of management teams, they need some leadership team.

Client perception is important for agencies, what impact does employee ownership have on brand and client perception?

Most businesses expect it to have a very positive impact on their brand. John Lewis for example, I certainly think it's part of their brand and it's something that a lot of people are aware of is that their employee owned and that creates positive associations for a lot of their customers.

When you're talking about agencies, being no strangers to the power of marketing, they will make quite a big deal of moving to an employee ownership model quite understandably and that's at least partly in the hope that that has similar sort of positive associations amongst their customers. It does need to be explained sometimes to customers: I have had situations for example, particularly with larger non- UK customers, where a client of ours that had been through employee ownership really had to explain fully what this change of ownership actually meant for the business because their non- UK clients weren't entirely understanding of what was going on. In the UK however, there's enough of an awareness of employee ownership as a model that most businesses don't have to go through that process.

Click here to listen to the full podcast on our website.