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Employee Ownership Trusts: why your employees should be at the centre of the transition
November 25, 2025
By Mike Raymond
Employee Ownership Trusts (EOTs) have rapidly become a mainstream exit strategy for business owners. According to the Employee Ownership Association, over 2400 UK companies are now employee-owned, reflecting a shift towards values-led succession planning, long-term stability, and shared rewards.
Our expert, Mike, outlines why employee participation should be a core consideration for any business that is planning or in the midst of a transition to becoming employee owned.
An EOT allows business owners to sell a controlling interest (at least 51%) of their business to a trust that holds the shares for the benefit of all employees. An EOT can be a great way for business-owners to ensure that the future and culture of the business is protected for the benefit of its employees. You can read more about EOTs and their business benefits here.
Within an EOT it is important to create a workplace where employees understand that they genuinely have influence, responsibility and a stake in the business’s future. When meaningful employee engagement occurs, employee-owned companies consistently perform better across several areas, including:
A well-planned transition is key to the success of any Employee Ownership Trust (EOT). Where employees are brought into the process early, whether through initial briefings, Q&A sessions, or involvement in shaping the post-completion vision, the handover tends to be far smoother. Early engagement helps staff understand the rationale behind the move to employee ownership, builds trust, and reduces any uncertainty, which means that by the time completion arrives, employees are already aligned with the company’s long-term strategy. This proactive approach can significantly minimise disruption, maintain continuity of service, and preserve the business culture that’s been built.
When employees see the direct link between their role and the company’s performance, productivity almost always rises. Employee owners tend to collaborate more naturally, hold each other to higher standards, and show greater commitment to quality.
In a competitive market, the promise of employee ownership stands out. The opportunity to have a meaningful voice and share in the success they help create can make employee-owned businesses highly attractive to skilled candidates wanting to shape company growth. Many Gen Z workers prioritise ethical values, purpose, and having a genuine say in how a business is run which makes employee ownership an attractive pull. By having a stake in the company, they feel more engaged, believe their opinions matter, and see real opportunities for growth. This, in turn, helps drive loyalty in a generation often stereotyped as job-hopping.
Employee-owned businesses typically have lower turnover. Job satisfaction tends to increase where employees feel respected, involved, and aligned with the company’s values. That increased morale translates directly into stability, continuity of service, and better long-term planning for the business.
With employees participating in discussions across departments and seniority levels, decisions are informed by a wider range of perspectives. This creates a more balanced, thoughtful and effective decision-making process that encourages a culture of accountability and problem solving.
Achieving meaningful participation requires deliberate planning. The ethos of employee ownership isn’t automatic; it must be built into daily practice to ensure that the business leverages the benefits of employee-ownership.
We’ve set out some key tips to help you strengthen your employee participation:
Clear communication to the employees before and after the sale to the EOT is essential. While you may choose not to announce the transition until contracts are signed, a key group should be informed early, as they will support the process, answer staff questions and will likely become trustee board members.
Messaging should be clear and consistent. Transitioning to an EOT has a lot of potential benefits for employees, however it’s important to ensure that the expected outcomes (especially in the short term) are made clear. For example, if employee bonuses are not likely to be paid in the first few years, then ensure this is communicated. Explain how their voice can be heard (for example, via employee councils or representatives on the board) and how they can influence decision-making.
How employees are spoken to directly influences how they view their role. Referring to people as “employee owners” or in similar terms shows that their contribution goes beyond that of a “typical” employee. Leaders can also support this mindset shift by explaining the reasons behind decisions and, where appropriate, properly consulting employees and taking the time to listen to their input.
Transitioning to employee ownership is often a good time to refresh or redefine the company’s values, ideally with the involvement of the employees who will now have a real vested interest in the success of the business. These should be easy to understand, aligned with employee expectations and reviewed regularly.
The recent growth in employee-owned businesses opens up increased opportunities to network with other businesses who are owned by their employees. Sending employees to events focused on employee-ownership can be an excellent opportunity to share best-practice and bring back fresh ideas to the business.
An EOT can be an excellent exit route for business owners who value cultural continuity, long-term stability and shared success. However, it is important for anyone considering an EOT to understand that the real strength of an employee-owned business lies not in its structure, but in how actively employees participate in it. When employees understand their ownership role and feel genuinely engaged, the benefits productivity, retention, morale and innovation are significant and lasting.
If you would like to discuss whether an EOT may work for you, you can discuss this with our M&A experts by contact us using the contact form or on 02920 829 100 to see how we can help.
To speak to one of our experts today, please contact us on 02920 829 100 or by using our Contact Us form for a free initial chat to see how we can help.
