EOT for music distribution company

Go EO helped Kudos Records Ltd sell to an Employee Ownership Trust.

The founder kindly agreed for us to share a few key details, together with quotes about his reasoning for choosing an EOT, and experience of the transaction/time since.

Kudos Records Ltd – EOT sale

Employee Ownership Trust sale for music distribution business, Kudos Records Ltd

Situation pre-sale:

“I founded Kudos in 1992 to provide distribution services to independent record labels.  We are a small company, employing 12 people, many of whom are long standing. 

For a number of reasons I started thinking about a long term retirement strategy. I saw my choices as either; 

• A trade sale – which I was uncomfortable with as it would inevitably mean rationalisation. I am also a passionate advocate of independent music distribution and believe further consolidation isn’t healthy.
• Wind the company up – which felt unnecessarily destructive!”

Why they felt the EOT was a good option for the business:

“An EOT felt like the perfect solution. It enables me to realise a fair value for the business over time while gradually extracting myself from running it day to day.  

I’ve personally committed to 5 years (minimum) which should give us enough time to transition from a benevolent dictatorship to something a little more democratic!”

“Chris’s guidance and advice was indispensable. Top marks!”

Danny Ryan, CEO of Kudos Records Ltd

How they feel afterwards (good, bad and ugly!):

“Feeling positive! Our trading environment is really very difficult right now, so having a highly motivated and engaged team is an absolute necessity. I’m also enjoying our new levels of transparency.

I feel I can share some of the more difficult decisions and keep the whole team better engaged and informed about performance, challenges, and strategies.”

Go EO’s involvement

This case had a further complication in that there was an investment in another trading company (Freestyle Records Ltd). This was dealt with first, to simplify things and help make it clear exactly what was, and wasn’t, controlled by the EOT.

Go EO assisted with the legals of the above share transfer, then the Kudos Records EOT sale itself. We also created the trust, and dealt with HMRC submissions (stamp duty and trust registration), as well as Companies House updates re the change of control.

If you are interested in finding out more about transitioning to an EOT, get in touch with us at Go EO to see how we can help.