This assessment examines three key areas to help you find out if selling to an employee ownership trust (EOT) is a realistic option for you and your business. Explore whether your business meets the eligibility criteria, what a realistic sale price looks like, and whether you're mentally prepared for this transition. At the end, you can read a report based on your answers straightaway. Helpfully, you can also have this emailed to you.
It only takes a few minutes to complete the assessment. You’ll need some basic shareholder information and details on your recent financial performance. We’ve included links to information that will help you dive deeper into the questions.
Eligibility
Answer these four questions to check if your business fits the criteria for sale to an EOT and qualifies for the associated tax benefits.
Company status
To qualify for the EOT tax perks the shares need to be sold by individual(s). If your trading company is owned by a holding company, and you own the holding company, you will need to sell your shares in the holding company to qualify. Learn more on our help page.
What type of shares do you hope to sell to the EOT?
Controlling stake
For a valid EOT transition with the associated tax benefits, you must sell a controlling stake (minimum 51%) of your business. This means even if you remain a shareholder, you'll become a minority stakeholder subject to EOT governance. Learn more on our help page.
Will your EOT gain and retain a controlling stake (51%+)?
Profit sharing
In an EOT, all eligible employees must benefit equitably from the profit share. This doesn’t necessarily mean every employee receives the same amount of profit share – but the system must not favour individuals. You can learn more about how profit share can be split on our help page.
Will the staff profit share be equitable?
Participator ratio
To qualify for an EOT sale, and associated tax perks, your business must comply with the participator ratio. Roughly speaking, you need at least five employees for every two shareholders. The correct participator ratio must be in place for at least 12 months before the date of the sale to the EOT. Add your information below and we’ll work out your ratio. You can find out more about this on our help page.
How many employees and shareholders do you have?
Valuation
Fill in your recent financial performance to discover an indicative sale price and payment timeline for selling to an EOT.
In smaller companies, the owner's salary often does not reflect fair market pay for their actual work. This is typically for tax reasons: they know they'll benefit from dividends and capital growth. The profit should be adjusted to reflect this difference. The figures you enter here will make the valuation more accurate.
You may have heard the phrase "EBITDA": this stands for Earnings Before Interest, Tax, Depreciation and Amortisation. If your company has received interest, or suffered depreciation/amortisation, profit should be adjusted for these.
EOT mindset
Are you ready for the change? Choosing to sell your business to an EOT is about more than ticking boxes and checking the numbers add up. There’s a psychological shift that you, as the founder, need to navigate. This isn’t the end of your business – it's the start of a new chapter. But remember, the company's success remains crucial to your financial outcome.
Here are some key statements you need to feel comfortable with before moving forward:
Who’s in control
You're selling a majority of your company’s shares to an EOT. You may still be heavily involved, but won’t always have the final say in decisions.
Are you comfortable with the fact there will be a change of ownership?
Irreversible decision
Selling to an EOT is a long-term decision. There’s no quick way to undo it and return to how things were.
Do you understand that once the sale completes, it cannot be readily reversed?
Long-term success
Your deferred payments rely on the company staying healthy. If it fails, everyone loses – including you. Plus, the capital gains tax break relies on the company continuing to meet the criteria long after the sale.
Are you confident your business can succeed for 5+ years post sale?
Something's not right. Please review the errors and try again.
Your eligibility results
Company status
You are selling shares owned by individual(s) to the EOT, which means your sale will qualify for the EOT tax benefits.
Unfortunately, your business does not qualify. The shares being sold to the EOT need to be in a trading company, or in the holding company of a trading group.
Companies can be structured in a variety of ways. Only individuals can benefit from the capital gains tax break when selling to an EOT; the shares must be sold by individuals – not companies.
In practice this means if the trading company you want to sell to an EOT is currently owned by another company (i.e. a holding company), you'd need to sell the shares in that holding company to qualify. This may not be ideal if the holding company also has other assets/companies which you'd like to keep outside the EOT. In which case you may need to liaise with your accountant about restructuring first.
Find out more about how company status effects your eligibility on our help page.
Controlling stake
Your plan to transfer 51%+ ownership to the EOT meets the controlling stake requirement.
The EOT needs to gain a controlling stake in your business – at least 51% to qualify for the EOT tax benefits. You need to understand that you will be handing control of your business to the EOT. If you are determined to retain control, an EOT probably isn't the path for your business.
Learn about why the controlling stake is important on our help page.
Profit sharing
You’re planning a fair and equitable profit share. That’s one of the key criteria for an EOT sale.
To sell your business to an EOT, you must create an equitable profit share payments plan for staff, meaning you cannot single out individuals positively or negatively.
If you do press ahead, we can give clear guidance on what you can and can’t do with profit share payments.
Read more about profit sharing on our help page.
Participator ratio
Your participator ratio is
Your business meets the ratio of employees to shareholders needed for an EOT sale.
- Staff on payroll
- Shareholders
- Employees with share options
- Employees related
Your participator ratio is . Your ratio needs to be 40% or under for your business to qualify.
This can become complicated, but at its heart, it’s about the number of shareholders compared to the number of employees. If you have relatives of shareholders on the payroll, or staff with share options, your ratio will be affected. Superficially, it looks like you fail to meet the required ratio to qualify, but it may be worth discussing with a professional to see whether this can be easily resolved.
Get the lowdown on the participator ratio on our help page.
- Staff on payroll
- Shareholders
- Employees with share options
- Employees related
Your valuation results
Your indicative sale price and payment plan
Warning.
- Maximum sale price for business
- Maximum sale price for % sold
- Stamp duty payable to HMRC on % sold
- Potential payment plan
- An initial payment of , followed by per month for months, followed by a final payment of .
Valuation not what you expected?
This sale price is based on simplified metrics of what we will likely consider a “fair market value”. If you want to sell your business for a much higher sum, an EOT may not be for you.
The key thing to remember about selling your business to an EOT is that you’re primarily paid from future profits. This means it’s vital the business succeeds for many years post sale for you to get paid. A high sale price relative to profits makes these repayments hard to achieve in a reasonable timeframe, usually 3-8 years.
Read more about why it’s a myth that with EOT sales you can name your own price.
The numbers you provided
- Profit before tax
- Net asset value / shareholder funds
- Profit expectation
- Total cash at bank
- Percentage being sold
- Actual salary paid to owners in year
- Actual pension contributions for owners in year
- Fair market value remuneration for efforts of owners
- Interest received in year
- Depreciation suffered in year
- Amortisation suffered in year
Your founder EOT mindset results
You've confirmed your understanding of the key realities of EOT ownership:
You're ready to relinquish control – accepting that final decisions won't always be yours.
You understand this is a permanent change – there's no simple way to reverse an EOT sale.
You recognize your financial success depends on the business thriving for 5+ years – your payments and tax benefits are tied to long-term company performance.
Why this matters
This isn't just small print – it's the foundation of a successful EOT transition. You're not just selling and walking away. You're choosing how to write the next chapter of your business story. Success comes from being genuinely at peace with this new reality, not fighting against it.
Your next steps
If this report points towards an EOT as a viable next step for your business, you’ll need expert guidance to make it happen. And that’s where Go EO comes in.
We specialise in helping founders like you make the move to employee ownership clearly, confidently and cost-effectively. Our transition packages bring together formal sales documents, tax knowledge, and accounting expertise under one roof, which keeps the process straightforward.
Your answers tell us that you need more information about the realities of an EOT sale. That’s great, because it is incredibly important you understand an EOT sale is about more than legal and financial rules. This sale is a fundamental change to your business and will affect you on many levels.
Who’s in control
When you sell a majority stake to an EOT, you're legally transferring ownership to your employees via the trust.
Whilst you can potentially remain full time MD, retaining day to day decision making, you need to understand you would no longer have ultimate control. Major decisions will involve the trustees, and you will no longer be the largest shareholder. Being at peace with the business no longer being “yours” is an important mental step you need to take. Putting thought into your role post sale is a really valuable exercise.
Irreversible decision
When you sell to an EOT, the company ceases to be yours. If you later decide it was a bad idea, you can’t simply take it back. Theoretically you could agree a price with the trustees to buy it back, but in practice this seems extremely unlikely. Plus, if you did buy back the business, you’d have another hefty set of professional fees and would also lose the capital gains tax break.
Long-term success
Your repayment plan is directly tied to the company's ongoing success. If the business collapses, there will be no profit and no more payments to you. You will only walk away with the money you’ve been paid up to that point. The company would also no longer be a trading company, breaching one of the conditions for the Capital Gains Tax (CGT) exemption. Which means you’d suffer tax on all the payments you received to this point.
The bottom line
Selling to an EOT is different to other sales, you’re not just selling your business and walking off into the sunset. How you choose to write the next chapter – whether it’s staying fully involved, offering mentorship, or stepping aside entirely – will shape how the rest of the story unfolds. To move forward, you need to be genuinely at peace with what this sale means.
Your next steps
Take time to reflect on what you really want. Are you genuinely fully reconciled with it no longer being your company? Are you confident the business can stay profitable for (at least) the next few years? If you do plan to take a big step back, can the team cope without you? And do you have other things lined up to keep you busy or fulfilled? If the answer to all these is “yes”, then an EOT could be a good fit for you.
When you're ready to start your EO journey, Go EO is here to help. Our transition packages bring together formal sales documents, tax knowledge, and accounting expertise under one roof, which keeps the process straightforward.
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Get this report emailed as a PDF – useful if you’re discussing your options with business partners, advisers, or just want to think it over.
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