How long does it take to get my money out?

When you sell your business to a third party, they buy it with a combination of equity (their own money) and debt (the bank’s money). When you sell your company to your employees through an Employee Ownership Trust (EOT), employees don’t pay anything for the acquisition.  

That means no one is bringing equity to the deal, and it will be 100% financed by debt. Part of this debt is financed by a bank loan—that’s the money you take home right away. What’s left of the debt is what’s owed to you: basically an I.O.U. that the company pays you over time. 

There is no set rule for the amount of time the seller’s loan can be repaid. Usually, it’s in the range of 5 to 10 years. Canada’s EOT law states that 15 years is the maximum time for repayment. But there are many considerations that go into deciding on the repayment terms. Let’s look at an example of a UK company that sold to an EOT. 


For the most discerning yacht and private jet owners of the world, there are only a handful of companies you would trust for bespoke design. Winch Design is one of them. Today, it boasts over 150 designers, but in the beginning it was just two people: Andrew Winch, a trained 3D designer, and his wife Jane, a former nurse with a knack for business management.

When Andrew and Jane embarked on the journey to transition their company to employee ownership, they did so with a clear vision and a strategic blueprint. What drove the structure of their shareholder loan agreement was their deep sense of responsibility not only to the business but to their employees. 

Andrew saw the stark difference between selling to an external buyer and transitioning to an EOT. He felt that with an external buyer, “they will take 100% of the dividend profit and all of the employees will get their salary and maybe a bonus, but they will not profit from the success of the business.” The EOT, on the other hand, aligned more with their vision. 

When we spoke with Andrew, he was three years into a seven-year shareholder loan to the company. Andrew and his team structured the loan to prioritize the financial strength of the business, with Andrew emphasizing the importance of avoiding premature payments that could leave the company struggling: "Rather than pay it all today, day one, and then you'll be bankrupt in two years time because you haven't got that capital to work with. So we set it up to be a fair exit.”  

Another primary concern for the founders was ensuring immediate benefits for the employees, so that they didn’t have to wait years to see the upside of their ownership. A loan that is structured to eat up all of the annual profitability leaves nothing for employees. Instead, they structured the loan to share the profits between debt repayments, bonuses, and profitability for the employee right from the first year. In this way, employees who see profitability early on are instilled with a sense of ownership from the get-go.

The decision to structure the duration for the seller financing will depend on many factors: 

  • Your company’s cash flow and ability to finance the debt
  • The short term goals for the company’s growth
  • The experience you want your employees to have as they become owners

Although selling to an EOT means you have to wait for a portion of your money to get out, you do get the benefit of a Capital Gains Tax exemption on the first $10 million of the sale value. That’s up to $3.6 million in savings. And during that time, though you no longer hold the majority shares, you can still be involved in, and have influence over, the strategic direction of the company.  

While selling to your employees is not the fastest exit, it might turn out to be the most lucrative. It certainly is the best choice for protecting your legacy and your employees, so they endure and grow far into the future.