On Being a Vanguard Company

Canada’s EOT legislation is new as of January 1, 2024. Companies that choose to sell to an EOT are going to be the first of their kind in Canada, the vanguards forging the path and leading the way for other businesses to do the same. What does being a vanguard mean for these companies?  

Canada’s legislation is heavily influenced by the UK’s EOT legislation, which came out in 2014. Let’s look at a vanguard EOT company from the UK to understand what it’s like to go first.


Before there was Quintessa Limited, there was Dr. David Hodgkinson in the environmental division of Canadian company, Interra Information Technologies. For over 13 years, Hodgkinson built this division from scratch, establishing offices in Ottawa, Calgary, Toronto, the UK, Sweden, and Barcelona. After years of dedicating himself to its growth, it was spun off and sold. The new company changed what he had built, cratering the quality, collaboration and innovation he had worked so hard to establish. So he left, starting his own business in the UK. He called it Quintessa Limited, and it focused on highly quantitative scientific modeling. 

Although the company was highly successful and profitable from its first days, for Hodgkinson it wasn’t primarily about the money; it was about the people. Quintessa was built by and for great people to work on and solve the most challenging consulting problems he could find. His company garnered a reputation for outstanding talent and results. 

After more than a decade of growth and success, and with retirement approaching, Hodgkinson wanted to find a way to turn his company over to all of its employees, not just a select few in leadership positions. “I wanted to be employee-owned. If all your decisions are based on some purely business calculations, it doesn't show full respect to the people who work there,” he said. But at the time Hodgkinson began planning his exit, the UK did not have an EOT. 

The UK’s EOT legislation was based on 30 recommendations by Graham Nutall, in a document colloquially known as the Nuttall Report. Hodgkinson heard about the Nutall Report and realized that EOT was the right vehicle for Quintessa. They became a vanguard company and started the preparatory work for the transition before there was any legislation in place. Being ahead of the legislation and with very few experts available in the country to take Quintessa through the exercise of transitioning, they hired Graham Nutall to help them. “Graham was obviously fantastic and helpful,” Hodgkinson said. “And he had a couple of more junior people with him who were fantastically helpful too.”  

They waited for the legislation to be drafted and approved. Draft legislation was submitted in the 2014 Finance bill and went through the process of approval, including a sign-off from the Queen. “So that was it,” Dr. Hodgkinson says. “July the 17th, legislation came in for us. Five days later, we became an employee-owned company.” Quintessa was one of the first companies to become 100% employee-owned under this legislation in the UK.

With expert help, Hodgkinson was able to create a stable vehicle for his company’s succession: “It was a relief. I can retire and everything is set up such that this company has a fighting chance of continuing.” That was nearly a decade ago. Today, Quintessa is still thriving. Hodgkinson is philosophical about it: “What do you leave behind you in life? I leave behind my children, but how nice to say I left behind this company. And, you know, I'd like to think that maybe in 20 years time I'll look at it and it's still thriving.”

Today, Canada is in the same position the UK was back in 2014: freshly-minted EOT legislation and companies looking to sell to an Employee Ownership Trust for the first time. While being a Vanguard company means there is no general standard for these transactions, we are in the lucky position of having best practices to draw on from both the US and UK employee ownership companies. As in the UK, we have experts in the design of the legislation available to guide them, like Tiara Letourneau from Rewrite Capital Advisors. 

For owners that want to protect their legacy and their people, EOTs are a custom solution. With good planning, expert guidance, and advice from peers around the world, they can create the newest vanguard companies and, like Dr David Hodgkinson, tell their success stories for decades to come. You could be one of them.