Who will buy your company?

Is it time to sell your business, but you don’t know who will buy it?  

Do you have a family business or private business, with no obvious successor?  

Canada’s new Employee Ownership Trust (EOT) was specifically designed to help you solve this problem by making it possible for you to sell it to your employees.


Although it’s new in Canada as of January 1, 2024, Trust-based employee ownership models are well established in the US and UK. Let’s take a look at Taylor Guitars from California. They faced this exact problem.


Planning for succession is a critical element of business leadership, and this task posed a unique challenge for Kurt Lustig and Bob Taylor, the founders of Taylor Guitars back in 1974. Taylor Guitars had grown from a small guitar design and repair shop to a US $150 million revenue household name. Neither Kurt nor Bob had children suited to take over the company, so when it came time to sell, the usual family succession plan was ruled out. Like most mid-sized and family businesses, Taylor Guitars was too small to go public, so to sell the business they would need to find a private buyer. 

They didn’t like the idea of a strategic buyer because they didn’t want to be rolled up into a much larger company culture. “Every company is different,” said Kurt. “We like how we do business. We make guitars differently. So that would probably be lost if we sold to a strategic partner.”

Neither did they like the idea of selling to private equity. Kurt explains: “They'll have a five-year investment horizon. They're buying you and they're trying to increase the value to then sell the company. A lot of companies don't make it through that process. They don't survive it. We didn't want the company to go that way, although we could have gotten more money and gotten money more quickly if we'd sold to private equity.”

They decided that they needed to protect the company, its culture, and its people: “The only way to do that was for the company to remain independent and to create an [employee-owned] trust, where our long term employees would continue to manage the company.” 

It was the only solution that would keep the company and its culture intact. But even better, it meant that the future of the company would belong to all the people who had made Taylor Guitars what it was and continues to be. “And really, any increase in equity and wealth of the company would see the benefits go to the employees, not people that were already super wealthy,” Kurt concludes.

Canada’s EOT allows current business owners to sell to a Trust, which holds the equity on behalf of all the company’s employees. The Trust—not the employees—holds the shareholder rights and duties. This means all employees can benefit from distributions of profit and/or equity, but they are not voting on management or board decisions. 

The EOT holds the shares and its Trustees appoint the company’s Board of Directors; the Board continues to make strategic and financial decisions; the management team continues to execute those decisions; and the employees do the jobs they have always done. The only difference is that now, the employees benefit from ownership through shared profits and/or equity value, which makes them more motivated to see the company’s value increase.