Also known as:
Employee trust, worker ownership trust (the UK equivalent), or ESOP, which is how the U.S. refers to a broadly similar, though structurally distinct, structure.
Suitable for:
EOTs are best suited for owners who want a full or majority sale of the business, want broad-based employee benefit, and want to preserve the company's independence and culture after they leave. The $10 million CGTE makes EOTs particularly compelling for owners who would otherwise face a significant capital gains tax bill on a third-party sale.
What's in it for employees:
Employees benefit collectively from the company's performance through trust distributions, without needing to invest their own capital. The structure is genuinely broad-based: it's designed to include the whole workforce, not just senior leaders.
Challenges:
EOTs are more complex to structure and administer than the other plans described here, and the legislative framework in Canada is still relatively new. Given the complexity and the stakes, EOT transactions require specialized advisory expertise to execute properly.