How it works
How can you get the full value of your business when you sell to your employees, at no cost to them personally?
The current owner of the business is the seller. That individual (or group) shareholder has the sole authority to choose who will buy the company.
For the employees to become owners, an Employee Ownership Trust must be formed. This Trust allows employees to own the shares as a group in a tax-effective way, without requiring individual employees to purchase and manage them. The Trust becomes the purchaser and manages the responsibilities of ownership on behalf of the employees.
The corporation is the thing being sold. It will provide the cash flow to service the buyout debt, and later to generate profit and company growth.
The employees are the ultimate beneficiaries of the corporation's profit and value. The structure of the Trust determines how and when employees benefit — through annual disbursements, long-term share value increases, or a combination of the two.
Since employee owners do not bring their own equity to the purchase of the company, employee ownership transitions are 100% debt financed. Bank financing is essential to make these transactions possible.
This image is an example only.
EO transactions are complex and require knowledgeable advisors.
We helped build Canada’s Employee Ownership Trust legislation.
We are uniquely positioned to successfully transition your company to an employee-owned business.
