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?

With an Employee Ownership Trust.

Photo women sit at table in storage room with a laptop

There are 5 parties
to any EO transaction:



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.


The Buyer/
The Trust

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.

Flowchart of a saleFlowchart of a sale

This image is an example only.

Anatomy of an EO Sale

EO sales are financed 100% by debt and company cash.
At the time of the transaction, the seller will receive the amount of the bank loan issued for the transaction and any cash built up in the company for the buyout. The remaining amount will be financed by a “seller’s note”. This is a loan from the seller, to be paid out over a period of time.
The majority of company stock is sold to the EOT, on behalf of all employees.
In the case of a hybrid model, some stock may also be sold directly to select employees.
Sellers can choose to retain a minority equity position at the time of sale. This allows sellers to participate in the growth of the value of company shares while they wait to be fully paid out.

If you are considering selling your business to your employees and want to understand the intricacies involved,
let’s talk.

EO transactions are complex and require knowledgeable advisors.

We are the experts in Canada’s EOT legislation — because we helped build it.

We are uniquely positioned to successfully transition your company to an employee-owned business.

Stay informed about EOTs in Canada. Subscribe to our newsletter.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.