Spotlight on…Business succession through employee ownership

How to sell your business without selling your soul

In this spotlight on article Clémence Chatelin, Chartered Financial Planner at Ovation Finance shares how an employee-owned business can be profitable, purposeful, and people-first.

Few questions haunt business owners more than this one: “What happens when I’m done?” You’ve poured years (and probably a few too many late nights) into building something good. A business with heart, purpose, and a cracking team. But when it comes time to step back, the idea of selling to a faceless buyer or private equity firm can feel… well, a bit like watching someone redecorate your house in colours you’d never choose.

Traditional exits often look great on paper, until the ink dries. New owners rebrand, restructure, and sometimes rip out the culture that made the business special. There is, thankfully, another way, one that rewards the people who helped you build it, keeps your ethos intact, and lets you walk away with pride (and financial security). It’s called an Employee Ownership Trust, or EOT for short.

In 2018, Ovation Finance’s founder Chris Budd sold the majority of his shares to an EOT, that today holds 70% of Ovation’s shares for the benefit of us, the employees. He did so precisely to preserve the company’s culture, values and long-term purpose.

For SMEs intent on reducing carbon emissions, operating sustainably, and remaining true to their ethos, this route is one worth exploring.

What is an Employee Ownership Trust (EOT)?

An EOT is a trust vehicle that holds a controlling stake in a company on behalf of its employees. The seller relinquishes control (at least 51%) but the business remains independent, and the employees become the indirect beneficiaries of its success. An EOT offers something refreshingly different: continuity, fairness, and purpose. It is a smart and fairer way of preserving your achievement, releasing value without employees having to raise finance.

The advantages

1. Your legacy lives on

Selling to a faceless buyer can feel a disappointing end to the entrepreneurial story. With an EOT, you know exactly who’s inheriting the family silver, namely the people who helped you polish it in the first place. Employee ownership can maintain the culture, ethos and values of the business. With proper preparation, the business can continue in the same spirit, only now with shared stewardship.

2. Your team becomes the biggest asset

When people feel they truly own part of what they build, energy changes. Engagement rises, retention improves, and everyone’s more invested in the long-term. At Ovation, we’ve seen first-hand how ownership turns a job into a mission.

3. A smoother handover

No culture shocks, no mystery buyers, no “Day 1 Reorg” emails. Instead, a steady, well-planned transition is what will keep clients calm and employees confident. You get to leave knowing the ship is steady and still sailing true.

4. Financially fair (and sometimes tax-friendly)

As part of the process of selling to an EOT, the shares are valued by an independent body, usually a suitably qualified accountant. The shares are then sold for that value, or less, if the owner so chooses. Payment for the shares can come from existing cash within the business, and future profit.

Things to prepare for

1. You’ll need to truly let go

The EOT model only works if you actually hand over the reins. No hovering in the passenger seat pretending not to touch the wheel. That can be tough (your business has probably been your life’s work) but when you see your team taking the reins and thriving, it can be one of the most rewarding leadership moments you’ll ever have (given proper preparation).

2. Plan the funding carefully

The trust typically buys the shares over time, funded by future company profits. That means good cash-flow planning are crucial for both the business and your personal finances. You might ask yourself: “How much do I need to sell the business for?”. Not how much is it worth, but how much do you need to give you the money for the life you want. That’s where Ovation can help.

3. Culture shift takes time

Don’t expect everyone to wake up the day after the sale and start acting like mini owners. Ownership is a mindset, not a memo. You’ve got to nurture it. You’ll need to invest in communication, governance, and helping employees understand what ownership really means. Do the transition before the transaction.

4. Governance matters

The EOT introduces a new structure: trustees, information flow, and clear accountability. Get this right early to avoid confusion or apathy later.

In short, start this journey well ahead of your ideal exit time.

Our employee ownership story at Ovation Finance

Back in 2018, Ovation Finance joined the employee-ownership movement. Today, the trust is governed by three trustees (an independent trustee, our compliance director, and an employee representative), making sure we stay true to our ‘flag’, our purpose and values.

The result is a thriving, increasingly sustainable business that kept its independence, strengthened its culture, and stayed true to its people. Clients get the same level and style of service that they’ve always valued, and the team knows their hard work genuinely matters. In short, we didn’t sell out. We bought in to something better together.

For businesses with a sustainability mission, this is a powerful model: you retain credibility, culture and client-trust while embedding ownership across the team.

So, what next if you’re tempted by the idea of selling without selling out?

Before you hand your business over to the highest bidder, have a coffee with someone who’s been through it. At Ovation, we combine financial planning with real-world coaching to help you plan your future and your business’s.

Selling your business doesn’t have to mean selling your soul. Sometimes, it just means sharing it.

Get in touch at enquiries@ovationfinance.co.uk or call 0117 942 4333. If you’d like to explore how to build a truly eternal business, check out The Eternal Business Consultancy.

 

This spotlight on article is part of a collection of resources developed for our Climate Action Programme which supports organisations of all sizes and sectors to reduce their carbon emissions and prepare for the impacts of a changing climate.

Find out more about the Climate Action Programme

 

 

Disclaimer

This article is for information only and does not constitute advice.

Ovation Finance Ltd is authorised and regulated by the Financial Conduct Authority. You can find Ovation Finance Ltd on the FCA register by clicking here. Reference number: 190914. Registered in England & Wales. Company number: 3830502. Registered Office: Ovation Finance Ltd, Queen Square House, 18-21 Queen Square, Bristol, United Kingdom, BS1 4NH.

The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren’t able to resolve themselves. To contact the Financial Ombudsman Service please visit www.financial-ombudsman.org.uk. Please note, the Financial Conduct Authority does not regulate tax advice, cashflow planning or trusts.