Former UK Government independent advisor Graeme Nuttall believes that employee ownership trusts (EOTs) can provide a succession solution for businesses in Ireland.
Nuttall, author of the UK’s landmark study Sharing Success: the Nuttall Review of Employee Ownership, said that the EOT is usually the best and most flexible form of employee ownership for businesses.
In his recent article, An introduction to the Employee Ownership Trust, Nuttall says: “The UK employee ownership sector grew by over 300% from 2014, when the UK started promoting the EOT, to June 2020. Well over 90% of that growth was from companies adopting the EOT ownership model. When these statistics are next updated we will see that the annual growth rate of the UK EO sector has increased even more, all because of the EOT.”
EOTs have been particularly popular in regional and rural parts of Scotland, where they have been embraced by the Scottish Government and have been providing an effective succession solution.
Nuttall says: “The main driver behind the new EOTs now being created each week in the UK is as a business succession solution for private company owners. Any owner considering a move to EO will quickly appreciate the advantages this offers compared to, say, a trade sale. It avoids sharing trade secrets with competitors and gives control over timing.”
By allowing a business owners to sell their company to their employees in a tax-efficient manner, an EOT also secures the jobs of workers and ensures a that company remains in its community, compared to selling to a competitor, which can often result in a business being dismantled or relocated, with accompanying loss of jobs.
Nuttall, a partner at Fieldfisher LLP, believes EOTs can work anywhere and has produced the new article to encourage those interested in employee ownership to look more closely at the EOT.
IPSA continues to engage with the Government on EOTs, seeking the introduction of a mdoel similar to that in the UK.