Employee ownership support

What is an employee-owned company?

An employee-owned business is one in which the employees, rather than external shareholders, hold a significant stake (majority of shares) in the company.

This business model has been shown to better engage, reward and attract staff.

Employee ownership is also a succession planning option. It allows you to exit your business at your own pace, safeguard jobs and arrive a a fair price for your company. Selling to your employees can also offer tax advantages.

How does employee ownership work?

There is no one model of employee ownership. The structure can be shaped to fit with your company and your aspirations as an owner.

Employees can either own individual shares directly, or hold shares indirectly through an Employee Ownership Trust (EOT). Many companies combine trust and share ownership in what's often called the hybrid model.

The most common process, however, is to form an EOT, which purchases the shares from the owner. The Trust holds the shares on behalf of the employees.

The management team still run the company, with the board of directors responsible for the success of the business.

Subject to certain conditions, the EOT also brings some tax advantages to both the owner as seller, and the employees.

Benefits of selling to an Employee Ownership Trust (EOT)

Employee ownership gives workers a meaningful stake in their organisation, together with a genuine say in how it is run.  It roots business in Scotland, drives performance and boosts economic wellbeing. 

You, your business and employees will all benefit. Selling to an EOT allows you to: 

• Get a fair market value for your business
• Preserve your company location and culture
• Avoid the hassle of a commercial sale
• Keep existing management
• Safeguard a family legacy
• Exit gradually

If you need advice, you can watch our video guide on selling your business to an EOT.

How Co-operative Development Scotland can help

Co-operative Development Scotland (CDS), part of Scottish Enterprise, can help you with the transition.

To help you decide if employee ownership is the right exit strategy for you, we can provide up to three days funded support with an experienced adviser. Together, you can review all the business succession options available to you.

If employee ownership is identified as a possible exit solution for you, we'll do an employee ownership feasibility study for your business. The report will examine potential ownership structures, as well as options for governance, management, funding and how a transition would occur. Our specialist advisors can also advise around implementation.

Employee ownership masterclasses

Have you considered what will happen to your business when you’re ready to take a step back?  

Co-operative Development Scotland runs a programme of masterclasses throughout the year to give valuable insight into the benefits of employee ownership as an exit strategy for owners.  

Join one of our sessions to hear from specialist advisers and business owners who have first-hand experience of selling to their employees. You’ll have the opportunity to learn about the various succession planning options available and explore whether employee ownership is a good fit. 

The events are free to attend but registration is required.  

Get details of upcoming sessions