Letting go as a leader when selling to an EOT

Our EO consultant Jeremy Gadd has worked with more than 100 founder/owners

What’s your succession plan for your business?

Today's challenging times have brought this issue into focus for many company owners, crystallising their desire to leave or step aside from the top while remaining on board.

It can be an exciting time, especially if your exit strategy includes selling to an Employee Ownership Trust (EOT). But it can also have a profound impact on you individually as a leader as you prepare to ‘let go’.

‘Transitioning your business to employee ownership is like any major change project,' says our employee ownership consultant Jeremy Gadd.

'If you want it to be successful, you have to prepare for the impact that change will have, not just on your organisation but on you as an individual too.’

At Telos Partners, our team has spent time listening to more than 150 founders/owners – including those we helped interview for the eoa’s landmark ‘The Road to Succession’ report.

That’s why we understand that, when it comes to employee ownership, no leader can know how they’ll feel until the transition is done.

Securing your legacy when selling to an EOT

So how can you prepare yourself and your business for this change?

Founder/owners generally choose employee ownership for a mix of reasons.

Commercially, selling to an EOT can be the most tax-efficient option when succession planning – despite recent HMRC changes to CGT relief. Yet legacy and loyalty can also influence this important choice.

‘Legacy, because the founder/owner wants to secure their company’s long-term sustainability and values,’ Jeremy says.

‘And loyalty, because they don’t want to ‘sell out’ their team or worry that a trade sale will see good people lose their jobs and those skills disappear from their community forever.’

Employee-owned Aardman Animations, Riverford Organic Farmers, Go Ape and The Entertainer are all good examples of this approach.

The lack of a natural ‘heir’ in a family business can also influence the decision, he explains – or selling to an EOT can be the logical next step in becoming a values-led company.

Preparing yourself for a different future

From left: Jeremy with the previous owners of three EO businesses he has supported – Chris Barrington Brown (Cunning Running), Neal Criscuolo (NC2) and David Sproxton (Aardman)

Whatever the reasons, it’s a step into the unknown that creates an impact. And like marriage, divorce or moving, this can take time to show.

At Telos Partners, we’ve seen first-hand that how founders/owners prepare themselves psychologically to stay or go will significantly affect the success of the initial employee ownership transaction.

‘For leaders, mindset matters as much as the legal and financial process,’ agrees Jeremy, whose interest in this area runs particularly deep.

In fact, he wrote his Henley Business School MSc dissertation on the impact on leaders when their business becomes employee-owned.

‘Each client has their own ‘story’ and – in my 12 years of supporting them through the succession and exit process – I’ve yet to meet a founder/owner without a passion for the company they’ve built,’ he says.

Defining your legacy in a way that is accessible and relevant for your successors can be a useful first step in the process of moving on. Find out how to do this here.

Shaping your new identity and purpose

'Being a founder/owner isn't just a title: it's an identity. Adjusting to that loss and finding... a new purpose can be a shock, but also an opportunity for personal growth'

So what’s the greatest challenge for leaders planning a transition to employee ownership?

‘Being a founder/owner isn’t just a title: it’s an identity,’ Jeremy points out.

‘Adjusting to that loss and finding who they now are and a new purpose can be a shock, but also an opportunity for personal growth.’

This is why our EO team enjoys supporting founder/owners to prepare themselves and their leaders through our focused and practical approach.

Securing knowledgeable support from a specialist adviser who understands employee ownership can be the difference between a successful transition for you and your company and one that takes much longer to bear fruit.

What should you do next?

From left: Joanna Booysen, Jeremy and Coralie Hooper from our EO team

If you're a founder/owner who's selling your business to an EOT, we can help.

Our experienced employee ownership team has supported more than 100 founder/owners and their businesses to prepare for and achieve a successful transition to EO.

We can also help you create the foundations you and your people need to embed, grow and renew your employee ownership in the years to come.

Find out more by visiting our employee ownership page and get in touch with us here.