Employee ownership trust or trade sale?
Price, certainty, tax, confidentiality and what happens to your staff. Where the two genuinely differ, and what makes each one the right answer.
Two genuinely different exits, and the right answer depends on what you want out of it rather than which is objectively better. This page sets out where they differ so you can work out which fits.
The short comparison
| EOT | Trade sale | |
|---|---|---|
| Price | Independent market value, no strategic premium | Can exceed market value where there is a strategic reason |
| When you get paid | Mostly over five to seven years | Mostly on completion |
| Certainty of payment | Depends on future trading, usually unsecured | High, subject to any earn out |
| Capital gains tax | Around 12 per cent, disposals from 26 November 2025 | 18 per cent with BADR from 6 April 2026, or 24 per cent |
| Ongoing exposure | Relief at risk for four tax years after disposal | Warranties, indemnities, any earn out period |
| What happens to staff | Protected by design | Depends entirely on the buyer |
| Confidentiality | Internal process, no competitors involved | Your information goes to buyers, some of them rivals |
| Speed | Often faster, no buyer to find | Six to twelve months, sometimes longer |
Price
A trade buyer can pay more than the business is worth on its own numbers, because they are buying something you cannot see on your profit and loss: your customers, your accreditations, your people, or simply the removal of a competitor. That premium is real and an EOT cannot replicate it.
An EOT pays market value, and since 30 October 2024 the trustees have a statutory duty to take reasonable steps to ensure it does not exceed market value. There is no premium available, by design.
So on headline price, a trade sale usually wins where a strategic buyer exists. Where one does not, the gap narrows considerably.
Certainty
This is the real difference and it is larger than the tax one.
A trade sale typically pays most of the money on completion. You have it. An EOT pays you out of profits the business has not yet earned, over several years, usually without security, while you no longer control the decisions that generate those profits.
A lower certain number can be worth more than a higher uncertain one, and only you can price that.
When the money actually reaches you
Cumulative proceeds on a £5m deal, illustrative.
Tax
The EOT advantage has narrowed. For disposals from 26 November 2025 the effective capital gains rate is around 12 per cent, against 18 per cent on the first million of lifetime gains under Business Asset Disposal Relief from 6 April 2026, or 24 per cent without it.
A few percentage points, with no lifetime cap, set against four tax years of clawback exposure you do not carry on a trade sale. Detail on the EOT overview.
What happens to your people
The reason most owners raise an EOT in the first place.
A trade buyer may keep everyone, and many do. They may also consolidate functions, move the operation, or run the integration plan that made the acquisition make sense to them. You will have no say once the money has cleared, whatever was said during the process.
An EOT removes that question. The structure exists to benefit all employees and it cannot be quietly unwound.
If that matters more to you than the last ten per cent of price, it is a legitimate basis for choosing, and it is the most common honest reason owners go this way.
Confidentiality
A trade sale means showing your numbers, your customers and your margins to people who may be competitors and may not buy. Handled carefully it is manageable. It is never nothing.
An EOT is internal. Nobody outside sees anything.
Your involvement afterwards
On a trade sale you may be asked to stay for a handover, or longer where there is an earn out. You are then an employee in a business you used to own, which some owners find harder than they expected.
On an EOT you can stay involved, and many sellers do. What you cannot do is retain control: since 30 October 2024 former owners and connected people cannot control the trust and cannot make up half or more of the trustees.
What makes each the right answer
A trade sale tends to be right when
- There is a buyer with a strategic reason to pay above market value
- You need the money, or most of it, on completion
- The business cannot generate enough spare cash to fund its own purchase
- Profits are cyclical or unpredictable
- There is no management team capable of running it without you
An EOT tends to be right when
- Cash generation is steady and predictable
- There is a management team already doing the job
- You can wait several years for the bulk of the money
- What happens to your staff genuinely matters to you
- There is no obvious trade buyer, or the ones that exist are competitors you would rather not open your books to
How to decide
Run both. Find out what a trade buyer would actually pay before assuming an EOT is the answer, and model whether the business can fund an EOT before assuming a trade sale is. Both questions can be answered early and neither commits you.
Our 30 day market test answers the first without going to full market. The valuation calculator gets you a range for the second in a few minutes.
Answered.
Which one gets me more money?
Usually a trade sale, where a strategic buyer exists who will pay above market value. An EOT pays market value and cannot pay a premium. Where no strategic buyer exists the gap narrows a lot, and the tax difference closes some of what remains.
Can I test the market and still do an EOT?
Yes, and it is often the sensible order. Finding out what a trade buyer would pay gives you a real number to compare against, rather than choosing an EOT on the assumption that nobody would have paid more.
Is an EOT faster than a trade sale?
Often, because there is no buyer to find, no competitive process and no external diligence to survive. The trust, governance and clearances still take time, but you are not waiting on someone else’s investment committee.
Do my employees have a say in which route I choose?
Legally no, it is your company. In practice an EOT depends on the management team being willing and able to run the business afterwards, so their view matters commercially even though it does not bind you.
What would a trade buyer actually pay?
Choosing an EOT without knowing that number is choosing blind. A 30 day market test tells you, with your money back if it does not.
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