Moore Kingston Smith advises recruitment marketing client on its sale to an Employee Ownership Trust (EOT)

Moore Kingston Smith is delighted to have advised a recruitment marketing business on its transformation into an employee-owned company, through its sale to an Employee Ownership Trust (EOT).

The client is a highly successful recruitment marketing agency that works with employers to enhance talent attraction and employee communications. The business uses tracking and data to measure results, analyse effectiveness and build high performing marketing solutions for its clients. It has worked with a range of well-known employers.

The company was founded in 2013. As the business grew it attracted a loyal pool of talented employees, and the founder was keen to consider how to put in place longer-term plans to secure the future of the business. She was interested in realising the value of her ownership of the business, but was most keen to ensure the company’s culture and independence were preserved and her colleagues and employees could have a share in its future. The company is fundamentally a people business, and the recruitment and retention of talent is key to its success.

The founder was introduced to the corporate finance and tax teams at Moore Kingston Smith, who advised that a sale to an EOT could meet all of the business’ objectives. It would allow the founder to sell her stake in the business, but rather than sell to a third-party acquirer, who might have wanted to take the business in a different direction, a trust would be established to hold the shares for the benefit of all current and future employees.

The founder would no longer own the business and going forward she would share management responsibilities with members of staff appointed to the board by a newly-formed Employee Council. As an employee-owned company it would be governed and operated in the employees’ best interests and would reward employees for the development and growth of the business.

Having agreed that sale to an EOT was the company’s best option, Moore Kingston Smith assembled a team of advisers to help it make the transition, introducing various parts of the firm at key points to keep the process moving. Our corporate finance team advised the company on valuation and financial issues, while our tax team advised on tax clearances and how to structure the transaction effectively in order to benefit from the various tax advantages that sale to an EOT confer. Our legal services team prepared all the legal documentation governing the sale and establishing the EOT, including the sale & purchase agreement, trust deed and new articles, while our HR team drew up new director service agreements and incentive scheme rules.

The sale to the EOT has been welcomed by the company’s staff who see it as a positive reflection on their contribution to the business and a great incentive to help the company grow still further. The founder believed being able to tell potential new hires that the business is employee-owned will be a significant factor in its future success.

Reflecting on her experience of working with Moore Kingston Smith, the founder said: “From my first conversation with Moore Kingston Smith it was immediately clear that I was surrounded by impressive professionals. Each member of the assembled team played an important part, and quickly became trusted advisors in the truest sense. It has been a privilege to work with them on this important evolution for my business and with the successful establishment of the EOT we have undoubtedly benefited from their combined expertise.”