When Baxendale Employee Ownership began advising businesses on Employee Ownership twenty five years ago, Employee Ownership Trusts (EOTs) did not exist (these were not introduced until 2014), and there were few examples to be found beyond John Lewis, Arup and ourselves, of businesses operating an employee owned structure in which all employees were owners, with a trust for the benefit of employees at its heart.

Fast forward to 2026 and the growth of Employee Ownership (EO) has been outstanding, mainly driven by the introduction of EOTs, which streamlined the implementation of trust based EO structures and came with attractive tax benefits for both sellers and employees.

Rapid Growth in Employee Ownership – And in EOT Advisers

Over this time the number of advisers on EO structures has naturally grown too, as demand for implementation of EOTs has grown: from a small group of specialist employee ownership advisers who all knew (and know) each other well, to a much broader group, from many different backgrounds.

This growth of both businesses transitioning to EO and advisers in the space has been fantastic for the growth of the sector as a whole; but it also comes with risk. As more and more advisers move into the space, the variability in terms of both technical knowledge and understanding of employee ownership becomes more varied.

The Rising Risk of Poorly Implemented EOTs

An unexpected side-effect of this growth of EO, for our team at least, has been undertaking work “fixing” EOTs that have been badly implemented by others. Whether speaking with sellers who have been badly advised, or to the next generation of leadership / management of a company where shares were sold to an EOT with little or no instructions / engagement with the leadership team or employees on how their Employee Ownership should work in practice; it has become clear that the variability in terms of quality of advice has never been greater. Although there may be cost savings to be made on transition fees, the cost of putting things right retrospectively is often higher.

EOT Legislation Changes Since 2024: Why Good Advice Matters More Than Ever

In addition to this, there have been significant changes to the EOT legislation since late 2024.  The tax changes in the November 2025 budget have grabbed headlines, but equally important are the legislative changes that took place the year before. These changes gave HMRC a longer period in which to claw back the seller Capital Gains Tax relief if certain conditions were breached, whilst also tightening the rules around Trust Board composition and business valuation. There is now significantly more scope for oversight and challenge, meaning poor advice has the potential to be even more costly now than it was before the October 2024.

A Successful Transition to Employee Ownership Is More Than a Share Sale

Beyond the legal and tax implications, if businesses want to benefit from the long term advantages of employee ownership, they need to think about their transition to employee ownership holistically and not just as a sale of shares.

A successful EO transition certainly needs a well-structured deal for the sale of shares to the trust, that works for both the Sellers and the business. But beyond this, it also needs to introduce a good governance structure that is fit for the future; it needs to be well communicated to employees and senior team; and it needs to provide a platform for a process of leadership succession, which often takes place over time.

Why Specialist Employee Ownership Advice Is Essential

Specialist advice that is not only legal and technical, but also practical, is essential if businesses are going to thrive in employee ownership.  Without good advice and guidance, EO businesses may ultimately arrive at the same place; but it will be a longer more complicated journey, which can often involve a painful unpicking of the mistakes of the past.

When it comes to choosing an adviser, we would love everyone who is exploring employee ownership to have a conversation with us at Baxendale Employee Ownership. But whichever adviser businesses and their owners are speaking with, we would urge them to consider the following questions:

• How many businesses has the adviser transitioned into employee ownership? Are they a specialist, or have they just done one or two alongside more conventional sales.  If it’s the latter, can you be sure they are properly across the most recent changes to legislation and guidance?
• Will your transition be personal to you and your business? Are there certain elements of culture / ethos / values which you would want the transition to protect, alongside protecting the independence of the business? There are ways to build these elements into bespoke EO structures which can enable the structure to feel more ‘yours’ and drive better employee engagement.
• Does your adviser have knowledge of different types of employee owned structures and ways EOTs can be implemented? Employee owned structures can be very flexible, but some of the approaches we have seen in the past can be very rigid / restrictive. Do the advisers have expert in-house legal advisers or will they be subcontracting legal work and / or using model documents that do not consider your specific circumstances?
• How will the business be supported into the practical realities of employee ownership? Will there be clear updates to governance structures as part of the transition?  Will there be training and information for leadership, trustee directors and employees?
• How will the business be supported post transition? Will your adviser still be available to answer your ad hoc questions once the project is over?  Do they have the practical knowledge of how an employee owned company works to help you with any challenges ahead?

A great place to start looking for good advice is the Employee Ownership Association’s Specialist Adviser group, of which Baxendale Employee Ownership are founding members, or why not contact us directly for a free initial chat?