In Employee Ownership we Trust: Why UK agencies turned to EOTs

From W Communications in London to Golley Slater in Cardiff, a growing number of independent agencies have embraced Employee Ownership Trusts (EOTs)—passing ownership to a trust established for employees rather than selling to a network, private equity investor or another trade buyer.

For founders, the attraction is obvious.

An EOT can provide liquidity and succession while allowing the business to remain independent, protect its culture and give employees a meaningful stake in its future.

So why are more agencies making the move?

Why agencies are embracing EOTs

For many agency founders, the traditional exit routes aren’t necessarily attractive.

A trade sale can deliver significant upfront value, but may eventually mean integration into a much larger organisation, changes to management and culture, and potentially the disappearance of the independent brand the founder spent decades building.

Private equity can provide liquidity while preserving some ownership, but usually comes with a clear growth and subsequent exit agenda.

A management buyout can maintain independence, but the management team may not have the capital—or appetite—to finance it.

An EOT provides another route.

A trust acquires a controlling interest in the company for the benefit of employees. The purchase can be financed through available cash, external borrowing and, commonly, deferred consideration funded from future profits.

For qualifying transactions, founders have historically been able to sell to an EOT at 0% Capital Gains Tax.*

That combination of liquidity, independence, tax efficiency and legacy can be powerful.

What employees get

The attraction isn’t limited to the selling shareholders.

Employees gain an indirect economic interest in the business they are helping to build and, where the relevant conditions are met, EOT-owned companies can pay qualifying employees income-tax-free bonuses of up to £3,600 per year.

More importantly, employee ownership can create a different relationship between the team and the company.

People are no longer simply working for the founders. They are participating in a business being held for their collective benefit.

Done properly, that can support retention, engagement and succession while creating a positive story for employees and clients alike.

But the words “done properly” matter.

An EOT isn’t employee ownership simply because the legal documents say so. Governance, communication and genuine employee participation determine whether ownership translates into a different culture.

The movement builds

The agency sector has provided particularly fertile ground for EOTs.

Purplefish in Bristol transitioned to employee ownership. The Union in Edinburgh brought more than 80 employees into its EOT structure. RPM in London joined the movement, while businesses including Brandnation, Wonderful Creative and Clean Digital have also adopted employee ownership.

And these sit alongside larger and more established examples across the sector.

That makes sense.

Agencies are often people-led, relatively capital-light businesses. Their value sits in client relationships, reputation, intellectual property and talent rather than factories or physical assets.

They are also frequently founder-led for long periods, creating a difficult succession question when those founders eventually want to step away.

Employee ownership can provide an answer without requiring the business to become part of a larger group.

EOTs are therefore becoming a credible fourth exit route alongside trade, private equity and management buyouts.

But it’s not all upside

EOTs aren’t a magic bullet.

One of the biggest differences between an EOT and a conventional company sale is where the money comes from.

In a trade or private equity transaction, the buyer typically arrives with capital.

In many EOT transactions, a significant proportion of the founder’s consideration is effectively funded by the future cash generation of the business being sold.

That matters.

A headline valuation of £10m isn’t necessarily equivalent to receiving £10m at completion.

If a substantial amount is deferred and needs to be paid from future profits over several years, the founder remains economically exposed to the performance of the business long after ownership has transferred.

If the company performs strongly, that can work extremely well.

If trading deteriorates, cash is needed elsewhere or management struggles after the founder steps back, repayment can take longer than expected.

Headline value and realised value are not the same thing.

Valuation, growth and the competing demands on cash

There are other trade-offs.

An EOT valuation may be lower than the premium available from a motivated strategic buyer. The company also needs sufficient cash generation to fund deferred consideration while continuing to invest in growth.

That can create a natural tension.

Cash can repay the founders. It can reward employees. Or it can be reinvested into people, technology, acquisitions and growth.

Successful EOT structures need to balance all three.

Governance also needs to work. Trustees, management, employees and former shareholders can have different priorities, particularly while deferred consideration remains outstanding.

And EOTs may be less suitable for rapidly scaling businesses that expect to need substantial external equity capital to execute their strategy.

An EOT does not remove commercial risk.

It effectively asks the business to finance its own succession.

So when does an EOT make sense?

For a profitable, cash-generative agency with a capable management team, strong client relationships and a founder who genuinely wants to preserve independence, employee ownership can be highly attractive.

It can be particularly relevant where there isn’t an obvious strategic buyer willing to pay a meaningful premium—or where the founder simply doesn’t want to sell to one.

But founders should compare the alternatives properly.

What would a strategic buyer pay? How much would be available upfront? What would the founder receive after tax? What proportion of an EOT consideration would be deferred? How long would repayment realistically take? What happens if EBITDA falls 20%? And what does the founder actually want their involvement to look like five years from now?

The highest headline valuation isn’t necessarily the best outcome.

Neither is the lowest tax bill.

The right exit structure is the one that best balances value, certainty, timing, control and legacy.

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2026 update: When this article was originally published, qualifying disposals to an EOT could benefit from 100% Capital Gains Tax relief, effectively allowing qualifying founders to sell at a 0% CGT rate. The rules changed for disposals made on or after 26 November 2025. EOT relief is now available on 50% of the qualifying gain, with the remaining 50% subject to CGT. This reduces—but does not remove—the tax advantage and makes it even more important to compare an EOT with a trade sale or other exit route on net proceeds, timing, risk and the level of deferred consideration.