Creative Group

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Castle Corporate Finance has assisted the founders of a strategic marketing and advertising agency in entrusting the future prospects of the group to its employees, under an Employee Ownership Trust (“EOT”) structure.

As founders and shareholders, our clients have been considering their succession strategy for some time but were not keen on pursuing the traditional route and selling to a larger trade entity and possibly losing the culture and values that have made them successful to date. Ultimately, a sale of their shares to a trust for the benefit of all their employees provided an ideal solution, enabling them to crystallise the value they have generated to date, whilst ensuring succession and continuation of the business in the hands of their loyal team.

Our clients commented: “We are immensely proud of the business we have built up and it was important to us that we protected that legacy, but at the same time enabled the employees to share in the long term future of the business as our way of saying ‘thank you’ for all their efforts. We engaged Castle to explore our strategic options and as part of the work they introduced us to the concept of the EOT, which really resonated with us. We don’t want to retire fully and sit on our hands just yet, but in this way we can help our team develop and take on much more responsibility for the future of the business, and also participate in their own success.”

“Castle guided us through all the practical steps to get us to where we are today, and introduced BDO (tax) and Ashfords LLP (legal) to help advise us on the technical aspects of this process. We could not have asked for a better team or working partnership, and cannot thank them enough for their time, and the efforts they made to find a solution that worked for all concerned.”

Victoria Ansell, director at Castle, said: “We are delighted to have helped our client take this big step towards securing the future prosperity of the group. An EOT is not a one-size-fits-all solution for succession, but in this case, it offered strong motivation for all concerned. We have experienced increasing demand from potential clients wishing to explore whether or not an EOT can be a viable alternative to the more traditional routes of a trade sale or private equity investment. This deal is testament to the fact that there is another way. We wish everyone all the best for a strong future.”

Castle Corporate Finance

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What is NOT a qualifying trade?
A company can be assumed to undertake a qualifying trade, unless it is involved in a non-qualifying trade. Examples of non-qualifying trades are:
  • dealing in land, shares or financial instruments;
  • providing finance or insurance;
  • leasing or receiving royalties or licence fees;
  • legal or accountancy services;
  • certain property-based trades such as property development, farming, market gardening, hotel management and operating or managing nursing homes or residential care homes;
  • the generation or export of electricity or the generation of heat or any other form of energy; producing gas or fuel.
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