The Yorkshire estate agency where all staff are owners

EOTs can be set up by existing owners, such as Nicola, as part of a succession plan or exit strategy.

The profits from the business are then used to pay the owner of the firm out over a set period of time, meanwhile staff are shareholders for as long as they work for the EOT, which means they get a share of the profits once the owner has been paid out.

If an employee leaves the firm they relinquish their share and their replacement becomes a shareholder.

Nicola who is staying on as MD and who will effectively be a member of staff, says: “I knew that at some point I would have to sell the business and retire but I didn’t want to sell to a large estate agency chain, which would mean losing what Spencers is all about while possibly putting staff at risk.

“My parents sold their estate agency in 2011 to a big company and it was very stressful indeed.

“I heard about Employee Owned Trusts and decided to look into it. It became obvious that it was a perfect solution for me and my team. They have so many benefits, including being stress free. You just need an accountant and legal firm to help you set one up.

“Once I have been paid out from the profits of the business then the profits go to the staff and they are allowed to have up to £3,600 a year tax free.

“It is a great incentive for employees to work hard and to stay for longer, which is good because retention rates in estate agencies are generally quite low.”

She adds: “In traditional estate agency you can become a director or partner but that costs and it means only people with money can afford to do it. By having an EOT every single member of staff benefits from the deal.”

Nicola used Scott Sanderson of Hawsons accountants and Paul Trudgill of Knights legal and professional services in Sheffield to set up the trust and give her advice.

She adds: “When you own and run a company as a sole director, there must be a clever exit strategy in mind, even if it is for ten years down the road, as ultimately you are solely responsible for all of the employees, their families, and their mortgages, so I don’t think you can’t just decide to lock the door one day and walk away.”

“The truth about our team at Spencer is that all the people here care as much as I do, and this way they can really be part of the future of the company and can reap any rewards for their loyalty and commitment.

“For our clients, this means that absolutely nothing changes, there won’t be a new fat cat company taking over and making changes or increasing fees and prices.

"We will continue in exactly the same way as we have always done, the only difference being that when a sales caller asks to speak to the owner of the company, then whoever answers the phone can say they already are.

“The success of the company means more than ever to me and more than ever to the team here so we are expecting an even brighter future.”

Scott Sanderson at Hawsons accountants says: “EOTs have existed for some time but there have been changes that made them a more favourable option for business owners.

“At the moment if you sell your company via an EOT it is effectively tax free.”

Hawsons is seeing more sale transitions done this way and there have been more recently during what is usually a quieter time of year.

This is thought to be due to concerns that the new government could put an end to Employee Owned Trusts and their tax efficient benefits.

“While some owners choosing to leave immediately and others stay on as an employee. Nicola will be paid out over a period of around ten years or less and when she eventually leaves the business, there will be a new MD appointed,” says Scott.

He adds that the risk is that an EOT business underperforms then the previous owner will see their repayment fall and if it fails Nicola will lose her money, though he stresses that is also an incentive to keep doing well.

Useful contacts: Spencers Estate Agents www.spencersestatagents.co.uk; Hawsons, www.hawsons.co.uk; Knights, www.knightsplc.com