EOT Deals on Wheels

Over the last six months RM2 have completed two confidential Employee Ownership Trust (“EOT”) transactions in the motor vehicle retailing sector.

In a sector keen on “new models” these clients were drawn to the relatively new M&A model of EOT’s (established in legislation in 2004 and now more than 1,000 in number in the UK) as an exit route and an elegant succession planning solution which is currently gaining significant momentum as deal volumes are rapidly growing.

A common theme in both of the transactions was that each client had benefitted from a very strong second-hand vehicle market post pandemic which has led to significant profits and build up of surplus cash. An EOT transaction represents a relatively unique opportunity to include surplus cash as part of the consideration which can be extracted tax free given that 100% capital gains tax relief is afforded to all vendors in the year that more than 50% of a Company’s shares are sold to an EOT.

This then represented a “win win” solution allowing the owner managers to put control of the Company in their colleagues hands, ensuring long term survival of the ethos and culture which they had worked hard to instill, but also doing so in a very tax efficient manner.

If you know of Companies who have built up surplus assets in their balance sheet please do let us know; we’d love to “kick the tyres” and explore whether an EOT solution might be an appropriate way forward for them.

Get in touch by emailing enquiries@rm2.co.uk and we can arrange for a convenient time to have a call.