B-Loony EOT Sale, Promotional Materials Manufacturing (2023)
How RVE advised on the promotional materials manufacturing EOT sale of B-Loony completed in 2023, with the corporate finance, tax, legal and trustee work delivered as one engagement.
Deal Facts
“Becoming an Employee Ownership Trust is a natural next step for the business. B-Loony has been creating lots of fun experiences for customers’ events, supplying printed balloons, flags, bunting and top-quality promotional products for over four decades. Our employees have been the backbone of the company for 45 years, many of you long serving, and we believe that giving you a stake in the business will only strengthen our commitment to excellence. By setting up an Employee Ownership Trust now, we maintain our unique B-Loony brand identity, protect the jobs of our employees and give them an incentive in the future growth of the business. We're really excited about this new opportunity for B-Loony and the benefits it will bring for you our employees, for our customers, and for the local community.”
The story of the deal
RVE advised B-Loony Ltd, a Chesham-based manufacturer of specialist marketing materials on its sale to EOT in early 2023. Their 35 employees will have a stake in success of the business, a say in its direction and an opportunity to share in its future profits. Key to their decision in becoming EOT owned was a deep commitment to safeguarding the culture and values of B-Loony for the benefit of all.
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Case Study - common questions.
Yes. Most founders / controlling shareholders stay on as director (and often as chair or CEO) for between 1-5 years post-completion, then transition to a part-time non-executive or consultancy role. You agree your role and time commitment with the trustee board; there is no requirement to exit operationally. Many founders find the post-EOT phase the most rewarding part of their career, with a clear financial exit having been arranged and a plan for management succession in place.
EOA research consistently shows employee-owned businesses outperform privately-held peers on productivity, profitability and employee engagement. RVE founders consistently report that their businesses perform ahead of plan post-completion, with vendor loans paid down ahead of schedule. The cultural alignment and engagement boost typically delivers measurable productivity gains within the first 12 to 24 months of EO. Growth depends on the business; the EOT structure does not constrain it.
The deferred consideration due to the vendors is repayable from future company profits, typically over a 5-8 year period. So if the business genuinely struggles, the term of the loan note may need to be extended by 2-3 years. In extreme circumstances, some of the vendor loan may need to be written off (eg if the business were to become insolvent).
The vendors do therefore retain business risk relating to the ultimate payment of the sale consideration under the EOT model.
If the business outperforms the original projections however, the vendor loan can be accelerated, and some vendors have been paid out in full within 4 years.
We are happy to talk over Teams or meet to discuss your exit planning.
We can normally assess whether an EOT transaction will be viable and the likely valuation range at our first meeting.
For accountants, lawyers, and wealth managers
Are you working with a client who should be considering a sale of their business to an EOT? We will complement the work you do to deliver an optimal outcome for your client.