Engage EOT Sale, Logistics and IT Consultancy (2022)
How RVE advised on the logistics and it consultancy EOT sale of Engage completed in 2022, with the corporate finance, tax, legal and trustee work delivered as one engagement.
Deal Facts
“We are delighted to have worked with RVE and Womble Bond Dickinson to make the Employee Ownership Trust a reality. We couldn’t have done it without the advice, support and technical expertise of our advisory team.”
The story of the deal
RVE Corporate Finance (“RVE”) has advised Engage Technical Solutions Limited (“ETSL”), a fast growing logistics and IT consultancy for the defence sector based in Wiltshire, on its move to employee ownership.
On 14 March 2022 an Employee Ownership Trust (“EOT”) acquired 90% of ETSL from the founder, David Gagen and other family shareholders.
ETSL represents the latest of 16 companies which RVE has helped to move into employee ownership in the last two years, using the EOT model. Womble Bond Dickinson worked alongside RVE providing legal advice on the transaction.
Mark Butler at RVE commented:
“We are delighted to have advised Engage Technical Solutions on the transition to employee ownership. The company has performed exceptionally well and has a great future as an employee owned business.”
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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.