Huxley UK EOT Sale, Golf Surfaces and Sports Turf (2020)
How RVE advised on the golf surfaces and sports turf EOT sale of Huxley UK completed in 2020, with the corporate finance, tax, legal and trustee work delivered as one engagement.
Deal Facts
“RVE Corporate Finance advised us on our transition to employee ownership. The team were very professional, guiding us through the financial, tax and legal aspects of the transaction and helped us set up the trust structure - which is working very well in our first year as an employee owned business. It is clear that RVE really understands how to successfully guide a company through an EOT transaction.”
The story of the deal
The British company leading the way around the world with premier quality all-weather golf surfaces including putting greens, golf mats and golf nets.
RVE helped the Hampshire based team make the switch to EOT in August 2020. — Paul Huxley, Director, Huxley UK Ltd.
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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.