A straightforward EOT transaction takes three to six months from decision to completion. Here is what happens when — and, more usefully, what tends to cause the delays.
Before the clock starts: thinking (weeks to years)
The longest phase has no adviser in it. Owners typically consider employee ownership for a year or more before doing anything — reading, comparing options, watching a peer do it. This time is well spent. The single best accelerator of the later stages is an owner who has already answered the personal questions: what they want, what they need, and when they intend to step back.
Month 1: feasibility and decision
The first formal stage tests whether the transaction works: an indicative valuation, an affordability model built on cautious forecasts, a review of the shareholder base and any share schemes, and an honest conversation about leadership succession. It ends with a decision — proceed, pause, or choose another route. Done properly, this stage is cheap relative to what it prevents.
Months 2–3: structure and terms
The commercial design: the percentage sold, the price, the day-one payment, the deferred consideration schedule and any external funding; the composition of the trustee board; and the founder's continuing role, written down. Heads of terms capture all of this before the drafting starts — ambiguity left here resurfaces later at legal rates.
In parallel, the application goes to HMRC for clearance: confirmation, in advance, of the tax treatment of the sale and the funding arrangements. HMRC turnaround is typically four to eight weeks, and the rest of the work continues while you wait.
Months 3–5: documents and diligence
The legal phase: the trust deed, the share purchase agreement, revised Articles where needed, board and shareholder approvals, and funding documents if a lender is involved. Reserved legal activities are handled by regulated law firms — in our transactions, working alongside us, including Spencer West LLP. Diligence in an EOT is proportionate rather than adversarial: the buyer already works there.
Completion day
Signatures, funds flow, and the trust becomes the controlling shareholder. It is worth planning this day for the people as much as the paperwork — the announcement to employees matters more than the completion dinner. (See The first 100 days.)
Years 1–7: the payment period
The vendor is paid down out of profits; governance finds its rhythm; profit share typically begins. The end of deferred consideration is a genuine milestone — many businesses mark it, sensibly, because it is the moment the employees' ownership stops sharing its cash flow with the past.
What actually causes delay
- Unresolved shareholders. A minority holder discovered late, or option promises never documented. Surface these in month one.
- Price expectations meeting the affordability model. The most common pause, and better a pause than a bad structure.
- Leadership gaps. If the succession plan is aspirational, the timeline stretches until it isn't.
- Accounting untidiness. Director loans, informal intercompany balances, surplus assets in the trading company — all fixable, all faster when found early.
- Advisers learning on the job. An EOT is unusual work for a generalist. Specialists are not faster because they hurry; they are faster because they have seen the problem before.
Timescales here are typical, not promised — a clean five-person company can complete faster; a group restructure first can take longer. For where your business would sit, ask us.