Advantages of employee ownership trusts and how they work
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Thank you to Robert Welke, CEPA from ProAct Business Solutions Inc. for this guest post!
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Most businesses create income for their owners, but most do not create wealth. Owners invest years and money into their businesses to grow them, yet less than 10% of businesses sell when an owner decides to retire. Exit Planning is a process designed to help small and medium sized, privately owned businesses create and accelerate salable value by optimizing operations, developing, and executing on strategic initiatives that drive current and future value. Owners who are able to sell their businesses have one thing in common – they have great business that have sellable value, and that is not the same as being profitable. If you want to sell your business, it must have sellable value and be sellable.
Employee Ownership Trusts (EOTs) have recently burst into the business succession scene in Canada and are consuming a lot of owner’s thoughts, providing a previously unavailable option for those business owners who hope to transition out of their business. This mechanism is designed for a business owner who wishes to sell their company to their employees when they decide to transition out. The most unique aspect of an EOT is that the business is sold to employees (indirectly) without the employees having to contribute any monies for that purchase. Owners use EOTs as an exit mechanism because they offer a unique combination of financial, strategic, and cultural benefits that can support a successful transition of ownership to employees while preserving the company’s legacy and creating value for employees and the broader community.
Please click here to learn more about Employee Ownership Trusts.
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Robert Welke, B.Comm., CEPA is a serial Entrepreneur who has started five (5) businesses and has sold three (3) over the past 34 years. He now works as an Exit Planning Advisor focusing on business owners who are looking to transition out of their business, preparing both themselves, and their businesses, for maximum value exits.
For more information or to learn how Rob can help you and your business, please visit his website here.
Thank you,
Your Costen Insurance Team