Case Study

​​Steel stockholder sale to an Employee Ownership Trust


This case study details the successful sale of a steel stockholding business to an Employee Ownership Trust (EOT), providing a solution to the owner’s succession planning and retirement needs. The company had been approached with low offers to buy the business, but after the unprecedented increase in steel prices, a bidder re-emerged with a better offer. 

The owner was concerned about the future profits and continuing to run the business as a non-controlling shareholder. With the help of Logros Advisory Partners, they explored various options and ultimately decided to sell to an EOT, ensuring the business’s independence and safeguarding the workforce.

Key takeaways

  • Selling to an Employee Ownership Trust can be a viable solution for succession planning and retirement needs while ensuring the business’s continuity, and independence and safeguarding the workforce 
  • Employing corporate finance advisors,, can help business owners understand the full range of options available to them and ultimately achieve a better outcome.
  • It shows how flexible financial forecast models can help create a deal structure that balances a fair return for the seller without causing too great a strain on the business.


Steve* was 62 and had run his steel stockholding business for over 30 years. He had been approached three years earlier with offers to buy the company, but fortunately, the offers were low, and he decided to keep the business. He then enjoyed the benefits of the unprecedented steel price increase and its dramatic impact on his profits.

With no clear successor to take over the business from within, Steve was receptive when one of the earlier bidders contacted him again last year. The offer had previously been at Net Asset Value (NAV) but now was at a slight discount to this. However, with the profits of the last two years, the NAV had more than doubled,  the offer was at a level that Steve could accept.

Exploring options

We had been introduced sometime earlier to Steve and called for a catch-up as Steve was considering the offer. He was concerned that a significant amount of money depended on future profits and that he would be expected to continue running the business but no longer be the controlling shareholder. 

We discussed the offer that he had received and what his broader options were. This is vital as many business owners need help understanding the full range of options. Steve was open to a broader marketing process and a sale to a trade buyer if that was the only way to get a fair deal done. 

Steve preferred to maintain the business’s independence and safeguard the workforce. With the impact on the steel price following Russia’s invasion of Ukraine, it was impossible to forecast that the profits of the last two years would be maintained. It wasn’t clear if the business would be profitable in the period leading up to the sale.

When selling to an external buyer, the recent historic and short-term forecast financial performance is critical in supporting the valuation. The uncertainty in this period made it unlikely that a third party would value the business higher than an internal deal could achieve.

Defining the deal

On a high-level review of the financials, it was clear that the offer currently on the table could be delivered without external equity investment, so we could at least match it by creating a buyer for the business. As It is never certain how a sale process to a trade buyer will go, Steve’s preference for an internal deal that safeguarded the company meant that the choice was made to pursue an internal transaction.

With no clear internal candidate for the Managing Director role, the choice was to identify a buy-in candidate or for Steve to continue in this role post-transaction and work on developing a successor. Buy-in candidates can be a great option to bring in broader experience and high motivation to succeed. However, with a likely deal structure leaving money still owed to Steve, the choice for him to stay on was obvious, as he was keen to work for another two or three years, and no one understands the business as well as he does.

We then reviewed the company´s financial performance over the last three years to create a flexible financial forecast model that would allow us to consider the impact on the business’s working capital and cash in various scenarios. This enabled us to create a deal structure that Steve felt highly confident in, which balanced a fair return for him without causing too great a strain on the business.

In the event, this deal structure represented approximately a 25% increase over the offer that was on the table for Steve, with greater security for his future payments. With Steve’s desire to protect the workforce and the business’s long history of independent trading, creating an employee ownership trust (EOT) to be the company’s buyer made sense.

Employee Ownership Trust

With an EOT, the company’s shares are held in trust on behalf of the employees. An employee representative on the trust company board owns the shares, but the employees do not directly control or run the business. The company’s existing board continues to run the business on behalf of the trust company, and the extent to which the employees influence the running of the business can increase over time. This allows for a smooth transition; while ownership changes on day 1 of the deal, there is no need for a ‘cliff-edge’ change in management approach.

In this case, the intention is to bring certain managers into direct share ownership over the next 12-24 months as they prove themselves within the succession process to replace Steve as managing director.


Steve has addressed the need to sell the business to enable his retirement and has significant cash that secures his financial future. He can remain in place as long as he needs to ensure a smooth handover, but he also can leave at any time as he has secured his exit.  He is comfortable that he has done a good deal for himself, the business, and his employees.

Contact us

If you are in a similar situation or just generally wish to discuss your options to exit your business now or in the coming few years, please contact us to arrange a free and no-obligation meeting.

*Steve’s name has been changed, and financial details have been withheld to preserve his privacy.

  • Brian Higgins

    Brian is a corporate financier with over 20 years of experience in company sales, acquisitions, MBOs and similar transactions. Brian was previously on the board of M&A Worldwide, a leading mid-market global M&A advisory practice.

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