What gets skipped when we call it a 'transfer’.
There’s a particular vocabulary that tends to accompany an employee ownership transaction. Words like ‘transition’, ‘transfer’, ‘legacy’, ‘values-led’. These aren’t wrong – in many ways, they’re exactly right. But somewhere in that language, something important gets quietly dropped from the conversation.
The word ‘transaction’.
When a founder sells to an Employee Ownership Trust, they receive market value consideration. In most cases, that’s a significant sum of money – paid by a trust on behalf of the employees. There is a seller. There is a buyer. There is a price. By any reasonable definition, that is a commercial transaction.
None of that should be controversial. And I’m not saying it diminishes what EO can be – some of the best business outcomes I’ve seen have come out of EO transitions, for founders, employees, and the businesses themselves. But the framing matters. And the ‘altruism’ framing that tends to dominate the EO narrative has a cost: it leads people to skip questions that any other type of buyer would have forced them to answer.
What a trade sale or PE deal would have surfaced
In a conventional trade sale or private equity transaction, the due diligence process does a particular job. It’s not always comfortable – it can feel intrusive, exhaustive, occasionally adversarial. But it works. It surfaces the things that weren’t being said out loud.
What’s the business actually worth, and what drives that value? Is the revenue model diversified, or is it propped up by two clients and the founder’s relationships? Can the leadership team perform without the founder in the room – and has that ever really been tested? What decisions are still being made by instinct rather than evidence? What does the pipeline really look like?
These questions get asked in other transactions because a buyer needs to protect their investment (and it very much informs the valuation). In an EO transaction, the dynamic is different. The trust has a duty to pay no more than market value – and that constraint is now better understood and, broadly, well handled – since the update to the legislation in late 2024. There is also now a great depth of professional and objective advice available in the UK when it comes to the legal, tax, transactional and financial elements of the deals. What happens less consistently is a thorough assessment of the maturity of the business itself: its capabilities, its leadership capacity… its commercial foundations.
That’s not a criticism of EO as a model. It’s an observation about a gap in commercial and operational DD – and gaps have consequences.
The questions the emerging leadership team deserves to ask
The people who tend to inherit the operational reality of an EO business are the appointed succession team. In some cases, they’ve been in the business for years. In others, they’re stepping into roles that were previously absorbed by the founder. Either way, they’re being asked to perform at a level that wasn’t previously required of them – often without having been given a complete picture of what they’re inheriting.
There are things that would naturally surface in a trade sale due diligence process that, in an EO transaction, can go unasked. How long will the founder remain involved? In what capacity? What institutional knowledge leaves when they do – and what’s the plan for that? What are the commercial arrangements that depend on the founder’s relationships, and what’s the transition plan for those?
The emerging leadership team should have the opportunity – and the permission – to probe these things. Not because it signals a lack of trust in the founder, but because that’s what good governance looks like.
Creating structured space for those conversations before the deal completes is one of the most valuable things an EO business can do. It doesn’t change the price. It changes the readiness.
It’s not too late if you’re already post-transaction
If you’re reading this and you’re already 12 months in – or further – this isn’t about re-hashing the deal. The consideration was set. The rules around trustee duties re market valuation are clearer following the regulatory changes in November 2024, and that’s as it should be.
But the underlying questions don’t expire at completion. If anything, they become more urgent. Understanding the true maturity of the business – what’s working, what’s fragile, what’s missing – is the foundation of every growth decision that follows. Without that evidence base, leadership teams are navigating on instinct. And instinct, however experienced, isn’t a strategy.
This is where the framing of ‘this was always about the values’ can quietly become a liability. It can create a cultural resistance to asking hard commercial questions – a sense that raising them is somehow inconsistent with the spirit of what EO is supposed to be. It isn’t. The businesses that thrive post-transition are almost always the ones that asked the hard questions early, understood their foundations clearly, and built their plans from evidence rather than optimism.
Evidence before action
At Still We Grow, we start most engagements with the Growth Foundations Assessment – a structured diagnostic across eight interconnected areas of business performance, from commercial and financial clarity to leadership capability, governance, and operational excellence. It’s not a scorecard – it’s a structured way to understand what’s really going on.
For EO businesses – whether they’re pre-transition and building the case, or post-transition and finding their feet – the Growth Foundations Assessment does something specific: it replaces assumption with fact. It gives leadership teams the picture that the due diligence process either didn’t produce, or didn’t share with the people who needed it most.
It also gives founders something valuable: confidence that the business they’ve built will be understood, stewarded, and grown by people who know what they’re working with.
EO can be a brilliant outcome. The employees win. The founder wins. The business – if it’s properly understood and properly led – wins. But the commercial mechanics of the transaction deserve the same rigour as the values that motivated it. Not because ‘transaction’ is a cold word, but because that clarity is how you protect what’s already been built.
If any of this resonates – and particularly if you’re sitting with questions that haven’t quite been asked yet – that’s usually a good place to start a conversation with us.