Deborah Groban Olson, Attorney at Law, PLLC

An EOT is a perpetual trust that can be created under state law in some US states, and can be used to purchase companies that continue to operate in any state. The EOT enables company owners to sell their business to a trust that provides financial benefits and governance rights to employees, without the cost and complexity of creating an Employee Stock Ownership Plan (ESOP). It is a profit-sharing plan that allocates profits (after company costs that include purchase debt) to employees and is managed under a trust agreement that provides for employee governance rights. It avoids key ESOP concerns including: 1) there is no obligation to repurchase stock from departing employees, as employees do not own the stock; and 2) the company can remain employee owned perpetually, and cannot be forced to sell to an outside buyer.

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