Just over a year ago, Canada introduced the Employee Ownership Trust (EOT) as a new way for business owners to transition ownership while keeping their companies locally rooted and employee aligned. Since then, interest has grown—but questions remain.
Drawing from the UK, where over 2,250 companies have adopted the EOT model since 2014, we are seeing the early signs of what a made-in-Canada EOT landscape might look like. These first 12 months have made one thing clear: while the model is still new here, momentum is building.
What is an EOT?
An Employee Ownership Trust is a structure that allows a business to be sold to a trust that holds the company on behalf of all employees. It offers an alternative to a third-party sale—one that rewards the team, protects company culture, and keeps the business locally rooted.
In return for selling 51% or more of the company to an EOT, owners may qualify for the $10 million Lifetime Capital Gains Exemption, which makes it an extremely tax effective option for those looking to transition.
Rather than requiring employees to buy shares directly, the trust acts as a long-term steward.It is typically financed through a combination of bank loans and vendor take-back financing, allowing employees to become beneficial owners without needing to invest their own money. This helps overcome the affordability barrier often associated with more traditional employee ownership models.
Myths vs. Reality: Is EOT Right for Smaller Businesses?
One common misconception is that Employee Ownership Trusts (EOTs) only work for large or complex businesses. In practice, they can be a great fit for small companies—especially those with a strong culture and a long-term mindset. While EOTs can involve more setup than a simple share sale, they are typically financed through a mix of vendor take-back and bank financing, making them accessible without requiring upfront employee investment. We are seeing growing interest from purpose-driven businesses—including several B Corps—who view the EOT not just as a succession tool, but as a way to embed their values into the company’s long-term governance.
Hybrid Models Gaining Ground
Some of the most promising applications of EOTs in Canada so far involve hybrid approaches, pairing the trust structure with a Management Buyout (MBO) or Employee Share Ownership Plans to create tailored solutions. This approach helps keep leadership in place while gradually expanding ownership to the whole team.
Firefly Insights is currently working with a company preparing to launch their own hybrid EOT model, highlighting how the structure can be adapted to meet business realities while still delivering meaningful employee ownership.
Canadian Early Adopters
Two notable examples of early Canadian adopters include:
- Grantbook – One of the first to complete a transition using the EOT model, positioning employee ownership as central to their long-term strategy.
- Brightspot – A B Corp embracing EOT as a values-aligned ownership structure to carry their climate-focused mission forward.
These stories reflect the broader interest and experimentation happening across Canada, especially among purpose-driven companies.
Looking Abroad: Lessons from the UK
In the UK, over 2,250 companies have transitioned to EOTs, with sectors ranging from design to healthcare to engineering. Adoption has tripled in the last decade, and EOTs now account for 6% of all business transfers.
Performance data is compelling:
- 8-12% more productive per employee
- Over 80% of employees report increased motivation when they become owners
- 20% increase in performance, driving revenue increases of up to 43% after becoming Employee Owned
These results offer a glimpse into the long-term potential of EOTs in Canada—if we can build the right support ecosystem.
What Comes Next?
At Firefly Insights, we believe the future of employee ownership in Canada depends on more than just the policy—it depends on bold business owners and thoughtful advisors who are willing to help shape the model into something practical, meaningful, and enduring.
If you are looking for an exit strategy that protects your legacy, supports your team, and keeps your business rooted in the community, we would love to talk.
Be part of the next wave of EOTs in Canada—book a call with us to explore whether it could be right for your business.