Attorneys from Warner Norcross + Judd LLP played a key role in establishing a new employee stock ownership plan for Crystal Flash, one of the largest independent energy distributors in Michigan.
Justin Stemple, who specializes in ESOPs, led the Warner team that helped the Michigan-based company establish the plan for its 250 employees at 14 Michigan locations. These employees will become beneficial owners through the ESOP beginning in 2016.
The plan came about as Fehsenfeld family members decided to transition their interest in the company after more than 80 years and three generations of leadership. Stemple lauded the collaboration between the local management team – led by President Tom Olive – and a “broad group of family shareholders” led by Tom Fehsenfeld, saying it helped ensure the success of implementing the transition of ownership to the ESOP.
“Everyone had a focus on the best result for the company,” Stemple said. “ESOPs can be an excellent transition strategy when a family-owned business needs to be sold because it allows for the continuation and preservation of the legacy and culture that was built by the family.”
Crystal Flash already had what Stemple called a “thriving employee culture” as leaders embarked on creating the ESOP, making the transition all the more meaningful.
Stemple said he is seeing an uptick in new ESOPs nationally. He attributes the increase to factors that include Baby Boomers reaching an age where they are seeking optimal transitions for company ownership as well as “pent-up demand” after the 2008 recession. Company valuations and financing options have become more favorable as the economy has recovered.
He also noted that the West Michigan area has a business culture that values giving back to the employees that helped build success, which was a driving factor in the Crystal Flash ESOP.
“This is a very strong region for ESOP activity,” Stemple said. “There is much more activity in the ESOP market in West Michigan than in some parts of the country. It just seems to fit here.”
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