January 3rd, 2020
Cross Company, a 100% employee-owned industrial solutions company based out of Greensboro, NC, announced its acquisition of Flow-Tech, a Maryland-based process instrumentation and measurement technology sales and service provider earlier this week. All of Flow-Tech’s employees will be eligible to join Cross’s team of nearly 700 associates in participating in the company’s ESOP.
Flow-Tech joins Cross Company’s 100% Employee Stock Ownership Plan
“We are excited to add Flow-Tech’s associates to our team, as they bring 35 years of experience in a broad range of measurement technologies with quite an installed base of customers and equipment to add our valuable services,” said Cross Company CEO John King in a press release. “It’s really exciting for them as well, because they now can join our ESOP, or employee stock ownership plan, and become employee-owners.”
King’s statement is a perfect illustration of how an employee stock ownership plan can position a company for phenomenal growth while providing significant benefits to both your customers and employees.
The substantial tax savings enjoyed by ESOP companies—which include tax-deductible dividends paid on stock held by an ESOP and, for S Corps, the ESOP’s share of corporate earnings not being subject to taxation—means that companies with ESOPs have a greater cash flow on hand with which to acquire other companies. This empowers ESOP companies to improve, expand, and diversify their services, and to outbid or simply buy out competitors.
The employees of acquired companies like Flow-Tech suddenly become owners thanks to the ESOP. Not only does that mean they get to enjoy the retirement benefits that come from participating in the plan, but they also get the pride of ownership that comes with it. Having a true stake in the company’s future inspires employee-owners to work harder and smarter to help the business succeed.
That ownership mentality extends into every customer interaction. Every Flow-Tech client who now turns to Cross Company for their measurement needs will benefit from knowing that they are not just dealing with someone cashing a paycheck, but an owner who has a personal interest in maintaining the relationship and providing excellent service.
Cross Company was among the first companies in America to form an ESOP after the passing of the landmark 1974 ERISA legislation co-authored by John Menke. Since then, they have been no strangers to using their advantageous position to strategically acquire other businesses. In fact, John King, quoted above, became president and later CEO of Cross Company only after it acquired his previous business, J.A. King in 2018.
Congratulations to Cross Company and all the new employee-owners from Flow-Tech.
Interested in learning how a Menke ESOP can help to grow your business? Try our free Preliminary Analysis.
Menke & Associates, Inc. has helped over 3,500 companies successfully transition to employee ownership. Our holistic ESOP approach enables a positive outcome for the company, its employees and its shareholders. We believe ownership is powerful.
