For three generations, Crystal Flash has been controlled by the Fehsenfeld family. Now, however, one of the largest fuel distribution companies in the state has new owners — lots of them.
Crystal Flash on April 28 established an employee stock ownership plan, commonly known as an ESOP, to ensure the company’s long-term future.
The propane retailer services approximately 24,000 Lower Peninsula customers through 14 locations in the state. The company, which has about 250 employees, is now 100 percent employee-owned, said Tom Olive, president.
“Our 250 team members are very excited by this opportunity. They’re very grateful for the gift of the family, and the trust they’ve placed in us. They’re excited to continue growing the business,” he said.
“As always, our goal is to provide customers with reliable and high-quality service. We believe an ESOP puts us in the best position to continue that commitment to our valued customers.”
Warner Norcross and Judd LLP provided Crystal Flash with legal counsel for establishing the ESOP, Olive said, adding Charter Capital Partners served as financial advisors and Mercantile Bank of Michigan provided the financing. All of them served as “exceptional partners” during the transaction, he said.
The ESOP is a popular method for transitioning business ownership, Olive said, adding they have been around since the late 1970s. ESOPs are also qualified retirement plans that invest in the stock of the sponsoring employee, he said. Those employees annually receive shares of stock, which are then “cashed out” when they retire.
“They’re a popular vehicle for transferring ownership to employees to become the owners. It is an ERISA-qualified retirement program, governed under the IRS. It’s a vehicle (in which) employees become beneficial owners of the company over a period of time, and in their retirement years receive a payout of the value they’ve helped create over the years,” he said.
“Research has shown that employee-owned companies perform above industry averages. Knowing our team members, that will be an easy standard for them to continue.”
John Fehsenfeld founded Crystal Flash in 1932 in Indianapolis. At the time, he only had one truck and a rented fuel storage facility. His son, Frank, eventually moved operations to Grand Rapids. In the 1940s, the company shifted its focus from gas stations to the home-heating business, Olive said. In the early 1980s, the company entered the propane business, expanding into commercial fleet fueling.
“In (2002), with the growth of the national chains, the leadership chose to strategically exit that business and come back to our roots as a fuel distribution company,” Olive said.
He said the Fehsenfeld family was looking at its portfolio holdings and realized its time with Crystal Flash had perhaps come to an end.
“The parent company — the family — still has a lot of holdings in Indianapolis. The family had reached a point where they looked at Crystal Flash and their other portfolio holdings and decided Crystal Flash was a unique business that didn’t fit their other holdings,” Olive said.
“Tom Fehsenfeld retired (as president) last May, and they were looking for strategic things to do with the business. Tom came to the option that ESOP was (right for the) business, transferring it from one family to what I refer to as another family — the family of Crystal Flash.”