Company Overview
Founded in 1963, Cryomech Inc. is a leading equipment designer and product manufacturer of cryogenic refrigeration for customers in the U.S. and abroad, including those in the education, health care, agricultural and manufacturing industries. Headquartered in Syracuse, New York, the company’s pride is its trained, detail-conscious, knowledgeable and motivated employees who focus on a mission of “continual innovation, improvement of our technical expertise and relentless focus on product quality that meets applicable requirements.” In 2014, Cryomech sold 100% of its stock to an employee stock ownership plan (ESOP) to secure the future of the organization and reward its employees. At that time, the company also elected to have Cryomech treated as an S Corporation for federal and state income tax purposes.
Situation
In 2022, the company’s largest customer, Bluefors, a leading Finnish manufacturer of ultra-low temperature cooling systems and technologies, offered to acquire Cryomech. Bluefors had been sole sourcing equipment made by Cryomech, but Cryomech was concerned that Bluefors would need to seek a second source if it couldn’t control the supply. Cryomech management, board of directors and the ESOP trustee all agreed that the company needed to evaluate the offer, given the potential impact to the business if Bluefors found a competitor in their sector and Bluefors’ willingness to pay a premium to secure a source of best-in-class equipment, processes and people. It was determined that the strategic acquisition would be mutually rewarding: Bluefors gains a streamlined supply chain while employee-owned Cryomech benefits from an attractive liquidity event for its employees. Bluefors, backed by private equity investors, was well equipped to finance the acquisition.
Solution
Cryomech engaged SES ESOP Strategies and its affiliated law firm, Stevens & Lee, to assist in negotiating the terms of the acquisition. SES provided the Cryomech board of directors with a written fairness opinion and managed the transaction process. In this role, SES kept the transaction on a tight but reasonable timeframe, provided financial due diligence information to facilitate the acquirer’s due diligence process, assisted in negotiating the transaction and guided the transaction to completion. Stevens & Lee assisted in negotiating the transaction, completing legal due diligence and drafting transaction-related documents. Cryomech’s ESOP shareholders shared strong approval and enthusiasm for the transaction, which closed in March 2023. The President of Cryomech continues to lead the team and operation in Syracuse, which remains home to the entire range of Cryomech products and services.
For more information on this transaction, please contact Mark B. Russell, Head of Finance, at 817.566.1013, or Paul S. Fusco at 215.508.5642.