Our ESOP Journey: TechFlow

What should an owner do when their company faces severe headwinds? Reassess strategy, retool the workforce, or explore M&A options? When Robert Baum’s growing business stalled, he pursued all three, with a unique twist: employee ownership.

TechFlow's Growth and Challenges

In 1995, Baum founded TechFlow, an IT consultancy specializing in technology modernization and transformation. The firm quickly built a strong roster of corporate clients, including DreamWorks, MGM, and Toshiba. When the dot-com bubble burst, Baum pivoted to government contracting, securing a long-term agreement with the General Services Administration (GSA)—a move that provided TechFlow with financial stability and positioned it for growth.

But nothing lasts forever, and by 2010, the company hit a rut. Annual revenue declined by 25%, primarily due to global economic instability and increased competition. Baum and his leadership team recognized that they needed to rethink every aspect of their business.

A Strategic Overhaul

Rather than retreat, TechFlow reorganized its operations, streamlined its workforce, and explored new business models. Within two years, the company stabilized earnings; however, growth remained elusive.

"We had some core contracts that had been with the company for a long time, and we were still winning those," Baum recalls. “But new business just wasn't coming in like before.”

Even with a more efficient operation, TechFlow lacked the cultural spark that had fueled its earlier success. Baum recognized the need for deeper team engagement and sought a mechanism to instill a sense of ownership among employees.

Shifting to Employee Ownership

"We wanted a grassroots effort," says Baum. “I always found it tough to hear other entrepreneurs say 'my money' or 'my company.' I wanted to change that mindset, so we started exploring employee stock ownership plans (ESOPs).”

Baum remembers "[spending] a lot of time reading and getting self-educated about ESOPs. I reached out to mentors and white knights in the industry, and I spent hours with several leaders of ESOP-owned government contractors. Their insights were invaluable."

Employee ownership resonated with Baum and his team. An ESOP strategy could help TechFlow:

• Motivate employees and foster a more collaborative environment
• Provide team members with a direct financial stake in the company’s success
• Maintain its independence and focus on long-term growth

In 2015, TechFlow initiated an ESOP sale process, and within a year, the company was officially 100% employee-owned.

The ESOP Effect: A Cultural and Financial Transformation

The impact was immediate. "There was excitement and a noticeable shift in engagement—everyone was thinking about the future," says Baum. But he knew that initial enthusiasm wasn’t enough.

To ensure lasting benefits, TechFlow built a comprehensive ESOP education and communication program, which remains in place today. "Just saying ‘ESOP’ doesn’t mean anything," Baum explains. "We constantly reinforce what it means to be an employee-owner and how to maximize this benefit. When employees understand the value of ownership, we motivate ourselves and thrive as a team. Everyone wins."

TechFlow’s commitment to employee ownership has paid off:

• Multiple Inc. Best Workplaces Awards
• Industry-leading employee retention rates
• 500% revenue growth in the first decade of employee ownership
• Millions of dollars in ESOP plan contributions and participant payouts

A Long-Term Focus, Not Short-Term Gains

Beyond financial success, the ESOP has reshaped TechFlow’s strategic approach. “With an ESOP, we focus on long-term sustainability rather than maximizing EBITDA quarter by quarter for outside investors,” says Baum. "We can make decisions that might cost us in the short term but strengthen long-term customer relationships and ensure the company’s future stability."

A Blueprint for ESOP Success

TechFlow’s journey demonstrates the power of patience, vision, and employee ownership. By embracing the ESOP model, the firm not only navigated financial uncertainty but also emerged with a more engaged workforce, a stronger culture, and a growth-focused mindset.

For business owners facing market challenges, TechFlow’s story proves that an ESOP isn’t just a transition strategy—it’s a catalyst for transformation and long-term success.