Radio firms' CEO leaving business to his employees

To know Dale Petrovitch is to know his generosity, his employees say.

And that goes beyond competitive wages, health benefits, and 401(k) matches. Their boss has been known to spring for their kids' wedding and prom limousines, provide for special needs of their ailing family members, and fund local school programs.

So when Petrovitch decided to essentially hand the family business over to his workforce of 30 at the close of 2011, it didn't necessarily surprise his employees as much as it terrified some of them because of the enhanced responsibility it put on them for the company's survival.

"That we really can't pull together and continue it in a forward motion - that's my biggest fear," office administrator Eileen Adams confessed last week.

Thus starts a new chapter at Metropolitan Communications Inc. in Exton and Radio Communications Service Inc. in Eddystone, sister firms serving the wireless-communication equipment and systems-support needs of emergency responders, hospitals, and a variety of other businesses in Pennsylvania, New Jersey, and Delaware.

Petrovitch, president, chief executive officer, and second-generation operator, took at least three opportunities in an interview Wednesday to emphasize one thing: "I'm not retiring!"

Rather, he is laying the groundwork for it. About 34 years after he decided to go into the business his father, Joseph, had started in the family home in Marcus Hook in 1955, Petrovitch, 60, determined it was time for succession planning.

Passing the business on to his sons wasn't an option, Petrovitch said. As he explained it, he didn't become a parent until later in life, and his sons, now 17 and 13, are not "self-formulated."

Plus, when he flat out asked the older boy about any interest in running the company in the future, Daniel Petrovitch's reply, according to his father, was: "Dad, would you be upset if I didn't?"

Though it is a business involving what many young boys might find irresistibly cool - outfitting police cars and fire trucks with all sorts of high-tech equipment - younger son Samuel hasn't shown any signs of being enthralled with it, either.

"He's more interested in airplanes and buildings," Petrovitch said, without a hint of disappointment.

So, after considerable research and consultation with experts, Petrovitch decided to convert the business' structure into an employee stock-ownership plan (ESOP), forming one parent company in which all employees have a financial interest. That took effect Dec. 31.

Now, the shares are held in trust for the benefit of employees. The trust essentially bought them from Petrovitch at a price he would not disclose, borrowing the money from him to do so.

The money earned by the company over the next several years will go toward paying off the debt obligation to Petrovitch, said James Steiker, of the law firm Steiker, Fischer, Edwards & Greenapple P.C. and head of SES Advisors Inc. The related Manayunk companies advised Petrovitch on his decision.

As the debt is paid down - a process expected to take five or six years - employees will receive shares in proportion to their compensation. As they retire or otherwise leave, they will be entitled to receive payment for their shares from the company, Steiker said.

"They now are working for their own benefit because the better and more efficiently they work, the faster they pay off the debt and the more valuable the company becomes," he said.

For Petrovitch, there are tax advantages as well as "emotional and psychic satisfaction," said Donna Marie DeCarolis, associate dean for graduate programs and head of the management department at Drexel University's LeBow College of Business.

ESOPs afford business owners "the satisfaction of knowing that the company will carry on, typically in the hands of people that they have worked with," DeCarolis wrote in an e-mail, "and the loyal employees of the company retain their jobs - that is, there is no fear that a new owner will institute layoffs or reorganizations."

That is not to be confused with a job guarantee for life, DeCarolis cautioned.

"The company is still a going concern and remains subject to competitive and market pressures," she said.

That is why, despite how "emotionally hard" it is to "give up something," Petrovitch didn't postpone his decision until he was ready to retire. He said he wants to be around to help the company continue to prosper and allow employees to get used to the idea of having an ownership stake in it.

A dozen have been with the business more than 25 years; an additional 10, more than eight years. That makes them "as much a part of this business as I am," Petrovitch said.

He attributed that, in part, to the very nature of the business, which requires around-the-clock dedication to serve. If, for instance, the 911 system in Chester County went down at 9 p.m., sending a repair crew in the morning wouldn't fly.

"The competency of the company creates its own destiny," Petrovitch said.

Heightened emphasis on security since the terrorist attacks on Sept. 11, 2001, along with continually evolving communications technology, has been good for business. Annual revenue totals $8 million, and the company is debt-free with access to a bank line of credit exceeding $500,000, Petrovitch said.

Though he is "at peace" with his ESOP decision, which requires no cash buy-in from employees, Petrovitch said, he worries about the company's ability to keep the work that sustains it coming in.

Currently, 40 percent of the business comes from serving Chester and Delaware Counties. He is anxiously awaiting a decision by Chester County on a $35 million to $50 million radio-system project that, he said, could bring steady work for three to four years.

Sharing now more than ever in the anxiety over landing that work is Scott Chandler, 52, a systems engineer with Petrovitch's business for 32 years - and now a co-owner.

"We all have a direct stake in what happens," Chandler said.