March 30 - April 5, 2015 - Crain`s Cleveland Business
Transcription
March 30 - April 5, 2015 - Crain`s Cleveland Business
20150330-NEWS--1-NAT-CCI-CL_-- 3/27/2015 3:01 PM Page 1 $2.00/MARCH 30 - APRIL 5, 2015 Browns’ partners benefit SUMMA HEALTH SYSTEM: THE 100-DAY BLUEPRINT Fans often disagree with team, but the constant chatter is good for biz New CEO Dr. Thomas Malone is not afraid to scale the mountain of changes facing him By KEVIN KLEPS [email protected] By Timothy Magaw A s Summa’s chief operating officer, Dr. Thomas Malone’s fingerprints were all over some of the major changes that rocked the Akron-based health system last year, which included shuttering the emergency department at St. Thomas Hospital, axing inpatient services at its Wadsworth-Rittman hospital and cutting a handful of administrative posts. They were big — and tough to swallow — changes, no doubt, but with Malone now fully in charge as the health system’s president and CEO, don’t expect things to slow down anytime soon. Summa has steep challenges ahead, especially as the powerful Cleveland Clinic encroaches on its turf through a partial ownership of Akron General Health System, and Malone has an aggressive plan to retool the health system in short order. “I look at myself as a visionary,” Malone said. “I think my strengths are in strategic visioning and planning and putting the right pieces in place to get where we continued on page 9 SCOTT POLLACK With University of Findlay president Katherine Fell at his left, Cleveland Browns president Alec Scheiner gave advice to a handful of students who sat in a second-floor meeting room at the team’s Berea headquarters on March 17. Near the end of the casual announcement that the Browns and the university were teaming up on an internship and ideas exchange program, Scheiner mentioned a significant result the team can offer that has nothing to do with wins, draft picks or more vibrant shades of orange. “One thing we do really well is we get a lot of attention,” Scheiner told the students and Fell. “And so when we partner up with the right partners, we can take that attention and kind of expose our great partners in a way that they wouldn’t have been exposed without us. You see that all the time with us, and that’s just a benefit that comes with this.” The attention, Scheiner said, isn’t the team’s “main priority,” but it has proven to be a rare constant during yet another tumultuous offseason. It’s that notice that is attractive to the Browns’ many corporate partners, whose bottom lines, unlike the emotions of the rabid fan base, don’t suffer every time a controversy strikes or Jimmy Haslam is portrayed as meddling. “I don’t think it matters very much,” Dix & Eaton president and chief operating officer Chas Withers said, when asked if the Browns’ national perception impacted its local partners. “In this market, they offer a completely unique channel to reach a key audience — notably the 19 to 50 male audience. They haven’t done anything criminal or untoward that would provide sponsors some sort of ethical dilemma. “The perception,” Withers continued, “that they’re not doing their job particularly well doesn’t matter to 13 See BROWNS, page 21 0 NEWSPAPER 74470 83781 7 ALSO INSIDE: Entire contents © 2015 by Crain Communications Inc. Vol. 36, No. 13 Small biz initiative making impact — P. 4 Balance’s big ideas are paying off — P. 5 SPECIAL SECTION: Finance — Pages 13-19 20150330-NEWS--2-NAT-CCI-CL_-- 3/26/2015 11:29 AM Page 1 Small Business Matters i Want more information and resources on this week's topics, ideas and events? Go to www.cose.org/smallbizmatters. PRESENTED BY 52 TIPS FOR YOUR BUSINESS #13: Share Your Expertise with the Community As we celebrate National Volunteer Week April 12-18, it’s the perfect opportunity to take a moment to recognize the importance of engaging in the community. When you decide to volunteer on a project committee for a community LVY[VYZLY]LVU[OLIVHYKVM[Y\Z[LLZVMHSVJHS UVUWYVÄ[IV[O[OLI\ZPULZZJVTT\UP[`HUK[OL JVTT\UP[`H[SHYNLYLHW[OLILULÄ[Z Volunteerism and professional development are not just for our friends in the corporate world. There are many opportunities for small business owners and their employees to lend their talents and connect with the community. Business Volunteers Unlimited (BVU) in Cleveland and the *LU[LYMVY5VU7YVÄ[,_JLSSLUJL*5,PU(RYVU provide a number of ways to get involved, including a nationally recognized board matching service, skill-based pro-bono volunteer opportu- nities, and Done-in-A Day volunteer project opportunities. When local employees connect with community organizations, they develop leadership skills HZ ^LSS HZ L_WHUK [OLPY professional networks. One of the drivers business owners often cite for taking the leap into entrepreneurship is that they want the freedom to “do their own thing,” and becoming involved in the community and lending your skills to help make HKPLYLUJLPZHNYLH[^H`[V[HRLHK]HU[HNLVM that freedom. March 30 By The Numbers Ohio Employment by Size of Firm 1-19 employees i ;VÄUKV\[TVYLHIV\[I\ZPULZZ volunteer opportunities, contact BVU or [OL*LU[LYZMVY5VU7YVÄ[,_JLSSLUJLH[ www.bvuvolunteers.org. 53% 16% 20-99 employees 17% 100-499 employees RULE BREAKERS Going Against the Grain by Over Servicing Clients As automation progresses, more and more companies are jumping on the techUVSVN` IHUK^HNVU" OV^L]LY THU` SVZL sight of personalized service along the way. Technology is great for data management, [YLUKPUN ÄUHUJLZ HUK ZOVWWPUN ZLY]PJLZ but it stands as a limited tool in times of crisis. When issues arise, who is there to help? Group Transportation Services (GTS), a third-party logistics provider in Hudson, has brought technology in new ways to shippers – but they also take the personal approach to customer service seriously. “Freight doesn’t sound complicated,” says Curt Gonya, Vice President of Sales for GTS. “It’s moving product from point A to point B. However, there are many unforeseen factors SPRL^LH[OLYHUK[YHUZWVY[H[PVUJVTWSL_P[PLZ that can arise. In those situations, our customers need more than an e-mail that tells them there is an issue.” Gonya describes three ways that they bridge technology with high-touch service. 1. When we set up a new client, we have a detailed conversation on goals and sensitivities. Knowing what they are trying to accomplish allows us to have a bet- 500+ employees ter sense of what kind of corrective action to [HRL^OLU[OPUNZKVU»[NVHZL_WLJ[LK 2. There is always the ability for a customer to get a live person – 24/7. Clients trust us with shipments both routine and sensitive. Their shipment can be supercritical to them, so we have to be super-responsive. 3. Exception reporting helps keep a problem from becoming a crisis. Whenever a shipping activity goes outside of norms ¶SVUNLY[OHUL_WLJ[LKWPJR\WJVUÄYTH[PVU delay or longer than planned time in tranZP[·V\YZ`Z[LTZRPJRV\[L_JLW[PVUYLWVY[Z that prompt us to look a little closer at what PZNVPUNVU0[OLSWZPUZLY[V\YL_WLY[ZPU[OL process where we can change an outcome for the customer. By elevating customer service and delivering real solutions in times of crises, businesses bring added value to clients beyond its products or services, and that can go a long way in building customer loyalty. What are you doing to over-service your customers? i To learn more about GTS, visit www.onestopshipping.com. 15% Ohio’s small businesses (1-500 employees) employed about half of the state’s private workforce in 2013. SOURCE: STATISTICS OF U.S. BUSINESSES, U.S. CENSUS BUREAU, PUBLISHED 2015. Connection Calendar COFFEE WITH COSE .YHIHJ\WVMJVLLHUKQVPU`V\YWLLYZH[ this informal networking event. TUESDAY, APRIL 7 8:30 – 10 AM, $5 Panera, North Olmsted Register at www.cose.org/events BEST OF TECH AWARDS DINNER Curt Gonya, Vice President of Sales for GTS Honoring the top technology companies in our region. THURSDAY, APRIL 16 5:30 – 9:30 PM Red Space at HotCards, Cleveland Cost: $35 OHTec Members, $75 Non-Members Reserve your seat at www.cose.org. LINKING IT TALENT TO OPPORTUNITY WORKERS’ COMPENSATION SERVICES Presented by the Greater Cleveland Partnership (GCP), this event connects job seekers to opportunities in the tech space. THURSDAY, APRIL 16 COSE Compensation Services offers the most comprehensive program in Ohio, including: • Safety consultation • Claims management • Unemployment consultation • Legal defense Request a free quote today! Download an AC-3 form at www.cose.org/workerscomp CONTENT PROVIDED AND PAID FOR BY THE COUNCIL OF SMALLER ENTERPRISES 1 - 4:30 PM Independence Civic Center Cost: Free for GCP, OHTec HUK*6:,4LTILYZ"5VU4LTILYZ Reserve your space at www.gcpartnership.org. Check out www.cose.org/events for all the latest happenings. 20150330-NEWS--3-NAT-CCI-CL_-- 3/27/2015 11:39 AM Page 1 The most fun you can have sitting down. Well, almost. ATS CLASSIC CADILLAC 2015 MONTHLY LEASE 2.0 TURBO/AWD $349* 39 Month lease requiring $3,344 Cash orTrade due at signing. 10,000 miles per year and 25¢ charge per mile over. Plus tax, title, license and doc. fee (MSRP: $39,155 - ST#W11837) Save an extra $750 with GM LEASE LOYALTY - Trade-in not required Must show proof of current GM Lease. Please call for complete program details. No Security Deposit Required. These savings won’t help you dribble but they will make you drool. 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Eminently Cool Under Pressure - Car and Driver - Kelley Blue Book CADILLAC BMW LEXUS MENTOR 440 255 6955 WILLOUGHBY HILLS 888 439 8833 WILLOUGHBY HILLS 800 525 7594 CLASSIC DRIVECLASSIC.COM Offers end 3/31/2015 20150330-NEWS--4-NAT-CCI-CL_-- 4 3/27/2015 11:41 AM Page 1 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM Region is building big equity via small business initiative FOR SALE FORMER CAR DEALERSHIPS 7160 PEARL ROAD, MIDDLEBURG HTS. d oa lR ar Pe )RUPHU 1LVVDQ 'HDOHUVKLS 6) EXLOGLQJRQ DFUHV Companies, many owned by women and minorities, benefit from grants By KATHY AMES CARR [email protected] 5715 DARROW ROAD, HUDSON )RUPHU Visit 9RONVZDJDQ 'HDOHUVKLS TerryCoyne.com 7ZREXLOGLQJV Or call Terry at WRWDOLQJ 6)RQ 216.453.3001 DFUHV Darrow Road MARCH 30 - APRIL 5, 2015 1350 Euclid Ave., Suite 300 Cleveland, Ohio 44115 Night & Day Improvement! • Installed 160 LED high bay fixtures • Increased light levels by 3x • Annual energy savings $17,000 • Installation completed in 3 days LINCOLN MANUFACTURING Strasburg, Ohio LET US HELP YOU ROI Energy 330-931-3905 www.ROI-Energy.com Serving NE Ohio Complimentary In-flight Wi-Fi AIR CHARTER SERVICE AIRCRAFT MANAGEMENT Northern Ohio’s Premier Air Charter Service Serving the area with a fleet of 9 Jets • 25-HOUR JET CARD NOW AVAILABLE • www.FlySkyQuest.com • 216-362-9904 [email protected] Volume 36, Number 13 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2015 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 212-210-0750 Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-9911, or email to [email protected], or call 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777. Anthony Lee has a goal of becoming Cleveland’s largest minority-owned flooring company. A new grant program offered through the city of Cleveland is helping him realize that vision. Lee in 2014 received a $7,500 performance grant through the Municipal Small Business Initiative, which is forgivable after three years as long as job creation terms are met. The grant’s 15% supplemental equity contributed toward the 25% down payment he needed for a $50,000 SBA-backed loan that financed his company’s expansion beyond Columbus. “It’s been a big help because a lot of the jobs we do, we don’t get paid for 30 or 60 days, so whatever cash you can get to get you going is helpful,” said Lee, owner of Anthony Flooring, which opened an outpost last May in the St. Clair-Superior neighborhood. “We received a lot of assistance, from the city, the SBA and the Urban League as part of that program,” he said. “Now we’re working on a $100,000 apartment flooring project in Geauga County.” The Municipal Small Business Initiative launched last fall to help Cleveland and Shaker Heights neighborhood businesses — many of which are female-owned and minority-owned — that want to grow but don’t have enough equity to satisfy the preferred 25% down payment needed for an SBAguaranteed loan. If the owner of a company in either city is accepted into the program, that borrower must commit 10% equity — or, $10,000 for a $100,000 project. The city will supplement the other 15% — or $15,000 — through a performance grant. The borrower then can apply for an SBA-backed loan through a participating lender to cover the project’s remaining cost. If the job creation terms are met, the performance grant is forgiven, and the borrower doesn’t need to repay the supplemental equity. The borrowers also have access to technical assistance from the Urban League of Greater Cleveland, Hispanic Business Association and Cleveland Heights Library. So far, four loans have been approved between the two cities. The city of Cleveland is hoping to disperse about 25 grants this year, said the city’s economic development director, Tracey Nichols. “We’ve had interest from all sorts of businesses, including restaurants, construction equipment, manufacturers and day care centers,” Nichols said. “We believe this program is a great way to help businesses afford expansion, which helps the region overall.” The Cleveland district SBA office approached Cuyahoga County in 2014 to create the loan program. CONTRIBUTED PHOTO Vintage Tea & Coffee owner Jeff Su, left, opened the Cleveland cafe in October. He is shown with barista Loc Dao. Giving merchants a helping hand Along with the Municipal Small Business Initiative, the city offers other loan and grant programs to facilitate entrepreneurial growth. The Neighborhood Retail Assistance Program, which provides financial assistance to merchants who want to make aesthetic improvements or buy equipment, is one example. That program in 2014 issued a total of $589,000 in city assistance to 18 small businesses, with loans averaging $40,000. The Grocery, a female-owned business in Ohio City, and Vintage Tea & Coffee, an immigrant-owned shop in downtown Cleveland, both benefitted from the program. Vintage Tea & Coffee owner Jeff Su said he received a $20,000 NRAP loan to help offset the cost of that $120,000 project. “The loan helps to relieve my financial burden on opening this business,” as well as streamlining the permitting process and integrating his business within the The county solicited interest from its municipalities, the partnership of which was contingent on a 50% match with the county. The cities of Cleveland and Shaker Heights agreed to participate. The cities are tapping a $1.5 million loan fund created in partnership with the county, which allocated $750,000 from its $100 million economic development fund. Of that, $500,000 went to Cleveland, which matched it with $500,000 to create a $1 million pool. Shaker Heights matched the county’s $250,000, bringing its fund total to $500,000. The U.S. SBA expects the $1.5 million loan fund to create a fresh capital pool of between $6 million and $8 million in SBA-backed community, Su said. The small business will create two full-time equivalent jobs with an anticipated payroll of $37,000. “The city of Cleveland is one of the few cities in the nation that funds restaurants,” says Tracey Nichols, the city’s economic development director. Startups also are getting a boost through Economic and Community Development Institute, a Columbus-based nonprofit recruited to Cleveland in 2012, which structures microloans to small businesses that would not be eligible for traditional bank funding. The city of Cleveland provided $200,000 to that entity, with $50,000 of that funding specifically geared toward immigrant and refugee businesses. Eighteen loans were issued to minority-owned businesses in 2014, 32 loans to female-owned entities and two loans for immigrant/refugee businesses. — Kathy Ames Carr loans, and that Cleveland is the litmus test for cities elsewhere in the United States. The initiative was highlighted last July at an SBA national field management meeting in Cleveland. “This program should have a big impact on small business growth,” said Gil Goldberg, district director for the SBA’s Cleveland office. “I’ve received calls from other states and district directors who are very interested in this program.” The programs are under twoyear contracts that began in August 2014. The county will assess each city’s progress at the end of the two years to determine future possible funding, said Jeane’ Holley, communications specialist for Cuyahoga County. 20150330-NEWS--5-NAT-CCI-CL_-- 3/27/2015 2:56 PM Page 1 MARCH 30 - APRIL 5, 2015 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM 5 Shiloh is looking better all around By RACHEL ABBEY McCAFFERTY [email protected] CONTRIBUTED PHOTOS Above, Jason Cooper (background), a design principal, and designer Gabriel Puerto go over ideas at Balance’s Tyler Village headquarters. Shown at bottom are Cooper and Joe Spalding, a designer at the company. It’s the right Balance After nine years of designing products, Cleveland company is developing them By CHUCK SODER [email protected] Nine years and hundreds of ideas later, Balance Inc. is finally ready to create some of its own products. Oh sure, the product development firm has designed all sorts of goods over the years — for other companies, like Diebold, Hoover and Euro-Pro (perhaps you’ve seen the new Ninja Ultimate blender that Balance helped develop). And for years, Balance designers have been writing down their own product ideas in the leather-bound notebooks that they carry around at the company’s headquarters in Midtown Cleveland’s Tyler Village. But that’s where those ideas remained. Now, however, that’s changing. On Jan. 1, Balance founder René Polin gave vice president Anthony DeMore a new title: principal of new ventures. So it’s now DeMore’s job to turn those ideas into products that could be licensed to other companies or spun out into new businesses. Businesses that would rely on Balance’s product development services. “We’re inventing our best clients,” DeMore said. The effort, which has been underway for several months, could produce results soon: Balance is working to finalize a deal with “an international health and wellness organization” that wants to license some intellectual property that could quickly become a product, Polin said. The company also has a few other ideas that it Ramzi Hermiz has high standards for the plants he oversees as president and CEO of Valley City-based metal processor Shiloh Industries Inc. And it shows. A recent tour of two of the company’s Valley City plants showcased clean plant floors, bright white walls in the midst of a paint job and highly automated equipment. The recently installed equipment is more efficient, which opens up floor space. A wall was even removed in the plant on Innovation Drive to increase employees’ line of sight, and new equipment has been enclosed in clear walls, instead of wire fencing, for transparency’s sake. “It’s really setting a positive vision to what we do,” Hermiz said. That visible transformation reflects the internal transformation Shiloh has made in recent years, shifting its focus from simply providing parts requested by customers to actively working with customers to develop solutions to problems. “When the industry has a challenge, they think of us,” Hermiz said. “They see us as a problemsolver.” Hermiz said he joined Shiloh in September 2012 because he saw the company’s potential to help vehicle manufacturers make their products lighter and more fuel efficient. Shiloh’s new approach means the company is doing more up-front engineering. Instead of just taking an order, it’s now more like a conversation with customers, Hermiz said. Unlike a pure aluminum or steel company, Shiloh can offer companies options that include a mix of metals and manufacturing approaches, from stamping to casting. “We’re helping make that decision,” Hermiz said. They’re lightweights plans to present to a new advisory board formed partly because Balance wanted guidance on how to launch products and create companies. Polin started Balance in 2004 and hired DeMore two years later. Ever since then, they’ve been talking about how Balance could create its own products. They’ve even organized official brainstorming sessions. Nothing came of those efforts. Why not? Typically, the company would take on a new project and get distracted by deadlines. Today, however, the company is in a much better position to develop its own products anyway. Back when DeMore was hired as director of business development in 2006, Balance mainly did one thing: A client would ask the firm to design a product, and the company would do so. Since then, the company has expanded its capabilities. For instance, about seven years ago, Balance started helping clients conduct market research and come up with product development strategies. And in 2012 it started beefing See BALANCE, page 22 Hermiz shared his vision on lightweighting from the start, said Thomas Dugan, vice president finance and treasurer. Dugan has been with Shiloh for about 15½ years, and previous attempts to grow focused on doing more — more blanking or more stamping, he said. This approach is different. “We’re actually selling an innovation, we’re selling a technology, that no one else can do,” Dugan said. Dave Andrea, senior vice president, industry analysis and economics for the Original Equipment Suppliers Association in Troy, Mich., didn’t comment specifically on Shiloh, but he did note that the push to increase fuel economy is helping to increase the use of advanced materials in vehicles. “More and more these developments are being driven by the suppliers who hold the keys to the innovation of not just the production of the material itself, but the testing and validation, simulation modeling, fabrication and assembly and joining requirements that are required,” Andrea said in an email. “This is forcing suppliers to increase their engineering sophistication and manufacturing footprint to support their global OEM customers.” And Shiloh’s been an innovative company for quite a while, said Bill Gaskin, president of the Independence-based Precision Metalforming Association. Gaskin pointed to the member company’s tailorwelded blanks, which allow customers to use a thicker metal where it’s needed and thinner metal where it’s not to create a lighter part. Shiloh was a leader and early adopter in that area, he said. It certainly seems like the company’s devotion to innovation is paying off. Hermiz said that in the past two years, Shiloh’s customer base has grown — in 2012, General Motors and Chrysler made up about 45% of the company’s sales. Helping to drive change But today, while Shiloh has more business with those companies, those sales make up just about 30% of the company’s sales. The company is serving more Tier 1 suppliers, in addition to OEMs, he said, and it’s working with more commercial vehicle makers, in addition to its base in passenger vehicle makers. Shiloh has even entered the oil and gas market by making reactor cores for Velocys plc, though Hermiz said he doesn’t see the company expanding its markets beyond vehicles and oil and gas. Shiloh has also grown through acquisitions, adding to its capabilities, since Hermiz joined about twoand-a-half years ago. That includes last year’s acquisitions of Radar Industries and Finnveden Metal Structures, the latter of which gave Shiloh magnesium processing capabilities. By the fourth quarter of 2014, Shiloh had about 3,300 employees, compared with about 1,400 employees at that time in 2012. The company also has been increasingly investing in its plants across the globe, much like the upgrades seen in its Northeast Ohio plants. According to provided information, Shiloh invested $48 million globally, with $17 million in Ohio investments in 2014, compared to just $18 million globally in 2012, with $8 million going to Ohio facilities. The company plans to invest about $60 million this year and intends to open some plants in China. The business needs to support that kind of investment, Hermiz said — and it certainly appears to be. In 2014, the company’s sales were $878.7 million, up nearly 50% from $586.1 million in 2012, according to the company’s respective annual reports. But, its pro forma sales — a figure that accounts for a full year of sales from acquired companies — paint an even stronger picture. That figure was $1.1 billion in 2014, according to information provided by the company. And Hermiz sees more growth ahead for Shiloh. The automotive industry needs to get its fuel efficiency to 54.5 miles per gallon, regardless of the type of engine manufacturers opt for, and Shiloh plans to be there to support that transition, he said. “The need for lightweighting is going to be around for awhile,” Hermiz said. 20150330-NEWS--6-NAT-CCI-CL_-- 6 3/27/2015 4:11 PM Page 1 CRAIN’S CLEVELAND BUSINESS POWER. REACH. WWW.CRAINSCLEVELAND.COM MARCH 30 - APRIL 5, 2015 EXPERIENCE. NOW HIRING Does a career in Commercial Real Estate interest you? Now is your chance to join the best, most experienced firm in the business. Hanna Commercial is looking for talented, self-motivated professionals to join our sales team. For further information, please call: R. M. (Mac) Biggar, Jr., CCIM, SIOR 216.861.7200 HannaCRE.com CONTRIBUTED PHOTO A $1.3 billion project in Osceola, Ark., received help from veteran attorneys at BakerHostetler and David Stickler, a Cleveland-based executive at Global Principal Partners LLC. Steel mill gets strong push $1.3 billion Arkansas project was bolstered by NEO connection By JEREMY NOBILE [email protected] The Leadership Lab for Women in STEM WEATHERHEAD EXECUTIVE EDUCATION 2015 PR O GR A MS It’s time to make the most of your career in STEM. The Leadership Lab for Women in STEM provides professional and leadership development for women in technology-driven, male-dominated professions. Guided by expert faculty through three sessions and one-on-one coaching, participants will overcome barriers to success by building skills and gaining practical knowledge. SESSION 1 | April 28-30 SESSION 2 | June 17-19 SESSION 3 | July 29-30 Women in STEM: Bias, Barriers and Opportunities High-impact Leadership for Women in STEM Skills and Strategies for Leading the Way Forward in STEM For more information or to register, visit http://bit.ly/STEMleadershiplab A $1.3 billion flat-rolled steel mill currently under construction in Arkansas might still be a pipe dream if not for the involvement of some veteran attorneys at BakerHostetler and a Cleveland executive at investment and advisory firm Global Principal Partners LLC. The immense project, which is estimated to create 525 high-paying manufacturing jobs in an economically impoverished region of the South, took more than two years to pull off. Its execution involved multiple layers of public and private financing; dealings with the Arkansas government, a German bank, and the Environmental Protection Agency; and legal pushback from a rival steel company. “Sometimes making sausage isn’t the prettiest thing,” said David Stickler, senior managing partner with Global Partners, “but the outcome is fabulous.” BakerHostetler provided legal counsel and coordination with a team led by firm partners Al Adams and Phillip Callesen. But work arguably began with Stickler, who is stationed in Cleveland for Miamibased Global Partners. The firm, which specializes in massive steel mill projects, owns a 20% stake in Big River Steel. Stickler originally was approached by a group of entrepreneurs to raise the capital about three years ago, launching a site selection process along with it. The site in Osceola, Ark., which is about an hour north of Memphis, was preferred because of its location near the Mississippi River and a major railway for shipment of supplies, Stickler said. It also didn’t hurt that the area was adjacent to a power plant, because the mill will use an estimated 425 megawatts of power, comparable to the con- sumption of the city of Nashville. Beyond securing 1,400 acres for the steel plant, which involved multiple layers of entitlements falling into place, one of the biggest challenges was securing financing. There was no single deep pocket being reached into, Adams noted, so everything had to be blended together with all other moving pieces on the same deadline. That includes $125 million in bonds from the state of Arkansas and $800 million backed by German-government-owned KfW bank. Big River Steel also has a $650 million contract with SMS Siemag AG, a German steel industry equipment provider. Ground broke on the project in early July 2014, barely hours after the June 30 deadline imposed by legislation providing the state financing. The plant, which is scheduled for completion in mid-2016, will recycle steel and produce highstrength, lightweight steels for automobiles, tubular goods for the oil and gas industry, and electrical steels. Calling the project massive is an understatement. Big River Steel is expected to be unique and have such a big economic impact that the project was recently named the North American Mining & Metals Deal of the Year by IJGlobal Americas, an international infrastructure journal and project finance magazine. According to IJGlobal, the facility is expected to have the highest air quality standards for any electric arc furnace steel mill in the world and will make Mississippi County one of the largest steel-producing counties in the country. A competing company, Nucor Steel, has tried to block the project with various lawsuits, several of which have been dismissed so far, although Nucor is seeking appeals. One suit alleged the state financing was illegal because it was backed by taxpayer dollars. Another claimed the project didn’t follow EPA standards. “We had to explain to people in Germany about to give us $800 million that we’re confident these lawsuits have no merit,” Stickler said. “Culturally, over there, they’re just not expecting lawsuits like this.” The local team that brought the project together marveled at the Cleveland connections to major projects like Big River Steel across the country. One of the most prominent projects Stickler and the BakerHostetler team pushed off the ground includes Steel Dynamics in Fort Wayne, Ind., which formed in 1993 and drew investments from major private equity firm Bain Capital. In yet another Cleveland hook, John Correnti, chairman and CEO of Big River Steel, once worked in Cleveland. He launched his steel career with U.S. Steel in 1969 where he served in construction management activities until 1980. His sister, Maryann Correnti, is CFO of Heinen’s, Stickler noted. Professionally, the project was a culmination of decades of experience for those involved, Callesen said. “Everything you do as a business litigator, these things bring it out,” he said. “There’s a complete sense of reward in what we’re doing. We’re turning farmland into a billion dollar-plus operating business. … What it takes in legal skill to bring about that kind of transformation can’t be underestimated.” Conference calls were often held at 4 a.m. to accommodate German bankers. Teams often would work until 2 a.m. solving issues. Stickler said for some, it was like being back in their college fraternity houses, staying up late, working on projects over pizza — although, he assures, without the booze. 20150330-NEWS--7-NAT-CCI-CL_-- 3/27/2015 4:01 PM Page 1 MARCH 30 - APRIL 5, 2015 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM 7 Cosmetic fixes help fill Rockside Road office spaces By STAN BULLARD [email protected] New York-based hedge fund Five Mile Capital and its Chicago-based realty unit Riverview Realty Partners are proving on the Rockside Road office market that an old maxim little applied lately remains true. They’ve found that spending to refresh tired, slightly dated office buildings can reap leasing results. In the case of the three-building Park Center Plaza and two-building Corporate Place complexes in Independence, the out-of-towners in the past year have put millions into renovating and made big gains in occupancy. Jeff Patterson, Riverview president and CEO, said in a recent interview at Park Center Plaza I that the turnaround “frankly happened faster than I thought it would.” When all the tenants that the owner and its broker, CBRE Group Inc., have secured move into the buildings, which have a total of 600,000 square feet of office space, vacancy will drop to 7% from 30%. Although the real estate wheeling and dealing also benefited from new tax incentives adopted by the city of Independence, the prizes have generated headlines over the past year. One was the headquarters of publicly traded advanced materials maker GrafTech International Inc., which took a big chunk of space as it shed its former home in Parma. Others were financial research firm Longbow Research, which came from another Rockside Road area building in adjoining Seven Hills, and University Hospitals. All told, nine new tenants have moved in and are going into the properties, and an existing tenant is expanding. They will boost occupancy in the properties to almost 93%. An analysis by CBRE for Patterson shows the buildings outperformed the Rockside Road office, where occupancy stayed almost flat at 80%. “No one else in this (south suburban) market had really done what we did in this market to reposition properties with this type of careful investment,” Patterson said. “We feel we have established a new bar for the market.” However, Park Center Plaza and Corporate Place already set a high bar in the market. They were built in the 1990s with above-average amenities, although they had languished in the near-decade that prior owner Duke Realty Corp. of Independence spent marketing them for sale during the downturn. Doug Leary, a CBRE vice president who led the three agent team CBRE had on the assignment, said, “You took toptier buildings and made them pristine.” Few buildings have the large, multistory lobbies of the Five Mile buildings, fitness centers and huge conference rooms that distinguish them as Class A properties in the south suburbs. Park Center Plaza I, II and III are at 6050-6150 Oak Tree Plaza. Corporate Plaza I and II are at 6450 and 6480 Rockside Woods Blvd. South. David Browning, CBRE managing director, said in Five Mile and Riverview, the buildings had an owner with funds to restore the properties, albeit in a cautious way. “We went through the buildings and did an office by office analysis of what was needed,” he said. “In some cases, old offices were torn out so prospective tenants were able to envision themselves in the space. A large, semicircular orange wall in another office came down.” Many improvements were made to the buildings. Both complexes got updated lobbies with new digital directories and new carpeting on main floors, and the indoor parking garage at Park Center Plaza was spruced up. Old fitness centers were updated with new lockers, big-screen TVs and top-tier equipment. Throughout both properties, dated finishes were replaced with contemporary ones selected with the Cleveland-based Vocon architecture firm. Meeting rooms in both complex- es also gained current digital technology. “You could not get a cell phone signal,” Browning recalled of the spaces, which was fixed along with adding new carpeting and paint. Parking lots are getting repairs, and new landscaping will go in this year, particularly at a park that gives the three Park Center Plaza buildings their name. The impact of the new owners on Rockside has not gone unnoticed. Bob Nosal, executive managing director of broker NGKF’s Cleveland office, said increased leasing activity on Rockside is a good sign for the market. “An active ownership helps to bring it down, and the city being more aggressive with tax incentives helps,” Nosal said. “In general, I’m seeing more activity quarter by quarter in terms of leasing on Rockside Road.” He looks for Rockside to gain more activity in coming months as new owners of nine other buildings on Rockside undertake their own improvement programs. By NGKF’s numbers, the southern suburb of which Rockside is a part saw vacancy fall to 15.9% at the end of 2014 from 17% a year earlier. For Five Mile and Riverview, the improved leasing levels allow the firms to make good on a big bet. They paid $62 million for the two Independence office complexes, tak- ing a risk on Northeast Ohio, a relative backwater for Chicago and New York real estate types. Five Mile spent its money in Northeast Ohio instead of diving deeper into Chicago, where it owns many properties. “A lot of guys were looking at the same (office) product,” Patterson said. “Prices were going up. It made sense to look at a second-tier market.” What’s next for Park Center Plaza and Corporate Place? Patterson said the goal is to fill all five buildings. Upward momentum is again a factor on Rockside. Leary said CBRE has prospects for more space than it has to fill at Park Center Plaza and at Corporate Place. THE 3D PRINTING REVOLUTION WHAT EVERY BUSINESS MUST KNOW TODAY ABOUT 3D PRINTING/ADDITIVE MANUFACTURING: MAY 6, 2015 Rock and Roll Hall of Fame and Museum Cleveland, Ohio 4 HOURS OF CLE CREDIT PENDING APPROVAL REGISTRATION To register, please contact MEGAN PAJAKOWSKI at [email protected]. We will be holding a webinar to introduce and preview this topic April 28, 2015 11:00 a.m. – 12:00 p.m. Please register at www.crainscleveland.com/webinars. 1:00 p.m.: Registration 1:30 p.m.: Program 5:45 p.m.: Cocktails, networking, optional Museum touring This half-day seminar will alert you to 3D Printing technology’s game-changing opportunities and challenges: • New, complex products manufactured in one build with less waste by-product • Increased supply chain efficiency, global digital factories • Labor markets transformed • Manufacture over the Internet and print to order • Print at home, sell/share over the Internet • Intellectual property and product liability issues • Challenges for spare parts businesses On October 1, 1982, Billy Joel’s 52nd Street was the first commercially-released CD album. Beginning in June 1999, Napster allowed people to easily share MP3 files with each other. Digitization profoundly changed the music industry. Now digitization is changing the way we make and sell almost everything else. To paraphrase Robert Johnson, we’re standing at the crossroads. Speakers will include: MARK AVSEC Vice-Chair of the Innovations, Information Technology and Intellectual Property Group of Benesch PETER MENELL Professor of Law and Co-Director of the Berkeley Center for Law & Technology www.beneschlaw.com JOHN CHEEK Senior Corporate Counsel/IP of Caterpillar Inc. JENNIFER LAWTON CEO of MakerBot, the manufacturer of the leading desktop 3D printer BRETT CONNER Associate Professor of Mechanical & Industrial Engineering and Director of the Advanced Manufacturing Workforce Initiatives at Youngstown State University 20150330-NEWS--8-NAT-CCI-CL_-- 8 3/27/2015 3:52 PM Page 1 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM MARCH 30 - APRIL 5, 2015 K&D adds to downtown portfolio Willoughby company purchases Keith Building for $5.2 million By STAN BULLARD [email protected] WHO WILL RISE TO CRAIN’S 52 FASTEST-GROWING COMPANIES THE TOP? APPLICATIONS NOW OPEN CRAINSCLEVELAND.COM/CRAINS52 PRESENTED BY Additional sponsor support: Aetna, Cox Business, Apple Growth Partners, Taft Stettinius & Hollister LLP and Ohio.net The 21-story Keith Building has become the latest downtown Cleveland office building to become part of Willoughby-based apartment owner and developer K&D Group’s portfolio. Unlike K&D’s other office deals last year, the Halle and Leader buildings, Keith will remain an office building. Through 1621 Keith LLC, a company name that matches the structure’s Euclid Avenue address, K&D on Tuesday, March 24, paid $5.2 million for a place to try to put office tenants from Halle and Leader. That frees up space to add to existing vacancies as it pursues future plans to adapt much of Halle and Keith to residential rentals. “The idea is to keep everyone downtown,” said Doug Price, K&D CEO, in a phone interview on Friday, March 27. About 60,000 square feet of office space in Keith is empty. Price believes K&D may be able to fill most of it with tenants from Halle and Leader alone. The 1921-vintage neoclassical Keith Building, which has prominent arched windows visible in much of downtown, provides a traditional office space for tenants in Leader who like that kind of environment, Price said. K&D also is offering tenants space in empty offices and a former charter school at its Reserve Square mixed-use apartment, retail and office complex. Keith and Reserve THE FUTURE BEGINS WITH A CAPITAL “G”. For families, family offices, endowments, and foundations, the path to financial stability and opportunity begins with a company founded by the Pew family in 1956 — Glenmede. As a privately-owned trust company with $29 billion under management, we never struggle with competing priorities. We remain singularly focused on investment and wealth management and serving your best interests. Our seasoned professionals take a long-term view and gauge success based on how well we manage your wealth, from one generation to the next. Square both are renting in the range of $12 to $14 per square foot, Price said, which many Leader tenants are paying. However, Price worries one important group of office tenants won’t land in its properties or find affordable options downtown. Those are law firms that are being displaced from K&D’s buildings and others recently sold as real estate developers got a fever for buying old — but still occupied — buildings for conversion to apartments. “They want to stay close to the courthouse, and that’s hard to get,” Price said. “We’re really in the commercial business now.” – Doug Price CEO, K&D Group Buying the Keith, also home to PlayhouseSquare’s Connor Palace under a long-term lease, was not your typical office deal. To make the deal a go, the former Keith building owner — a partnership led by longtime Cleveland realty broker and property owner Bill West — first had to buy a lease for land underneath the Keith’s foundation. Land records show West’s group on Oct. 15, 2014, bought the remainder of the long-term lease for the land under the Keith for $700,000 from a trust administered by the Richmond, Va., office of Genworth Life and Annuity Insurance Co., part of Genworth Financial. With its purchase of the Keith building from West’s group, K&D also bought the land lease, Price said. Having both the land and building under common ownership makes the building easier to finance in the future. Two other long-term leases under the Palace remain undisturbed by the transaction, Price said. However, PlayhouseSquare’s long-term rental of the Palace makes the need to consolidate control of those leases unnecessary, Price said. With the purchase of the Keith Building, which can house more than 200,000 square feet of office users, K&D controls almost 1 million square feet of downtown office and retail space. Since parts of Halle, 1228 Euclid Ave.; Leader, 526 Superior Ave.; and Reserve, 1701 E. 12th St., will remain office space, K&D will establish a downtown commercial office, Price said. That office will be in 8,000 square feet on the Keith’s third floor. “We’re really in the commercial business now,” Price said. K&D also wants to centralize commercial services it now fulfills through multiple locations. Moreover, K&D inherited about 10 employees when it acquired Keith and Halle last year, and wants to put them in a single office. Leasing operations for apartments will remain in place at each of K&D’s four downtown apartment properties. West could not be reached and did not return a phone call by 2 p.m. Friday, March 27. Meet Brett! The Wizard of Magical Custom Network Solutions & our President Ethernet Internet Data Center Fiber Engineering & Consulting Brett knows the importance of delivering best-in-class network solutions while providing a steadfast commitment to customer service that is unrivaled within the industry. There’s more to your Network than just wires. See how Brett and the rest of the Everstream™ team can transform your business. visit everstream.net or call 216-923-2300 www.glenmede.com Glenmede’s services are best suited for those with $5 million or more to invest. To learn more, please contact Linda Olejko at 216-514-7876 or [email protected] CLEVELAND • MORRISTOWN • NEW YORK PHILADELPHIA • PRINCETON • WASHINGTON, DC • WILMINGTON 20150330-NEWS--9-NAT-CCI-CL_-- 3/26/2015 4:09 PM Page 1 MARCH 30 - APRIL 5, 2015 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM 9 SUMMA continued from page 1 need to go.” Just recently, he has rounded out his leadership team with a handful of new people. He’s also piecing together a facilities plan and figuring out the future for what remains at St. Thomas. In addition, Summa will be tasked with fixing its moneylosing insurance plan, SummaCare, which could result in it dropping certain lines of business. At the heart of it all, Malone said, is transforming the health system into one that focuses on keeping people out of the hospital. If anything, Malone is blunt in his assessment of Summa’s challenges. He’s not one to sugarcoat the issues, and like many hospital CEOs, he doesn’t talk in platitudes about the state of the health care industry. He calls the problems as he sees them. “What happens a lot of times with some executives is that when they present (the problems), it’s often with a softer approach,” said Valerie Gibson, Summa’s new chief operating officer, who worked with Malone at hospitals in Detroit. “His style is much more ‘I’m going to rip off the Band-Aid to show you where the flaws are and what we can do together to fix those flaws.’” Investing in change Last year, Summa, now a roughly $1.5 billion operation, posted a healthy 3% operating margin and about $45 million in net operating income. That’s a particularly impressive accomplishment given that Summa barely inched into profitability during the first six months of the year. The operational changes early in the year relating to Wadsworth-Rittman and St. Thomas helped, but so did working on its supply chain and revenue cycle with Mercy Health, the state’s largest health system who through a subsidiary purchased a minority stake in Summa in 2013. Still, Malone doesn’t want his staff or board of directors to get too comfortable with that operating margin. Over the next few years, he expects sizable investments in technology and facilities to go along with the health system’s transformation into one that promotes population health. Summa, for one, is transitioning its outpatient and inpatient electronic health record systems to the Epic platform — a project slated to cost $24 million. Also, Malone said the system is piecing together a facilities plan, which should be completed by late May or early June, that could outline investments in new facilities promoting primary care, women’s health or geriatrics. More importantly, further changes could be coming to Summa’s venerable community hospitals. Malone, however, stressed the health system has no plans to eliminate Barberton Hospital’s inpatient unit, though he expects other services could be cut as not to duplicate efforts of the health system’s main hospital, Akron City. Moreover, Summa plans to move its behavioral health unit out of St. Thomas and into Akron City to create a more integrated behavioral health institute. Crystal Clinic Orthopaedic Center continues to operate an inpatient unit within St. Thomas, but they’ll ultimately have to find a new home once its lease is up, Malone said. In December, Summa finalized the sale of its 49.65% ownership stake in the Crystal Clinic to a third-party investor, GBS Corp. in North Canton. “We’re trying to find a long-term strategy with the city of what to do with that facility because we know we’re not going to be there,” Malone said about St. Thomas. Malone said investments in facilities for primary care, women’s health and geriatrics facilities aren’t going to immediately pay dividends for the health system. Other health systems, most notably the rivaling Akron General, have invested their resources in service lines with strong margins, such as cardiology and neurology. However, the primary care component is a key prong of Summa’s strategy to transition the system to one that promotes population health and accountable care. It’s a shift even Summa’s board chair, James McIlvaine, said “comes with a lot of growing pains.” Summa was one of the early adopters of the so-called accountable care organization. The idea behind an ACO is rooted in banding together providers and rewarding them for keeping set populations healthy, and Summa is bracing for a day when the entire health care industry is structured in that way. It’s a far cry from the cur- rent structure where reimbursements from government and commercial payers are largely doled out based on how many services are provided. “They’re really been on the forefront of this movement,” said AnnJeanette Colwell, a senior analyst who studies the Ohio market for Decision Resources Group, a Massachusetts-based health care research firm. She added, “You need to be able to communicate and have that integration across the entire continuum of care. That’s something Summa has.” Then there’s SummaCare … While the health system appears to be performing well, its insurance arm has struggled in recent years. Malone said SummaCare came in at a $14 million loss in 2014, and its business in the small group, commercial and individual markets hasn’t performed well. “Those books have not been growing, and we have to look at whether we want to stay in all those lines,” Malone said. “There are not enough enrollees to balance the risk.” Complicating matters even fur- ther, last August, the Centers for Medicare & Medicaid suspended enrollment in SummaCare’s highly rated Medicare managed-care plans — some of its best performing products — for what it described as “multiple, serious violations.” In its August letter to SummaCare officials, CMS noted that the violations “resulted in enrollees experiencing delays or denials and increased out-of-pocket costs for medical services and prescription drugs.” Last week, however, the feds lifted the sanctions after SummaCare changed some administrative processes that had been causing the problems. Had the issues not been corrected by the end of March, the plan would have sustained a steep revenue hit as the feds would have severely limited their reimbursement rates. “From the moment we initially learned of the sanctions, we have worked diligently to ensure all necessary fixes were made,” said Claude Vincenti, SummaCare president, in a statement. “We have resolved the deficiencies cited by CMS and assure our valued Medicare members that taking care of their needs remains our number one priority.” Upcoming Editorial Feature HIGHER EDUCATION Northeast Ohio’s institutions of higher learning are continually developing. This section examines what’s happening on the region’s campuses. Use this ad opportunity to showcase your organization’s course offerings, unique educational programs and professional development opportunities. ISSUE DATE: MAY 4 AD CLOSE: APRIL 23 BRUCE CWEIBER 216-397-9499 | [email protected] Chicago Title is excited to announce the acquisition of Precision Title Agency. Precision Title has been a well-respected agent of Chicago Title for 15 years. "Providing the highest quality real estate and escrow services has always been the hallmark of Precision Title", said Bruce Cweiber, President of Precision Title. "Combining our knowledge and expertise with those of Chicago Title will further enhance our ability to handle all types of transactions in Ohio and throughout the entire country." Bruce and his team will be joining the Chicago Title operation in Cleveland. Chicago Title is a member of the Fidelity National Financial family of companies (NYSE: FNF) and the nation’s largest group of title insurance companies through its title insurance underwriters, who collectively issue more title insurance policies than any other title company in the United States. Contact Nicole Mastrangelo at 216-771-5158 or [email protected] for more information on how to place your ad. 20150330-NEWS--10-NAT-CCI-CL_-- 10 3/26/2015 4:28 PM CRAIN’S CLEVELAND BUSINESS Page 1 WWW.CRAINSCLEVELAND.COM MARCH 30 - APRIL 5, 2015 PUBLISHER: John Campanelli ([email protected]) EDITOR: Elizabeth McIntyre ([email protected]) MANAGING EDITOR: Scott Suttell ([email protected]) OPINION Pave the way Springtime brings the pleasant retreat of unwelcomed tundra from the streets of Cleveland, but it also brings a most unpleasant surprise: Potholes. And we’re not talking about a rim-bender here or there. We’re talking about a pothole-to-spring-crocus ratio of about 5-to-1. As we slalom our way down main roads and side streets, downtown and in the neighborhoods, trying to avoid craters that threaten to flatten tires and damage rims, we need to keep reminding ourselves: It’s a sign of warmer days ahead. And we need to keep asking ourselves: Is this really the best we can do? Cities in Northeast Ohio need to get serious about properly maintaining roadways, and Cleveland, specifically, should be leading the pack if it’s going be a destination city where people want to live, visit, work and do business. Fortunately, Cleveland leaders last week took a small step toward implementing a more permanent solution to fixing those streets that are in the most critical stages of disrepair. (Never mind that it can feel sometimes like a majority of streets would fit into that category.) On March 23, Cleveland City Council President Kevin Kelley announced a plan to more than double the city’s street repaving budget, increasing the amount from $4.4 million last year to as much as $10 million next year. This year, the city plans to spend $6.5 million on street resurfacing. Each year, the increased funds would target the worst 5% of residential streets in the city. The streets most in need of repair would be determined by a study done annually that would issue a rating for every road in each ward of the city. According to ideastream, Kelley said that Cleveland’s streets are in “crisis mode,” and called on his council colleagues to support “a comprehensive, data driven plan to roadway resurfacing that’s going to maintain every roadway in the city of Cleveland.” Kelley added: “To get there, we’re going to need to spend a lot more money.” This goes beyond patching potholes. It’s about repaving, which helps stop the potholes from popping up in the first place. How certain basic services are delivered speaks loudly about a city’s health and well-being. During the lean years of the Great Recession, Mayor Frank Jackson and his administration managed to balance the city’s budget. But when that’s done at the expense of maintaining and repairing the city’s streets, the city is much poorer for it. Bad infrastructure — and that includes pocked roads — impedes business development, lessens the quality of life for residents and can leave visitors with a bad impression. Perhaps the RNC convention next year explains the timing of this increase in funding for streets, but it needs to continue long after the election is over. Kelley has said every neighborhood street would be resurfaced within 20 years. City leaders in the years to come, then, need to stay committed, and it wouldn’t hurt to find a way to step up the timeline. When visitors leave Cleveland, we want them to tell friends about how great our city is, and not just about how efficient our tire repair shops and emergency dental services are. FROM THE MANAGING EDITOR Lights, camera, Cleveland ... You can learn a lot about people by spending time with them in the dark. At a film festival. (Did you think I meant something else?) I had the privilege this year of being one of three jurors watching 200-plus short films that were competing for 11 awards at the 39th Cleveland International Film Festival. That meant a lot of trips over to Tower City Cinemas during the workday — tough job, I know — to check out a pretty terrific array of work by filmmakers from across the globe. Hollywood movies might not be what they used SCOTT to be, but the state of indepen- SUTTELL dent cinema is strong. One thing I learned from talking to my seatmates at various screenings is that people who visit CIFF from out of town are convinced Cleveland has one of the best festivals in the country, and that Cleveland is a blast to visit. A San Diego man in front of me at Shorts Program 5 on March 21, for instance, raved about the festival’s programming taste and added, “Great town. Really fun,” when asked about his trip here. (Moral of the story: Don’t apologize for the weather, Cleveland. Just produce great things that make people want to visit.) There’s another lesson, or maybe more of an inspiration, to be found in the joy some of these young filmmakers get from visiting the festival and interacting with audience members. It’s one thing to get a Facebook like, or an admiring tweet, in recognition of your work, but face-to-face feedback still can’t be beat. The director/star of a fun comedy called “Dry Me Crazy,” Ethan Corn, brought a small group of friends and family to a screening, and they couldn’t have been more excited to show the film to a live audience and talk about it when the lights came up. No one’s getting rich on these short films. They’re works of passion, often aimed at attracting industry attention that will lead to a feature gig. It’s apparent, though, how crowdfunding is changing the world of independent movies, just as it’s changing other parts of the economy looking for new ways to attract capital. The end-credits of many of the films offer thanks to crowdfunders, including “Bert,” who backed the very funny comedy “The Hyperglot,” about a New Yorker with a unique talent. One of the strongest short films of the festival, “Simon Says,” tells a dystopian tale of a would-be entrepreneur who battles the voice inside his head maintaining that he’ll never succeed. A few of you — or more than a few of you — probably can relate. That voice is a nasty piece of work, though in this film, it’s brought vividly to life by actor Brian Stepanek, a Cleveland native. Ignore the voice. Do your homework and forge ahead. The film festival’s reputation has been on the rise for years. One manifestation of that is its inclusion in a USA Today online poll to identify the country’s best fests, along the likes of well-known events in Austin, Chicago, New York, Palm Springs, Sundance and Telluride. As I wrote this last Thursday, Cleveland was in second place. You can remedy that by voting at www.10best.com/awards/travel/bestfilm-festival/. Then the rest of the country can learn what Clevelanders already know. LETTER TO THE EDITOR Thank you for the article about Accountable Care Organizations in the March 23 edition of Crain’s. ACOs are an innovative model for our community. However, the headline “ACOs aren’t as profitable, but are becoming norm in Northeast Ohio,” is misleading. Yes – ACOs are often not profitable for a health system in the short-term. The ACO model is meant to create change and lessen costs to health systems over time by creating efficiencies and collaborations to create a more healthy community. ACOs are designed to save the health system and community significant health care costs over time. The goal of ACO coordinated care is to ensure that patients get the right care at the right time, while avoiding unneces- sary duplication of services and preventing medical errors. The Legal Aid Society of Cleveland is part of the ACO model at MetroHealth where a Legal Aid attorney is integrated into the health-care team at MetroHealth’s Senior Health and Wellness Center. On its face, it may seem strange for lawyers to be working alongside doctors. But Legal Aid and MetroHealth are working together to address the social determinants of health. Living in poverty is unhealthy. Not every illness has a medical remedy and some illnesses can be avoided altogether by addressing issues of poverty. A family forced to choose between food and heat in the winter months cannot be treated with a prescription or a vaccination. Similarly, an asthmatic person will never breathe symptom free — no matter how much medication is administered — if he or she returns from the doctor’s office to mold-infested housing. Our attorneys and physicians practice preventive lawyering and medicine to assist patients and their families in successfully addressing some of the social and environmental barriers to good health. This partnership will reduce health disparities in low-income communities. And, as the ACO model encourages, will save the community costs over time. — Colleen M. Cotter Executive Director The Legal Aid Society of Cleveland 20150330-NEWS--11-NAT-CCI-CL_-- 3/26/2015 2:44 PM Page 1 MARCH 30 - APRIL 5, 2015 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM GOING PLACES 11 Send information for Going Places to [email protected] WE ARE PROUD TO SPONSOR JOB CHANGES None 4 Under 21 CONSTRUCTION and choices beyond GILBANE BUILDING CO.: Charles Weitzel to project manager II. CONSULTING FINDLEY DAVIES: Jason Rothman to senior consultant and member, Technical Resources Practice Group. 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EXIT PLANNING INSTITUTE, NORTHEAST OHIO CHAPTER: Patrick C. O’Brien (PNC Bank) to president. REAL ESTATE None 4 Under 21 is a campaign focused on reducing teenage fatalities, especially during prom and graduation season. Start the conversation with your teen about drinking and driving today by printing out the Elk & Elk parent-teen drinking and driving pledge. Discenza The attorneys and staff of Javitch Block LLC mourn the passing of the firm’s longtime partner and friend VICTOR JAVITCH ST. AUGUSTINE HEALTH MINISTRIES: Robert Pumphrey to chair; Karen McCarthy to vice chair; Janet Gosche to secretary; Damon Taseff to treasurer. Javitch Block LLC OHIO INDIANA KENTUCKY TENNESSEE TEXAS WEST VIRGINIA JBllc.com 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383, Fax: (216) 694-4264, www.crainscleveland.com Publisher: John Campanelli ([email protected]) Events manager: Jessica Rasmussen ([email protected]) Editor: Elizabeth McIntyre ([email protected]) Special events coordinator: Kim Hill ([email protected]) Managing editor: Scott Suttell ([email protected]) Advertising director: Nicole Mastrangelo ([email protected]) Sections editor: Amy Ann Stoessel ([email protected]) Assistant editor: Kevin Kleps ([email protected]) Sports Senior reporter: Stan Bullard ([email protected]) Real estate and construction Reporters: Jay Miller ([email protected]) Government Chuck Soder ([email protected]) Technology Dan Shingler ([email protected]) Energy, steel and automotive Tim Magaw ([email protected]) Health care and education Rachel McCafferty ([email protected]) Manufacturing and energy Jeremy Nobile ([email protected]) Finance Research editor: Deborah W. Hillyer ([email protected]) Art director: Rebecca R. Markovitz ([email protected]) Cartoonist/illustrator: Rich Williams Senior account executive: Dawn Donegan ([email protected]) Account executives: Lindsie Bowman ([email protected]) John Banks ([email protected]) Laura Kulber Mintz ([email protected]) Rob Divine ([email protected]) Marketing strategist: Michelle Sustar ([email protected]) Office coordinator: Denise Donaldson ([email protected]) Web Editor: Damon Sims ([email protected]) Digital strategy director: Nancy Hanus ([email protected]) Audience development director: Eric Cedo ([email protected]) Web/Print production director: Craig L. Mackey ([email protected]) Production assistant/video editor: Steven Bennett ([email protected]) Billing: Michele Ulman, 313-446-0353 ([email protected]) Credit: Todd Masura, 313-446-6097 ([email protected]) Customer service/subscriptions: Cummins Tom Fox, SIOR tel 330 535 2661 www.naicummins.com Commercial Real Estate Services, Worldwide. 877-824-9373 INDUSTRIAL BUILDINGS FOR SALE Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Chris Crain: Executive Vice President, Director of Strategic Operations KC Crain: Executive Vice President, Director of Corporate Operations Dave Kamis: Vice president/production & manufacturing Anthony DiPonio: Chief Information Officer Thomas Stevens : Chief financial Officer Mary Kramer: Group publisher G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) 1545 INDUSTRIAL PKWY AKRON, OH 44310 #/--%2#%34 p3& p3& p p p#LEAR p(EAVY0OWER#RANES p&IRE3UPPRESSION3YSTEM p&ULLY!IR#ONDITIONED 4!,,-!$'%/( p"ANK/WNED 20150330-NEWS--12-NAT-CCI-CL_-- 12 3/26/2015 4:41 PM Page 1 CRAIN’S CLEVELAND BUSINESS Cuyahoga & Lorain County companies: WWW.CRAINSCLEVELAND.COM MARCH 30 - APRIL 5, 2015 WANT HAPPIER EMPLOYEES? Offer credit union membership in your benefits package. It’s easy…call Jill at 440-892-6880 x231 Free online and mobile banking and bill paysNationwide surcharge free ATM networksLow fees/Super easy loans: mortgage, auto, signatures Direct deposit to employee accounts: employees receive pay one day early 30400 Detroit Road, Ste 101 Westlake, OH 44145 440-892-6880 lakeshoreccu.com 586 Moore Road Avon Lake, OH 44012 440-933-3181 facebook.com/lsccu Federally insured by NCUA AT HOME. IN THE OFFICE. AT THE GYM. ON THE GO. STAY CONNECTED. Facebook.com/CrainsCleveland | Twitter.com/CrainsCleveland Instagram.com/CrainsCleveland Brutal winter might have impacted local job dip the last two months Employment in the seven-county Cleveland-Akron metropolitan area dipped slightly in February, with the region losing 1,579 jobs in February, a 0.14% loss from January. That dropped total employment to 1,132,703 on a seasonally adjusted basis, from 1,135,532 working people in January, according to the Ahola Crain’s Employment report. That’s the second straight monthly decline in employment. The February ACE report showed that the sevencounty metropolitan region lost 2,784 jobs in January, a 0.24% decline in jobs. On a year-over-year basis, though, employment was up 1.14%, with a 13,135 increase in people employed from February 2014. “The losses (for both months) may be due in part to the adverse winter weather Northeast Ohio and a large swath of the U.S. experienced since the beginning of 2015,” wrote Jack Kleinhenz, the Cleveland Heights economist who created the ACE model. “It may be too soon to attribute losses ExactCare Pharmacy’s Prescription for Success: to the stronger dollar, which may cause a reduction in exports and export related jobs.” He added that energy-related jobs also might have been impacted with the recent decline in the price of oil. The employment numbers are based on payroll data compiled by The Ahola Corp., a Brecksville payroll and human capital management firm. The figures come from 3,000 employers who use Ahola’s payroll processing service. The job losses were spread across small and midsize goods-producing and service firms, hitting industrial firms a little harder. Employment in that sector dropped 0.27%. Comparing this data with a similar survey suggests that the region is lagging the national recovery. The monthly ADP Regional Employment Report shows increased employment in the four major regions, with Midwest jobs growing by 0.13%. The ADP report shows employment in Ohio also is up 0.13%. ADP processes payroll for nearly 24 million workers. Regional jobs in the construction industry may be especially hard hit. According to data compiled by the Associated General Contractors of America, an industry trade group, construction employment in the Cleveland-Elyria region declined 10% between January 2014 and January 2015, a loss of 3,000 jobs from a base in January 2014 of 30,300. That was partly offset by an increase of 6%, or 600 construction jobs, in Akron, a rise to 10,700 construction jobs. Nearly two-thirds of the metro regions surveyed by the Associated General Contractors reported jobs gains. Only the St. Louis metropolitan area lost more construction jobs than Cleveland-Elyria, according to the group. The organization attributed the mixed construction industry picture to a generally rising economy that was tempered by fluctuating oil prices and the reluctance of Washington to fund needed highway, bridge and transit — Jay Miller repairs. SALT • SALT • SALT • Water Softener • Industrial • Food • Ice Melt • Sea Salt Call For Pricing!! Minimum Delivery: 1Pallet WORKING WITH ADP. ExactCare Pharmacy, a revolutionary pharmacy solution for individuals challenged with taking multiple medications, rapidly grew beyond the startup when they began to notice some unwanted side-effects. Payroll and Human Resource challenges were holding them back from focusing on their team, strategy and growth. The cure was working with ADP. This story is quite common for growing companies. If you find yourself bogged down in administration when you really should be focused on strategy, visit Beyond The Startup—a website dedicated to helping companies like yours find business advice, ideas and insights. beyondthestartup.com/exactcare ADP and the ADP logo are registered trademarks of ADP, LLC. Copyright ©2015 ADP, LLC 1-800-547-1538 Salt Distributors Since 1966 20150330-NEWS--13-NAT-CCI-CL_-- 3/26/2015 2:49 PM Page 1 CRAIN’S CLEVELAND BUSINESS MARCH 30 - APRIL 5, 2015 13 FINANCE REBECCA R. MARKOVITZ From left, KeyCorp’s Stephen Wilton, Diana Oxenrider, Cristina Topan-Popoiu, Naftali Midamba, Katerina Pikovskiy and Mark Lalli. KeyCorp is one of several Northeast Ohio companies that is refining its recruiting strategies to ensure the business grows with the best talent it can find, including some of its newest staff pictured here. Demand means challenges are adding up Increased competiton for top CPAs and money managers is making local companies get more creative By JEREMY NOBILE [email protected] Companies small and large are jockeying for new and experienced talent in Cleveland’s finance and accounting sector, resulting in more competitive recruiting efforts and greater investments of time and money to feed talent pools. And all that competition also means more lucrative opportunities for top talent. Nationwide, top CPAs and money managers are in high demand as the economy improves and companies expand. It’s a hunger that’s felt at professional service firms and banks as well as within other industries, where companies are seeking professionals to mind their growing finances. “The demand is real,” said Ed Evans, director of human resources for Cleveland accounting firm Maloney + Novotny, “and it is very competitive right now.” Evans said competition to attract and retain young and veteran accountants is at a premium, particularly manifesting itself at college campuses where companies increasingly are recruiting soon-to-be grads in finance-related fields earli- er on. Maloney + Novotny, for one, hires interns nearly every season — from a couple in the summer to up to seven in the winter — offering jobs to the top performers. Evans said 95% of Maloney + Novotny’s first-level accountants at some point completed an internship at the firm. And, Evans said, for midsize organizations without the deeper pockets of a Big Four firm to offer incentives like signing bonuses, “We have to be creative to a point, saying this is why you should come work with us. … We’re all See DEMAND, page 17 A FIELD THAT PAYS When higher-level CPAs leave one company for another, they’re generally expecting at least a 15% pay increase at the new firm, said Ralph Dise, president of Cleveland-based recruiting and human resource consulting firm Dise & Co. That said, median incomes for accountants and auditors are trending upward, according to the Bureau of Labor Statistics, increasing to $72,500 in 2013 from $63,550 in 2012. According to a June 2014 report by nonprofit research organization WorldatWork, an all-time high of 74% of U.S. companies offered signing bonuses, compared with 54% in 2010. That increases to 89% for those in finance and accounting fields, with the average size of bonuses between $5,000 to $9,999. About 4% of that group saw bonuses of $25,000 or more. Retention bonuses also spiked, with 54% of companies offering those in 2014, versus just 25% in 2010. A more public look: ViewRay plans to hit Nasdaq By SCOTT SUTTELL [email protected] ViewRay Inc. of Oakwood Village, which makes an MRI-guided radiation therapy system called MRIdian that images and treats cancer patients simultaneously, has raised well more than $100 million from private investors. Now it’s looking for more — this time from the public market. The company said in documents filed Feb. 13 with the U.S. Securities and Exchange Commission that it has applied to list its common stock on the Nasdaq Global Market under the symbol “VRAY.” In a March 25 amendment to the initial filing, ViewRay said it plans to sell 4 million shares of common stock. (Underwriters of the offering also have the option to purchase 600,000 shares.) ViewRay said in the filing that it expects the initial public offering price will be between $12 and $14 per share, and that the IPO will raise a total of about $64.4 million. (You can read the amended IPO filing at tinyurl.com/oydmjx7.) The company estimates that net proceeds from the offering will be about $45 million, or about $52.2 million if the underwriters exercise their option to purchase additional shares in full, at an assumed IPO price of $13 per share, which is the midpoint of the expected price range. “We currently intend to use the net proceeds we receive from this offering to support the ongoing commercialization of MRIdian, including sales and marketing activities, manufacturing and supply chain management, installation, customer support and product quality, for research and development related to continued product development activities and for general corporate purposes, including working capital,” ViewRay said in the amended IPO filing. Michael Saracen, senior director of marketing at ViewRay, said in an email that the company could not comment on the IPO, since the company is in the “quiet period” set by SEC regulations. The IPO is just the latest growth step for the company, which received U.S. Food and Drug Administration marketing clearance for MRIdian in May 2012 and now has patients receiving treatment on the system at three of the country’s top cancer centers: Washington University in St. Louis, the University of California, Los Angeles and the University of Wisconsin. As recently as February, ViewRay raised $15 million from investors, following a $16 million raise in January, according to documents filed with the SEC. (The document for the $15 million February fundraise is at tinyurl.com/o98cxgh.) Before this year, it had raised more than See VIEWRAY, page 19 20150330-NEWS--14-NAT-CCI-CL_-- 14 3/26/2015 2:52 PM Page 1 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM MARCH 30 - APRIL 5, 2015 Firms can’t afford to fail at cybersecurity By JEREMY NOBILE [email protected] Several major data breaches made national headlines last year in the bank sector, but it’s not the only segment within the overall financial services industry seeing costs mount for cybersecurity. And big or small, the damage to a company’s brand following a breach may be the most costly expense of all. Even so, despite the fact that cybersecurity is largely considered to be a cost of doing business, the expense of investing in protection has discouraged some in non-bank, finance-related industries from taking such precautions, said Michael Stovsky, a partner at Benesch and chairman of the firm’s innovations, information technology and intellectual property group. The reluctance is often greatest at smaller and midsize companies, where budgets are tighter and costs are harder to absorb, he said. While many firms are required to have certain baseline protections as mandated by the Gramm-LeachBliley Act, some still resist and risk being noncompliant with standards. “We’re still dragging some of our clients kicking and screaming into the world of up-front compliance,” said Stovsky, speaking specifically of financial service companies. “Even in a world where we have lots and lots of breaches, we still have trouble convincing companies to invest in this.” Those resisting are in an apparent minority, though, as dollars spent nationwide on protection increase. The Ponemon Institute, a Michigan-based independent research firm studying data protection and information security, found that the average total cost of cyber protection for financial service firms was $20.8 strategies and investments related to cybersecurity. Many cited concerns that doing so might make them a target for attacks. High standards million in 2014. According to the report, only the energy/utilities and defense sectors spent more last year on cybersecurity, with organizations spending an average of $26.5 million and $21.9 million, respectively, in 2014. The California-based nonprofit Identity Theft Resource Center found the medical/health care industry was the most targeted sector in terms of identified breaches in 2014 with 42.5% of all incidents, followed by the business sector with 33%. According to the Ponemon report, out of 14 industries, the health care sector saw the second-lowest investment in cybersecurity with an average spend per organization of $6 million in 2014. Only 5.5% of all incidents were seen in the banking, credit and financial sectors, according to the center. But, that still equals about 1.2 million records compromised in 43 breaches for those industries. Michigan-based accounting firm Rehmann, which has offices in Independence and Westlake, launched its first cyber protection efforts 13 years ago, said CIO and director of consulting Jim Carpp. But he said companies in the past five years have become more fervent in such efforts especially as breaches make national headlines. One of the company’s recent strategies to bolster security includes contracting with more third-party companies to assess and audit its network. That’s crucial today, said Drew Kersh, Rehmann information security manager, because 99% of the time if there is a hole, it’s one that a company won’t see itself. Declining to talk hard dollars, Carpp said Rehmann has “doubled” cybersecurity efforts in the last two years, but most of that is spent on manpower, time and energy by the current IT department. He said about 15% of the firm’s IT budget goes toward cyber protection. Several Northeast Ohio financial service companies contacted for this story, including insurance and accounting firms, declined to discuss Jeff Rozek, a cybersecurity senior manager with Ernst & Young, said cybersecurity spending can fluctuate depending on a company’s size, what it does and the records it keeps. Banks and health care entities have a variety of mandates with which to comply, depending on the records they have — the federal Health Insurance Portability and Accountability Act requirements covering the protection of data at hospitals also applies to insurance companies, for example — and the larger ones tend to spend the most. A top standard of protection today is to have real-time notifications of when a hack or breach has happened, he said. According to a 2014 report by EY, though, fewer than 20% of all businesses surveyed across all industries had that. Many who invested heavily in protection in years past are either maintaining those levels today or, in some cases, going “above and beyond” mandated baselines for protection, a move that Rozek encourages. “There’s been a push to go well above that,” Rozek said. “Good security will make you compliant. But if they just focus on being compliant, they will not have good security.” Large companies today might spend 10% to 12% of their IT budgets on security, he said. Smaller companies tend to spend between 5% and 7%. Both are growing compared with years past. Meanwhile, a “huge” push by boards of directors at smaller to more midsize companies today is driving investments at some firms, said Benesch’s Stovsky. “No one can prevent a data breach 100%. And the last thing these companies want to do is pay for the costs of security and compliance because it’s not an activity that generates revenue,” he said. “But the middle-market companies who have been slow to comply are now sort of seeing the light.” Chris Loede, director of IT at Beachwood-based HW&Co., said his firm also is investing more in thirdparty protection assessments because “if you’re not staying on top of that stuff, you’re going to be vulnerable.” A 16-year veteran of IT, Loede said he sees more companies that don’t have the resources for substantial protection in-house are moving more data to off-site clouds. Loede said the firm invested heavily in cyber protection between 201213 with infrastructure upgrades. The firm’s average cybersecurity spend has fluctuated recently from between 3% and 8% of the IT budget. Much of today’s cost comes from maintenance and system testing. Asked whether costs could be passed on to customers, Carpp said Rehmann does not intend to raise fees at this time to defray cyber protection costs. While the security may not lift revenues, he said the damage to an accounting firm’s reputation, or any other financial service company, following a breach would be much, much more costly. “A lot of times, an organization in 12 to 14 months is out of business because of loss of reputation for a breach,” he said. “Your average organization typically can’t survive that loss of reputation.” Our mission is to understand your business. Expertise Pays Off For more than 80 years, we have helped middle THYRL[JVTWHUPLZHJOPL]LÄUHUJPHSZ\JJLZZ -PUHUJPHS[H_0;HUKVYNHUPaH[PVUHSK\LKPSPNLUJL 7\YJOHZLHJJV\U[PUNJVUZ\S[H[PVU ;H_Z[Y\J[\YPUN + Risk assessment/risk mitigation (\KP[[H_HUKHK]PZVY`ZLY]PJLZ 3L[V\YRUV^SLKNLL_WLYPLUJLHUKL_WLY[PZLILHU HZZL[[V`V\YJVTWHU`»ZVWLYH[PVUZTHUHNLTLU[ HUKZOHYLOVSKLYZ Cleveland | 216.363.0100 Canton | 330.966.9400 Delaware | 740.362.9031 Elyria | 440.323.3200 Business Advisors and Certified Public Accountants maloneynovotny.com Buckingham, Doolittle & Burroughs is Northeast Ohio’s business law firm. Serving the Akron, Canton and Cleveland areas for over 100 years, this region has become our home and the businesses in this region have become our family. We don’t just represent you; we support you and stand by you. We understand your business and become an extension of it. We celebrate with you and cheer for you. We go to great lengths for you and we listen to you. Because of this we are more than a business law firm; we are your partner in business. Akron • Canton • Cleveland bdblaw.com 20150330-NEWS--15-NAT-CCI-CL_-- 3/26/2015 2:53 PM Page 1 MARCH 30 - APRIL 5, 2015 ADVISER CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM 15 MARK BOBER Acquisition agreements: Avoiding buyers’ remorse Northeast Ohio had its fair share of successful corporate acquisitions in 2014, and the prevailing sentiment is that 2015 will be another strong year for such deals, both locally and nationally. Acquisitions are hard enough to make work; combining cultures, product lines, sales channels and internal tech systems can take months or even years. Adding post-acquisition accounting disputes to those challenges is certainly an unwanted complication for both the buyer and seller, so the best course of action is to try to avoid such surprises. The buy-sell agreement, also known as the Definitive Purchase Agreement, is the critical foundation of the deal. Get that right, and most of the postacquisition financial disputes that occur are either easily resolved or don’t even surface in the first place. In our M & A practice, we often see three common areas as potential sources for post-acquisition disagreements where accounting related issues come into play: Net working capital adjustments; representations and warranties; and contingent earn-outs. Net working capital adjustments Most transactions include a negotiated working capital threshold or target, with a true-up between the threshold and the actual working capital as of the closing date. Further, the assessment as to the amount could become a potential area for dispute if not clearly defined. As such, it makes sense to anticipate these areas of disagreement and define how they’ll be resolved. Will you use GAAP (Generally Accepted Accounting Principles) as a standard for accounting rules or International Financial Reporting Standards (IFRS)? Different standards lead to different calculations. In fact, the same standard can produce different interpretations, so it’s important even once you’ve agreed on which standard to follow that you clarify your interpretations up front. How are you treating accounts receivables? Are the buyer and seller both consistently valuing such assets? Do they treat uncollectibles and doubtful accounts in the same manner from a valuation standpoint? Similar questions surround accounts payables. How is the cutoff date determined? Is the seller making any estimates on warranty accruals or pending claims that don’t come to pass and end up affecting the working capital value at the deal’s close? In addition, liabilities based on estimates can result in post-acquisition disagreements, so again it’s important to define in writing in advance. Inventory valuation is another area of potential dispute. Did the buyer and seller discuss in advance how to account for excess or obsolete inventory? Consider whether you’ll allow for factory overhead to be absorbed into inventory. How are you handling soft costs such as R&D and other intangibles? The buyer and seller need to agree on what’s included here at the outset, not post-acquisition. Representations and warranties So many post-acquisition disputes emanate from this portion of the negotiations. As buyer and seller agree on a price, typically both make certain representations of what they expect to occur. At times, something negative will happen affecting the business while the deal’s closing, and the buyer wants to know if the seller knew of this coming bad news (i.e., loss of a key customer) all along and failed to disclose it. Are there alleged misrepresentations in the balance sheet or income statement that have now come to light? Is the sustainability of the income or the business’ profitability now in question? One common example we see are different interpretations of liability — is something included as a contingent liability or should it have been accrued as a true liability? The Definitive Purchase Agreement should contain language as specific as possible when detailing the seller’s representations and warranties to eliminate as much room for different interpretation and opinion as possible. Earn-out provisions A typical Definitive Purchase Agreement defines additional payments to the seller if financial milestones are hit after the deal closes. This is another area that requires tight language in how the parties define the accounting methodology behind earn-out calculations, as it’s often the source of disputes at or after the close. ■ What sources of revenue are included or excluded? ■ Did additional expenses occur, how do those affect the earn-out, if at all? ■ Do both existing customers and new customers acquired during the closing period count? ■ Does revenue from new products or services developed after the acquisition count toward the earn-out? ■ How are warranty reserves accounted for? Some business owners prefer to think in broad strokes rather than the details that determine whether a deal ultimately proves financial success. But as with most aspects of the business, “the devil’s in the details.” That certainly applies to M&A negotiations and constructing a tight Definitive Purchase Agreement that works for both the buyer and seller. Mark Bober is a partner at Bober, Markey, Fedorovich and a practice leader for the firm’s Transaction Advisory Services Group serving private equity groups. I’ll guide you if the going gets rocky. And steer you toward a smoother path before it does. I know compensation & benefits aren’t your business. And you know you can’t run your business without them. I bridge the gap. Set up the plans. Consider the implications. Keep up with the regulations. Represent you in disputes. So you stay compliant and competitive. The laws can be massive, and the rules keep changing. Sometimes your business changes. You want to grow. Or merge. Or move on. But the HR details have to be settled first. I’ll lay out your options, along with the risks. So your business stays compliant and competitive, and you stay on track. I’m LISA KIMMEL. I’m on your team. MY BENESCH MY TEAM > Chair, Executive Compensation & Benefits Practice > Focuses on tax, compliance and fiduciary issues relating to qualified and nonqualified retirement plans, welfare benefit plans and executive compensation programs. > Transactional work involving transition and continuity of benefits, and dispute resolution including Internal Revenue Service (IRS) and Department of Labor (DOL) audits and controversies. > Counsels clients on Affordable Care Act business application and compliance. > (216) 363-4459 | [email protected] www.beneschlaw.com 20150330-NEWS--16-NAT-CCI-CL_-- 16 3/27/2015 CRAIN’S CLEVELAND BUSINESS 3:22 PM Page 1 WWW.CRAINSCLEVELAND.COM MARCH 30 - APRIL 5, 2015 Nonprofit is happy to lend help By ANNE BRENNAN [email protected] Three little words helped change Ron Tabak’s financial future. Weighted down with four payday loans, behind in his mortgage payments and on disability, he typed in “help for loans” online and found the Hebrew Free Loan Association of Cleveland, based in Beachwood. Tabak, 52, of South Euclid, had stumbled upon a group that offers interest-free loans to Northeast Ohio residents, of any denomination or background, who have been turned down by conventional lenders. Tabak has taken out two loans, one for $1,500 and later for $5,000, and arranged repayment. “My wife and I are elated,” he said. “It’s put food on the table. I’m getting very stable.” Payday loans, which can charge interest as high as 300%, and other high-interest loan alternatives are a common reason clients apply for financial help through HFLA of Cleveland these days. Tabak estimates a Springleaf.com loan he took out for bill consolidation would have taken about 10 years to pay off, compared to the two-year plan with HFLA. One month, he explains, HFLA allowed him to postpone a payment so he had money for Christmas presents. “They said: ‘If you don’t have it, it’s OK. You can get Christmas gifts. Pay us later,’ ” he recalls. The HFLA of Cleveland has a 111year history, beginning with a $400 donation to help European refugees in 1904. The premise of interest-free loans is inspired by the Jewish biblical tradition of helping people help themselves, considered one of the highest forms of charity, explains Michal Marcus, HFLA’s executive director. The Cleveland group is part of an international network of nonprofits, the International Association of Jewish Free Loans, based in Los Angeles. They work in conjunction with each other, sharing best practices and other development information, explained Cindy Rogoway, IAJFL vice president, who is based in San Francisco. Lending capital for these groups is “recycled” through donations, grants, endowments, honorariums and memorials. The funds for HFLA are at a “critical point,” Marcus said of the nonprofit’s $500,000 financial base. “About 90% of funds are in use,” she said. “The group has about $25,000 to $30,000 available to loan.” Increased outreach has changed HFLA from being the “best kept secret in town,” to one that many agencies, such as the Cleveland Clinic, now know about and refer people to, according to Marcus. “We would love to see HFLA get to the point of being able to achieve a loan fund of $1 million and grow the office capacity to meet that need,” she said. “The need for help is there in the community, but we need to have the increased funds and staff to meet it.” The San Francisco association is in a similar predicament, with 90% of lending capital in use, according to Rogoway. “It’s a pretty scary place to be,” she said. By continuing their strategy of marketing and fundraising as well as sharing best practices, both groups aim to increase their lending capital. HFLA typically works with people who need help with a variety of expenses such as family (child care, fu- nerals, weddings), home (repairs), education (student loans), work (uniforms) and health care not covered by insurance. “The loans are based on need, not want,” Marcus said. Applicants must be able to repay the loan immediately via monthly installments. One or more co-signers are needed. Other requirements include a tax return from the previous year, a budget plan, and a letter of explanation for the funds request. Applicants meet with an HFLA committee, which is typically three people. Loan checks are issued directly to creditors. If someone arranges a loan for a car repair, for instance, the check will be sent to the repair shop, not the HFLA client. HFLA reviews applications on a case-by-case basis, Marcus said. If a client doesn’t meet all the requirements, other arrangements may be available. If an applicant doesn’t know a co-signer with excellent credit, for example, the group will look for a co-signer who can vouch for the client’s character. A separate co-signer is required for every $4,000. HFLA makes loans up to $12,000, Marcus said. One of the goals of the network of Jewish free-loan agencies is to raise the maximum limit of loans, according to Rogoway. An increase in the limit has a bigger impact on the borrower as well as on the overall economy, they have found. So what’s the return for HFLA lenders? “We’re helping someone get to a better place and helping the NEO economy,” Marcus said. The Tabaks, in fact, are down to paying off their last payday loan. “Hopefully we’ll never have to use HFLA again,” he said, “but it’s good to know that they’re there for you.” Success Depends on Continued Excellence Taft is the only Ohio-based in Venture Capital Law by U.S. News - Best Lawyers® "Best Law Firms." Venture Capital Law Contact: Howard Bobrow (216) 706-3953 [email protected] www.taftlaw.com Chicago / Cincinnati / Cleveland / Columbus / Dayton / Indianapolis / Northern Kentucky / Phoenix 20150330-NEWS--17-NAT-CCI-CL_-- 3/27/2015 11:41 AM Page 1 MARCH 30 - APRIL 5, 2015 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 17 DEMAND continued from page 13 competing for the same people.” Identifying potential young employees sooner is just one strategy companies are using in today’s competitive hiring landscape. Indeed, accountants ranked 16th in U.S. News and World Report’s list of the 25 best jobs of 2015. According to a March, secondquarter report by Chicago-based staffing and recruiting firm Brilliant, which specializes in accounting, finance and IT, companies have more accounting and finance positions open and they’re looking to fill them faster (corporate accounting positions are among the most vacant). The Ohio Department of Commerce also has said finance-related industries are expected to trend upward over the next five years, noted Steven Dennis, chairman of Kent State University’s finance department. Considering the economic momentum in Northeast Ohio, Dennis suspects that growth could be even greater in this region. “It’s a natural byproduct of the market we’re in,” said Rick Fedorovich, CEO and managing partner of Bober Markey Fedorovich. “In Northeast Ohio, we’re in a really mature marketplace. But things are definitely looking up, especially in Cleveland, but we still have a ways to go to really see that expansion take root and physically happen,” he said. Besides overall economic activity pushing staff growth, there’s the movement of aging baby boomers leaving the industry. Not only does that leave positions to be filled within companies, it creates general business opportunities through a wave of wealth transitions. Additionally, some professionals may be more willing now to change jobs than they might have been during the recessionary years. Meanwhile, the regional talent feeder system for many companies has been busted. Community banks such as First Federal Lakewood historically relied in part on Cleveland-headquartered banks to train its future bankers and lenders. With the banking landscape changing, and fewer of those institutions headquartered here today compared with years past, “that luxury isn’t there anymore,” said CEO Thomas Fraser. As a result, Fraser’s bank is investing more in attracting and retaining younger people — their turnover rate is quite low, at just about 4% — and developing training programs in house. That effort started about five years ago, he said, and was refined about three years ago. “For talented bankers all across our footprint, there is more of a battle for talent than there has been in the past,” said KeyCorp’s Cleveland market president, Kip Clarke, who recruits in Northeast Ohio and across the country. When it comes to finding new, young employees, getting to college campuses is critical, said Key’s director of talent management, Brian Fishel. “We want to engage college students to get them here for active internships earlier,” Fishel said. “And many of them end up being our best recruiters.” The bank is still plenty restrictive, though. Fishel said the incoming average GPA has risen 20%. “We do start at a high level,” he said. Beyond companies competing for the best, up-and-coming financial minds, there’s also the challenge of turnover. Younger generations tend to “jump” between companies more instead of working their entire careers with one company, Clarke said, while poaching and recruiting of more top-level executives has always been rampant in larger financial service companies. Standing out Large companies like Key can leverage their massive network and strong brand to recruit, but competition has still meant fine-tuning their approach. In Northeast Ohio, Key and Bober Markey Fedorovich say they research what schools are most likely to yield the best employees. So rather than expand their reach to more schools, each company tends to increase its presence at its favorite locations, investing more time and money in screening people and hosting, sponsoring or simply joining recruiting events and job fairs. At Kent State, Dennis said job fairs are getting bigger and more prevalent with an increased number of financial service companies getting involved. The business school, for instance, just held its first Insurance Industry Career Fair in February, reflecting one sector’s push to recruit young people. Even for a robust midsize company like Maloney + Novotny, “you sometimes feel like the redhead stepchild of the accounting field,” Evans joked, referencing how students often flood tables at larger, more recognizable companies at those fairs. Drawing top students, then, might mean playing the game a bit differently. Rather than push potential starting salaries or signing bonuses, the firm, like many others, instead promotes a smaller turnover rate compared with the levels at larger organizations and a work-life balance. That itself is a trend with young people today, said Ralph Dise, president of Cleveland-based recruiting and human resource consulting firm Dise & Co. “Millennials aren’t like the boomers in today’s CPA firms. They want balanced lives, right from the get-go,” he said. “I attribute that in part to them seeing parents getting laid off even though they worked really hard.” Those people may have spent entire careers at one company before a layoff, working nights, weekends and putting in 60-hour work weeks. The younger generations saw parents lose jobs despite that, Dise said, and now think, “Why should I do that?” “That was the sort of mentality at one point back then,” Dise said. “Young people aren’t as willing to do that as much anymore.” SS&G has joined BDO The people you know at SS&G, one of the Midwest’s top accounting firms, have combined their dedicated professionals and staff with BDO. With both local knowledge and expanded resources, we look forward to delivering the same exceptional client service to entrepreneurial and growing businesses across the Midwest – and all over the world. BDO Akron 301 Springside Drive Akron, OH 44333 330 668 9696 Accountants and Consultants © 2015 BDO USA, LLP. All rights reserved. BDO Cleveland 32125 Solon Road Cleveland, OH 44139 440 248 8787 www.bdo.com BDO Downtown Cleveland Hanna Building, 1422 Euclid Avenue, Suite 1500 Cleveland, OH 44115 216 325 1700 20150330-NEWS--18-NAT-CCI-CL_-- Q 18 3/27/2015 2:56 PM Page 1 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM MARCH 30 - APRIL 5, 2015 Lawsuit targets local firm DID YOU 256> A Nesco Resource R&D engineers have designed technological advancements and products to better protect our nation’s firefighters? Nesco Resource is the answer for matching exciting g talent t l t onal with great opportunities, making us the largest national nd staffing firm headquartered in Northeast Ohio. To find the talent you need, or your next opportunity visit: www.nescoresource.com (5LZJV0UJ*VTWHU` Skoda Minotti is criticized for failing to detect credit union fraud Best of Staffing award winners four years in a row. By JAY MILLER [email protected] Six depositors in the defunct Taupa Lithuanian Credit Union are suing the financial institution’s auditing firm for $1.6 million, claiming in a complaint filed in Cuyahoga County Common Pleas Court that Skoda Minotti & Co. was negligent in failing to detect “the rampant embezzlement that was taking place” at the Cleveland credit union. Skoda Minotti is a certified public accounting and consulting firm headquartered in Highland Heights with offices in Akron and Tampa, Fla. It ranked eighth on Crain’s Cleveland Business’s list of the region’s largest accounting firms with 187 employees, including 77 certified public accountants. In 2013, the Ohio Division of Financial Institutions liquidated Taupa after determining that the 1,150-member Cleveland financial institution, which had been reporting assets of $24 million, was insolvent. Since then, six people, including CEO Alex Spiritaikis, have pleaded guilty to charges of fraud or embezzlement from the credit union. Spiritaikis pleaded guilty in December to one count of conspiracy to commit bank fraud and was sentenced to 130 months in jail and ordered to pay $15 million in restitution. A seventh person, Andrew Belzinskas of Lyndhurst, was indicted last week on one count of conspiracy to commit bank fraud and one count of bank fraud for defrauding the credit union out of more than $436,000. Belzinskas held several positions at the credit union. A federal investigation likened the collapse of Taupa to the failure of St. Paul Croatian Federal Credit Union in 2010. In that case, the Eastlake credit union was closed with losses of about $170 million. Nearly 20 people have been convicted of bank fraud or related crimes in that case. In what is called a Material Loss Review, the inspector general of the National Credit Union Administration, the federal credit union overseer, in March 2014 wrote, “this (credit union) loss looks, sounds & acts like St. Paul’s Croation (sic) waiting to happen all over again.” The current civil lawsuit charges that while Skoda Minotti audited the credit union’s financial statements from 2006 to 2012, it failed to uncover discrepancies in the reporting of assets and the embezzlement of at least $4.2 million by credit union managers. “At no time during the approximately seven years that Skoda audited Taupa’s financial statements did it identify the slightest impropriety in Taupa’s financial statements,” the court filing charged, contending that Skoda Minotti “rubber stamped the financial statements created by Taupa Management” and “negligently failed to verify crucial data with original sources and documents.” Vigorous defense planned Heidi Meier, a professor of accounting at Cleveland State University, said that while this kind of a lawsuit against an outside auditing firm doesn’t happen all that often, it’s serious because shareholders rely on the outside auditor to monitor financial statements. “For an accounting firm, this is a worst-case scenario,” she said in a telephone interview. “It’s damag- ing to their reputation.” Meier noted that an outside auditor relies on the integrity of management in doing its annual review and that detecting fraud is especially difficult when a chief executive is acting in collusion with other executives, as happened at Taupa. Similarly, Brent Silverman, an attorney with Kaufman & Co. who is representing Skoda Minotti in this case, laid the blame for the fraud on the people with day-today responsibility for running the credit union. “The individuals responsible for perpetrating the fraud on the investors — including the CEO, a former bookkeeper and others — have been indicted or charged and are in prison for their crimes,” he said. “Skoda Minotti will vigorously defend itself in this case.” ‘There has to be accountability’ The NCUA inspector general’s review found that Taupa failed “primarily due to management fraudulently overstating assets” and to inaccurate financial reporting and inadequate board oversight. The inspector general’s report also faulted state and federal examiners for failing to react to several red flags they found at Taupa. It noted that when the National Credit Union Administration and the Ohio Division of Financial Institutions conducted an examination at Taupa in 2011 they found two bags of coins, approximately $200, under a sink. “When examiners questioned the CEO, he stated that the coins had been under the sink for over See LAWSUIT, page 22 Our strength is in our numbers. Put one of the region’s largest real estate practice groups to work for you. We have the resources and experience to handle transactions of any size. Land Use & Zoning Leasing Development Urban & Historic Redevelopment Real Estate Finance Tax Credit Transactions Tech, Multi-family & Shopping Centers The Real Estate Attorneys of Josh Hurtuk, Carl Dyczek, Megan Zaidan, Kevin Murphy, Tyler Bobes, Todd Hunt, Jack Waldeck, Sophia Deseran, Nick Catanzarite, Nate Felker, Jennifer Heimlich, and Geoff Goss Cleveland | 216.781.1212 | www.walterhav.com 20150330-NEWS--19-NAT-CCI-CL_-- 3/27/2015 11:42 AM Page 1 MARCH 30 - APRIL 5, 2015 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM VIEWRAY continued from page 13 $100 million from investors. Aram Nerpouni, president and CEO of BioEnterprise Inc., the Cleveland-based business formation, recruitment, and acceleration initiative which assisted ViewRay after the company moved here from Florida in 2008, said it’s “incredibly exciting” to see a Northeast Ohio company going public, which of late has been a rare occurrence as the IPO market generally has slowed. But biomedical and biotech companies have been a recent exception to that trend. The Boston Globe reported, for instance, that a record 71 biotech companies went public in 2014, “raising more than $5.2 billion in a financing and investment boom period during which drug, medical device and diagnostic companies outperformed broader markets that were also hot.” That activity has been disproportionately concentrated on drug development and pharmaceutical companies, Nerpouni noted, where IPOs have been “rather frothy.” He said IPOs for medical device companies have been “relatively light,” and that acquisitions, rather than public offerings, “have been the main proxy” for cashing out. This could take a while As a result of receiving the FDA clearance and placing MRIdian in three big cancer centers, ViewRay has been generating revenue. But so far, that revenue is modest. ViewRay said it generated revenue of $3.2 million in 2013 and $6.4 million in 2014. Those figures could be about to rise sharply, though, since as of Feb. 28, ViewRay said in the amended IPO filing that it had 11 signed sales contracts for MRIdian systems in backlog with a total value of $60.4 million, “of which we expect to recognize approximately 35% to 50% as revenue in 2015 representing four to six MRIdian systems.” Still, the company’s losses to date have been substantial. ViewRay reported in the filing that it had net losses of $27.2 million in 2013 and $33.8 million in 2014. Such losses are not particularly unusual for a company going public these days. Jay Ritter, a business professor at the University of Florida who tracks IPO data, found that more than 70% of companies that had an IPO last year had not yet posted a profit. (Ritter posts extensive data about IPOs on his website; you can find it at tinyurl.com/pdqxtn2) Investors in such companies, essentially, are taking a chance on a big future return if a product turns into a major hit. ViewRay cautioned in its IPO filing that, “We expect our net losses to continue as a result of ongoing expansion of our commercial operations, including increased manufacturing, sales and marketing costs.” These net losses “have had, and will continue to have, a negative impact on our working capital, total assets and stockholders’ equity,” the company stated. “Because of the numerous risks and uncertainties associated with our commercialization efforts, we are unable to predict when we will become profitable, and we may never become profitable.” On target ViewRay in the IPO filing bills the MRIdian system as “the first and only MRI-guided radiation therapy system that images and treats cancer patients simultaneously.” MRIdian uses magnetic resonance imaging and Cobalt-60 radiation therapy to “locate, target and track the position and shape of soft-tissue tumors while radiation is delivered,” according to the filing. The MRIdian system allows doctors to take real-time MRI images to pinpoint the location of cancerous tumors and then shoot them with radiation. It’s a delicate process that requires precision. Karen Spilizewski, vice president of business development at BioEnterprise, said patients with, say, lung or breast cancer are moving as they breath, and therefore the tumors are moving. MRIdian’s design enables precise targeting of tumors without irradiating healthy tissue, she said. BioEnterprise’s Nerpouni characterized ViewRay as “an incredibly innovative company.” He noted that in January, ViewRay entered into an exclusive distributor agreement with ITOCHU Corp. to sell ViewRay’s MRI-guided radiation therapy system for the treatment of cancer in Japan. In a news release announcing that agreement, Chris A. Raanes, president and CEO of ViewRay, said, “Through our partnership with ITOCHU, we look forward to making the benefits of our … technology widely available to Japanese physicians and patients over the next few years.” UNCLE SAM WANTS YOUR MONEY! Like many Americans, you probably don’t mind paying your fair share of taxes, but not one dime more than you have to, right? We agree. Let Tom Hart, Financial Consultant with LPL Financial, show you how you may be able to keep more of your money for yourself by offering you tax planning strategies. Did you know that the things you do in early 2015 may help with your 2014 taxes? So don’t put it off. Meet with Tom today by calling 888-801-1666 or visit middlefieldbank.com to get more details. Located at The Middlefield Banking Company www.middlefieldbank.com • 888-801-1666 15985 E. High Street • Middlefield, OH 44062 Not FDIC Insured Not Bank Guaranteed Not Insured by Any Federal Government Agency May Lose Value Not a Bank Deposit Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. The Middlefield Banking Company is not a registered broker/dealer and is not affiliated with LPL Financial. To receive Crain’s newletters alerts sign up at @ www.CrainsCleveland.com/newsletters For all the latest business news...online REPRESENTED BY: THERE’S NO BUSINESS LIKE YOUR BUSINESS. Vorys, Sater, Seymour and Pease is a full-service corporate law firm that works with all kinds of businesses to help them grow. We recognize that your business is unlike any other. And what a coincidence — because our law firm is unlike any other, too. For more information, visit vorys.com. Vorys, Sater, Seymour and Pease LLP 200 Public Square Suite 1400 Cleveland, Ohio 44114 106 South Main Street Suite 1100 Akron, Ohio 44308 Columbus Washington Cleveland Cincinnati Akron Houston Pittsburgh 19 WELCOME HOME. 50 PUBLIC SQUARE • SUITE 2700 • CLEVELAND, OH 44113 216-464-6266 • SPEROSMITH.COM 20150330-NEWS--20-NAT-CCI-CL_-- 20 3/26/2015 11:29 AM Page 1 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM MARCH 30 - APRIL 5, 2015 MONEY MANAGERS JJ JJJ'%( "&%%&%'!$" ! !&) & %$& "! "!% " #!+ $%% ! "!% & ! ( ! ' "&!' $ ! 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During their inaugural partner summit on Feb. 26, the Browns gave the 35 sponsors on hand, along with a few prospective partners, a “playbook” filled with juicy tidbits. A few that stood out: ■ The average local TV rating for Browns games in 2014 was 33.6 — an even more remarkable number when you consider that the record ratings norm produced by the 200809 Cavaliers on Fox Sports Ohio (8.67) was roughly a quarter of that figure. ■ The ratings average for the Browns’ four preseason games in 2014 was 21.9. The mostly meaningless exhibitions were watched by an average of 325,000 households and had a 36% household share. ■ The Browns’ win over the Steelers on Oct. 6 registered a Super Bowllike 70 share. ■ Page views for the team’s revamped website jumped 34% yearover-year, and video views more than doubled. ■ The team claims that within two years of teaming up with the Browns, corporations see a 5% increase in views to their websites and a 3.6% jump in purchases. The likelihood of Browns fans recognizing that a company has a relationship with the team is 75%, according to the Partnership Playbook. Ed Fernandez, divisional general manager of The E.W. Scripps Co., which includes Cleveland’s WEWSTV, Channel 5, in its media stable, said the Browns’ approach to partnerships is different than most sports teams. “They truly want to hear the ideas and present plans that fit their clients’ needs,” said Fernandez, who led a panel discussion at the partner summit last month. “It’s not a big buffet and ‘here’s what you get.’ That’s unfortunately how a lot of other teams operate.” Papa John’s regional marketing director Michele Ezell said the pizza giant has been in business with the Browns and Indians for the last two years. The benefit of the Browns’ sponsorship get-together, she said, is the networking opportunities that are presented. “We’re all each others’ partners,” Ezell said. ‘See you tomorrow’ Randy Domain spent 11 years with the Cavs, the last four as the team’s vice president for corporate sponsorships and activations, before joining the Browns in a similar role last June. He said the Browns engage with their partners on an “integrated basis,” meaning they want the businesses to view the organization as “an asset and platform for 365 days a year.” With many teams, that would seem ridiculous. But for the Browns, dominating the local sports discussion every day is business as usual. Included in the Partnership Playbook on Feb. 26 was a graphic that displayed the year-round nature of NFL. The calendar is broken down CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM into three segments — “building the Browns” (the road leading to the scouting combine, draft and free agency), “countdown to kickoff” (training camp and the preseason) and the regular season. “Football nowadays is 12 months a year,” Domain said. For the Browns, that has meant a lot of rocky moments — many selfinduced and some resulting from the built-up frustrations of their followers. “This fan base is so passionate,” Domain said. “If we’re able to tap into that in the best way — winning is always the best way, but we think there have been more initiatives focused on tapping into that passionate fan base. We eventually feel there will be a groundswell with winning.” The business team “can’t control what happens on the field,” Domain said, but it does “feel that we’re headed in the right direction.” Withers, Dix & Eaton’s president and COO, has been a Browns season-ticket holder for more than 20 years. He believes the organization has a “major brand issue,” but says that’s more of a national perception than a regional view. “We are so rabid for success here,” Withers said. “We want to see our team do well. I can’t say I’ve experienced a time since they’ve been back that I’ve sensed more frustrations or a higher sense of apathy. We want a reason to believe.” Asked recently about that mounting anger, Scheiner said “our job is to just always focus on doing our job, which is to win games and engage the fan.” The team president believes the organization has done a much better job of the latter, and he’s repeatedly stated that it’s been a productive time on the business side. Scheiner believes the most crucial part, the ever-elusive string of successful seasons, will come. Until then, the Browns will continue to be the talk of the town — and an attractive buy because of it. Ezell said an advantage she has as Papa John’s regional marketing director is she’s a Northeast Ohio native who knows how entrenched the football team is in the community. A lot of the conjecture consists of complaints and raised voices, but Cleveland’s sports teams are part of the “family,” she said. “You talk about your cousins, but at the end of the day, you say, ‘See you tomorrow,’ ” Ezell said. “It’s the same way for us. We understand what the relationship is with the team and its fans.” Does your parking lot look like this? Then it’s time to make a call to: 800.PAVE.NOW Quality and Excellence in Asphalt Paving Since 1939 • • Asphalt Paving • Pavement Milling Pavement Marking • Hot Mix Production Facility • Concrete and Excavating Services www.RonyakPaving.com SUMMIT PRESENTED BY AWARDS PRESENTED BY SAVE THE DATE THURSDAY, JULY 23 BNQNtCleveland Convention Center Tickets on sale soon at CrainsCleveland.com/WON Are you ready for April showers and May flowers? CALL TODAY FOR YOUR COMPLIMENTARY ANALYSIS! Providing Commercial & Multi-Family Landscaping Service Since 1995 Landscape Maintenance Lawn Fertilization • Mowing • Trimming & Edging Innovative Design • Landscape Construction • Mulching Tucker Landscaping Inc. • 986 Broadway Avenue • Bedford, Ohio • 44146 (440) 786-9840 • Tuckerlandscaping.net 21 20150330-NEWS--22-NAT-CCI-CL_-- 22 3/27/2015 2:57 PM Page 1 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM MARCH 30 - APRIL 5, 2015 BALANCE continued from page 5 up its ability to develop digital user interfaces. It added to its abilities again on Jan. 1, when it hired Tom Bernot to replace DeMore as Balance’s vice president. He gives the company additional marketing expertise, which could come in handy as it prepares to launch its own products. The company typically employs 15 to 20 employees and contractors on a full-time basis, up from 10 to 12 two years ago. And it’s in the process of hiring a few more employees with expertise related to digital design, financial products and medical products. Even with those new skills, Balance decided to seek outside assistance to help it navigate the process Contact: Phone: Fax: E-mail: LAWSUIT of creating its own products and companies. About a year ago, the company formed an advisory board consisting of five corporate business leaders, according to Polin, who would not identify them. They’re tasked with helping the board vet ideas and figure out how to do the things that Balance doesn’t typically do: License technologies, create companies, hire CEOs and raise investment capital for those companies. Both the board and Bernot are tasked with helping Balance achieve a separate goal: Landing more large clients who can serve as a steady source of new projects, which could help Balance even out its revenue stream and rely less on contractors. Denise Donaldson (216) 522-1383 (216) 694-4264 [email protected] The New Ventures initiative could generate new business for Balance, too, if it’s successful, Bernot said. The initiative could help Balance create jobs, and it could create companies that create jobs. Any new companies formed probably would remain in Tyler Village, so they can work closely with Balance. The product design firm moved into the cavernous campus about two years ago. The old Tyler Elevator Products factories are now home to an eclectic mix of organizations, including many young companies. Polin would love to see Balance spinoffs take up more of that space. “It makes sense to stay here,” he said. continued from page 18 10 years,” the report stated. While putting the failure primarily on management, the inspector general’s report said that state and federal examiners “could have reduced or mitigated the loss” had they been more diligent. John Chapman, the Cleveland attorney who is representing the Taupa account holders, acknowledged that the examiners’ oversights contributed to the failure to uncover the embezzlement. But he said Skoda Minotti, as the outside auditor, should be held “solely responsible” for not uncovering the problems at Taupa. This is not the first time Skoda Minotti has been sued by Chapman. In 2012, he filed two lawsuits for REAL ESTATE AUCTIONS investors in InkStop, a Mayfield Village niche retailer that specialized in consumable computer printer ink cartridges that went bankrupt, seeking more than $15 million in damages. Those suits charged Skoda Minotti with professional negligence and violating Ohio securities law and were settled out of court. Chapman would not disclose the settlement in those cases. “There has to be accountability,” Chapman said. “When the watchdog is asleep and the security system fails, the consequences are terrible. “The only way to improve that system and make sure it doesn’t happen again is to make people accountable for their mistakes. Skoda needs to be accountable.” Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card LEGAL NOTICE LUXURY PROPERTY Request for Qualifications Fairport Harbor Mixed-Use Development AUCTION - MAY 2, 2015 ATTENTION HOME BUYERS, DEVELOPERS & INVESTORS! CATAWBA BAY WATERFRONT HOMESITES & MARINA Marina 40 AC DEV. SITE Developer close-out of remaining development land and Marina at Catawba Bay. Located on Catawba Island, one of the most exclusive yet affordable residential/resort locations on Lake Erie. 5050 E. Muggy Rd., Port Clinton (Catawba Island), OH 43452 The Lake County Ohio Port and Economic Development Authority is seeking Qualification Statements from experienced developers of mixed-use hospitality projects. A pre-qualification meeting will be held on April 6, 2015 at 3:00 PM at Fairport Harbor Village Hall, 220 Third Street, Fairport Harbor, Ohio 44077. 35 Acre Country Estate NE Ohio, Equestrian Facilities. Details at ohiovu.com VACANT LAND To receive a copy of the Request for Qualifications and to pre-register for the April 6 meeting, please contact Peter Zahirsky at 440-3572290, ext. 227 or [email protected] . The registration deadline is April 3, 2015. Prime Multi-Family Land FAX OR E-MAIL US YOUR AD... SW Cleveland Suburbs 200-500 Units, Mixed-use, 5 Stories Entitled FAX: (216) 694-4264 E-MAIL: [email protected] 216-389-2244 Principals Only 27 SINGLE FAMILY WATERFRONT HOMESITES: 10 HOMESITES Offered With Published Reserve Prices of Only $5,000 Each! 40 ACRES APPROVED FOR 54 CONDO UNITS AND MARINA: Offered With A Published Reserve Price of Only $350,000! 2.6 ACRE OPERATING MARINA WITH 40 FLOATING 30’ DOCK SPACES AND 16 JET-SKI LOCATIONS. CURRENT NOI OF $50,000: Offered With A Published Reserve of Only $250,000! Catawba Island is the jumping off point to the Lake Erie Islands of Kelleys, North Bass, South Bass, Middle Bass, Put-In-Bay, Rattlesnake and others. Located just 75 miles from Cleveland, 47 miles from Toledo and 100 miles from Detroit. This is a terrific opportunity for astute buyer/ builder to purchase high quality residential/resort real estate at a fraction of the original prices! On-Site Due Diligence Seminars: Saturdays April 11 & 25 from 11:00 A.M. to 1:00 P.M. FOR BROCHURE & TERMS CALL: MARK ABOOD, OH RE SALESPERSON 216.861.7200 CHARTWELLAUCTIONS.COM CHARTWELL AUCTIONS, LLC / HANNA COMMERCIAL REAL ESTATE MICHAEL BERLAND, OH AUCTIONEER CLASSIFIED BUSINESS SERVICES C. W. JENNINGS INDUSTRIAL EXCHANGE Global Expansion Consulting Construction • Acquisitions Exporting • Financing (855) 707-1944 FOR SALE Used forklifts, L.P., elec., pneu., cushion. Scrubbers, sweepers, pallet racking. 216-641-7897 216-641-8260 Stys Since 1962 UST REMOVALS • REMEDIATION DUE DILIGENCE INVESTIGATIONS (800) 690-9409 BUSINESS SERVICE OWNERS! Submit your business card to promote your service. To find out more, contact Denise Donaldson at 216.522.1383 List your commercial, industrial, luxury property or Retail Space Here! BUSINESSES FOR SALE Position Wanted Crain’s Cleveland Business’ classifieds will help you fill that space. Thinking of Selling? OEM inside sales Free Market Analysis No Upfront Fees See our listings at www.empirebusinesses.com Estimating, product assessment. Sheet metal fabrication background. 440-461-2202 440-842-4753 Contact Denise Donaldson at 216.522-1383 FLYNN ENVIRONMENTAL To place your Crain’s Cleveland Business Executive Recruiter ad Call Denise Donaldson at 216-522-1383 20150330-NEWS--23-NAT-CCI-CL_-- 3/27/2015 2:16 PM Page 1 MARCH 30 - APRIL 5, 2015 WWW.CRAINSCLEVELAND.COM THE WEEK MARCH 23 - 29 The big story: A California man was charged with using manipulative trading techniques to fleece investors in Cleveland and elsewhere out of $27 million. Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, charged Izak Zirk De Maison of Redland Hills, Calif., with one count of conspiracy to commit securities and wire fraud, two counts of securities fraud and securities violations, and four counts of wire fraud. The prosecutor charges that from 2006 through 2014, De Maison and a group of at least 10 co-conspirators created five public companies and then sold shares in the companies to unwary investors after the group had artificially pumped up the prices of the companies’ stock. Burden is lifted: The federal government lifted potentially damaging sanctions on SummaCare’s Medicare managed-care plans. As such, SummaCare, the insurance arm of the Akron-based Summa Health System, can resume marketing its managed care plans. Back in August, the Centers for Medicare & Medicaid Services suspended enrollment in the plans for what it described as “multiple, serious violations.” A new era: Cliffs Natural Resources Inc. is jumping out of the Ring of Fire. The Clevelandbased mining company agreed to sell its chromite assets in northern Ontario, Canada, to Noront Resources Ltd. for $20 million. The transaction is comprised of the chromite deposits and associated claims held by Cliffs. The company said the asset sale “further demonstrates execution of Cliffs’ strategy which includes divesting non-core assets and focusing on being the major supplier of iron ore pellets to the North American steel industry.” In the running: Jonathon Sawyer, the chef and owner of The Greenhouse Tavern, Trentina and Noodlecat restaurants, was named a finalist for the 2015 James Beard Awards in the Best Chef: Great Lakes category. Two other Northeast Ohioans — author Michael Ruhlman and WKSU radio host/producer Vivian Goodman — are nominees in the book, broadcast and journalism side of the awards. United for the cause: United Way of Summit County named Jim Mullen, a veteran of the United Way system, as its next president and CEO. Mullen arrives from United Way of Metropolitan Nashville, where he now serves as director of workplace engagement. Previously, he served as senior manager of resource development for United Way of Greater Cleveland. Mullen starts in his new role May 4. He takes over for the retiring Bob Kulinski, who has led the organization since 2000. Cross talk: Michael N. Parks, a former U.S. Coast Guard commander, has been named the new regional leader for the American Red Cross. Parks, who starts in his new role April 13, succeeds Mary-Alice Frank, who left the Red Cross in January after 36 years with the organization. Parks is a 35-year veteran of the Coast Guard. From 2010 until 2013, Parks was based in Cleveland as commander of the Ninth Coast Guard District. 23 REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS Towering view energizes Spero-Smith for the future Terminal Tower is one of the most recognizable locations for an office, but SperoSmith Investment Advisers Inc. found another benefit as the Beachwood firm selected the building for its new office, which it is scheduled to open Monday, March 30. Spero-Smith is on the 27th floor, just over half-way up in the 52-story building. Even so, there is a perk to being a full-floor tenant that Robert Smith, Spero-Smith’s chairman and a high-profile civic leader, enjoys. “Every office has a stunning view of our beautiful city,” Smith said. The 13-person firm gained space to expand its staff by at least three within the coming year. SperoSmith moved to 8,000 square feet from its prior office of 6,500 square feet in the Fairways Building, its home since 1981 in Beachwood. The new office mixes traditional features of the tower with smart modern finishes, Smith said. The fee-based financial management firm also watched its pennies with the move. The firm could have easily found offices to locate in a newer building, but Smith said the company did not want to pay that much for its own offices. “We just kept coming back to the tower,” Smith said. He would not say how much rent it agreed to pay building owner Forest City Enterprises Inc., whose headquarters is in the same structure. Jeffrey Malbasa, president and chief operating officer at Spero Smith, is also excited about the move. “Spero-Smith is proud to be a Clevelandbased company,” Malbasa said in a news release. “We are eager to be part of downtown Cleveland at this exciting time in our city’s revival. A more central location will make it easier for us to serve our clients across the region and collaborate with other professional advisors on our clients’ behalf.” Smith hopes the move helps with recruitment of young professionals but acknowledged he was surprised some of his associates were wary of a downtown move. “Many people who choose to work in the suburbs do not go downtown very much,” Smith said. “It’s something people struggle with who are in leadership.” He believes the caution will ebb as associates better learn the city. The former chairman of Greater Cleveland Partnership also admitted to enjoying a shorter commute downtown than from his Westlake home to Beachwood, not to mention hopping back and forth between the suburbs and downtown for his nonprofit and government board meetings. — Stan Bullard Their stock in trade is helping women in manufacturing It’s official — Independence-based Women in Manufacturing is now its own 501(c)6 national trade association. WHAT’S NEW Don’t wave these red flags COMPANY: American Greetings, Brooklyn PRODUCT: Automotions birthday cards American Greetings has infused the spirit of viral video clips and animated photos into its new line of birthday cards. Each card in the Automotions line “features music, motion and 3D lenticular innovations, greeting recipients with an outrageous animation that loops over and over and over again,” the company says. The cards are lighthearted and reflect the types of images that are popular online. Designs include a piano-playing cool cat, a pumped up exercise enthusiast, an extra excited dog and a dancing nun, according to American Greetings. “To continuously bring exciting inventions to the greeting card aisle, we draw inspiration from everywhere, including current trends,” said Carol Miller, vice president of corporate innovation at American Greetings, in a statement. “Taking note of the popularity of sharing animated photos online, Automotions give consumers an entertaining new way to celebrate their loves ones’ birthdays,” she said. American Greetings says it now has introduced more than 100 new greeting card formats under the Inventions brand, incorporating “brand-new twists on technology in cards with carefully written copy and celebratory artwork.” For information, visit www.americangreetings.com. The organization, which started as an offshoot of the Precision Metalforming Association in 2011, aims to support women who work in the manufacturing industry. The group hosted its first local event in January and has hosted regional events across the country. President Allison Grealis said in an email that the group officially filed for its trade association status Thursday, March 19, and celebrated its new status on Twitter (with a cake) the following Monday. It had its first official board meeting in Washington, D.C., last Thursday, March 26, along with the Manufacturing Institute’s STEP Awards, which honor women in the field. The Precision Metalforming Association and its members are proud to see Women in Manufacturing become its own independent organization, though it will continue to support and house it in Independence, said PMA president Bill Gaskin. Gaskin also said he was pleased to see the organization’s first chairperson was Gretchen Zierick of Zierick Manufacturing Corp., as she had been the first woman to be the chair of the Precision Metalforming Association in 2010. Grealis said Zierick was a good choice to lead the organization through its transition, as she really understands its roots. Women in Manufacturing has continued to grow since it first started to accept members in 2012. The group has about 500 members now, Grealis said, and it has a goal of reaching 1,000 members by the end of its first fiscal year on March 31, 2016. — Rachel Abbey McCafferty BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com. Global view: Goodyear Tire & Rubber Co. set up its first development center in China. Employees at the Akron-based company’s development centers work directly with customers like OEMs to adapt Goodyear tires to their needs, as those needs can vary region to region. Goodyear already has development centers in Hebron, Ohio, and Hanau, Germany. The new development center is located at the company’s tire manufacturing plant in Pulandian. It will make it possible for Goodyear to enter new original equipment platforms in China. CRAIN’S CLEVELAND BUSINESS USA Today offered tips to avoid being audited, many of which come from Paul Dunham, tax managing director at business services firm CBIZ Inc. Typos, bad math and a big one-time change are among the factors that trigger audits, the newspaper reported. Dunham added the following: ■ Doubling up dependents: If there have been changes in your household situation, make certain any dependents are claimed on only one taxpayer’s return. “Claiming dependents that have been claimed by someone else or have already filed a return and have claimed themselves” is a common source of audits. ■ Odd itemized deductions: “If a taxpayer has an unusually high amount of itemized deductions given their income levels, an audit is potentially more likely,” Dunham said. Claiming any deductions but not including proper documentation can rub the tax man (or robot) the wrong way. ■ More than $1 million in income: “The higher the adjusted gross income, the more likely the taxpayer is going to be audited,” Dunham said, adding that IRS audit statistics show roughly half of audits occur to those reporting $1 million or more in income. ■ Zero income: Another red flag is the lack of any income, particularly self-employed individuals running their own business. In some cases, unprofitable businesses are either simply set up to reap the benefits of tax breaks or are significantly underreporting income — neither of which sits well with the IRS. Cleveland on his mind A map on CityLab.com charted every city mentioned in Willie Nelson’s songs. Can you name the song that mentions Cleveland? Take a minute. Or two. (No checking Google.) The title you’re looking for is “Pancho and Lefty,” which includes the following lines: The poets tell how Pancho fell Lefty’s livin’ in a cheap hotel The desert’s quiet and Cleveland’s cold So the story ends we’re told CityLab.com said cities “serve as metaphors and signposts in Willie’s songs — a role they tend to play in much of blues, country, and folk. … That interest unites all those different genres in his catalog. The experience of traveling crosscountry, getting the hell out of some place or setting off for a new start, is an entire category of Willie Nelson songs, right up there with cowboy heartbreak and drinking whiskey.” Courting big money Forbes.com reported that LeBron James “remains the biggest endorsement star in (basketball) with estimated earnings of $44 million this year off the court, and he is still the king when it comes to moving product.” It said Nike sold $340 million worth of James’ signature shoes in the last 12 months through January, up 13% from the prior year, according to SportScanInfo. That amount is nearly double the amount of the NBA’s second best seller, Kevin Durant. Forbes.com says James earns an estimated $20 million a year from the Beaverton, Ore.-based sports giant, which racks up sales of $30 billion annually. James isn’t the only Cavaliers star putting his foot down in the shoe business. Kyrie Irving “is an up and coming player to watch,” according to Forbes.com. “His first signature Nike shoe was released in December, and it racked up $7 million in sales during its first three months,” the website reported. 20150330-NEWS--24-NAT-CCI-CL_-- 3/26/2015 11:29 AM Page 1 It is time to spring for some new wheels. 419 $ 2015 Mercedes-Benz C300 4MATIC® Per month lease for 36 months. $4,713 due at signing. ($3,499 down pa uisition fee, $419 first payment) $44,025 MSRP, AMG® Sportline, 7-Speed Automatic Transmission, Collision Prevention Assist, Keyless Start, Split-Folding Seats, Power Seats w/ Memory, Heated Front Seats, Sunroof 599 $ 2015 Mercedes-Benz E350 4MATIC® Per month lease for 27 months. $5,293 due at signing. ($3,899 down pa uisition fee, $599 first payment) $60,105 MSRP, COMAND® w/navigation and voice control, Sirius XM Radio, Power Rear-Window Sunshade, Luxury Package, Comfort suspension for Elegance, Luxury code, ABS Traction control Curtain airbags Passenger Airbag, Bluetooth®, Power locks, Power windows, Sunroof Mercedes-Benz of North Olmsted 28450 Lorain Road . 888-450-8064 . mbohio.com Discover something new this spring. Amazing offers on exceptional vehicles. *Qualified customers only can get up to $2,500 toward select 2015 Mercedes-Benz vehicles. See dealer for details. 2015 Mercedes-Benz C300 4MATIC® advertised lease rate based on a gross capitalized cost of $43,027. Includes destination charge and optional sport package which includes AMG® Sportline, 7-Speed Automatic Transmission, Collision Prevention Assist, Keyless Start, Split-Folding Seats, Power Seats w/ Memory, Heated Front Seats, Sunroof. Excludes title, taxes, registration and documentary service charge. Total monthly payments equal $15,084. Cash due at signing includes $3,499 capitalized cost reduction, $795 acquisition fee, and first month’s lease payment of $419. Total payments equal $19,378. 2015 E350 4MATIC® – 27 months, 10,000 miles per year. 25¢ per mile thereafter. Rate based on MSRP of $60,105 through 3/31/15. Advertised lease rate based on a gross capitalized cost of $57,496. Includes destination charge. COMAND® w/navigation and voice control, Sirius XM Radio, Power Rear-Window Sunshade, Luxury Package, Comfort suspension for Elegance, Luxury code, ABS Traction control Curtain airbags Passenger Airbag, Bluetooth®, Power locks, Power windows, Sunroof. Excludes title, taxes, registration, license fees, insurance, dealer prep. and additional options. Total monthly payments equal $16,173. Cash due at signing includes $3,899 capitalized cost reduction, $795 acquisition fee, and first month’s lease payment of $599. Total payments equal $20,867. For all offers, subject to credit approval. No security deposit required. 10,000 miles per year, $.25 thereafter. Lessee may be liable for wear and tear. Lease offers expire 3/31/15. Options shown. Not all options available in the U.S. © Mercedes-Benz USA, LLC. ©2015 Porsche Cars North America, Inc. Porsche recommends seat belt usage and observance of all traffic laws at all times. Porsche recommends four winter tires when driving in cold, snowy, or slippery conditions. More people on the edge of more seats. The new 2015 Panamera 4. 949 27 $ */ MONTH MTHS $5,727.74 due at signing Excludes tax, title and doc fee. No security deposit required. Porsche of North Olmsted 28400 Lorain Road, North Olmsted, Ohio 44070 888-597-4741 Open 24/7 at: clevelandporsche.com $949 per month for 27 months at 10,000 miles per year, .30¢ per mile after 10,000 miles, $5,727.74 due at signing (First payment $949, doc fee $349.74, reg fee $34, acq fee $895 and $3,500 cash down). Prices and payments exclude tax, title, registration and documentary service charge. Payment or upfront fees do not include sales or county tax. Financing is subject to credit approval. Stock #PF000817. MSRP $89,225. Sale MSRP $82,533. Security deposit waived. Lessee may be liable for wear and tear. Offer good through 3/31/15. ©2015 Porsche Cars North America, Inc. Porsche recommends seat belt usage and observance of all traffic laws at all times. Vehicle shown includes optional equipment available at additional cost. NO CHARGE PICK-UP AND DELIVERY VALET PARKING DISCOUNTS COMPLIMENTARY LOANER VEHICLES