March 30 - April 5, 2015 - Crain`s Cleveland Business

Transcription

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
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
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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,
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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
[HRLÔLU[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,
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Reserve your seat at www.cose.org.
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TO OPPORTUNITY
WORKERS’ COMPENSATION SERVICES
Presented by the Greater Cleveland
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seekers to opportunities in the tech space.
THURSDAY, APRIL 16
COSE Compensation Services offers the most comprehensive program in Ohio, including:
• Safety consultation
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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.
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for all the latest happenings.
3/27/2015
11:39 AM
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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
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(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.
3/27/2015
2:56 PM
Page 1
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.
6
3/27/2015
4:11 PM
Page 1
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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
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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.
3/27/2015
4:01 PM
Page 1
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.
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8
3/27/2015
3:52 PM
Page 1
K&D adds to downtown portfolio
Willoughby company purchases Keith Building for $5.2 million
By STAN BULLARD
[email protected]
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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
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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.
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3/26/2015
4:09 PM
Page 1
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.”
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10
3/26/2015
4:28 PM
Page 1
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_--
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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
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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
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WORKING WITH ADP.
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strategy and growth. The cure was working with ADP.
This story is quite common for growing companies. If you find yourself bogged
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ADP and the ADP logo are registered trademarks of ADP, LLC. Copyright ©2015 ADP, LLC
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Salt Distributors Since 1966
20150330-NEWS--13-NAT-CCI-CL_--
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Page 1
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
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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
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20150330-NEWS--15-NAT-CCI-CL_--
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2:53 PM
Page 1
ADVISER
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
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20150330-NEWS--16-NAT-CCI-CL_--
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3/27/2015
3:22 PM
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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.”
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20150330-NEWS--17-NAT-CCI-CL_--
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17
DEMAND
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.”
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Lawsuit targets local firm
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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
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11:42 AM
Page 1
VIEWRAY
$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.”
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20150330-NEWS--20-NAT-CCI-CL_--
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20150330-NEWS--21-NAT-CCI-CL_--
3/27/2015
2:28 PM
Page 1
BROWNS
sponsors who are trying to reach as
many people as they can.”
That reach, as is the case with any
NFL team, extends all over, but the
Browns’ grip on Northeast Ohio remains stunningly strong despite a
16-year run that has included 88
more defeats than victories.
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
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.”
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21
20150330-NEWS--22-NAT-CCI-CL_--
22
3/27/2015
2:57 PM
Page 1
BALANCE
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.
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
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20150330-NEWS--23-NAT-CCI-CL_--
3/27/2015
2:16 PM
Page 1
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.
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
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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

March 30 - April 5, 2015 - Crain`s Cleveland Business

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