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Small buys are next big thing Private equity firms are targeting acquisitions at lower end of middle market because of better values and lower costs By MICHELLE PARK mpark@crain.com
If this keeps up, more small to midsize companies will net bigger paydays if and when they sell. The number of acquisitions at
the lower end of the middle market is up, and observers expect the deal volume to keep growing because those who make them happen are hungry. Private equity firms flush with investor cash are yearning for yield
and are willing to move down in deal size to deploy that capital, especially because valuations for larger deals are pricey, observers say. Some sellers — many of whom are baby boomers who have waited
INSIDE
INSIDE: A look at U.S. private equity buyouts in the middle market from 2000 to 2012. Page 16 to exit their companies until their performance improved after the recession — desire liquidity. And, faced with a stagnant economy, strategic buyers are chasing growth by acquiring and tucking in smaller businesses. See BUYS Page 16
Hot spot for cyclists Blazing Saddle Cycle, located in a former hardware store on Detroit Avenue, is the place to go for those who prefer to commute to work via bike. PAGE 3
Onosys is making its living with help Software company has doubled business since it was bought by LivingSocial By CHUCK SODER csoder@crain.com
eight-story atrium and lobbies to enliven the high-toned but restrained former headquarters of BP America.
Before it was bought last year by LivingSocial.com, Onosys had a sales force consisting of Stan Garber. Nowadays, Mr. Garber has some help. As a subsidiary of LivingSocial — which offers daily deals and other services to 70 million members worldwide — Onosys now has five inside sales representatives based in Washington, D.C., who Garber are helping the Cleveland company sell its software, which allows restaurants to take orders via the Internet. That’s just the beginning, according to Greg Mazanec, general manager of takeout and delivery at LivingSocial.
See SQUARE Page 6
See ONOSYS Page 17
RENDERING PROVIDED
A rendering of the major renovation Westlake Reed Leskosky will make to the eight-story atrium and lobbies at 200 Public Square.
200 Public Square entering a new era Westlake Reed will liven up office building’s lobbies and atrium
The 200 Public Square office building in downtown Cleveland can be called a lot of things, including a trophy skyscraper and the
home of corporations and law firms. But few think of it as a building with inviting entrances or dynamic first-floor space. That’s about to change.
26
By STAN BULLARD sbullard@crain.com
The building’s owner, an affiliate of real estate investment firm Harbor Group of Norfolk, Va., has retained Westlake Reed Leskosky to design a major renovation of its
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MILITARY VETERANS Plenty of help is available when former service members report to work ■ Pages 11-14 PLUS: ADVISER ■ STORIES FROM THE HOMEFRONT ■ & MORE
Entire contents © 2013 by Crain Communications Inc. Vol. 34, No. 26
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COMING NEXT WEEK Be on the lookout Crain’s takes an artistic look at our annual Women of Note, with the help of photo shoots that took place at the Museum of Contemporary Art in Cleveland. We will profile the 16 honorees in next week’s issue.
REGULAR FEATURES Classified ....................17 Editorial ........................8 From the Publisher ........8 Going Places ...............10
Letter............................8 Milestone ....................18 Reporters’ Notebook....18 The Week ....................18
WWW.CRAINSCLEVELAND.COM
JULY 1 - 7, 2013
SPEND IT IF YOU’VE GOT IT Ohio is home to five of the 100 companies that spent the most on U.S. advertising in 2012, including the biggest of them all, Cincinnati-based Procter & Gamble Co. The one Cleveland-area company that made the list was Progressive Insurance Corp. in Mayfield Village. Collectively, the top 100 spent $104.5 billion on U.S. advertising last year, up 2.8% from 2011. Here’s data for the five biggest ad spenders, plus the other Ohio-based companies in the top 100: Total U.S. advertising spending Rank, Company, Headquarters 2012 2011 % change 1. Procter & Gamble Co., Cincinnati
$4.82B
$4.90B
-1.5%
2. General Motors Co., Detroit
$3.07B
$2.82B
+8.9%
3. Comcast Corp., Philadelphia
$2.99B
$2.76B
+8.2%
4. AT&T, Dallas
$2.91B
$3.14B
-7.2%
5. Verizon Communications, New York City
$2.38B
$2.52B
-5.6%
19. Macy’s, Cincinnati
$1.60B
$1.51B
+6.4%
51. Progressive Corp., Mayfield Village
$800.9M
$798.5M
+0.3%
71. Kroger Co., Cincinnati
$553.0M
$532.0M
+3.9%
94. L Brands, Columbus
$413.4M
$430.9M
-4.1%
Source: Advertising Age research; www.adage.com
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
3
Fortuna Cos. could be next for Flats
INSIGHT
Westlake business plans to move to former Rockefeller oil refinery location By JAY MILLER jmiller@crain.com
more than 230 who work at its headquarters on Highland Parkway, which is “full to the gills,” said CEO Chuck Rotuno. But soon it won’t feel so packed. The company plans to build a 20,000square-foot addition attached to the back of the 50,000-square-foot building in the next six months or so, Mr. Rotuno said.
A local construction industry company is planning a move to a piece of land in Cleveland’s Flats with a celebrated — and reviled — past. Fortuna Companies of Westlake plans to spend $2.7 million to bring most of its operations to land that was part of John D. Rockefeller’s Standard Oil Refinery No. 1 along Transport Road and, fittingly, Rockefeller Avenue. President Matt Fortuna was reluctant to speak in detail about the move because he’s awaiting a state grant to assist with the environmental cleanup of the property before completing the purchase of the land. More than 25 years old, Fortuna Cos. does excavation work and crushes concrete and other aggregate materials for recycling. It holds an option to buy the land and has been using a building and part of the property for a concrete crushing and recycling operation. Moving to the Flats would allow the company to expand its aggregate recycling operations. “We’re going to try to consolidate all our companies into one and move into Cleveland,” Mr. Fortuna said. “It’s premature to talk about the whole thing; there’s still some things that are still in the negotiation process.” Among the items up in the air is winning a $550,000 brownfield cleanup grant the city is seeking from the state’s Clean Ohio Revitalization Fund. Tracey Nichols, the city’s director of economic development, has been working with the state and is confident the city will win the grant. Mr. Fortuna described his plan as “world headquarters” for a business that also does crushing, where it uses a portable crusher to recycle materials on site.
See DRIVEN Page 7
See FORTUNA Page 4
ANGELO MERENDINO
Travis Peebles is co-owner of Blazing Saddle Cycle, which is housed in a former Cleveland hardware store building that is more than 100 years old. By LAURA STRAUB clbintern@crain.com
CATERING TO J COMMUTERS But at Blazing Saddle Cycle, those workers prefer to get there by bike
ames Rychak and Travis Peebles own and run what they call a “very different-looking” bike shop in Cleveland’s Detroit Shoreway neighborhood. “We have to work here every day, so we set it up the way we want,” Mr. Rychak said. But that setup also seems to please customers, especially their commuter cyclist following. “Even if you’re not a bike person you would be able to find something on that wall that See COMMUTERS Page 9
ON THE WEB Cyclists who bike to work must raise their awareness. Read the story at: www.crainscleveland.com
OEConnection’s growth is driven by autos Richfield software provider to car dealers is adding jobs, expands headquarters as business accelerates By CHUCK SODER csoder@crain.com
Rotuno
Employees feeling a bit cramped at OEConnection’s Richfield headquarters can
blame U.S. and Canadian auto dealers. The automotive software company has added 50 positions since the start of 2012, including 24 this year. OEConnection now employs about 260 people, including
THE WEEK IN QUOTES “It was never really seen as a place where you could see someone lingering. It was a promenade to reach the office tower. It needs cues that it’s a public space with retail uses.” — Ronald Reed, principal in the Westlake Reed Leskosky architecture firm. Page One
“We leverage everything that we can from LivingSocial, when it comes to accounting, marketing, PR — they’re a massive organization.” — Stan Garber, director of sales for Cleveland-based Onosys and one of its three founders. Page One
“Many (vets) have real barriers and others have perceived barriers to gainful employment. Some employers don’t get the fact that they have highly technical skills that might not fit a job description but are very transferable.”
“Veterans bring to the workplace an amplified and expanded skill set. … You put it all together and it helps make not only the veteran more competitive, but the company more competitive and the bottom line more profitable.”
— Bryan McGown, employer outreach specialist, Cuyahoga County Veterans Commission, and a retired U.S. Marine sergeant. Page 13
— John Ross, a military veteran, AT&T employee and president of the Ohio chapter of the AT&T Veterans Employee Resource Group. Page 13
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Another Waxman takes charge By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com
Newmark Grubb Knight Frank would like to welcome
to Northeast Ohio, and congratulate them on their recent acquisition of 2.6 million SF of industrial space in Ohio.
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There’s a new Waxman family member at the helm of Waxman Industries Inc., a plumbing and industrial products supplier based in Bedford Heights. The company said it has named Laurence Waxman as CEO, succeeding brothers and co-CEOs Melvin and Armond Waxman, who will continue to serve as co-chairmen. Laurence Waxman, 56, is the son of Melvin Waxman. Melvin, 79, and Armond, 74, had succeeded their father, Stanley Waxman, the founder of Waxman Industries.
Laurence Waxman has been with the company for more than 35 years. He most recently was the company’s president and chief operating officer, L. Waxman a position he has held since 2004, and the president of Waxman Consumer Products Group. He has been on the company’s board of directors since 1996. In his new role, Mr. Waxman will continue to serve as president of the consumer products group, the company’s largest operation, said Mark
Wester, the company’s senior vice president and chief financial officer. His role as president of that group is “integral” to the company in the United States and in Asia, Mr. Wester said. Armond Waxman said in a news release that the transition “has been in the works for some time, and we are confident that Larry’s energy and expertise will serve the Waxman family as well as our shareholders and associates in the years to come.” Waxman Industries went private in 2004 and does not share its annual revenue with the public, Mr. Wester said. It has about 500 employees. ■
SC Fastening has more room to grow By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com
When SC Fastening Systems LLC moved into its new home in Macedonia last November, it more than quadrupled its space, which the owners have used to boost its inventory and to open a showroom to display the fasteners and hardware it distributes. Less than a year later, the industrial supplier is on pace this year to reach $2 million in sales, a nice increase from its sales of $1.6 million to $1.7 million in 2012, said president and co-owner Scott Filips. Mr. Filips and co-owner and CEO Chuck Domonkos started their company in 1999 when they were in their 20s. After a few months of working out of temporary space, SC Fastening set
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that includes power tools, welding supplies and paints and chemicals. Mr. Filips jokes that they’d find a way to sell Girl Scout cookies if people asked for them. “You just hate to say no,” he said. The duo also sells fire extinguishers and related products and services as SC Fire Protection LLC, with products in the new showroom and a special area set aside for repairs in the warehouse. Bob Fligger, a manufacturing representative for Metabo power tools with Voelp Associates Inc., said SC Fastening supports the manufacturers with which it works. Mr. Fligger was in attendance at SC Fastening’s ribbon cutting and open house June 14, along with other vendors. “Service is why they’re here,” he said. ■
Fortuna: Land has an eventful history continued from PAGE 3
The other half of the business is excavation work to prepare land for sewers and streets. The company maintains storage yards in Akron and Grafton. David Ebersole, brownfield project manager for the city’s economic development department, said Fortuna would employ 15 at the Flats site. Mr. Fortuna said the company has a total of 35 employees. The city in 2011 won a $300,000 Clean Ohio grant that it used to assess the environmental problems on the property and get a good idea of what it would cost to solve the problems. The $550,000 would help with the cleanup cost. “The site is great for them, it’s just that they didn’t know what it might cost them,” Ms. Nichols said. “We were able to help him with that.” Brownfield financial assistance, Ms. Nichols said, “levels the playing field” when the city seeks to attract new businesses to Cleveland. Past use has exposed most industrially zoned property in the city to environmental hazards that must be remediated before new development or redevelopment can take place.
Away from it all Co-Presented by:
up shop in a 5,000-square-foot warehouse and office in Oakwood village. They stayed there until last fall, when they moved into the 23,000-squarefoot Macedonia location. The 10-employee company is renting the building through Mr. Filips’ family holding company, SJF Investments LLC. The larger warehouse has allowed SC Fastening to expand its inventory. And the showroom, which the company didn’t have before, makes it easier for people to stop in and buy products off the rack, Mr. Domonkos said. The company has evolved its business model over time. When SC Fastening started, the name pretty much said it all: Messrs. Filips and Domonkos were selling fasteners. Today, the company offers a wideranging mix of industrial products
In a briefing paper prepared by the economic development department for Cleveland City Council and other city officials, the proper-
ty is described as “a major development challenge.” Mr. Fortuna couldn’t agree more. “On a project the size of this, you could have had $10 million or $20 million” in cleanup costs, he said. “You don’t know until you go through the whole process with the (assessment).” He added that he believes the location is ideal. “It’s close enough to highways,” he said. “But we’re far enough away from (residential areas) that you’re not going to have any problems (crushing concrete). “Down here we’re away from everything,” he said. Mr. Ebersole said Fortuna has said it will invest about $700,000 in site development and $2 million in equipment at the property.
Little piece of history John D. Rockefeller’s fledging Standard Oil Co. began operating an oil refinery at the site shortly after the Civil War and operated there until 1966, according to the city’s briefing document. In the early 1970s the administration of Mayor Ralph Perk briefly considered buying the 106-acre refinery property from what by then was Standard Oil Co. (Ohio) for a solid-waste landfill. Part of the 11.4 acres Fortuna plans to occupy has an especially
troubled past. In 2006 a welder’s torch ignited volatile, toxic fumes at an industrial waste recycling operation. The explosion and fire injured six people. That triggered investigations by the city and the U.S. and Ohio Environmental Protection agencies of the property’s then-owner, General Environmental Management LLC, which recycled liquid industrial waste on the property. The plant closed in 2008 rather than comply with city fire codes. In addition, three executives of General Environmental Management pleaded guilty that year to failing to report the disposal of toxic chemicals into the sewer system. Other parts of the property were used at different times for industrial waste storage and chemical processing. Whatever concerns Mr. Fortuna may have had about the property’s environmental history, he also enjoys its association with Mr. Rockefeller, probably the most influential businessman the city has ever produced. “This property has a lot of history to it,” Mr. Fortuna said, recalling watching “The Men Who Built America,” a History Channel series that featured Mr. Rockefeller and Standard Oil. “I was watching that and said, ‘That’s probably our place down there.’ ” ■
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Square: Project on iconic downtown building could begin later this year continued from PAGE 1
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The owner’s marching orders for the architect are to make the 45story building more inviting and to capture some of the energy generated by recently unveiled plans from Cleveland Mayor Frank Jackson and Cuyahoga County Executive Ed FitzGerald to remake Public Square and the nearby malls. Ronald Reed, a name principal of Westlake Reed and its lead designer, called the assignment an “unparalleled opportunity to re-imagine and re-purpose this noble and dignified space for its users and visitors.” How unparalleled? “We hope to make this the fifth quadrant of Public Square,” Mr. Reed said. “It just happens to be covered on top.” Mr. Reed said his inspiration will be the Grand Galleria of Milan, a glass-topped, 19-century structure in Milan, Italy, where the activity level of the street continues inside the building. When constructed in 1985, the Public Square building was designed to serve as a corporate headquarters for Standard Oil Co. (Ohio) — which British Petroleum would acquire — with granite walls, floors and a fountain to match. However, Mr. Reed said multitenant buildings generally have livelier firstfloor and retail areas than the building locals came to know as BP Tower. “It was never really seen as a place where you could see someone lingering,” Mr. Reed said in an interview. “It was a promenade to reach the office tower. It needs cues that it’s a public space with retail uses.” “Technology has also transformed the workplace since the building was constructed,” he said. “Now a lawyer or ad copywriter in the building who has hit a (mental)
“It was never really seen as a place where you could see someone lingering. It was a promenade to reach the office tower. It needs cues that it’s a public space with retail uses.” – Ronald Reed, lead designer and name principal, Westlake Reed Leskosky block may take his or her work or team to a different environment to get a different frame of mind. With the right furnishings, it can become a spontaneous work space tenants want today.”
‘Prestige’ factor Particulars of the project, scheduled to begin later this year, have not been determined, and a cost estimate wasn’t disclosed. But the goals are clear. Renee Evans, 200 Public Square general manager for Harbor Group, said the building is iconic and the improvements will be designed to “enhance its prestige.” The makeover also will help with commercial concerns. Brian Hurtuk, managing director of real estate broker Colliers International’s Cleveland office, which handles leasing for the building, said the innovative redesign of the atrium “will only add to the massive appeal this building already has.” Bill Stevens, a Colliers senior associate who works on leasing the building, said elements of the design will be centered on making the first floor more efficient and useable. The long-closed Frank & Pauly’s restaurant on the Superior Avenue side of the structure may be carved into at least two spaces for retailers or restaurants. And an empty food court in the atrium also
will be rejuvenated, he said. The 1.2-million-square-foot building no longer has the yawning vacancies that existed before mining giant Cliffs Natural Resources, Huntington Bank and a bevy of law firms made it their home. However, at 84% occupancy, there still is empty office space, and a more inviting lobby can help the building’s owner fill it.
Timing is everything The planned update would be well-timed, said Michael Deemer, vice president of business development for the Downtown Cleveland Alliance, a nonprofit that markets downtown and oversees maintenance and security issues. “It makes all the sense in the world for them to do this,” Mr. Deemer said. “There is momentum from the bus rapid transit line. And they can capitalize on plans to make the area from Public Square to the lakefront more people-oriented.” While the goal of the makeover is to be transformational, Mr. Reed said he sees his work as a balancing act between making the building brighter — perhaps with new lighting designs — and more welcoming without “doing something gaudy to its noble design.” Commercial real estate insiders note that before the eastern edge of Public Square between Euclid and Superior avenues was redeveloped as the massive skyscraper, it was the city’s best retail corner because it sat between mass transit stops on the square and office buildings to the east. Mr. Reed recalls walking on Euclid as a teenager and hearing music — specifically, the B52s — emanating from a store where 200 Public Square stands today. “That’s the kind of thing that tells you that you are in a city,” he said. ■
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Driven: Richfield location has added 140 employees in six years continued from PAGE 3
The expansion has been a long time coming: Six years ago, when OEConnection moved in, company officials told Crain’s they eventually might need to expand the building, which was designed with an addition in mind. “When we built the building, we had 120 people. Now we’re 260,” Mr. Rotuno said, adding that the company will take another 3,000 square feet next to its 5,000-squarefoot Columbus office before the end of the summer. So what’s driving all that hiring? Steadily growing revenue from U.S. and Canadian auto dealers, which use OEConnection’s software to sell original equipment parts to other dealers, body shops and other customers via the web. The company’s revenue has grown by an average of 13% each year for the past seven years, and its operating income has increased by an average of 18% annually during that period, Mr. Rotuno said. He would not give specific dollar figures. Today, OEConnection serves two-thirds of all U.S. auto dealers, and revenue from those dealers keeps increasing as the company releases new products allowing dealers to target different groups of customers.
‘We earn it’ Over the past three years, OEConnection has landed big contracts in Canada, too, including the Canadian divisions of General Motors, Ford, Toyota, Kia and Chrysler, Mr. Rotuno said. Other countries have been harder to crack, though, he said. Earlier this year, OEConnection entered
another when it signed a deal with General Motors de México, which will provide the software to its dealer network in Mexico. Now OEConnection’s challenge is to break into overseas markets. Company officials have talked about selling software overseas since at least 2009, but the process has moved “slower than we’d like,” Mr. Rotuno said. That’s partly because the sales cycle is longer in other countries. In the United States, the company often sells straight to dealers, but in other countries the automakers tend to make purchasing decisions. While selling to an automaker’s U.S. division typically takes about six to nine months, the process might take 12 to 18 months in other countries, he said. OEConnection’s owners — GM and Ford Motor Co. — can open doors in new countries, but their local divisions make the decisions. “They don’t hand us business,” Mr. Rotuno said. “That’s the one thing that’s always been the case. We earn it.”
made progress overseas, Mr. Rotuno said. It has been nurturing several prospects in Europe over the past 18 months, with the help of a sales partner that he would not identify. “If that proves to be beneficial, we could adopt that model elsewhere,” Mr. Rotuno said, noting
that OEConnection has other prospects in Australia, Brazil and China. OEConnection could penetrate foreign markets even faster if any of the automakers it serves decides to use the company’s software at all of its dealerships worldwide. For instance, GM one day proba-
bly will pick one system that all its dealers would use to exchange parts online, Mr. Quigley said, adding that there’s no guarantee GM would choose OEConnection’s technology. “It’s just a matter of time before we merge our technologies globally,” he said. ■
736 CHIEF EXECUTIVES MADE AN EXECUTIVE DECISION.
Global push That’s true, according to OE Connection’s board chairman, Jeff Quigley, who also is director of enterprise analysis and revenue at GM. Although OEConnection’s sales grow by double-digit percentages every year, selling the software overseas has been tough for a number of reasons, Mr. Quigley said. “Some of the emerging markets aren’t ready for the technology, some are, and some of the mature markets have alternatives that they’ve already developed,” he said. Even so, OEConnection has
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PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
The end
W
as this trip really necessary? It’s the introspective question Republican legislators should ask themselves — and take the time to answer — in light of the contents of the two-year state budget they were settling upon late last week as a June 30 deadline loomed. Five months of deliberations in the Ohio House and Senate appear to have produced a bill that is part budget measure, part social agenda. In some ways, the bill resembles the budget proposal Republican Gov. John Kasich put forth in early February, although the income tax breaks the measure would give to individuals and small business owners aren’t as big as those sought by the governor. And lawmakers decided to raise the state sales tax by a quarter percentage point, to 5.75%, rather than go with the governor’s proposal to reduce the rate a half-point to 5% but apply the tax to most services. But did it really need to take nearly a half-year of the Legislature’s time to reach this consensus on the tax portion of the bill? And why, in a budget bill, do Republican lawmakers insist on wading into the abortion issue? No matter where you stand on abortion, a budget bill isn’t the place to change existing law. Any changes should be debated in a separate bill, not tucked away as sneaky amendments to a broader measure. The repeated mishandling of important legislation speaks to a certain dysfunction among members of the ruling party, and it isn’t healthy for our state. Consider: Last year at this time leaders of the Ohio House were sitting on desperately needed reforms to keep Ohio’s five public employee pension funds solvent. The reforms had won overwhelming bipartisan support in the Senate in May. Yet House Speaker William Batchelder wanted to wait until a study commissioned by the Ohio Retirement Study Council was completed sometime that summer. The House last September finally approved the reform measures essentially as is. But during the four months in between the actions of the Senate and House, the pension funds needlessly continued to burn through millions of dollars a day. More recently, it was the Senate that was slow to act on legislation that effectively would put an end to the houses of gambling disguised as Internet cafés. Although the House late in the last session of the Legislature and early in this session moved along a bill aimed at killing the cafés, the Senate appeared in no hurry to follow suit. But soon after The Columbus Dispatch reported in mid-April that café interests had hosted a dinner with key lawmakers and had contributed more than $110,000 to legislators’ campaigns last year, the Senate suddenly put the bill on a fast track. Meanwhile, Ohio Attorney General Mike DeWine had to exhaust time, money and personnel pursuing legal actions against those Internet cafés that blatantly operated as gambling parlors. Such performances — or lack thereof — are all the more reason to put an end to term limits so that lobbyists aren’t leading novices by the nose and turning bills into special-interest gumbo.
FROM THE PUBLISHER
Seeing red over red-light camera bill What? Does anyone else reading that o our state legislators — dominatquote think it borders on preposterous? ed as we know by Republicans in Many things could be blamed both chambers — are as excuses for not going to wading into the fight BRIAN church in a small Ohio village. over traffic cameras, thus all but TUCKER Golf, sleeping, a demanding ensuring another court battle work schedule. Maybe (God forover Ohio’s long-held tradition bid, if you’ll pardon the pun), a of home rule. boring voice from the pulpit. Late last week, the House votNot, however, traffic cameras ed by a two-thirds majority to in a village that might take 90 approve a bill that would ban seconds to drive through at cities’ use of cameras to spot posted speed limits. traffic violators. This vote came In an hour of debate over despite evidence that the instalHouse Bill 69, opponents argued that relation of such devices is not only genermoving the cameras would jeopardize ating revenue but also saving lives. safety in those communities that have According to The Columbus Dispatch, them. some House members rationalized their “Motorists learn where those cameras vote by attacking the practice as a monare, and guess what? Driving habits ey grab. A Cincinnati Democrat, Alicia change; they change for the better,” the Reece, even decried it as an attack on renewspaper quoted Rep. Michael Curtin, ligion (well, sort of — read on). a Democrat from Marble Cliff, as saying. “The village of Elmwood (Place) issued Cleveland has such cameras and I’ve 6,000 tickets in 30 days at $105 a pop … never gotten a ticket issued in such a manwith 40% of the revenue going to a company that is not located in Ohio,” she ner. But then, it seems silly to me to break said. “Folks don’t even want to go to speed laws in a city because intuitively we church because they don’t want to drive all know it’s more dangerous to drive over through the village.” the speed limit inside a city’s limits.
S
In fact, I was shocked to see a 35-mph sign on Fulton Avenue near St. Rocco’s church last week as my daughter and I drove downtown. I appreciate that the street has been totally rebuilt, but that speed seems dangerous in a residential area. I cannot imagine that Cleveland or some other city — if this camera-banning measure passes the Senate — won’t challenge it in the courts, as well they should, if Gov. Kasich were to sign it into law. ***** And speaking of Cleveland, the editorial team at Crain’s is tackling a special editorial project that will look at what our city might look like by 2030. Entitled “CLE 2030,” this section will examine what’s succeeded in Cleveland, and what needs to improve if the city is to build on the progress downtown and in the neighborhoods. Reporters will speak to business and civic leaders as well as community representatives and citizens to gather ideas on how best to stop the trend of population loss that has afflicted our city for decades. For more information, visit our website, www.crainscleveland.com. ■
LETTER
Our designs should be on excellence
I
t was so refreshing to read Brian Tucker’s June 24 commentary, “Don’t build another box downtown,” regarding the design of a new convention center hotel in Cleveland. I know this is not a new comment from Mr. Tucker or Crain’s. We have supported this strategy for many decades. We join all those who ask for design excellence in building associated with new developments in downtown Cleveland. When Irv Chelm wanted to create a new design downtown, we created a unique concept for a hotel/office complex and a 2,000-car parking garage between East Sixth and East Ninth streets on Superior Avenue. At that time, we had a letter of intent from the Westin Hotel. Unfortunately, the economic environment
WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 441131230; Email: editor@crainscleveland.com
suppressed Mr. Chelm’s enthusiasm. In a similar manner, we were asked to design the new Cuyahoga County administration building on East Ninth between Euclid and Prospect avenues. Our team was in competition with many of my colleagues here in the city. However, our design, to our knowledge, reached the highest levels of acceptance. These innovative opportunities do exist. We just completed a parking garage for Cuyahoga Community College next to the school’s administrative offices and across from Progressive Field. A decade
ago, we built a glass-enclosed garage at East Sixth and Euclid Avenue for David Goldberg. All of these projects have been recognized by our peers. Following Cleveland Clinic CEO Toby Cosgrove’s methodology, we approach projects with these key questions in mind: What do we want to do? When do we want to do it? And most importantly, how will we do it? Please, no more rhetoric. I follow Mr. Tucker’s call to encourage the leadership of Cleveland and Cuyahoga County to pursue design excellence in new projects contemplated for our city. Richard Fleischman Senior partner and design director Richard Fleischman + Partners Architects Inc. Cleveland
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Commuters: Business plans to open a second showroom upstairs continued from PAGE 3
interests you,” Mr. Rychak said. “It’s like a little museum in here.” Blazing Saddle Cycle, housed in a former hardware store well over 100 years old, overflows with a selection of bikes and parts. Pre-World War II bicycles and period-correct rebuilds hang suspended from the ceiling, while state-of-the-art racing bikes, including their own line of bikes, dubbed “Gringo,” and five premium brands line the hardwood floors. This shop is not sterile like many other bike shops, Mr. Rychak said. Although the space is filled to the brim with commodity equipment, there is a method to the madness, along with a place for the shop dog, Sparky, to curl up and take a nap. After working together as friends on anything from guitars to cars, they made the leap in 2010 and went into business together. “We decided to build bikes,” said Mr. Rychak, 28. “And it was something we were pretty good at.” Mr. Rychak’s knowledge of bicycles stemmed from his time at another bike shop. He worked behind the scenes, ordering parts and concentrating on mechanics; however, he was ready for more involvement. “Me, I’m a self-taught genius,” said Mr. Peebles, 32. He specializes in general mechanics, restorations and contracting. “Putting the two talents together is kind of how everything came to be,” Mr. Rychak said. Looking down the block from the store at 7427 Detroit Ave., it is easy to spot the bicycle commuters who make up a chunk of Blazing Saddle’s customers. “We deal with a lot of commuters because of our location,” Mr. Rychak said. “Since I moved to this neighborhood in 2007 the number of riders has increased exponentially.” From 2000 to 2010, bicycle commuting in Cleveland increased 280%, to an estimated 3,200 commuters daily, according to regional bicycle advocacy group Bike Cleveland. That’s the highest percentage increase of any large city in the country, said Jacob VanSickle, Bike Cleveland’s executive director. Of Bike Cleveland’s 450 members, some bike downtown to work from as far away as Lakewood and Bay Village, Mr. VanSickle said.
Men of steel Many of the bikes Blazing Saddle carries for its commuter cyclists are made out of a material that competitive cyclists overlook — steel. The current desire for the lightest and fastest equipment available calls for bicycles made of carbon fiber. However, that material doesn’t have the strength and shock resistance commuters need. “Steel has a nice ride,” Mr. Rychak said. “It has a little bit of character and durability.” These qualities come in handy when riding on heavily traveled roads riddled with bumps and potholes. “We would go searching out these really great old steel frames because they’re so versatile,” Mr. Rychak said. Those steel frames often have made their way into custom projects or restorations. “Any time you do a restoration, it’s really gratifying,” Mr. Peebles said. Besides steel frame bikes, Blazing
Saddle also offers an array of products to help bicycle commuters on their daily trips. Rain or snow gear, messenger bags, cell phone mounts, racks and fenders all can help the commute go smoothly. Although the owners encourage traveling to work by bike, Mr. Rychak warns against spontaneously changing commuting habits. “Don’t just wake up one morning and decide, ‘I want to bike to work,’ ” he said. Instead, he suggests taking bicycle commuting for a test run on a weekend. It’s less stressful when new riders can take more time and fight less traffic. Make sure it is something for you before you commit, he said.Ohio is a very carcentric state, Bike Cleveland’s Mr. VanSickle said, and many policies concentrate on expanding freeways versus remodeling existing roadways to accommodate cyclists. “Our design is primarily to move cars,” Mr. VanSickle.
Uncool no more Even with room for improvement in creating more bicycle-friendly streets, though, Northeast Ohio boasts a cyclist resource not many other urban areas can compete with — the Cleveland Metroparks trail network. As bicycle riding experiences a revival of sorts, people increasingly use this resource. “I think there was a time period where it was kind of lame,” Mr. Rychak said of cycling. “It wasn’t cool to be on a bicycle.” Mr. Rychak and Mr. Peebles hope to keep the revival alive through their shop. They plan to have weekly group rides for both competitive and novice riders. The rides would depart and return to the Detroit Avenue shop on Tuesday evenings, and riders could enjoy some postride company in the shop’s large backyard garden. These rides would be in an addition to the USA Cycling-sanctioned racing program developing at Blazing Saddle. The team is in its inaugural season racing road, mountain bike and cyclocross competitions. Cyclocross competitions are unique because these closed circuit obstacle races do not begin until the road and mountain bike racing seasons wrap up. The lack of season overlap attracts road racers, mountain bike racers and fans alike. Because cyclocross takes place on a closed circuit it becomes a spectator event, with onlookers cheering as racers push through gravel, grass or mud and dismount their bicycles to supersede obstacles. “It’s a very interesting style of racing,” Mr. Rychak said. “And it’s very fun to watch.” As bike culture grows, Blazing Saddle grows with it. The co-owners moved into their current location two years ago when they outgrew the old Armstrong Laundry building across the street. “We needed a good storefront,” Mr. Rychak said. And even after obtaining that storefront, the shop continued to grow. The twosome plans to open a second showroom of products in the upstairs apartment of their current location. Although organized, their stock is growing too quickly to be contained on the main floor. “The apartment needs a good bit of work,” Mr. Rychak said. “But it won’t be long until our room on the (current shop) floor is no more.” ■
ANGELO MERENDINO
Blazing Saddle Cycle co-owner James Rychak works on a bike at the shop, which is located at 7427 Detroit Ave.
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GOING PLACES JOB CHANGES CONSULTING CENTRIC CONSULTING: David Kaufman and Dale Stewart to consultants. COMPASS CONSULTING SERVICES LLC: Tameka Taylor to president.
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Greene
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Kolenc
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Kohn
Nikel
Taylor
Cruz
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Jubeck
Mayher
Doyle
DISTRIBUTION SIRNA & SONS PRODUCE: Anthony Sirna to sales representative.
ENGINEERING MS CONSULTANTS INC.: Joseph Surra to director of sales, oil and gas.
FINANCE FIRST NIAGARA FINANCIAL GROUP: Philip L. Rice to Ohio market executive; James V. Cannella and Anthony J. DiMare to senior relationship managers. J.P.MORGAN: Myah Moore Irick to vice president and private banker.
FINANCIAL SERVICE CAPITAL PLANNERS: Yoav Hami and Patrick Perkins to field
representatives. LEVIN, SWEDLER & CO.: Todd Kennedy to partner. SS&G WEALTH MANAGEMENT LLC: Scott Pfeiffer to associate.
HOSPITALITY
LEGAL
CEDAR CREEK GRILLE: Tyler Brandenburg to general manager.
MCELROY LAW LLC: Lindsey M. Wilber to associate.
HEALTH CARE
INSURANCE
CLEVELAND CLINIC: Rev. Amy Greene to director of spiritual care.
CHELKO CONSULTING GROUP: Austin Chelko to consultant.
LODI COMMUNITY CARE CENTER: Mihaela Iovi, M.D. to internal medicine staff; Nicole Klonaris to adult medicine and respiratory therapist.
TRANSAMERICA LIFE INSURANCE CO.: Brad Kogan to area sales manager, Northern Ohio and Pittsburgh, Transamerica Employee Benefits.
MANUFACTURING AKRON-MILS: Mike Iafigliola to new product development manager. BRENNAN INDUSTRIES: Michael Caliebe to general manager, Ohio distribution center. EATON: William M. Braun to director, operations and functional excellence, supply Chain Management.
MARKETING COSO MEDIA: Andrea Kiger to graphic design specialist.
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REAL ESTATE COLDWELL BANKER HUNTER REALTY: Asli Happel, Joseph Jancsurak, Scott Buettner, Gerald Kay Jr., Daniell Collyer, Christine Orosz, David Lyngholm, Karl Hershberger, Jeffrey Prinz, Jason Raffle, Zane Coffin Jr., Peter DiNunzio, Wilmont Baker, David McCrone, Noelle Dean and Lesley Pantich to sales associates.
TECHNOLOGY BENEFITFOCUS: Greg Boehm to sales director, informatics, Great Lakes and East coast. MCPC INC.: Brandon Kohn to lead generation specialist; Brandon Nikel to managed service technician; Caitlin Taylor to engineering operations specialist; Herminio Cruz to OSC analyst; Matt Lehotsky to business analyst, quoting; Ryan Adcox to rotational desktop technician; Wayne Rieke to rotational network technician; Regina Dusan to executive coordinator. OECONNECTION: Sarah Truman to manager, product.
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AWARDS
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INSIDE
14 THREE VETS SHARE THEIR STORIES ON FINDING WORK.
MILITARY VETERANS AND BUSINESS Veterans usually have skills to fit bill Companies tout many desirable assets of those who served in military By KIMBERLY BONVISSUTO clbfreelancer@crain.com
S
elf-discipline, teamwork, organizational and problemsolving skills, along with a can-do attitude. Those are the skills local employers say they automatically find in the military veterans they now call employees.
INSIDE: An employer offers advice to veterans on putting military skills to work in civilian life. Page 12
they did in the service and help a recruiter see that value.” Mr. McGown’s organization is just one in a vast network of resources — including job fairs, career counseling and employer tax credits — that are helping Northeast Ohio’s veterans integrate into the civilian workplace. Nationally, there are signs that these efforts are working. The staggering difference in unemployment rates between post-9/11 veterans and non-veterans that existed one year ago — 12.7% versus 7.7% — has all but vanished. Today, the unemployment rate among such veterans is 7.3%, just slightly over the general population at 7.0%. “It’s like a swimming pool,” says Benjamin Johnson of the Ohio Department of Job and Family Services, which operates the Ohio Means Veteran Jobs statewide employment program. “At the shallow end, we help proofread a resume or a cover letter. On the deep end is on-the-job training (subsidized by the state).”
“Veterans bring to the workplace an amplified and expanded skill set,” said John Ross, a Clevelandbased military veteran, AT&T employee and president of the Ohio chapter of the AT&T Veterans Employee Resource Group. “The technical side is important, but the more esoteric skills make the biggest impact — organization, the ability to solve problems, the attitude that no problem is without resolution, a see-it-through commitment. “You put it all together and it helps make not only the veteran more competitive, but the company more competitive and the bottom line more profitable.” A number of organizations, such as AT&T, have made a commitment to finding effective ways to translate those skills into the civilian work place. Indeed, AT&T spokeswoman Holly Hollingsworth says the telecommunications company hires hundreds of military veterans annually through external outreach and has a variety of programs geared toward veteran hires, including: ■ A military talent attraction manager who educates AT&T managers on the benefits of hiring military veterans. ■ The military skills translator, a computer program that helps veterans determine which civilian jobs best fit their military skill set. ■ The Careers4Vets job search adviser program, which provides job search guidance by veterans to veterans, while the Veterans Talent Network makes available to all veterans newsletters and text messages on AT&T openings and career events.
See DUTY Page 12
See SKILLS Page 13
MCKINLEY WILEY PHOTOS
Representatives from the Home Depot (above) and AT&T (below) speak with veterans during a job fair at the Advanced Technology Training Center on Friday, June 21 at Cuyahoga Community College.
REPORTING FOR DUTY Former service members have a large network of resources available when they attempt to find ‘gainful employment’ By JENNIFER KEIRN clbfreelancer@crain.com
I
t’s easy for Bryan McGown to relate to the unemployed veterans who visit his office at the Cuyahoga County Veterans Commission, where he’s an employer outreach specialist. Not long ago, Mr. McGown himself was an unemployed veteran. He’s a retired U.S. Marine sergeant who joined the civilian work force in 2001, but when the small business he worked for lost a critical contract in 2011, he was out of a job and spent about a year hunting. Last year, a volunteer position at a career center for veterans connected him to his current job, and he now spends his time helping vets make themselves marketable in the civilian work force and connecting them to jobs in Northeast Ohio. “Many (vets) have real barriers and others have perceived barriers to gainful employment,” says Mr. McGown. “Some employers don’t get the fact that they have highly technical skills that might not fit a job description but are very transferable.” It’s Mr. McGown’s job to serve as an interpreter, translating how five years on an aircraft carrier might correspond to a job in a Northeast Ohio machine shop. “It’s not always an exact match,” he says. “The veterans have to be educators, be confident about what
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Transitioning to work force can mean Duty: State program has more ‘you’ than vets are anticipating helped many find work
F
inishing up one’s time in the military can be a kind of identity crisis. You know your rank, and your piece in the puzzle of your unit. You’re part of a “we mentality” that gets things done and keeps people safe. But what happens when that chapter of your life is over? A 2011 Pew Center study of 1,853 veterans showed about three in 10 said re-entry into civilian life was difficult for them — a figure that rises to 44% among veterans who served during the 10 years since the Sept. 11, 2001, terrorist attacks. Here’s how to evaluate the skills that proved to be so successful for you in the armed forces and leverage them to begin or continue your career:
From ‘we’ to ‘me’ People in the military often recall pride stories of tough missions or projects, and the most pivotal element of the story is the people in the proverbial “foxhole” with them. Being a part of a team is rewarding. Successful collaboration toward a shared goal is a powerful motivator, and the “we” mentality can be hard to shake because it feels good to be a part of something. But when you’re looking for that first job post-military, recruiters and managers want desperately to learn more about something you may not be totally comfortable talking about: You. Prepare yourself, the word “I” is going to be creeping into your vocabulary a lot more than you’d like. Here’s why: Recruiters need to know what “you’re” capable of and what unique skills and talents
CONNIEDINGEMAN
ADVISER “you” possess that are the right fit for position X. The purpose of this information isn’t to diminish the importance of succeeding on group projects, but when you’re in the interview phase, you’re about as likely to have a teammate as Tiger Woods. So the takeaway here is this: Don’t lose your love of the team, just shelve it for a while and focus on what “you” bring to the corporate table.
Translating your skills Looking through civilian job postings and shaking off the military terminology is about as easy as learning another language on your lunch hour. Over time, our recruiters have noticed a pattern in skill sets many people learn in the military that translates well to certain types of civilian jobs. Here are just a few examples. ■ If you held a telecommunications position in the military, you probably excel at skills that would be a solid fit for an IT position or a help desk. ■ Your work helping internal customers is highly beneficial. Something to keep in mind: Be sure you don’t leave your customer service experience off your
continued from PAGE 11
RESOURCES ■ www.onetonline.org: Plug in a military job code into the system and get a list of civilian jobs that match those skill sets. ■ www.militarytransitionadvisors.com/webinars.html: Free veteran webinars ■ www.Military.com: A general resource look for sample interview questions and styles. resume simply because it’s interoffice-focused. If a civilian recruiter unfamiliar with military terminology sees TelComm Support or Internal Service Provider they might be unaware of the heavy focus on customer service. In addition, if you had a prevalent writing component, consider public relations or internal communications. ■ Were you a part of the military security team? Law enforcement or security positions are a logical fit, but did you ever think about a career in the claims field? Your skills and strengths involve an investigative element and being able to understand legal situations is imperative for being in the field and dissecting what happened. ■ Personnel specialists within the military have similar skill sets to an office administrator or an HR assistant because you run the office day-to-day. If you excel at managing personnel issues, look into jobs for HR consultants or specialists. Connie Dingeman is a recruiting manager and leads the military recruiting efforts for Mayfield Village-based Progressive Insurance.
Get me a veteran, stat Gayle Agahi can’t hire enough veterans. Ms. Agahi oversees a program called Hero Experience at the Cleveland Clinic, a strategic effort of hiring more veterans through targeted national recruiting, job fairs, classes and virtual interviewing. The program launched in January 2012 and has since hired nearly 400 veterans. “If 200 (military nurses) popped up tomorrow, we’d probably take all of them,” Ms. Agahi said. “The ones that have been in the military know how to function under pressure … that’s something a new grad would not have, or even some civilian nurses with experience.” Ms. Agahi also has hired veterans for the health system’s police force, environmental services department and other patient care positions. She said they often exhibit maturity beyond their years, good problemsolving skills and cool heads. “Those are the soft skills that are very important to the success of an organization, especially one that’s focused on patient satisfaction,” Ms. Agahi said. Anita Witcher is one of those veterans hired by the Clinic’s Hero Experience program. She has been back in the civilian work force for a long time — she left the U.S. Army in 1981 — but remembers how tough that transition from military to civilian life was. “In the civilian world, it didn’t feel secure like it did in the service, where everyone had everyone’s backs,” said Ms. Witcher. “It made me consider re-enlisting.” Her new job in the Clinic’s Solon appointment center couldn’t be more different, and she encourages other veterans to apply whenever she can. “The Cleveland Clinic wants you,” she said.
Financial incentives There are bottom-line benefits to employers who hire veterans. Through the Department of Labor’s Work Opportunity Tax Credit, hiring a vet who has been unemployed for at least six months
“In the civilian world, it didn’t feel secure like it did in the service, where everyone had everyone’s backs.” – Anita Witcher Cleveland Clinic employee, military vet comes with a credit of up to $5,600, or up to $9,600 if that veteran also has a service-related disability. The state of Ohio also gets more than $6.6 million in federal funds through the Jobs for Veterans Grant, which Mr. Johnson said supports staffs of veterans representatives in every county, including nine in Cuyahoga County. Of the nearly 4,000 Ohio veterans who participated in “intensive” services from the Department of Job and Family Services — help beyond just resumes and cover letters — more than 60% found employment, Mr. Johnson said. Support for veteran employment isn’t just coming from the public sector; the U.S. Chamber of Commerce Foundation also sponsors Hiring Our Heroes job fairs across the country — more than 500 since the program began in March 2011. Despite the sea of resources available, it’s still often difficult for veterans and employers to make a match. A big obstacle for the Cleveland Clinic is veterans who lack the proper licenses for civilian work; it’s a hold-up that a June executive order from Gov. John Kasich promises to address. Meanwhile, Mr. McGown, the volunteer for the Cuyahoga County Veterans Commission, is pushing to see more employers credit “related military experience” for required job qualifications. He also hopes for changes to the American Council on Education’s policies to confer more college credit for similar service experience. The military itself is a bit to blame, too. “The military doesn’t always make it easy to find people,” said Ms. Agahi. “They have old-fashioned ideas of how companies recruit.” ■
Retirement Investment Asset Management www.mgo-inc.com
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Skills: Gates Mills resident forms nonprofit for disabled vets continued from PAGE 11
■ The Veteran Employee Group, which works with the Employer Support of the Guard and the Reserve, a Department of Defense office, to support outreach activities and causes that benefit veterans. In addition, AT&T and Alorica — a California-based call center company — in 2010 launched AloricaCares, a customer care program staffed entirely by veterans with disabilities.
Strength in numbers PNC Financial Services Group Inc. also has made a commitment to including veterans in its work force diversity strategy. The bank works with several external organizations that advocate for hiring military veterans and draws on its own internal experts and employees to recruit veterans. Amanda Snow, a New Yorkbased PNC diversity and inclusion recruiting strategist and vice president for talent acquisitions in human resources, said PNC enhanced its military strategy last year to develop, retain and recruit veterans and those active in the National Guard and Reserves. “We are constantly looking at ways to enhance the overall processes, strategies and initiatives to have an inclusive culture,” Miss Snow said. “We have really seen that veterans bring a type of leadership, time management and effective prioritization skills to the work force.
STAYING UP TO DATE ON THE GI BILL The Servicemen’s Readjustment Act of 1944 — commonly known as the GI Bill of Rights — offered a college scholarship to all who served in uniform, whether or not they fought on the front lines. The bill was designed to help veterans assimilate back into civilian life. It was revamped in 1984 and became known as the Montgomery GI bill and required military members to “buy in” to be eligible for a monthly stipend for a qualified educational or trade program. The GI bill was revamped yet again in 2008. The Post-9/11 GI Bill provides veterans with active duty service on or after Sept. 11, 2001, financial support for education at colleges, universities, trade schools “They are very adaptive and always ready to learn,” Miss Snow said. Spencer Manning, a PNC business systems analyst in Cleveland and retired veteran of the U.S. Navy, found his way into the company through the military Employee Business Resource Group (EBRG). Mr. Manning was working with a temporary contracting agency that placed him at PNC, where he read about the company’s military EBRG, talked to some members and applied for an open position. Mr. Manning joined the military EBRG and shares camaraderie
and for on-the-job training, apprenticeships and flight schools; a monthly housing allowance; annual books and supplies stipend; and the ability to transfer unused education benefits to spouses or children. The Yellow Ribbon GI Education Enhancement Program, a provision of the Post 9/11 Veterans Educational Assistance Act of 2008, allows institutions of higher learning to enter into an agreement with the VA to fund tuition expenses that exceed either the annual maximum cap for private institution or the resident tuition and fees for a public institution. The institution can contribute up to 50% of those expenses and the VA will match that amount. For more, go to www.gibill.va.gov. with other veterans at the company. “It helps you because now you have other people in the group, employees within the bank. You find out about various resources and share experiences and share with each other, which helps reduce a lot of anxiety and increases your comfort level as you start making that transition,” he said. “A 20-year career is a hard thing to completely remove from your life.”
Insuring their future Gates Mills resident James R. Pender, who spent more than 50
years with the Oswald Cos., is heading up a pilot program with Floridabased partner Gary V. Trippe to train and generate employment within the insurance industry for physically disabled veterans. The nonprofit Disabled Veterans Insurance Careers works with the U.S. Department of Veterans Affairs to screen veterans and train them for high-level financial work within the insurance industry. While the program is just at the starting line with its first group of eight veterans, Mr. Pender said he expects to have 100 veterans on board within three to five years. He portrayed the program as a partnership between the insurance industry, government and veterans. Disabled Veterans Insurance Careers is partnering with HUB International Limited, a large insurance brokerage in Chicago, for its first pilot. HUB International is supplying a physical training facility for mobile veterans, although remote training will be available. Future training sites will be determined based on the interest and concentration of qualified veterans, as well as partnerships with interested insurance agencies. Veterans who make it through the one- to two-year training program are guaranteed a job. Initially they will work for Disabled Veterans Insurance Careers and perform insurance functions on a contract basis for other insurance agencies. Eventually a veteran
could go to work directly for an insurance carrier or agency. “In the long run, our objective is to make sure that person has a career,” Mr. Pender said. “If anything, we want to be a launching pad for their career.”
A tradition of service The Reserves Network, based in Fairview Park, is veteran-owned and prides itself on being veteranfriendly. The regional staffing company’s name and red, white and blue signature colors trace back to founder and chairman Don Stallard and his background as an officer and pilot in the U.S. Air Force Reserves. Today the Reserves Network has offices in nine states and is “committed to helping those who have done so much to help us,” according to the company’s pledge. The Reserves Network participates in veteran job fairs, is involved on job boards that focus on recruiting veterans and develops relationships with veteran organizations for referrals. It also has screening, interviewing and testing programs in place to determine how skills can best translate into job opportunities. In addition, the firm has orientation programs to aid in a smooth transition. “No candidates in today’s job market have a greater amount of transferable skills than job seekers with military experience,” said Reserves Network spokesman Brandon Thimke. ■
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STORIES FROM THE HOMEFRONT RICK GROSS
R
ick Gross, a certified public accountant and father of three young boys, had just finished a stint in the U.S. Navy when he decided to move his family back to Cleveland in 2010. With a degree in accounting and an MBA in finance, Lt. Gross found a position as a senior financial analyst with MGO, a wealth management firm in Beachwood, where his uncle happens to be one of the partners. As a member of the U.S. Navy Reserve, Lt. Gross was called to
duty on a number of occasions for reasons ranging from tsunami relief missions to reserve duty. Then he received word from the Secretary of Defense that he was being called up for 10 months of active duty beginning in February. “We had to decide what to do,” said Ron Gross, MGO president and CEO. “We like to be charitable. We believe in giving back. How could you not pay them when they are serving their country?” Mr. Gross and his partners, vice
president Paul Orchosky and director of investments Michael Moskal, brainstormed about ideas, eventually deciding to continue Lt. Gross’ full pay and benefits during his active duty. “We brought him in to be part of the future of our firm. Are we really going to allow a hardship for his family?” Mr. Gross said. For a small firm of 24 employees, Lt. Gross’ absence meant more work for the people around him. While Mr. Gross said it’s been somewhat of a hardship on the company, he said the partners are committed to their employees. MGO’s efforts have not gone unnoticed. The company was notified in February that it is the recipient of the Employer Support of the Guard and Reserve’s Patriot Award recognizing employers for their support of guardsmen or reservists. The company also was nominated for the Secretary of Defense Employer Support Freedom Award, the highest recognition given by the U.S. government to employers for their support of employees serving in the Guard and Reserves.
AKANIAO KOZENIEWSKI
W
Northeast Ohio Region
hen Akaniao Kozeniewski, an Iraq War veteran who served two tours of duty, left the U.S. Marine Corps and moved from his native Hawaii to Cleveland to join his girlfriend — now his wife — he never imagined his service background would figure into a new career. Mr. Kozeniewski was working on his MBA when his neighbor, Mike Cleaver, operations manager at Voss Industries Inc. in Cleveland, mentioned a sales opportunity at the company. He soon learned that the manufacturer’s
clamping, coupling and ducting products went into the military, aircraft and ground support products Mr. Kozeniewski himself used while in the service. “Working for Voss, being a part of a company that helps out the military in a way, it was definitely a draw,” he said. Mr. Cleaver said Voss does not have a veteran recruitment program, but the nature of the work does draw veteran employees. Military veterans, he said, have a work ethic instilled in them that is difficult to find. “We can teach someone how to spot weld or package parts, but we can’t teach them to show up at work,” Mr. Cleaver said. “What we like about veterans is they come in with the ability to do the basics — everything after that we can teach them.” Mr. Kozeniewski was hired as a sales engineer to solve problems for customers, talk about parts functionality and process orders through the system. He said he learns something new every day. “There is a lot of engineering that goes into these parts, and we do a lot of in-house testing that’s really opened my eyes to how much goes into every particular piece of an aircraft,” Mr. Kozeniewski said. “Even the bolts we put on these things have to be certified. I have a new appreciation for the way things are built.”
DAN TESTA
D
an Testa’s experiences as an aircraft structural mechanic in the U.S. Air Force National Guard played a role in both his college education and his career. The 2006 Cuyahoga Falls High School graduate is a member of the Mansfield-based 179th Airlift Wing and was deployed to Afghanistan in 2009. After taking advantage of the GI Bill at the University of Akron, where last December he complet-
“In finance, the biggest thing is attention to detail. That is second nature in the military.” – Dan Testa associate financial analyst, Diebold Inc. ed a bachelor’s degree in corporate financial management, Mr. Testa held a work-study job in the veterans affairs office at the university. He worked with veterans entering school on a daily basis and discovered that many were not receiving proper academic credit for their service. He and another student worked with the university administration to correct those credit deficiencies for fellow veterans. His military background worked in his favor once again when he began looking for a job. Mr. Testa said it had a big impact in landing a job with ATM maker Diebold Inc. as an associate financial analyst. “In finance, the biggest thing is attention to detail. That is second nature in the military,” Mr. Testa said. “You have to pay attention to every little thing. You have to know if you mess up one thing, it can skew the whole result.” Jeffrey S. Darrah, director of service and installation finance for Diebold North America and Mr. Testa’s supervisor, said a military background tells him there is a level of discipline, self-control and attention to detail “that is kind of tough to find these days.” “What that says to me is he had a level of discipline to make it through the service,” Mr. Darrah said, adding that Mr. Testa had to think outside the box to look for different ways to fund his education. “He put in the work not just to be in the military, but to put himself through school. He brings to the table a level of maturity that is hit or miss today.” — Kimberly Bonvissuto
“When we ran an ad in Crain’s to advertise a property for sale, we received over 13 inquiries. It just goes to show that people are reading Crain’s…and our ads.” - Jonny Prell Ostendorf-Morris Company
Contact: Nicole Mastrangelo at nmastrangelo@crain.com com or 216-771-5158 216 771 5158 8
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WWW.CRAINSCLEVELAND.COM
CRAIN’S CLEVELAND BUSINESS
15
LARGEST OHIO PUBLIC COMPANIES RANKED BY MARKET VALUE
Company/Ticker symbol Headquarters Rank Phone/Website
Market cap 5-31-2013 (millions)
Business category
Top executive Title
$210,381.7
Manufacturer
A.G. Lafley chairman, president, CEO
1
Procter & Gamble Co./PG One Procter & Gamble Plaza, Cincinnati 45202 (513) 983-1100/www.pg.com
2
Eaton Corp./ETN 1000 Eaton Blvd., Cleveland 44122 (440) 523-5000/www.eaton.com
$31,253.0
Manufacturer
Alexander M. Cutler, chairman, CEO, president
3
Marathon Petroleum Corp./MPC 539 S. Main St., Findlay 45840 (419) 422-2121/www.marathonpetroleum.com
$26,794.9
Energy
Gary R. Heminger president, CEO
4
American Electric Power Co./AEP 1 Riverside Plaza, Columbus 43215-2372 (614) 716-1000/www.aep.com
$22,270.6
Utility
Nick Akins president, CEO
5
Sherwin-Williams Co./SHW 101 W. Prospect Ave., Cleveland 44115 (216) 566-2000/www.sherwin-williams.com
$19,449.7
Manufacturer
Christopher M. Connor chairman, CEO
6
Health Care REIT Inc./HCN 4500 Dorr St., Toledo 43615-4040 (419) 247-2800/www.hcreit.com
$19,145.9
7
Macy's Inc./M 7 W. Seventh St., Cincinnati 45202 (513) 579-7000/www.macysinc.com
8
Real estate investment trust
George L. Chapman chairman, president, CEO
$18,548.1
Retail
Terry J. Lundgren chairman, president, CEO
The Kroger Co./KR 1014 Vine St., Cincinnati 45202 (513) 762-4000/www.kroger.com
$17,510.5
Retail
David B. Dillon chairman, CEO
9
FirstEnergy Corp./FE 76 S. Main St., Akron 44308 (800) 736-3402/www.firstenergycorp.com
$16,314.6
Utility
Anthony J. Alexander president, CEO
10
Fifth Third Bancorp/FITB 38 Fountain Square Plaza, Cincinnati 45263 (800) 972-3030/www.53.com
$16,055.2
Financial services
Kevin T. Kabat vice chairman, CEO
11
Cardinal Health Inc./CAH 7000 Cardinal Place, Dublin 43017 (614) 757-5000/www.cardinalhealth.com
$16,052.0
12
Progressive Corp./PGR 6300 Wilson Mills Road, Mayfield Village 44143 (440) 461-5000/www.progressive.com
$15,355.2
13
Parker Hannifin Corp./PH 6035 Parkland Blvd., Cleveland 44124 (216) 896-3000/www.parker.com
$14,889.3
14
L. Brands Inc./LTD Three Limited Parkway, Columbus 43232 (614) 415-7000/www.limitedbrands.com
$14,461.7
15
The J.M. Smucker Co./SJM One Strawberry Lane, Orrville 44667 (330) 682-3000/www.smuckers.com
16
KeyCorp/KEY 127 Public Square, Cleveland 44114 (216) 689-6300/www.key.com
17
Teradata Corp./TDC 10000 Innovation Drive, Dayton 45342 (937) 242-4030/www.teradata.com
18
Cincinnati Financial Corp./CINF 6200 S. Gilmore Road, Fairfield 45014-5141 (513) 870-2000/www.cinfin.com
19
TransDigm Group Inc./TDG 1301 E. Ninth St., Suite 3000, Cleveland 44114 (216) 706-2939/www.transdigm.com
20
Mettler-Toledo International Inc./MTD 1900 Polaris Parkway, Columbus 43240 (614) 438-4511/www.mt.com
$6,588.4
21
Huntington Bancshares Inc./HBAN 41 S. High St., Columbus 43287 (614) 480-8300/www.huntington.com
$6,500.4
22
Cintas Corp./CTAS 6800 Cintas Boulevard, Cincinnati 45262-5737 (513) 459-1200/www.cintas-corp.com
$5,593.7
23
DDR Corp./DDR 3300 Enterprise Parkway, Beachwood 44122 (216) 755-5500/www.ddr.com
$5,587.1
24
The Timken Co./TKR 1835 Dueber Ave., S.W., Canton 44706 (330) 438-3000/www.timken.com
$5,457.7
25
Owens Corning/OC One Owens Corning Parkway, Toledo 43659 (419) 248-8000/www.owenscorning.com
$10,828.8
$9,923.1
$9,109.6
$7,730.2
$7,655.5
$5,195.2
Health care
Insurance
Manufacturer
George S. Barrett chairman, CEO Glenn M. Renwick president, CEO Donald E. Washkewicz, chmn., pres., CEO
Retail
Leslie H. Wexner chairman, CEO
Manufacturer
Richard K. Smucker CEO
Financial services
Beth E. Mooney chairman, CEO, KeyCorp
Technology
Insurance
Manufacturer
Manufacturer
Financial services
Michael F. Koehler president, CEO Steven J. Johnston president, CEO W. Nicholas Howley chairman, CEO Olivier A. Filliol president, CEO Stephen D. Steinour, chairman, president, CEO
Uniforms; Business Scott D. Farmer services CEO Real estate investment trust
Daniel B. Hurwitz CEO
Manufacturer
James W. Griffith president, CEO
Manufacturer
Michael H. Thaman chairman, president, CEO
Company/Ticker symbol Headquarters Rank Phone/Website
Market cap 5-31-2013 (millions)
Business category
Top executive Title
31
American Financial Group Inc./AFG 301 E. Fourth St., Cincinnati 45202 (513) 369-5000/www.afginc.com
$4,366.2
Insurance
Carl H. Lindner III, S. Craig Lindner, co-CEOs, copresidents
32
Abercrombie & Fitch Co./ANF 6301 Fitch Path, New Albany 43054 (614) 283-6500/www.abercrombie.com
$3,921.6
Retail
Michael S. Jeffries chairman, CEO
33
Goodyear Tire & Rubber Co./GT 200 Innovation Way, Akron 44316 (330) 796-2121/www.goodyear.com
$3,717.3
Manufacturer
Richard J. Kramer chairman, president, CEO
34
Vantiv Inc./VNTV 8500 Governors Hill Drive, Cincinnati 45249 (513) 900-5250/www.vantiv.com
$3,715.4
Financial services
Charles Drucker president, CEO
35
Forest City Enterprises Inc./FCE-A 50 Public Square, Suite 1100, Cleveland 44113 (216) 621-6060/www.forestcity.net
$3,678.6
Real estate
Charles A. Ratner, chmn.; David J. LaRue, president, CEO
36
DSW Inc./DSW 810 DSW Drive, Columbus 43219 (614) 237-7100 /www.dsw.com
$3,332.8
Retail
Michael R. MacDonald president, CEO
37
TFS Financial Corp./TFSL 7007 Broadway Ave., Cleveland 44105 (216) 441-6000/www.thirdfederal.com
$3,314.4
Financial services
Marc A. Stefanski president, CEO
38
FirstMerit Corp./FMER III Cascade Plaza, Akron 44308 (330) 996-6300/www.firstmerit.com
$3,127.5
Financial services
Paul G. Greig chairman, president, CEO
39
Chart Industries Inc./GTLS One Infinity Corporate Centre Dr., Suite 300, Garfield Heights 44125 (440) 753-1490/www.chartindustries.com
$2,949.4
Manufacturer
Samuel F. Thomas chairman, president, CEO
40
Scotts Miracle-Gro Co./SMG 14111 Scottslawn Road, Marysville 43041 (937) 644-0011/www.scotts.com
$2,916.7
Manufacturer
Jim Hagedorn chairman, CEO
41
Dana Holding Corp./DAN 3939 Technology Drive, Maumee 43537 (419) 887-3000/www.dana.com
$2,778.2
Manufacturer
Roger Wood president, CEO
42
Cliffs Natural Resources Inc./CLF 200 Public Square, Suite 3300, Cleveland 44114 (216) 694-5700/www.cliffsnaturalresources.com
$2,761.9
Mining and natural resources
Joseph A. Carrabba chairman, president, CEO
43
MPLX LP/MPLX 200 E. Hardin St., Findlay 45840 (419) 672-6500/www.mplx.com
$2,744.0
Energy
Gary R. Heminger chairman, CEO
44
Steris Corp./STE 5960 Heisley Road, Mentor 44060 (440) 354-2600/www.steris.com
$2,672.6
Manufacturer
Walter M. Rosebrough Jr. president, CEO
45
PolyOne Corp./POL 33587 Walker Road, Avon Lake 44012 (440) 930-1000/www.polyone.com
$2,552.7
Manufacturer
Stephen D. Newlin chairman, president, CEO
46
Greif Inc./GEF 425 Winter Road, Delaware 43015 (740) 549-6000/www.greif.com
$2,548.3
Manufacturer
David B. Fischer president, CEO
47
Worthington Industries/WOR 200 Old Wilson Bridge Road, Columbus 43085 (614) 438-3210/www.worthingtonindustries.com
$2,444.5
Manufacturer
John P. McConnell chairman, CEO
48
Wendy's Co./WEN One Dave Thomas Boulevard, Dublin 43017 (614) 764-3100/www.aboutwendys.com
$2,340.5
Restaurants
Emil J. Brolick president, CEO
49
Cedar Fair LP/FUN One Cedar Point Drive, Sandusky 44870-5259 (419) 627-2233/www.cedarfair.com
$2,271.3
Amusement parks
Matthew A. Ouimet president, CEO
50
Lancaster Colony Corp./LANC 37 W. Broad St., Columbus 43215 (614) 224-7141/www.lancastercolony.com
$2,252.8
Manufacturer
John B. Gerlach Jr. chairman, president, CEO
51
Diebold Inc./DBD 5995 Mayfair Road, North Canton 44720 (330) 490-4000/www.diebold.com
$2,050.4
Manufacturer
Andy Mattes president, CEO
52
Applied Industrial Technologies Inc./AIT 1 Applied Plaza , Cleveland 44115 (216) 426-4000/www.applied.com
$2,025.7
Distributor
Neil A. Schrimsher CEO
53
Big Lots Inc./BIG 300 Phillipi Road, Columbus 43228 (614) 278-6800/www.biglots.com
$1,982.3
Retail
Steven S. Fishman chairman, president, CEO
54
Express Inc./EXPR 1 Express Drive, Columbus 43230 (614) 474-4001/www.express.com
$1,937.3
Retail
Michael A. Weiss chairman, CEO
55
Convergys Corp./CVG 201 E. Fourth St., Cincinnati 45202 (513) 723-7000/www.convergys.com
$1,909.0
Customer management solutions
Andrea J. Ayers president, CEO
56
Glimcher Realty Trust/GRT 180 E. Broad St., Columbus 43215 (614) 621-9000/www.glimcher.com
$1,687.7
Real estate investment trust
Michael P. Glimcher chairman, CEO
26
Lincoln Electric Holdings Inc./LECO 22801 St. Clair Ave., Cleveland 44117 (216) 481-8100/www.lincolnelectric.com
$4,960.1
Manufacturer
John M. Stropki, exec. chmn.; Christopher L. Mapes, pres., CEO
27
Omnicare Inc./OCR 201 E. Fourth St., Cincinnati 45202 (513) 719-2600/www.omnicare.com
$4,829.7
Health care services
John L. Workman CEO
57
Cooper Tire & Rubber Co./CTB 701 Lima Ave., Findlay 45840 (419) 423-1321/www.coopertire.com
$1,636.8
Manufacturer
Roy Armes chairman, president, CEO
28
Nordson Corp./NDSN 28601 Clemens Road, Westlake 44145 (440) 892-1580/www.nordson.com
$4,573.4
Manufacturer
Michael F. Hilton president, CEO
58
Chemed Corp./CHE 255 E. Fifth St., Cincinnati 45202-4726 (513) 762-6900/www.chemed.com
$1,321.1
Health care; repair and maintenance
Kevin J. McNamara president, CEO
29
Owens-Illinois Inc./OI One Michael Owens Way, Perrysburg 43551 (567) 336-5000/www.o-i.com
$4,515.4
Manufacturer
Al Stroucken chairman, CEO
59
Bob Evans Farms Inc./BOBE 3776 S. High St., Columbus 43207 (614) 491-2225/www.bobevans.com
$1,286.9
Restaurants
Steven A. Davis chairman, CEO
30
RPM International Inc./RPM 2628 Pearl Road, Medina 44258 (330) 273-5090/www.rpminc.com
$4,390.0
Manufacturer
Frank C. Sullivan chairman, CEO
60
GrafTech International Ltd./GTI 12900 Snow Road, Parma 44130 (216) 676-2000/www.graftech.com
$1,130.8
Manufacturer
Craig S. Shular chairman, president, CEO
Numerical information provided by S&P Capital IQ, www.spcapitaliq.com. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate.TheBook of Lists and other specialized business lists are available to purchase at www.crainscleveland.com.
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Buys: Acquisitions valued at $25M to $100M continue to grow continued from PAGE 1
“If you want to grow, you need to expand your product (line) or expand your geography,” said Steven Rosen, co-CEO of Resilience Capital Partners, a Beachwood private equity firm. In the case of Aero Communications Inc., a Michigan-based provider of communications installation and construction that Resilience bought last year, Resilience is looking to acquire small businesses — those with $5 million to $10 million in annual revenues — to double the platform company’s footprint to 25 states from 12 in two years, Mr. Rosen said. “Several years ago, we would have bought a big company that was in those 12 states and gotten it (more market share) in one bite,” Mr. Rosen said. “We’re not doing it right now. It’s too expensive. (It’s) more risk.” Deals in the lower middle market accounted for the largest share of all middle market private equity deals in the United States in 2012 for the first time since 2009, according to PitchBook, a leading private equity and venture capital research firm. In its first half 2013 Middle Mar-
U.S. PRIVATE EQUITY BUYOUTS Year
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2011
2012
LMM deal count 272 177 253 352 486 558 646 730 540 363 400 429 496 CMM deal count 208 133 129 248 406 504 634 823 503 218 485 578 438 UMM deal count 40 16 26 47 53 88 158 242 87 47 167 179 158 ■ Key: LMM = Lower middle market, deals valued at $25 million to $100 million; CMM = Core middle market, $100 million to $500 million; UMM = Upper middle market, $500 million to $1 billion. ■ Source: PitchBook ket Report, PitchBook found the lower middle market — which it defines as acquisitions valued from $25 million to $100 million — grew to 45% of all middle market private equity deals last year, up from 36% in 2011. PitchBook data also revealed the number of such deals rose nearly 16%, to 496 in 2012 from 429 in 2011. In contrast, the number of deals in the core middle market ($100 million to $500 million in value) and upper middle market ($500 million to $1 billion in value) dropped in 2012 by 24% and 11%, respectively, from their levels in 2011.
It’s getting crowded Those who historically have focused their investing in the lower middle market see more investors
and competitors edging onto their turf. Some leveraged buyout firms that typically invest in larger deals have raised funds recently to invest in the lower middle market, said Tony Amador, managing director of Bellmark Partners LLC, a Cleveland investment banking firm. Wealthy families also have established investment funds with similar focus, Mr. Amador said. The change in focus is caused, in part, by a dearth of sellers of companies that produce $5 million and more in EBITDA (earnings before interest, taxes, depreciation and amortization) in the trailing 12 months, said Jim Hill, the attorney who chairs the private equity group of Cleveland law firm Benesch. “A number of private equity firms are saying, ‘There’s not a lot
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out there, we need to go down to where there are more companies,’ ” Mr. Hill said. So private equity firms have lowered their size expectations for platform companies, and have increased their number of smaller tuck-in deals, Mr. Hill said. All the dipping into the lower middle market is probably frustrating to those who, several years ago, started firms that invest exclusively in it because they saw opportunity, Mr. Hill said. Mark Mansour says so. “I hate it,” said Mr. Mansour, senior managing partner of MCM Capital Partners, a Beachwood private equity firm that focuses exclusively on deals for companies with $2.5 million to $8 million in EBITDA. “I would prefer our end of the market remain relatively ignored and underserved,” Mr. Mansour said. “The small end of the leveraged buyout market … is the market of interest right now.” These aren’t market conditions that business owners hate, though. The increased interest in their space should push up valuations, or the amount for which they can sell their enterprises, Mr. Mansour said. And while he “hates” it when his firm is the would-be buyer facing stiffer competition and higher costs to close a deal, Mr. Mansour said he was pleasantly surprised by the interest from larger private equity funds in a company MCM Capital recently sold.
Sellers hit the market Preqin, a data provider on private equity and other alternative investments, attributes the higher proportion of smaller deals to a “greatly reduced availability of credit required for large leveraged buyout transactions, especially for those buyout fund managers that take substantial public companies private.” Todd McCuaig, managing director of Cornerstone Industrial Group LLC in Chagrin Falls, says smaller sellers are driving the uptick, too. Although Cornerstone hasn’t bought a company since 2008, it has looked to acquire niche manufacturing businesses with less than $5 million in EBITDA and has seen a steady flow of sellers, Mr. McCuaig said. “There are more sellers coming to market, and I would further modify that by saying more healthy, more well-performing businesses for sale,” he said. “Many of those sellers waited until their businesses recovered before they were ready to come to market,” Mr. McCuaig said. “There was a pent-up supply of businesses that were ready to be sold that weren’t sold during the downturn, and now their performance has recovered to the point where the sellers are willing to go ahead.” Mr. McCuaig predicts the market
“I hate it. I would prefer our end of the market remain relatively ignored and underserved. The small end of the leveraged buyout market ... is the market of interest right now.” – Mark Mansour, senior managing partner, MCM Capital Partners will continue to work through the pent-up supply for another year or two before returning to a long-run normal. He doubts there’s a sustainable trend in larger private equity funds acquiring smaller businesses as platform companies. Mr. McCuaig suspects such private equity firms will tire of that practice, given the “much greater attention, time and effort (required ) to build value” in smaller enterprises. That said, he anticipates they will remain driven to acquire small companies as add-ons to other companies they own.
Risk vs. reward The lower middle market deal is one of inherently more risk, local dealmakers say. Smaller companies typically have fewer resources, which means there’s usually an immediate desire to improve infrastructure and add management, both of which increase the expense of a deal, MCM Capital’s Mr. Mansour said. Also, attracting top-notch talent to a smaller company can be challenging. It’s because of that risk that bank financing remains more limited for smaller transactions, said Resilience’s Mr. Rosen. Limited bank financing reduces the overall deal price, he noted, because private equity uses debt and equity to fund deals. “The banks are smart,” he said. “There’s more risk in a smaller business. There’s customer concentration. Supply chain risk.” But where there’s risk, there’s also potential reward, observers say. Smaller companies tend to be less efficient, which opens the door for private equity firms to improve the bottom line right out of the gate. MCM Capital’s Mr. Mansour expects interest to continue increasing in the lower middle market, and with that, higher purchase prices and diluted returns. When private equity must pay more on the front end, it’s harder to achieve the rates of return it might like at the end of an investment. “If we were to replicate our portfolio in today’s market, we probably would be paying a higher multiple to acquire the same businesses,” Mr. Mansour said. “Purchase price goes up — all things being equal — returns go down.” ■
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Onosys: Parent company has struggled financially continued from PAGE 1
The Washington, D.C.-based company — Groupon’s chief rival — has hundreds of sales representatives in North America alone. They’ll be “a powerful asset” for Onosys as more of them become familiar with the company’s software and start promoting it to their existing customers. “They’re already out there knocking on doors,” Mr. Mazanec said. “And 30% to 40% of the time, they’re knocking on a restaurant’s door.” Onosys is growing pretty quickly as it is. The company’s software is used by a total of 8,500 restaurant locations across the country, up from 4,000 in April 2012, when LivingSocial bought Onosys in exchange for cash and stock, said Mr. Garber, director of sales for the company. That number soon will grow even faster, according to Mr. Garber, who also is one of Onosys’ three founders. The company — which serves several big chains such as Applebee’s, Panera Bread, Papa John’s and KFC — in midMay released “Onosys for Independents,” a simplified version of its product designed for single restaurants and small chains. The new inside sales team is helping Onosys push that product, which is particularly well-suited for the many independent restaurants who already offer daily deals through LivingSocial, Mr. Mazanec said. LivingSocial has helped Onosys in other ways, too. For instance, the daily deals provider helped the company build a direct mail ad campaign promoting Onosys for Independents. Onosys will test the campaign on Greater Cleveland restaurants starting later this month. LivingSocial also helped Onosys revamp how its products work on mobile devices. Customers who’ve switched to the new mobile interface have seen a big jump in the number of orders coming in via
“They trust us to run the company because we’ve done it already.”
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– Stan Garber, co-founder, Onosys, on LivingSocial smart phones and tablet computers, Mr. Garber said. “We leverage everything that we can from LivingSocial, when it comes to accounting, marketing, PR — they’re a massive organization,” he said.
‘I go to bed just fine’ LivingSocial had about 4,500 employees last November, when it announced it would lay off 400 people. The company lost $650 million on $536 million in revenue in 2012, after losing $500 million on $250 million in sales the previous year, according to public documents filed by Amazon.com Inc., which owns about 30% of LivingSocial. Mr. Garber said he isn’t too worried about how LivingSocial is doing. He’s more focused on how Onosys is performing. It was profitable when it was acquired, he said, declining to say whether that’s still the case. The company has more than 30 employees today, up from about 20 when it was acquired. That growth — along with some encouragement from LivingSocial — pushed Onosys to move from a 3,000-square-foot office in Midtown Cleveland to a slightly larger, more open downtown office on West Sixth Street in the city’s Warehouse District. Mr. Garber added that he expects LivingSocial to become profitable as it matures. “I go to bed just fine,” he said. Investing $75 each, Mr. Garber and two of his colleagues — Alex Yakubovich and Oleg Fridman — founded their company as O-Web Technologies in 2003. The business focused on developing websites in its early years, back when the founders were students at Case Western Reserve University. In 2006, however, they developed
CHUCK SODER
Prior to Onosys being purchased by LivingSocial last year, Stan Garber was the only member of the company’s sales force. He is a co-founder of the company, which supplies software that allows restaurants to take orders via the Internet. the first version of Onosys. Two years later, they sold the web division to focus on selling software. Mr. Garber still drinks out of his O-Web Technologies mug, and new employees still get a pair of orange shoes. That color that has permeated the company’s offices for years.
The company’s founders plan to stick around, too, Mr. Garber said, adding that LivingSocial gives them leeway to manage their end of the business. “They trust us to run the company because we’ve done it already,” he said. ■
The July 22 issue of Crain’s Cleveland Business will feature a special report, “CLE 2030: Facing the Future.” In this report, we will explore what must be done now to make Cleveland a better place to live, work and play for generations to come. Crain’s is posing discussion questions via its LinkedIn group prior to the section’s publication. The first question already has sparked some lively discourse: What will attract young professionals to live in the city and compel them to be tomorrow’s leaders? Here is one response: “I think young people as well as old, need to feel that there is a exciting, vibrant and SAFE, downtown area to work and socialize. We have 3 major sports team, worldrenowned museums, a park system that rivals any, and last but not least Lake Erie. I do believe we need to do a better job at revitalizing the lakefront. I understand that living space in the downtown area is almost filled completely. The West 25th area is growing and University Circle is also on the way up. I think we are on the right track.” To read more and be part of the discussion, join Crain’s Cleveland Business’ LinkedIn group.
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THEINSIDER
THEWEEK JUNE 24 - 30 The big story: Eight Northeast Ohio projects redeveloping historic buildings to new uses were among 22 projects approved for state historic preservation tax credits. Five of the projects are in Cuyahoga County, two in Summit County and one in Portage County. The state awarded almost $34 million in tax credits that would leverage $200 million in private investments in 10 cities. The largest of the awards is for a $5 million state historic preservation tax credit on the $36 million renovation of Goodyear Hall in Akron by an affiliate of Industrial Realty Group of California. Working together: The Case Comprehensive Cancer Center won renewal of its five-year grant from the National Cancer Institute. The renewal process gave the center an “outstanding” rating and came with a recommendation it “receive more than $23 million during the course of the grant period,” according to the center, which is based at Case Western Reserve University and operated in conjunction with the Cleveland Clinic and University Hospitals Case Medical Center. Preparing for growth:
Nestlé Prepared Foods Co. broke ground on its $53 million Product Technology Center in Solon. Construction of the 144,000-square-foot research and development building will begin later this summer, and Nestlé expects it to open in 2014. The building will be dedicated to “frozen and chilled foods research that will serve Nestlé’s business units worldwide,” the company said. It will house offices and labs for about 100 staff members who will work side-by-side with chefs to create foods.
Welcome to the neighborhood: The 23story Ernst & Young Tower in the Flats East Bank development bagged another big tenant. Specialty chemicals maker OM Group Inc. of Cleveland signed a lease to move its world headquarters to the 13th floor of the tower by January 2014. OM Group currently is in Key Tower. It will take 27,600 square feet in Ernst & Young Tower. The 485,000-square-foot Ernst & Young Tower now is about 90% leased, Flats East Bank developers Fairmount Properties and The Wolstein Group said. Back to life: Three years after construction workers stopped stripping an aluminum façade from the 14-story Schofield Building at East Ninth Street and Euclid Avenue in downtown Cleveland, they are back to finish the job. Workers are beginning the $50 million conversion of the building to a Kimpton Hotel and 55 luxury apartments, said Steve Calabrese, who heads the Schofield Building LLC investor group that is undertaking the project. The investor group retained Mentor-based Cleveland Construction Corp. to complete the project by the end of 2014.
Momentum builds: The new Cleveland Convention Center landed another high-profile convention. The Healthcare Convention and Exhibitors Association selected Cleveland to host its annual meeting on June 21-24, 2014. The organization bills its annual meeting as the only educational conference in North America that focuses exclusively on health care convention marketing and exhibitions. It is expected to bring 700 attendees to Cleveland and will use more than 1,500 hotel room nights. Well-served honors:
Akron Community Foundation said H. Peter and Eileen Burg will be honored as the 46th recipients of the Bert A. Polsky Humanitarian Award. Peter Burg, the late FirstEnergy Corp. chairman and CEO, will be honored posthumously, and Eileen Burg will receive the award in person at an annual awards dinner Oct. 15.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
So, guess who played ‘Guess Who’ in Lakewood? ■ Thank you, Ohio film tax credit. Because of you, I can say Scarlett Johansson lived at my father-inlaw’s house for a month. Yup, one of the world’s most popular actresses and beautiful women is now practically, kinda, sorta, a member of my family. Ms. Johansson, along with her crew and two Johansson small dogs (one of which is purple), moved into the Lakewood home/palace in May, before she started shooting scenes around town for “Captain America: The Winter Soldier.” Sure, the movie ruined my commute to downtown Cleveland for a few weeks and would never have been shot here if it weren’t for the state tax credit, but I can’t complain. My extended family has benefited from her stay in a number of ways. My father-in-law, Dick West — who owns West Roofing Systems of LaGrange, which also won a contract to fix the roof of a warehouse that housed explosives for the movie — received a sizable rent payment to get out of town for a few weeks. Some of that Hollywood cash will trickle down to me: My wife, Laura, made all the arrangements for Ms. Johansson’s stay and spent a month serving as concierge for her group. As payment, her dad has agreed to replace our rotting, 90-year-old front door (it’s in print now, so he has to do it). Then there Dick’s cleaning lady, who
MILESTONE
pocketed a few checks from ScarJo & Co. and now can bill herself as cleaner to the stars. The Root Cafe in Lakewood probably should thank me as well. Ms. Johansson generated some local buzz when she made an appearance there. Probably because we included the eatery on a list of local establishments she and her posse should check out, per the suggestion of my fellow reporter Tim Magaw. He had no idea why I wanted his input. We didn’t meet Ms. Johansson, but she agreed to write a very nice note addressed to my 6-month-old twins, Kate and Charlie, wishing them “all the success, opportunity and magic life has to offer.” They left behind other stuff, too, such as shampoo (Laura’s using it), orange Tic Tacs (I’m eating them) and Captain America paper plates (perfect for a July 4th picnic). Also important to note: At some point, someone at the house played the board game “Guess Who?” — Chuck Soder
Preaching the gospel of competitiveness Ohio’s economy has underperformed the U.S. economy for years, retired Alcoa Inc. executive vice president Bill Christopher told a crowd of 300 at the annual meeting last week of manufacturing advocacy group
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
Europe leads the way
COMPANY: C.A. Litzler Co., Cleveland OCCASION: Its 60th anniversary C.A. Litzler, which custom-manufacturers industrial ovens, machinery and control systems for industries such as composites, textiles and plastics, is in its third generation of Litzler family ownership. The company was started in 1953 by Cy Litzler with an order to design a Tire Cord Dipping Machine for Firestone Tires. In a news release announcing its sixdecade anniversary, Litzler said it has “seen many developments as the markets and industries have changed,” and the company has expanded both internally and by acquisition. Litzler describes itself as “project-oriented rather than product-oriented” and says it works with customers “to address all operating needs — from planning and development to follow-up service.” Among its most prominent acquisitions over the years were Quickdraft in 1978, PSC in 1997, Thermovation Engineering/Molding & Coating Technologies in 2001, Indacomp in 2005, and Foudy and WAECO in 2011. Litzler also said it has expanded with the addition of offices in Shanghai, China. The company is led by CEO Matthew Litzler. For information, visit www.calitzler.com.
Send information about significant corporate anniversaries to managing editor Scott Suttell at ssuttell@crain.com.
Wire-Net. But he thinks there are steps the business community can take to turn that situation around. Mr. Christopher, CEO of Lakeview Consulting Enterprises, which helps small and midsize companies create growth strategies, chairs a task force to create a regional economic competitiveness strategy for Northeast Ohio. He said the goal of the group of business and philanthropic partners is to increase economic competitiveness in the 18county region. The task force found that of the region’s so-called “driver” industries — the ones that strongly influence the economy — chemicals, health care and professional services were doing well. The majority of the manufacturing sector, especially in the automotive and metals industries, was struggling. The task force came up with eight main strategies for growth, including putting an increased focus on retention and expansion of businesses, encouraging an environment of innovation, and taking advantage of opportunities to build an industry base around shale energy development. The availability of qualified employees will be a big issue, especially for manufacturing, Mr. Christopher said. He encouraged the manufacturers at Wire-Net’s event to work to change the perception of jobs in the industry and to train collaboratively, rather than waiting for an outside entity to take care of problems in training. “That is going to be a challenge, and you’re going to have to think differently about it,” he said. — Rachel Abbey McCafferty
■ North American cities, including Cleveland, are getting a relatively low return on the greenhouse gas emissions as measured by their annual economic output, according to TheAtlanticCities.com. The story was based on data from the Carbon Disclosure Project, which ranked regions of the world based on their annual economic output per ton of greenhouse gas emissions. Leading the way was Europe, where 24 cities measured in the study produced output of $12,502 per ton of emissions. Latin America was next, at $6,816 per ton, followed by East Asia ($5,831) and North America ($5,550). Cleveland was one of 20 North American cities included in the study. The Asian sample did not include any of China’s megacities, “where economic growth and emissions are rapidly on the rise,” according to TheAtlanticCities.com. “But it’s a worthwhile comparison to note that North American cities are producing substantially less wealth per ton of carbon emissions than European cities are. Undoubtedly, this has as much to do with the particular form of sprawling, car-dependent U.S. cities as the kinds of economies they have.” The website noted the full report “argues for how climate action can help make cities healthier and wealthier at the same time (as they save money on LED light bulbs, or expand bike lanes that also get people active).”
Just win, baby ■ Cleveland Indians fans are getting a good value for their ticket dollars so far this year. MarketWatch.com reported that a study from TicketCity, a Texas-based ticket reseller, ranked the Indians fifth out of the 30 major-league clubs when it comes to the
“bang for your buck” fan factor. TicketCity bases its rankings “on a complex formula that factors in three key areas for each club at home: the median price for tickets on the resale market, the winning percentage, and the skill level of opponents,” according to MarketWatch.com. (A team that costs less, wins more and faces stiff competition generally ranks higher.) The Pittsburgh Pirates are on top of the rankings through Sunday, the result of their good home record in the strong National League Central division and a median resale price ($15) that’s the lowest in the majors. Cleveland trails only the Pirates, the Detroit Tigers, the Washington National and the Arizona Diamondbacks in giving fans their money’s worth at the ballpark.
Summertime pleasures ■ As part of its summer travel coverage, USA Today profiled the Cuyahoga Valley National Park, which the paper said “may be the least-known and most family-friendly national park that draws big summer crowds.” It’s “an unusual national park because it lacks a natural spectacle — not a mountain, canyon, crater or even a natural lake,” according to the newspaper. Nonetheless, hiking trails abound, “and the flat park is a bicyclist’s paradise,” USA Today said. “Few trails will challenge the ultra-fit, but they’re perfect for parents with young kids or aging Baby Boomers looking to mix exercise and beauty. One long trail stretches along the old Ohio & Erie Canal next to a working tourist train that runs for 20 miles.” It’s not unusual, the paper said, “to see 6,000 people on the Ohio & Erie Canal Towpath — one of four major bike paths in the park — on a Sunday afternoon. Spread over 20 miles, that’s not as crowded as it may sound.”
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