colleges set to wield scalpels inside · susan jaranowski, 313-446-6024 ([email protected])...

By JOEL [email protected]

The Cleveland Indians raisedeyebrows this month whenthey announced their latestseason ticket packages, now

more incentive-laden than ever. Andit’s those incentives that may providea glimpse into the future of Progres-sive Field — a future the Indians

have been planning since last March.It was then that team officials be-

gan developing a master plan forthe ballpark. The process startedwith an invitation to seven architec-tural firms to tour the park andmake suggestions on what could bedone to take advantage of under-used areas, such as its suites and theTerrace Club restaurant.

By JOEL [email protected]

The Cleveland Indians raisedeyebrows this month whenthey announced their latestseason ticket packages, now

more incentive-laden than ever. Andit’s those incentives that may providea glimpse into the future of Progres-sive Field — a future the Indians

have been planning since last March.It was then that team officials be-

gan developing a master plan forthe ballpark. The process startedwith an invitation to seven architec-tural firms to tour the park andmake suggestions on what could bedone to take advantage of under-used areas, such as its suites and theTerrace Club restaurant.

$1.50/JANUARY 24 - 30, 2011

Entire contents © 2011 by Crain Communications Inc.

Vol. 32, No. 4

07148601032

604 SPECIAL SECTION

HIGHER EDUCATIONParents, investors spot opportunities in off-campus student housing ■■ 1PLUS: NOTRE DAME ■■ SPORTS PROGRAMS ■■ & MORE

NEW

SPAP

ER

Colleges set to wield scalpelsInstitutions look to trim their payrolls amidfears state will slice subsidies to higher edBy TIMOTHY [email protected]

Though Gov. John Kasich’s two-year budget won’t be unveiled for afew weeks, Northeast Ohio’s publiccollege and universities already are

taking precautions to brunt the impact of what they expect will bedeep cuts in the state’s support forhigher education.

College officials say they’re bracingfor a 10% to 20% reduction in thestate subsidy, which roughly makes

up one-third of their budgets. Manyhaven’t ruled out layoffs as personnelcosts make up the bulk of their operating budgets. Other cost-savingmeasures include consolidatingservices, halting renovation projectsand slowing hiring.

Newly elected state Rep. KathleenClyde, a Democrat whose districtincludes Kent State University, saidalthough budget details are scarce,colleges and universities are wise to

proceed with caution.“Cuts are likely to be made in a lot

of areas,” said Rep. Clyde, who serveson the Ohio House subcommitteeon higher education. “They’re wiseto be anticipating that and to developa strategy moving forward.”

At Kent State, President LesterLefton last month announced a universitywide hiring freeze in anticipation of state budget cuts.

INSIDEIrresistible Russia

Euclid-based Lincoln ElectricHoldings Inc. aims to capitalize onRussia’s economic growth andinfrastructure investments byexpanding its presence there inthe welding supply business. Themanufacturer’s recent acquisitionsillustrate its strategy. Read DanShingler’s story on Page 3.

Optimism onupswing atindustrialcompanies

By DAN [email protected]

The path of local manufacturersmay be reaching the edge of thewoods.

Local companies and their repre-sentatives say they are more opti-mistic now than they have been forthe last two years. Sales are continuingto pick up even through the normallyslow months of December and Janu-ary, and there are no signs that theyare slowing.

Two local manufacturing groups— Cleveland-based Wire-Net andthe Precision Metalforming Associa-tion — just completed surveys oftheir members. Both found increased,broad-based optimism with regardto the general economy and their

Manufacturers’ surveyssuggest a better 2011

See SURVEY Page 7

DAN MENDLIK/CLEVELAND INDIANS

The Indians during better times could pack Progressive Field — along with its premium seats and enclosed Terrace Club restaurant — with fans, butthey’ve struggled to fill the ballpark over the last couple of years.

THE LACK OF LUXURYIndians’ latest ticket incentives — free suite rental, Terrace Club membership— point to difficulty of selling premium inventory, may foreshadow changes

See INDIANS Page 6

See CUTS Page 4

The latest surveys conducted bymanufacturing advocacy groupsWire-Net and the Precision Metal-forming Association each showmembers gaining steam:

■ 83.6% of Wire-Net respondentsexpect increases in revenues this year,while only 7.3% expect a decrease insales. In 2009, Wire-Net presidentJohn Colm said, only 8% expectedrevenue increases.

■ For only the third time since 2009in PMA’s monthly poll, a majority ofmembers — 52% — said they expectorder volumes to increase.

INSIDE THE NUMBERS

20110124-NEWS--1-NAT-CCI-CL_-- 1/21/2011 1:43 PM Page 1

22 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM JANUARY 24 - 30, 2011

REGULAR FEATURES

Classified ..................................30Editorial ......................................8Going Places ..............................10List: Real estate investment trusts ..17Reporters’ Notebook ......................31

COMING NEXT WEEKDIFFERENCE MAKERSBanks on the lookout

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Keith E. Crain: ChairmanRance Crain: PresidentMerrilee Crain: SecretaryMary Kay Crain: TreasurerWilliam A. Morrow: Executive vice president/operationsBrian D. Tucker: Vice presidentRobert C. Adams: Group vice president technology, circulation, manufacturingPaul Dalpiaz: Chief Information OfficerDave Kamis: Vice president/production & manufacturingKathy Henry:Corporate circulation/audience development director

G.D. Crain Jr. Founder (1885-1973)Mrs. G.D. Crain Jr. Chairman (1911-1996)

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Publisher/editorial director:Brian D. Tucker ([email protected])Editor:Mark Dodosh ([email protected])Managing editor:Scott Suttell ([email protected])Sections editor: Amy Ann Stoessel ([email protected])Assistant editors: Joel Hammond ([email protected])SportsKathy Carr ([email protected])Marketing and foodSenior reporter: Stan Bullard ([email protected])Real estate and constructionReporters: Jay Miller ([email protected])GovernmentChuck Soder ([email protected])TechnologyDan Shingler ([email protected])ManufacturingTim Magaw ([email protected])Health care & educationMichelle Park ([email protected])FinanceResearch editor: Deborah W. Hillyer ([email protected])

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Industry analysts say acquisitions among bankscould rise in 2011, asinstitutions look to grow.We’ll analyze what’s next inour Finance section.

TRAINING WHEELS SPIN FASTER

Year Total training spending2010 $48.9B

2009 48.2

2008 56.2

2007 58.5

2006 55.8

2005 51.1

U.S. corporate spending on training increased slightlylast year, though it remained below levels of 2005,according to data compiled by a research and advi-sory firm for Workforce Management, a sister publi-cation of Crain’s Cleveland Business. Bersin & Asso-ciates’ national training figures are based on a surveyof 748 companies, all of which had at least 100 employees. Training-related expenses include learningtools and technology; outside products/services; facili-ties; materials; and training staff travel and payroll.

The May 16 issue of Crain's Cleveland Businesswill present Difference Makers, a special section inwhich we'll profile 10 individuals who have made significant, long-term contributions to the bettermentof Northeast Ohio.

We're asking readers to help us identify potentialprofilees.

As part of that process, we've provided an onlinenomination form at www.CrainsCleveland.com/nominate.

Nominations also can be submitted via e-mail toeditor Mark Dodosh at [email protected]; pleaseinclude “Difference Makers nomination” in the subjectline. In addition, they can be sent via regular mail toMr. Dodosh at 700 W. St. Clair Ave., suite 310,Cleveland 44113.

Nominations should be no longer than a singlepage. The deadline for nominations is the close ofbusiness today, Jan. 24.


“Long term, we could have multiple manufacturing sites (in Russia) because of the logistics.”

– John Stropki, CEO, Lincoln Electric Holdings Inc.

planning and development depart-ment with an economic develop-ment director who will be lookingto attract new high-tech and medical businesses that sproutfrom institutions in nearby Univer-sity Circle.

“There is a shifting paradigm inthe way inner suburbs are lookingat economic development,” saidHoward Thompson, who becamethe suburb’s economic develop-

ment director last November. “InCleveland Heights, the focus hadbeen on developing residential,entertainment and retail centers.Now we want to add commercialbusiness.”

Other cities are further along inremaking economic developmentefforts.

Shaker Heights in Novemberunveiled a new master plan that

JANUARY 24 - 30, 2011 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

INSIGHT

THE WEEK IN QUOTES“With the state facingan $8 billion to $10billion gap, we justdidn’t know wherewe’d end up this year.”— Jerry Sue Thornton, president,Cuyahoga Community College.Page One

Older, inner suburbs get creative in economic development Lacking developable land and new housing, cities turning elsewhere By JAY [email protected]

Building the tax base in older,close-in suburbs around Clevelandis a dicey business. These commu-nities don’t have the open, devel-opable land available in outer suburbs and, besides, they don’t

want more smokestacks or high-rise office buildings, if they haveany at all.

If they had their druthers, they’dprefer new, single-family homes orsmall cluster home communitieswith new retail shops.

But the recession has dashedany hopes of a housing-led revital-

ization, and too many shoppingstrips already have “for lease” signson them to make retailing a primeeconomic development tool. Sothese communities, with outdatedor underutilized buildings, havebegun to rethink their futures.

Cleveland Heights has replaceda generic assistant director in its See SUBURBS Page 9

By STAN [email protected]

In the same way tossing sticks and blowing puffs of airon dying embers rekindles a campfire, the slowly recov-ering economy, a resurgent Wall Street and rising opti-mism are re-igniting the market for big-ticket commer-cial real estate in Northeast Ohio.

Continued difficulty securing loans makes the processof doing a real estate deal resemble feeding a fire in therain, and sales still aren’t close to what they were beforethe recession. Nonetheless, a just-completed survey ofcommercial real estate sales in Northeast Ohio of prop-erties valued at more than $5 millionshows their volume more than dou-bled last year to $253 million from$118 million in 2009.

“The increase is surprising givenhow little financing is coming into themarket,” said Alec Pacella, a vice president at the NAI Daus brokeragewho compiles the annual survey. Mr.Pacella contributes the results to theReal Capital Analytics Inc. realty data service in New YorkCity for its global report on investment sales.

A total of 15 deals accounted for last year’s sales volume compared with 10 deals in 2009. In a sign of astrengthening market, sales of properties valued at morethan $5 million closed in nine of the 12 months last yearcompared with just five of 12 months in 2009. Until 2008,a month with no sales of at least $5 million was a rarity.

Well-heeled real estate investors and real estate invest-ment trusts that began buying again last year fed theuptick after they sat on the sidelines during the worseningeconomy.

See SALES 0

JASON MILLER

Lincoln Electric Holdings Inc., led by CEO John Stropki, is pushing its business into Russia as it seeksto capitalize on economic growth in the former Soviet centerpiece.

TO RUSSIA, WITH LOVE

With two purchases, Lincoln Electric aims to become leading welding authority there

By DAN [email protected]

They say not to invadeRussia in the fall orwinter, but LincolnElectric Holdings Inc.

thinks it can pull off whatNapoleon and other would-beconquerors could not.

To be fair, the Euclid-based manufacturer of weldingequipment and supplies isn’ttrying to take over Russia entirely. Lincoln Electric justwants to carve out a niche

kingdom for itself in its corebusiness, which company CEOJohn Stropki said is drivenhard there by strong funda-mental forces in the formerSoviet centerpiece.

In pursuit of Russia’s eco-nomic growth and infrastruc-ture investments — both ofwhich are outpacing activity inthe United States — LincolnElectric since October has purchased two Russian com-panies in the welding supply

See RUSSIA Page 9

“These luxury areasare hard to re-sell thesecond time around,and some teams arefar beyond the secondtime around.”— Michael Cramer, former president of the Texas Rangersand now director of the TexasProgram in Sports & Media at theUniversity of Texas. Page One

“Higher education asa growth industry iscountercyclical. Morestudents attend college in downturns,especially public universities. … We’vebeen the odd man outin the busting of thedevelopment bubble.”— Jack Boyle, vice president forbusiness affairs and finance administration, Cleveland StateUniversity. Page 11

“If you’re going to be acollege in the footballregion, and you don’tplay football, peopledon’t give you asmuch respect. …That’s probablywrong, but it’s thetruth.”— Dave Armstrong, vice president, Notre Dame College.Page 12

Big-ticketcommercialpropertysales riseDeals $5 million and higher slowlytrend up despite lack of financing

$5M CLUB IMPROVESThe volume of commercial property sales of more than $5million improved in 2010 from 2009, but still were well belowprevious years. In 2009, there were no sales exceeding $5million in seven months of the year. In 2010, only threemonths had no sales exceeding $5 million.

Northeast Ohio commercial property sales

Year Sales2010 $253.53M

2009 117.84M

2008 538.23M

2007 1.29B

SOURCES: ALEC PACELLA/NAI DAUS, REAL CAPITAL ANALYTICS

Pacella


There are limited exceptions to thefreeze, with Kent State planning tofill only “mission critical” positions,according to a letter Dr. Lefton sentto the university community.

“The motivation is that we don’textend an offer of employment andhave to turn around and withdraw theemployment if economic circum-stances become so troubled we can’tafford to keep our work force,” saidGregg Floyd, Kent State’s vice presi-dent for finance and administration.

Kent State also halted plans for a$250 million construction and reno-vation project after the Ohio Boardof Regents refused to sign off on a$210 million bond sale that wouldhave financed much of the plan. Dr.Lefton had said it would be appro-priate to wait until more is knownabout the state budget.

Mr. Floyd said each vice presidentwithin the university is examiningevery aspect of his or her operationto root out inefficiencies. He notedthat Kent State needs to “begin tothink in terms of priorities and aboutwhich things are essential to continueto do business.”

‘Piece by piece’ analysisCleveland State University has

assembled a task force led by provostGeoffrey Mearns to review “all theoperations and obviously look forplaces where efficiencies can befound as well as ways to increase revenues,” according to universityspokesman Joe Mosbrook. Some ofthose revenue increases could comein the form of higher parking orhousing fees.

Mr. Mosbrook said layoffs are un-der consideration. Spending cutswould be done strategically acrossuniversity departments.


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2010 Jack J. Rehmann Community Leadership Award

or outstanding commitment to our community and its

volunteer organizations, we arepleased to name Joseph Heider as arecipient of the 2010 Jack J. RehmannCommunity Leadership Award.

Each year, Rehmann associates donate thousands of hours of service to community organizations. We are proud of these collectiveaccomplishments and have established the Jack J. Rehmann CommunityLeadership Award to recognize those who go “above and beyond” for their communities.

Thank you, Joe, for your fineaccomplishments! We appreciate and applaud your efforts.

1340 Depot StreetRocky River, OH 44116440.356.4520

O u t s t a n d i n gC o m m u n i t y

C o m m i t m e n t

F

Volume 32, Number 4 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for com-bined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July,the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland,OH 44113-1230. Copyright © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio,and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’sCleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373.

REPRINT INFORMATION: 800-290-5460 Ext. 136

continued from PAGE 1

Cuts: Tension, uncertainty mount“We’re going to look at them

piece by piece and make recom-mendations where it makes mostsense,” Mr. Mosbrook said.

Cuyahoga Community College,the state’s oldest and largest community college, has taken stepsto curb its personnel costs, whichmake up 80% of the college’s oper-ating budget, according to presi-dent Jerry Sue Thornton. Tri-C’strustees and faculty agreed last fallon a new three-year contract thatoffers no salary increase for the current academic year, a 1% increasenext year and a 2% increase the following year.

“With the state facing an $8 billion to $10 billion gap, we justdidn’t know where we’d end up thisyear,” Dr. Thornton said

Dr. Thornton said Tri-C has cutcosts by eliminating some jobsthrough attrition. The college alsohas been hesitant to hire full-timefaculty, but rather has relied heavilyon adjunct professors — a strategythat has caused tension betweenthe administration and faculty andhelped lead to a non-confidencevote by faculty against Dr. Thornton.

The president said Tri-C thriveswhen the economy struggles because so many displaced workersgo to the college for training. If thecollege hired many full-time facultymembers, she said, they might needto be laid off if the economy re-bounds and state support is cut.

The tuition questionAside from state aid, tuition

makes up a large portion of the operating budgets of colleges anduniversities. As state support dwin-dled over time, tuition prices gener-ally have risen. Still, college officialsare hesitant to talk about whetherthey’ll raise tuition for the next aca-demic year; such moves, they say,largely are contingent on whetherlawmakers impose a tuition freezeor cap how much colleges can

increase their prices.Lawmakers are aware of the pres-

sure a tuition freeze, coupled withsubsidy cuts, could have on schools.

“I do think that we should keeptuition as low as possible and edu-cation as affordable as possible, butif there are significant reductions instate support, it would be unreason-able to expect universities to have astate tuition freeze imposed at atime of significant state reductions,”said state Rep. Randy Gardner, a Republican who is one of the archi-tects of a previous two-year freezeon tuition at state schools. He alsois chairman of the House subcom-mittee on higher education.

University of Akron presidentLuis Proenza said he’s encouragedby what he’s heard so far from theKasich administration, particularlywhen it comes to talk of easing regulatory burdens on employers.One such burden in the view ofstate-supported colleges is the “mul-tiple prime requirement,” wherethey must work directly with severalcontractors rather than with a sin-gle, or prime, contractor to manageconstruction projects.

“If those regulations are relieved,then we might — depending onwhat the budget numbers are —have a reasonable substitution ifnot an amelioration of that decreasein state funding,” Dr. Proenza said.

Dr. Proenza said the University ofAkron has worked over the last fewyears to develop new revenuesources and to enter shared servicesagreements. On the revenue front,Dr. Proenza cited the university’snew corrosion engineering pro-gram, which has brought in new tuition revenue and has yieldedcontracts with companies that wantto tap into its resources.

“We have leveraged resources tocreate new opportunities as well assavings,” Dr. Proenza “We’re in anexciting place. Let’s just say we’renot out begging.” ■

20110124-NEWS--4-NAT-CCI-CL_-- 1/21/2011 11:40 AM Page 1

local companies to 10-year leasesand so generate enough revenue tooffset the team’s share of stadiumconstruction costs.

Business people signed up back thenas a show of support for the club underthe ownership of the late Richard Jacobs,who invested heavily in the team andmade it into a winner, and becausethe economy was humming alongand they could use the suites in ashiny new ballpark for entertainingclients and would-be customers. How-ever, the fortunes of both the Indiansand the economy have changedsince then, and not for the better.

Last season was the first time theIndians used a free suite rental as aninducement for returning seasonticket buyers. It has become a way to

Team officials have said sinceMay, when Crain’s reported on theplan, that no decisions have beenmade and the process is ongoing.Team spokesman Curtis Danburgacknowledged last Thursday, Jan. 20,that suites and the Terrace Club remain “part of that conversation,”though nothing specific — such asrepurposing some suites and theclub — has been decided.

One decision that has been made,though, is to use those spaces as salestools in pushing season ticket plans.

As the team announced Jan. 7, allrenewing and new season ticket cus-tomers — including those who takeadvantage of a new offer of bleacherseats for $9 apiece — receive a free


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Indians: Suite sales drop as market sufferssuite rental, two free tickets in theclub section (where all food, fancy ornot, is free) and free membership tothe fine-dining Terrace Club.

The total value of the incentivesranges from $3,300 to $7,500. Thehope is that the carrot will boost sea-son-long commitments, drive con-cession revenues and perhaps turnon more fans to areas they may neverhave seen or used.

Too much of a good thingThe Indians long have acknowl-

edged the ballpark, which opened in1994, has far too many suites. It orig-inally was built with 121 — secondonly to the Texas Rangers’ Ballparkat Arlington, which has 128 — so thatthe team could sign up plenty of

As for the Terrace Club — wherethe Indians and club operator Dela-ware North split revenue 50-50 —traffic has waned along with the team’sseason ticket base, which dropped to8,000 full-season equivalents lastyear from 12,000 in 2009 and 15,000in 2008. Before including free mem-bership in the club with season ticketpackages for 2011, those customershad the option of buying member-ships for either $500 or $900.

“We evaluate our benefits for season ticket holders every year, andmany of them said this was their firstchance to be in a suite,” he said.“That played into expanding it thisseason. We said, ‘Here’s excess inventory. How can we use it to ouradvantage, and fans’ advantage?’”

Extreme makeoverSales declines likely will spell

doom for some suites and other lux-ury areas not just at ProgressiveField, but at other stadiums, too, saidMr. Cramer, the former Rangersexec. He’d have preferred the Ball-park at Arlington be built with about30 fewer suites and about 8,000 fewerseats than the 49,170 it has.

The Indians already have tried remaking a handful of their suites:Before last season, they turned oneinto a “Fancave,” featuring a pooltable and a handful of flat-screentelevisions; they also combined twointo a “presidential” suite behindhome plate.

“I wouldn’t be surprised if a lot ofthese areas go away,” Mr. Cramersaid. “Suites can turn into open areas, party suites, things wherethree suites turn into one. Now youcan offer different types of packagesthan the ones that weren’t sellingand see if those work.”

Jim Kahler agreed. The former vicepresident of sales and marketing forthe Cleveland Cavaliers and now executive director of the Center for Sports Administration at OhioUniversity said the Indians are doingwhat all teams should be doing.

“Good organizations are notafraid to take a look at where theyare,” said Mr. Kahler, who noted thata number of NBA teams, including thePortland Trail Blazers and PhoenixSuns, have responded to their mar-kets and trends by making changes.

“Kudos to the Indians for taking alook at their square footage and figuring out what works,” he said.“The teams that sit back are makinga mistake.” ■

put to use space that no longer is indemand like it once was.

“These luxury areas are hard to re-sell the second time around, andsome teams are far beyond the secondtime around,” said Michael Cramer,president of the Rangers from 1998to 2004 and now director of theTexas Program in Sports & Media atthe University of Texas at Austin.

“Four or five or 17 years after youopen a facility, it’s hard to sell to newbuyers and renew, so why not createtraffic there?” Mr. Cramer said.

Mr. Danburg last week declined toreveal recent suite sales figures, saying2010 and 2009 were similar. The Indians in June 2009 told Crain’sthey had 78 full-season-equivalentsuite sales; Mr. Danburg last weeksaid the Indians’ suite sales werecomparable to those at some of thenewer stadiums, such as the newYankee Stadium, which has only 56.

ABOUT THE FUTURE ...Let’s look into the future. In 2013, three Fortune 500

companies move to Cleveland. TheIndians turn around their poor trackrecord drafting and development.

Playoff appearances follow, including Cleveland’s elusive firstpro championship since 1948.

Will the fans, who have becomeaccustomed to a free suite rental,two free club seats and a TerraceClub membership — if it’s still there— once again pay for those perks?

“If we get to 14,000 or 20,000(full-season equivalent tickets), wemight not have the same inventorywe have now, and fans will under-stand,” said Indians spokesman Curtis Danburg.

Said Jim Kahler, a former Cavsexecutive and now director of theCenter for Sports Administration atOhio University: “If Southwest (Airlines) has a sale today (on extratickets), it may not sell them for thesame price next month or next year.Sports will be sensitive to it.”

— Joel Hammond


own business prospects and hiringplans.

Wire-Net received responses from213 businesses, mostly local manu-facturers of all types. The PMA’s datacame from 116 machine shops,stamping plants and other metalfabricators from across the UnitedStates, including Northeast Ohio, whereits membership is concentrated.

“I think this is pretty dramatic evidence that the corner has beenturned, and now, hopefully, we canpick up some speed on the straight-away,” Wire-Net president JohnColm said.

Mr. Colm said he was particularlystruck by his members’ optimismabout their prospects for higher salesand hiring in 2011.

A vast majority of Wire-Net’s respondents, 84%, said they expectedto see their revenues rise in 2011 —with 39.5% saying they expect an increase of more than 10%. Only7.3% said they expected to see a decrease in their sales this year.

“That was a dramatic switch from2009,” Mr. Colm said. “Only 8% in2009 said revenues would go up.”

Likewise, 52% of the PMA’s surveyparticipants said they expect theirorder volumes to increase over thenext three months. That’s only the thirdtime since 2009 in the monthly pollthat a majority of the organization’srespondents indicated they expectedan increase, and it’s the first time ithas happened since 54% said they expected a pickup in February 2010.

As for hiring employees, manufac-turers indicated they are adding peo-ple. Only 12% of the PMA’s respon-dents said they had any employeeson short time or layoff. The last timethat number was lower than 12% inthis survey was in October 2007,when only 8% of companies hadworkers on short time or layoff.

Among Wire-Net’s survey respon-dents, 56% said they would hiremore workers this year, while a scant4.1% said they planned to reducepayrolls. Those additions would beon top of the new hires made by 51%of the respondents in 2010 — a yearin which 17% let employees go, Mr.Colm noted.

‘So far, so good’Optimism among manufacturers


Advanced DecorativeSystems, Inc.

Sale of AssetsApril, 2010

ADCO Global, Inc.Acquisition of EternaBond, Inc.

December, 2010

Bucyrus Community HospitalSale of substantially all assets to an affiliate

of Galion Community HospitalDecember, 2010

Contango CapitalAcquisition of P.O.U. Partners, LLC

July, 2010

Forum HealthSale of substantially all assets to an affiliate

of Community Health SystemsSeptember, 2010

FirstSource LaboratorySolutions, Inc.

Sale to Laboratory Corporation of AmericaSeptember, 2010

Hawaii Medical CenterChapter 11 Reorganization

August, 2010

The Hall China CompanySale to The Homer Laughlin China Company

March, 2010

Innovative Process AdministrationSale to Mercer, a division of

Marsh & McLennan CompaniesJune, 2010

Hunter Equity CapitalAcquisition of Mid-Plains Power, Inc.

December, 2010

Marjoan, Inc.Sale of stock of Holly Hill Healthcare

CommunityJuly, 2010

Marjoan, Inc.Sale of stock of Briar Hill Health Care

ResidenceJuly, 2010

MCM Capital PartnersAcquisition of RMB Products, Inc.

December, 2010

MCM Capital PartnersSale of Amrep, Inc. to ZEP Inc.

January, 2010

OncoDiagnostic Laboratory, Inc.Diagnostic Laboratory Partners, Inc.

Sale to Predictive Biosciences, Inc.January, 2010

Ninth Street Capital PartnersAcquisition of Castronics, Inc.

December, 2009

Remington Products CompanyAcquisition of Stable Step, Inc.

April, 2010

Pathology Solutions, LLCSale to Aurora Diagnostics, LLC

March, 2010

Western PathologyConsultants, P.C.

Sale to Aurora Diagnostics, LLCDecember, 2010

Sequential Capital Partners LLCEquity Recapitalization of

Data Fusion Technologies, Inc.December, 2010

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Survey: Most plan for revenue boostcontinued from PAGE 1 appears broad-based. Manufacturers

in the automotive sector have beentelling Crain’s they’re seeing steadyimprovement going into 2011, andthose in other industries echo theirsentiments.

For example, Mentor-based Fredon, which is in the process ofdoubling its size to 60,000 square feet,is seeing an increase in its defense-related helicopter component busi-ness and in demand for parts it makesfor diesel locomotives. Sales for thelast six months of 2010 were 25%ahead of their pace during the sameperiod of 2009 — and so far this yearthey are running 39% over wherethey were last year at this time, saidFredon president Roger Sustar.

“So far, so good,” Mr. Sustar said.At Drabik Manufacturing in Cleve-

land, business has been picking upsince late August, but a continuedincrease in business during the normally slow months of Decemberand January has been a particularlypleasant surprise, said president JimDrabik.

“Even in normal times, thosemonths are usually slow,” Mr. Drabiksaid. “But right now, we’re busy.”

When Mr. Drabik’s workload picksup, it’s often a sign larger companiesare making substantial capital invest-ments. That’s because his machineshop does most of its work for heavyindustrial clients who need special-ized equipment, replacement partsand other large metal parts made orrebuilt. When Mr. Drabik receivesorders, it’s generally because an automotive plant, steel mill or recycler somewhere is investing in aplant, which means those largercompanies see demand continuing.

Mr. Drabik said his business normally makes a slow and steadyclimb out of any recession. This timethe recovery was slow in coming, but fast and steady once it began, hesaid.

His business looks good at leastthrough March, Mr. Drabik said, andas a result he has added some workers.His production staff of a dozen employees isn’t going to move theneedle on the state’s unemploymentrate, but two of those workers arenew machinists and Mr. Drabik saidhe’ll likely add a third and then atrainee in the months ahead.

Worried in a good wayStill, some manufacturers are

exercising caution, said Bill Beaufait,a partner at the Cleveland accountingfirm Maloney + Novotny who workswith manufacturing clients. Manu-facturers have become better at con-trolling their costs, he said, and somestill are reluctant to add to them, unconvinced the economic recoveryis as strong as some say.

“When they need another guy,they say, ‘I’ll make do,’ and whenthey need three or four they say, ‘OK,I’ll hire one,’” Mr. Beaufait attests.

Still, Mr. Colm said, “that’s betterthan the alternative.” He noted thatwhile pessimists remain among hismembers — 17% say they are stillworried about their prospects — thesituation today is a reversal fromwhat it was two years ago, or evenlast year.

“Now, more (manufacturers) tellus they are starting to worry abouttheir ability to find good people —and that’s a sign for optimism,” Mr.Colm said. ■

Elderly care provider’s future at homeBy TIMOTHY [email protected]

The A.M. McGregor Group, aCleveland-area provider of servicesto the aged, has taken over a program that allows poor seniors tolive at home rather than in costlierresidential care facilities, and itwants to use the program to launcha broader home care operation.

About 165 low-income seniorsare served by the program, but Mc-Gregor executives hope to doublethat number during the next year.The Centers for Medicare and Med-icaid Services oversees the programand 72 others like it in the country,including one in Cincinnati.

The program, known as the Program for All-Inclusive Care ofthe Elderly (PACE), will be labeledas McGregor PACE. Rob Hilton,McGregor president and CEO, saidMcGregor’s takeover of the home

care program allows the group toposition itself as a “one-stop shop-ping” destination for aging services,as it already provides skilled and intermediate nursing care, assistedliving and low-cost independenthousing.

“In a sense, home care is wherethe money is,” Mr. Hilton said.

Mr. Hilton said he expects grantmoney from private foundations, aswell as support from Medicaid, willfavor home care over residentialcare in coming years. Seniors typi-cally prefer home care, he said, andit’s less expensive than placingthem in nursing homes.

Ann Conn, McGregor’s chief financial officer, estimates thePACE program reaches only 2% ofseniors who are eligible for it. Toqualify, the person must be a Cuya-hoga County resident and eligiblefor both Medicare and Medicaid,and must require a level of care

provided in a nursing home.To boost enrollment in the pro-

gram, Ms. Conn said McGregor isworking with individuals who havebeen referred by the Ohio Depart-ment of Aging. McGregor also isworking with nursing homes anddischarge planners at area hospitalsto identify people who require askilled level of care but would like toremain in their homes.

The PACE program had beenmanaged by the now-defunct Con-cordia Care, which was a collabora-tion between Benjamin Rose Insti-tute and the MetroHealth System.Concordia Care ultimately decidedthe program would be better handled elsewhere because of itscomplicated regulations and reporting requirements, accordingto Concordia spokeswoman BarbaraPaynter. The 100 employees involvedwith the PACE program now are employed by McGregor. ■


Memo to Ohioans: If you thinkthe past couple years havebeen bad — what with theglobal financial meltdown

and all — batten your hatches and tightenyour seat belts.

You are in for a rough ride.By now, most people who can read or

hear know that the state is facing an enormous budgetdeficit over the next biennium.It’s been estimated at $8 billion,and the real gap could be higher.

Like several other states, Ohiohas a batch of newly minted,conservative Republicans inColumbus vowing to cut taxesand government. They’re led bya couple of veteran conservativepoliticians in Gov. John Kasichfrom Cincinnati and House Speaker BillBatchelder of Medina.

Few would argue that government —in all its forms — hasn’t grown to an unwieldy size, and that we’re spendingan enormous chunk of our precious revenues on salaries and benefits. Theintent of the new governor and speaker

to reduce the payroll is a message thatresonates with many Ohioans fed up withever-expanding government agencies.

So, it’s inevitable that we’ll see severeemployee reductions in state govern-ment, and budget cuts to a host of agencies, institutions and organizationsacross the state. And that will bring

cheers from the black-or-whitegang of new officeholders whorode that sentiment to office.

The trouble is, well, life israrely that easy. The cuts willbegin, soon to be followed byangry constituent calls about acommunity theater about to gobelly up, a bridge that will closebecause we can’t afford to fix it,or a program for troubled teensthat must end.

That’s when it gets complicated, espe-cially when the spouse of a big donor sitson the board of that troubled communitytheater, or a business can’t ship its products efficiently because that bridgeis unsafe. Those troubled teens? They’llbe on their own.

This next budget cycle is sure to be the

harshest seen in generations, and to succeed, we’ll need more challengingthinkers such as Ned Hill, urban affairsdean at Cleveland State University. Heurged radical changes in his remarks last week to a couple hundred folks whogathered in Akron to consider the futureof that city and its metro area.

Cut the number of counties until eachhas at least 750,000 people. Ohio’s 88counties were drawn so that everyresident could get to and from thecounty seat in a single day’s buggy trip.We could probably come up with morelogical boundaries.

Force regionalization, he advocates;the heck with parochial thinking. Turnwelfare oversight back to the state andadminister it from six “super-center”offices, not by sluggish bureaucracies ineach county. Focus all energy on productdevelopment and business creation andstop focusing on “quality of life”amenities. If towns want swimmingpools, or community theaters, or reccenters, they’ll need to pay for them.

We have to rethink Ohio. It’s our onlychance. ■


FROM THE PUBLISHER

BRIANTUCKER

Eighty-eight counties just won’t cut it

PUBLISHER/EDITORIAL DIRECTOR:Brian D.Tucker ([email protected])

EDITOR:Mark Dodosh ([email protected])

MANAGING EDITOR:Scott Suttell ([email protected])

OPINION

➤➤➤➤ View more of these comments by visiting the Multimedia section at www.CrainsCleveland.com.

THE BIG ISSUE

Cashing inS

ometimes it’s hard for people to see the economic changes taking shape in their ownbackyard. For example, there was a time whenthe words “Cleveland” and “venture capital”

only would appear in the same sentence if they werein a story about how our city wasn’t seeing much ofthose investment dollars coming its way.

That time has passed. If anything, Cleveland hasbecome somewhat of a venture capital magnet — atleast relative to other cities in the Midwest — when itcomes to securing investments in health care com-panies. And that’s a welcome development in a citystill viewed by most as a bedraggled old industrialtown without much of a future.

The numbers from the latest Midwest Health CareInvestment Report produced by nonprofit biotechadvocacy group BioEnterprise Corp. are encouragingfor Cleveland. They indicate this area has fared farbetter than most parts of the Midwest in attractingventure dollars for health care investments over thelast four years.

Of the 14 regions that BioEnterprise tracks over 11states, only health care companies in Minneapolisraked in more venture capital than those in Cleve-land during the period from 2007 through 2010. Thelatest BioEnterprise report estimates the total dollarsinvested in companies in this region over that periodat nearly $607 million. Chicago is a distant third, atalmost $423 million.

Also heartening is the number of investments thatadded up to produce that dollar total. BioEnterpriseputs the number of Cleveland-area companies receiving venture dollars during the four years at alow of 21 in 2009 and a high of 33 just last year.

The payoff for many of these investments has yetto be seen, and in some cases may never come, because that’s the nature of venture investing. It isn’t for those who like their investments to produceinstant gratification or who expect guaranteed ratesof return. That’s because the young companies fortunate enough to pull in venture dollars often areinnovators that still are developing the product ortechnology they’d eventually like to bring to the marketplace.

However, it is these very companies that down theroad each could employ tens if not hundreds ofNortheast Ohio residents in good-paying jobs shouldthey succeed in their missions. And the more ofthese companies the region can nurture, the betterthe chances of producing its share of winners.

Few companies ever evolve into the out-and-outgrand slam that is Minneapolis-based medical device maker Medtronic Inc., or even the home runthat is sterlization equipment maker Steris Corp. ofMentor. But we’re fairly confident economic devel-opment advocates in Northeast Ohio wouldn’t bedisappointed if the region could develop a solid lineup of singles and doubles hitters that in the aggregate would serve as a foundation for buildingits biotech base.

So, how’s this for a game plan: Let’s work to keepthose venture dollars coming by cultivating and encouraging the kind of ingenuity that already hasmade this area attractive for investment.

Do you think Congress should repeal the health care reform law that was passed last year?

JEFF BURGESSLakewoodI do not think Congress shouldrepeal that law, because Washington is notoriously tiedup and bogged down. It wassomething that was passedand to rework it at this point ...would just logjam Congress.

ERIK KOBALEuclidI don’t think it should be repealed, but I think theyshould go back and (change it)with a real bipartisan bill. Ithink it was kind of pushedthrough and kind of went toofar in one direction.

CINDY MARIZETTEClevelandCongress should not repealthe act. Hundreds if not thou-sands of Americans are relyingon the health care reform actto assist them in their medicalsituations today. Sick Americans... need this help badly.

SUSANN GEITHNERLakewoodI’m from Germany, so we havesocial health care. I think it’s agood idea to move in that direction. ... The “scare” stories,they are not true. ... (There is)no half-year waiting for an ap-pointment or anything like that.


recommends “more business-proac-tive policies, including competitivecommercial tax rates and aggressivemeasures to enhance the climate ofinvestment in and around its com-mercial districts and building stock.”

It also is helping a private devel-oper turn an old car dealership onLee Road into a business incubator.

West of the Cuyahoga River,Lakewood, which has a legacy industrial section and two multistoryoffice buildings, is stepping up efforts to attract small businessesand law firms to second-story officespace above shops along DetroitAvenue and elsewhere.

A little farther south and west,Fairview Park has bought a string ofrundown, obsolete motels alongLorain Avenue and is beginning toredevelop those properties as officebuildings. It’s now looking for a developer for an 11.8-acre site acrossfrom City Hall.

Back to basicsThese older suburban communi-

ties have fewer people to tax than10 or 20 years ago, but their policedepartments still have the samenumber of streets to patrol andtheir school districts face rising per-pupil costs. So they must findnew ways to raise revenue without

increasing municipal costs.“You have to spread the tax

base,” said Jim Kennedy, FairviewPark’s director of service and devel-opment.

“We’re always looking for highestand best use (of land), and in mostcases, for a municipality, that’s office development,” Mr. Kennedysaid. “You don’t put an extensiveburden on your infrastructure (asindustrial development would) andthey’re paying you some nice taxdollars.”

The trick for these communitiesis knowing what their strengths are and capitalizing on them, saidNathan Kelly, the new deputy chieffor development for CuyahogaCounty Executive Ed FitzGerald.

“The difficult task for a lot of suburbs is that there are a lot ofvogue things cities are doing,” said Mr.Kelly, who until recently was Lake-wood’s director of planning and development. “But there is only one University Circle, and you can’thave an incubator in every city.

“The smart cities aren’t tryinganything new; they’re going back tothe basics to find out what worksfor their city,” Mr. Kelly said.

‘We’re just evolving’The hiring of an economic devel-

opment director is a sign that

Cleveland Heights, for the first time,will look seriously at attracting office-based businesses to the community,beyond the occasional law practi-tioner or accountant.

Mr. Thompson said the commu-nity has several 1970s-era, open-plan schools that he believes couldbe attractive to high-tech or biotechstartups. They even come with ample parking, an important featurein the built-out suburb.

“I’m going to try to capitalize onthat,” he said.

Other communities are doingmore to retain existing businesses,to keep them competitive in achanging economy. Bedford Heightseconomic development directorMarty Divito said she has been ableto help energy-reliant manufacturersin her community by offering finan-cial and technical assistance tocompanies that make investmentsin energy-saving equipment.

“I don’t know if it’s different”from what other communities maybe offering, she said. “We’re justevolving.”

Ms. Divito said suburban com-munities are realizing the businesseswithin their borders are more thanjust commercial property ownersand taxpayers.

“We’re finally getting the globalcompetition concept,” she said. ■

business, and it could acquire morein the future, Mr. Stropki said.

So far, Lincoln Electric has boughtMezhgosmetiz-Mtsensk (which it ismercifully referring to as MGM), awelding wire manufacturer about250 miles south of Moscow, and OOO Severstal-metiz, another maker of consumable welding sup-plies about 30 miles away from theMGM plant.

Severstal has 283 employees and2010 revenues of about $40 million;Lincoln Electric announced thatdeal Dec. 28. MGM, with 200 employees, had 2010 revenues ofabout $30 million, Lincoln Electricreported in announcing that trans-action Oct. 27. It did not discloseterms of either deal.

Both are strategic acquisitionsaimed at making Lincoln Electricthe No. 1 or 2 welding supplier inRussia, like it is in most of the rest ofthe world, Mr. Stropki said. There isstrong motivation for achieving thatgoal.

“In and around Moscow, theamount of infrastructure develop-ment would dwarf anything you’dfind in the U.S.,” Mr. Stropki said inan interview.

Oil, gas lead the wayMr. Stropki said a number of

factors are driving Russia forward,many of them tied to the nation’sefforts to more fully exploit its oil,gas and mineral reserves throughexploration, drilling and mining. Allthose activities require a substantialamount of welding, he said, as dothe pipelines and facilities that arebuilt to handle and move the mate-rials.

Those investments play into Lincoln Electric’s strengths, said its senior vice president, DavidLeBlanc.

“In the mid-’90s, we became a

well-known and well-appreciatedsupplier to the pipeline industryand we really made a name for ourselves in (supplying weldingequipment to) both pipelines andpipe mills.”

Mr. Stropki predicts Russia willgrow its gross domestic product by5% to 6% this year, ahead of themost optimistic projections of U.S.growth of about 4%.

“But all GDP growth is not thesame to us,” Mr. Stropki said, explaining that the growth in Russiais more oriented toward infrastruc-ture and heavy industry than it is inthe United States.

The U.S. Central IntelligenceAgency backs up Mr. Stropki’s beliefthat Russia is growing. It notes in anonline report on Russia that its pre-recession growth was strong,and that its recession seems to haveended.

“The economy had averaged 7% growth since the 1998 Russianfinancial crisis, resulting in a dou-bling of real disposable incomesand the emergence of a middleclass,” the CIA states.

Other companies also have beenmoving into Russia, especially overthe last five years or so, observesBrooke Christian, senior vice presi-dent for New York-based transla-tion firm TransPerfect, which workswith many U.S. corporations.

“We certainly have seen a shift toward much more oil and gas activity there,” said Mr. Christian,who noted clients such as BP alsohave been using his services to establish operations in Russia.

“Oil and gas is so heavily tied tothe success of their economy, andthey’re starting to see some trickle-down effect as well,” Mr. Christiansaid.

“It makes sense to me that a company like Lincoln would gothere, too.”


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Russia: Growth areas need welding


Suburbs: Smart cities go ‘back to basics’

THE NEW GUY IN TOWNLincoln Electric in the last

three months has announcedtwo deals in Russia it hopes willhelp the company establish itself as a welding leader in anarea undergoing economicgrowth. The new additions:

■ Mezhgosmetiz-Mtsensk(MGM), which has 200 employeesand had 2010 revenues of $30 million

■ OOO Severstal-metiz, with283 employees and $40 million in2010 revenues

One step at a timeLincoln Electric has been watching

Russia for some time and has spentthe last four years finding and arranging its recent deals, Mr. Stropkisaid. It may do others as well, if itfinds the right opportunity, becauseRussia is such a large country geographically.

“Long term, we could have mul-tiple manufacturing sites there because of the logistics,” Mr. Stropkisaid.

Foreign ventures are nothing newto Lincoln Electric, which has beenestablishing operations in othercountries for longer than many manufacturers have been in exis-tence. Its first foray outside the United States was in Australia, sometime before World War II, Mr. Stropkisaid. Today, it has 40 operations in20 countries.

In most cases, Mr. Stropki said,Lincoln Electric began by participatingin large infrastructure or industrialprojects in a particular market, increased its export sales there andthen ultimately bought or formed amanufacturing operation — just asit’s doing in Russia. ■


RobinsonJacobsHeuser

SmithUmplebyReuscher


Was a regular garden good enough? Nope.

They put in a rock garden. And a rose garden.

Makes me tired just thinking about it.

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GOING PLACESJOB CHANGES

ARCHITECTUREVOCON: Jason Rohal to intern architect; Sarah Schwarz to projectdesigner; Steven Rush to informa-tion technology administrator.

CONSTRUCTIONGREAT LAKES CONSTRUCTION:Albert P. Leonard to vice president,project management.

ENGINEERINGOSBORN ENGINEERING: LeeHooper to president.

FINANCIAL SERVICEBAIRD PUBLIC INVESTMENT

ADVISORS: Eileen J. Stanic to vicepresident, senior relationship manager.BCG & CO.: Mary Cowx and EmilyZaubi to tax supervisors; Kathy Adkins, Tim Stiller and JessieHouck to senior associates; TanyaDunkle to assurance services manager; BJ Davis and Dana Howell to assurance services super-visors; Abby McMullen to senior associate; Jason Christman andDave Duma to senior associates; Albert Macso to valuations supervisor.BRUML CAPITAL CORP.: Eric W.Starr to vice president; Kelvin Zhanto analyst.BRUNER-COX LLP: Steven O.Pittman to managing partner. CORRIGAN KRAUSE: Janice L.Henshaw to bookkeeper.

ENTERPRISE CLEVELAND GROUP:Susan I. White to president, CEO;Eric Rader to senior vice president. FIRST FIDUCIARY INVESTMENTCOUNSEL INC.: Darian H. Chen toshareholder.SS&G WEALTH MANAGEMENT LLC:Michael J. Gheen to director; PatriciaValentic and Tammy Ertley to seniorassociates.

HEALTH CAREAKRON CHILDREN’S HOSPITAL:Dr. Bruce Cohen to director of pediatric neurology; Dr. RichardHertle to director, department of pediatric ophthalmology; Dr. RobertParry to pediatric general surgeon.

LEGALBENESCH: Jean Kerr Korman andChristopher P. Reuscher to partners;

Kimberly A. Umpleby to associate.BROUSE MCDOWELL: Todd C.Baumgartner, Nicholas P. Capo-tosto, Mark F. Craig, Caroline L.Marks and Louise M. Mazur topartners; Alexandra V. Dattilo andJustin M. Schafer to associates. MILLISOR & NOBIL: Jeffrey D.Smith to partner. THOMPSON HINE LLP: James B.Aronoff to partner-in-charge, Cleveland. TUCKER ELLIS & WEST LLP: ChrisCaryl, Jack Goldwood, KristenMayer, Tariq Naeem, JackPalumbo, John Patterson andBenjamin Sassé to partners.ULMER & BERNE LLP: Marie C.Kuban to partner.

MANUFACTURINGJOHN D. OIL & GAS CO.: CarolynT. Coatoam to chief financial officer.

WALLOVER OIL CO.: Dan Heuser tometalworking product manager.

MARKETINGHENNES PAYNTER COMMUNICA-TIONS: Nora Jacobs to vice president.

NONPROFITCITY YEAR CLEVELAND: Phillip M.Robinson Jr. to executive director. CUYAHOGA ARTS & CULTURE: JillPaulsen to director of grant programs;Jonah Weinberg to director of external affairs; Stacey Hoffman andDonnie Gill to program managers. GREATER CLEVELAND AUTOMOBILEDEALERS’ ASSOCIATION: NickHanna to director of regulatory affairs.

REAL ESTATECHARTWELL GROUP LLC: MarkAbood to senior vice president; JohnChluda, David Lang, Curt Schneiderand John Wagner to vice presidents;David Stover to executive vice president.GLOBAL REAL ESTATE ADVISORSINC.: David Sigg to vice president.

TECHNOLOGYBCG SYSTEMS INC.: Dominic Irrcherto senior network engineer; JoshHolyak to desktop/helpdesk technician.

BOARDSLEGAL AID SOCIETY OF CLEVE-LAND: Ilah Adkins (Charter One) topresident; Adrian Thompson andAnn Bergen to vice presidents; RickPetrulis to secretary/treasurer;Richard Panza to president emeritus.

Send information for Going Places [email protected].

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HIGHER EDUCATIONI N S I D E

JANUARY 24 - 30, 2011 CRAIN’S CLEVELAND BUSINESS 11

12 SPORTS PROGRAMS AWIN-WIN FORCOLLEGES.

By TIMOTHY [email protected]

Notre Dame College recentlybought the old ReginaHigh School site in SouthEuclid, and officials say

the much-needed space will helpalleviate the crunch caused by thecollege’s skyrocketing enrollmentover much of the last decade.

The college purchased the facility,which sits on eight acres, for just

Notre Dame lands nearby space to accommodate growth

A MARKET WITH SELLING POINTS

Parents, investors spot opportunities to capitalize on student housing near

NE Ohio college campuses

more than $2 million from the Sis-ters of Notre Dame, the Catholicorder that operated Regina HighSchool. The property is located onSouth Green Road next to theNotre Dame campus.

The high school closed last Junedue to dwindling enrollment andmounting financial trouble. NotreDame’s plans for the facility stillare fluid, but over the next fewmonths, it will be used for moreclassroom and office space.

Notre Dame had been leasingthe space since the school closed,but now that it owns the property,officials are weighing how best toleverage their new asset.

Renovations at the 115,000-square-foot facility and its adja-cent 1,100-seat auditorium likelywill take place over the next severalyears. Aside from classroom andoffice space, college officials wouldlike to create more common spacefor students to socialize because

Notre Dame, for instance, lacks astudent union.

But because of the immediateneed for space, officials aren’tplanning to demolish the buildingand start from scratch.

“We’re near capacity, and thischanges that dramatically,” saidAndrew Roth, president of NotreDame College. “It gives us moreroom to grow.

Since Dr. Roth was hired, enroll-ment at the private college on

Cleveland’s East Side has grownsubstantially. In 2003, the college’stotal enrollment was 894. Last fall,that number had climbed to morethan 2,000.

Likewise, the number of em-ployees — both full-time and part-time — rose from 114 in 2003 to222 in 2010. The college also heav-ily relies on adjunct professors,but Dr. Roth said he’s made it apriority to expand the school’s

See REGINA Page 16

By STAN [email protected]

Megan McKee, a 2009 graduateof Kent State University, fondlyremembers four years living in a six-bedroom house her

parents bought on Sherman Street in Kentfor herself and her older brother while theyattended the school.

“It was so much fun,” Miss McKee recallsof living with friends she grew up with at thehouse located so close to class “you could hitcampus with a rock.”

Matt Corpora and two longtime friends,freshmen at the University of Akron, beganthe latest quarter in a two-bedroom CapeCod in Cuyahoga Falls that his parents purchased for his college years.

See STUDENTS Page 15

COMFORTABLE LIVING QUARTERSNew-breed student housing is

providing an oasis of multimillion-dollar activity amid a desert-likeoutlook for realty development pro-jects in the downturn.

Central to many such projects isa combination of private bath-rooms and bedrooms for each student with shared kitchens and living rooms for one to fourstudents.

Amenities abound. A 596-bedstudent housing complex thatColumbus-based Edwards StudentHousing Management Co. wants toconstruct in Kent includes a fitness center, a business centerand 24-hour security and mainte-nance, said Ryan Szymanski, anEdwards vice president.

Edwards, the developer of10,000 student bedrooms over

the past decade, is facing opposi-tion of nearby residents as it seeksKent approvals to rezone nineacres on Lincoln and Summitstreets to “boarding house” in order to build units for more thantwo unrelated students rather thantypical apartments.

In the meantime, Kent Presbyter-ian Church wants to construct a

See CONSTRUCT Page 15



www.kent.edu

Kent State University, Kent State and KSU are registered trademarks and may not be used without permission. Kent State University, an equal opportunity, affirmative action employer, is committed to attaining excellence through the recruitment and retention of a diverse workforce. 10-2858

• Ranked as one of the top 200 universities in the world, by Times Higher Education, London• Named to the top tier of the Best Colleges in the nation by U.S. News & World Report• Generated 1.96 billion in added income to the Northeast Ohio economy• Ohio’s second largest public university• Nearly 200,000 alumni worldwide • Celebrating more than 100 years of excellence in action

Globally recognized Nationally ranked Locally vitalKent State University is the region’s leading public university

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HIGHER EDUCATION

If you play it, they will comeColleges that add football say programs score enrollment gainsBy JOEL [email protected]

The way Michael Victor seesit, the success of Lake ErieCollege’s still-youthful foot-ball program is directly

proportional to the amount ofStorm gear worn around Painesville.

And lately — on the strength of avastly expanded athletic depart-ment headlined by a now-DivisionII football team — those threadshave been multiplying, the school’spresident says.

At Notre Dame College, 25 milesaway in South Euclid, it’s perhapseven simpler than that, says vicepresident of enrollment Dave Armstrong: “This is the birthplaceof football. If you’re going to be acollege in the football region, andyou don’t play football, peopledon’t give you as much respect.

“That’s probably wrong, but it’sthe truth,” he said.

Lake Erie and Notre Dame, fiveand three years, respectively, afterinstalling their programs, say they arereaping the benefits: wild enroll-ment increases, expanding cam-puses, improved engagement withalumni and fundraising pushes.

They’re also two of 26 schoolsnationwide, according to an August USA Today report, that haveadded or will add football programsbetween 2009 and 2013. ClevelandState since October 2008 has con-sidered adding the sport, but afterthe school conducted a student survey last year to gauge their willing-

ness to pay part of the startupcosts, there’s been little move-ment, according to athletic depart-ment spokesman Brian McCann.

Storm surgesAt Lake Erie, enrollment has

doubled to 1,300 since 2006. As such,Mr. Victor said the school has beenable to be more selective in choosingits student body.

Football startup costs, Mr. Victorsaid, were about $500,000, but onlybecause there was no stadiumconstruction involved. The Stormplay at Jack Britt Memorial Stadium, also home to Painesville’sHarvey High School games.

School officials say the enroll-ment gains, spurred in large partby adding 100 football players andhundreds of other students partici-pating in 11 more varsity sports —the Storm now compete in 23 —have offset those startup costs.

“We’re in the black,” said Mr.Victor, who spearheaded the development of the football teamand the athletic department’s expansion when he arrived at LakeErie in 2006.

The revenue gained from theadded enrollment helped pay for arenovation of the old Andrews Osborne Academy gymnasium —which the college purchased in2007 to accommodate enrollmentgrowth — into Lake Erie’s athletictraining center. Plus, the $800,000price tag on the installation of turfat Jack Britt, split between the college and the Painesville CitySchool District, also was coveredby the student gains.

The Storm, in their first seasonas a full member of NCAA’s Divi-sion II, won seven games in 2009but slipped to a 3-8 mark in 2010.In 2008, as a Division III competi-tor, Lake Erie beat Glenville (W.Va.) State, a perennial nationalcontender in Division II, for the Pioneers’ only loss. They missedthe playoffs.

“It gives us a more vibrant insti-tution,” Mr. Victor said. “Morepeople want to attend. It helpsacademically. It helps retention,and it has an intangible effect.”

Falcons flyAt Notre Dame, enrollment has

increased to 1,200 full-time students, from 300 in 2003, Mr.Armstrong said. Factor in part-timers and continuing educationparticipants, and traffic has risento more than 2,000, from 800.

The football team has made thebiggest impact, with 100 men com-ing to campus; the school started awomen’s rowing team in an effort to

counteract that imbalance, and ithopes to grow its marching band,which numbers 55 right now, to 200.

The school in 2009 was recog-nized by the Palo Alto, Calif.-basedCarnegie Foundation as having thefastest enrollment growth among204 institutions in its weight class,so to speak.

On the football field, the Falconsplayed eight games in 2009 againstjunior varsity and club teams — likeLake Erie did in 2007. Notre Dame in2010 went 2-9 participating in theNational Association of Intercolle-giate Athletics (NAIA) and if it follows on its current path, will be afull member of NCAA Division II forthe start of the 2012 academic year.

That designation allows bothNotre Dame and Lake Erie to offercollege scholarships, somethingDivision III and NAIA schools cannot. Additionally, Notre Damepartnered with Good Karmabroadcasting, parent company ofESPN Cleveland WKNR 2 1540-AM,and its games are broadcast bothon the radio station and streamedlive on its web site.

“(Football has) had an immedi-ate impact,” Mr. Armstrong said.“We have cachet with people whohadn’t previously thought of us.”

Winning recordsStories of football — and other

high-profile sports — driving expansion and enrollment increasesabound. Akron’s men’s soccerteam has become a national powerhouse with a well-paidcoach and a newly renovated stadium, the latter possible because of on-field success andnational exposure. Cleveland Stateofficials have said the team’s upsetof No. 4 seed Wake Forest in the2009 NCAA men’s basketball tour-nament led to many more enroll-ment inquiries.

Also qualified to speak of the impact of athletic success is Laing Kennedy, who before he retired from Kent State was theMid-American Conference’slongest-tenured athletic director.The Flashes’ basketball programhas been the MAC’s flag-bearer inall sports and for a while was thenation’s top mid-major team.

In 2002, it advanced to the EliteEight, and the school has seen therewards.

“The impact on the school, thecommunity and the Kent Stateworld was very significant,” said Mr. Kennedy, who noted that appli-cations spiked in the aftermath of that success. “That develops new revenue to the total institution, intuition fees and other avenues.” ■

PHOTO PROVIDED

Notre Dame Falcons fans show their support for the football team, which the col-lege introduced three years ago.



HIGHER EDUCATION

New library spaces speak volumes about student preferencesColleges repurposefacilities to foster engagement, serviceBy TIMOTHY [email protected]

Being met with a glare for uttering anything beyond awhisper is a scene from anacademic library of a by-

gone era. Libraries at today’s colleges and universities aren’t somuch academic silos but rathergathering places armed with thelatest gizmos to enhance the academic experience.

Indeed, as more students andfaculty go to the Internet for research materials, Northeast Ohiocollege officials have had to conjureup ways to attract students to the libraries.

In many cases, that means betterfacilities, fewer books and moreelectronic resources and acute customer service. And so far, thosemethods appear to be working ascollege librarians say growing numbers of students are comingthrough their doors.

According to a guide from the Association of College and Research Libraries and the LibraryLeadership and Management Asso-

ciation, librarians and university architects looking to revamp theirlibrary space should strive to createa flexible space to plan for futuretechnology, changing library collections, future expansions andchanging user demographics.

It’s also important, the organiza-tions note, to understand how students and faculty are going to usethe space, and that’s what many local academic libraries have done.

“We’re much more multipurpose,”said Jeanne Somers, director of theGrasselli Library and Breen LearningCenter at John Carroll University.“We’re much less a storehouse ofbooks and much more preferredacademic space.”

Dr. Somers said the library atJohn Carroll isn’t the “hush-and-be-quiet” space it used to be, andthe 125,000 people who enter the library each year are using thespace much more for group studying,prepping collaborative projects andeven socializing. And to make spacefor more of those kinds of activities,Dr. Somers estimates the libraryhas reduced its print reference collection by 30% over a four-yearperiod.

“We’re moving toward redesigningourselves as an information commons and making more space for users and more space fortechnology and less space forprint,” Dr. Somers said.

The ‘Borders’ model

James Bracken, the dean of libraries at Kent State University,said research libraries used to bejudged by the sheer size of their collections. When the Kent State library opened in 1970, its member-ship in the Association of ResearchLibraries hinged on the number ofvolumes it had, so officials tried tofill the library as best they could.

That resulted in a collection thatnow hinders the university’s abilityto create more common space forstudents, so Dr. Bracken, whojoined the university in August, hastasked himself with eliminatingmore than 50% of the collectionover the next 10 years.

The idea is to create a warm envi-ronment similar to the national retail book chain Borders ratherthan the “austere and Spartan” oneof the past, Dr. Bracken said.

“The model has changed,” hesaid. “We no longer measure thequality of a research library bynumber of volumes. We measure itby how it engages its community,how its users see it as an intellectualcenter of campus and by a lot ofother things.”

Case Western Reserve Universityalso is looking to soften the atmos-phere of its library. The university isin the midst of putting together astrategic plan to guide the library

and point our users to it.”At Cleveland State University,

library employees have undergoneextensive customer service trainingto better appeal to students.

“Because of the way informationwas available in the past, librarianshad to focus on organizing the information so we could retrieve itfor people,” said Glenda Thornton,director of the library at ClevelandState University. “It was organizedmore to make us more efficient. That’snot necessarily just the case now.”

Students also have new avenuesof accessing information or other library services. Services such as“text a librarian” or online supportare ubiquitous at most institutions.At Kent State, the library will evengo as far as delivering printed mate-rials to a student’s dorm room.

Dr. Bracken said Kent State’s libraryis not required to keep a copy ofevery book, which allows the uni-versity to focus on making the stu-dent experience be the best possible.

“We can be more people centered,”Dr. Bracken said. “We can be morereflective of what our users want. ■

into the future, and a key compo-nent of that is figuring out whatworks for students.

At the moment, students areworking with university administra-tors to redesign the first floor. Addi-tionally, a café is being installed,which should open sometime inFebruary.

“It’s to try and change the atmos-phere of the building to make itmore warm and inviting and to makeit easier for students to study with-out having to leave the building,” saidArnold Hirshon, CWRU’s associateprovost and university librarian.

Customers are always rightIn the past, college librarians had

been viewed primarily as “gate-keepers and stewards of books,”said Phyllis O’Connor, associatedean of university libraries at theUniversity of Akron. Their primaryjob, she said, was to collect materials,organize them and keep them safe.

“We pretty much twisted thataround,” Ms. O’Connor said. “Wedon’t just amass the stuff to keep itsafe. We try to amass the right stuff

“We’re much less a storehouse of books and much morepreferred academic space.”

– Jeanne Somersdirector of the Grasselli Library and Breen Learning Center,

John Carroll University



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HIGHER EDUCATION

Oberlin’s Robert Kahn HallTHE PLACE: Oberlin College’s new$16 million Robert Kahn residencehall is a testing ground for learningabout environmental stewardship.

PLACESOFNOTEA look at Northeast Ohio’s interesting spaces

By TIMOTHY [email protected]

Oberlin College’s new, $16million Robert Kahn residence hall wasn’t what freshman Dalia

Fuleihan expected.The spacious student rooms,

the large living areas and the newlaundry and kitchen facilities, forinstance, were a bit of a surprise forher. Perhaps even more surprisingwas the pledge she had to sign inorder to live there saying she wouldagree to live sustainably — for one,take shorter showers — and notbring a car to campus.

“It’s a good environment,” Ms.Fuleihan said. “It’s nice to bearound other people who are dedicated to that.”

The new Oberlin residence hall,which opened last fall and houses150 students, is part of a growingmovement nationwide in whichuniversities and colleges aren’t justconstructing green buildings butrather putting the onus on studentsto live in a way that ultimately reduces waste and protects the environment.

These so-called “green buildings”have been embraced by higher education as a teaching tool, saidStephen Muzzy, a senior associateat Second Nature, a Boston-basedorganization that promotes sustainable strategies in higher education.

“I think higher education has anopportunity that if green buildingsare ubiquitous, the norm would bewhen students graduate and go intothe work force, they believe greenbuildings should go everywhere,and ask, ‘Why are you still buildingin the old paradigm?’”

A living laboratoryColin Koffel, an environment

sustainability fellow at Oberlin,works to develop programmingwith students to help them under-stand the importance of livinggreen. However, he said most of the ideas come directly from thestudents. For instance, he hasworked with students to developshower timers to remind studentsto use less water.

Meanwhile, the hall boasts a listof sophisticated features such as asystem that automatically shuts off the heat or air conditioning instudent rooms when windows areopened. Glowing orbs in the building

also change color depending on theenergy usage to remind students oftheir commitment.

However, it’s not all complicatedtechnology. There are simpler measures in place, such as clothes-lines in the laundry rooms and anonsite compost tumbler.

“If anything, the students thatlive (in Kahn) are asking us to domore of it,” Mr. Koffel said.

Because it’s a new building, it’snot without its kinks — at least inthe students’ eyes. Things, for instance, always could be done alittle greener.

In one of the hallways, studentsfelt the motion-censored lightswere wasting energy, so they puttape over the censors. They also unplugged a flat-screen panel display that details the energy usage in the hall.

“Students are extremely reason-able and extremely logical,” saidMolly Tyson, the associate deanand director of residential educa-tion at Oberlin. “They are whatmake the building work, and theyare the people that live here.”

A simpler approachOberlin isn’t alone in its efforts to

push students to live sustainably.Though perhaps not on Oberlin’slevel, other Northeast Ohio collegesand universities have put forth theirown efforts aimed at curbing student energy use and waste.

Even colleges without studenthousing, like Cuyahoga CommunityCollege, have made an effort to givestudents the tools to change theirbehavior.

Kevin Snape, that college’s newvice president of sustainability, saidthe college is starting composting atits dining halls and has placed student ambassadors to stand bythe trash cans to remind students toput their waste in the right bucket.

Kent State University, mean-while, implemented a bike sharingprogram to encourage students toditch their cars and bike aroundtown. The university also coordi-nates recycling and energy conser-vation competitions among the residence halls, according to AndyWeyand, the coordinator for administrative services and facilities for Kent State’s residenceservices.

“Our efforts are not so much togenerate interest but give them thetools to put that interest into action,”Mr. Weyand said. “I think as it becomes more and more of a trend,the interest is building with the stu-dents coming on campus. The interestis already kind of in their head.” ■


In both cases, parents boughtsingle-family homes for childrenwho sought to live away fromhome but not on campus duringtheir time at college.

Thanks to affordable housingprices in Northeast Ohio, thedream of converting college housingcosts into a house investment iswithin reach of more parents ofthe college-bound here than inmany parts of the country.

A recent Coldwell Banker Realtors survey even ranked twoNortheast Ohio cities among themost affordable college towns inthe country: Kent was ranked No. 8with a $153,662 average home listingprice in 2010, and Akron came in atNo. 5 at $139,711.

Against the grainDespite the challenges of

managing a high turnover popula-tion, niche factors are fuelingmovement in the student housingmarket for parent-owners and investors despite the worst realtydevelopment market since 1945.

“Higher education as a growthindustry is countercyclical. Morestudents attend college in down-turns, especially public universi-ties,” said Jack Boyle, vice presi-dent for business affairs andfinance administration at Cleve-land State University. “We’ve beenthe odd man out in the busting ofthe development bubble.”

Consider the dynamics at KentState as a test case. Ryan Szymanski,a vice president of Columbus-based Edwards Student HousingManagement Co., said that firmwants to build a $20 million project in Kent after several yearsof watching the market while developing similar student complexes across the country.

“Look at KSU’s growth in student enrollment over the lasttwo years — an increase of 3,000 students, or 17%, while there hasnot been that much additionalhousing added to the market,” Mr.Szymanski said. “That makes it aprime market for us.”

Some of the uptick is people

turning to college in a job-shyeconomy. Edwards focuses onpublic university areas becausemore students stay in-state indownturns.

Demographics also come intoplay. The baby boom echo genera-tion is now moving through colleges. The U.S. Department ofEducation estimates boomer off-spring will buoy college enroll-ments through 2015, according toMichael Zaransky, author of thebook, “Profit by Investing in Student Housing.”

CSU’s Mr. Boyle also notes thatcolleges try to keep enrollmentgains for the long haul, which maygive the phenomenon longer legs.

A parent-buyers’ marketStricter credit requirements

complicate second-home purchases,but experts say the housing down-turn has aided parents who wantto own houses for students attendingcollege, which in turn has reducednumbers of empty houses in someneighborhoods.

Gary Stouffer, the owner ofAkron-based Stouffer Realty, saidthe 20% decline in housing pricesin the region puts houses in nicerneighborhoods close to the Akronand Kent campuses within thereach of more prospective parentbuyers.

“Had home prices stayed wherethey were, fewer parents could afford to do it,” Mr. Stouffer said.For example, his firm has sold parent buyers homes for $100,000now that cost $130,000 five yearsago. The price decline has putneighborhoods such as CuyahogaFalls within reach, and he has seenparents like Matt Corpora’s grabthe opportunity.

The question of parents buyingstudent homes comes up moreregularly now, said Jack Kohl, president of Ravenna-based JackKohl Realty LLC, which has a Kentoffice and manages about 500 KentState student rentals, mostly insingle-family houses.

“We don’t go a week whensomeone does not stop in our office to talk about buying a house


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Students: Housing needs rise along with enrollment

for a student, keep it a few yearsand sell it.” Mr. Kohl said. “Wedon’t know how many actuallybuy.” He wonders, though, if joblosses and stock-market losseshave offset the upswing in interest.

Mom and dad know best

In Miss McKee’s case, her par-ents, David and Debbie McKee ofRichfield, bought the Kent house“because they knew how much it

was going to be to rent something… they wanted us to focus onschool.”

Her parents benefited fromrental income, but she noted“there was always a project to do.”

Although economics get topbilling, being a parent is the biggestfactor.

“They want their kids living innicer housing,” Mr. Stouffer said.“With University of Akron burstingat the seams, little housing is avail-able close to campus.”

Boarding house rentals in Kentare scarce, Mr. Kohl said, so parentsseek purchases for alternatives.

Ron Corpora of Hudson said hebought the house this month because he sought a less transient,quieter neighborhood than thosenear the Akron campus for his son.The $80,000 house is eight minutes from the University ofAkron and dates from the 1950srather than still-older homes nearcampus.

“I looked at it not as a chance toprofit on rents but to buy into a stable housing market at a goodtime,” Mr. Corpora said. ■

four-story building with 375 beds forstudents. The church’s plan capital-izes on its 1456 E. Summit St.grounds across from Kent State.

Other colleges and investorsthroughout the region also are get-ting in on the act or already have.

■ In downtown Akron, RichlandCommunities of Middleburg Heightshas opened 22 Exchange at thatstreet address near the university with471 beds for students in a complexthat includes shops and restaurants.

■ In Cleveland, American CampusCommunities of Austin, Texas, lastfall opened a 348-bed student housingproject on Euclid Avenue at ClevelandState University. Other developers

have finished or plan projects nearby.■ In University Circle, the $45 million

UpTown project is under constructionat East 115th Street near Euclid. It includes 100 apartments in its firstphase, and plans call for later dou-bling its size. All told, another 400renovated or new rentals are addingto University Circle’s residential base.

So, can these communities absorbthe influx? Beachwood-basedinvestor Dan Siegel, owner of 1,200Kent apartments, said new projectsmay soften the market, but it doesnot worry him — so much so that heplans to sell Edwards its site if it proceeds. He puts Kent apartment vacancy at 10% today compared with20% in 2000. — Stan Bullard

Construct: Development under waycontinued from PAGE 11



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HIGHER EDUCATION

full-time ranks. Since his arrival,the number of full-time faculty hasrisen from 24 to 61.

Dr. Roth attributed the growthto several tactics, including newrecruiting strategies that includedmore high school visits rather thanrelying solely on advertising. Pushing extracurricular programs,particularly sports, and upgradingthe campus with two new dormsand new technology also attrib-uted to the growth, he noted.

The growth had caused the college to be somewhat “out ofbalance,” according to JohnPhillips, the college’s vice presi-dent for finance and administra-tion. To make more room for classroom space, the college hadto move about 20 employees far-ther up South Green Road intosome leased space. But with theRegina acquisition, those employees,which include the marketing department and others, will moveback to campus.

A new front door

Notre Dame essentially is land-locked on its South Euclid campus.Since the college opened in the1920s, residential communitieshave sprung up around the campus, stifling the possibility forfurther expansion. The college’smain entrance faces south towardCollege Road, but campus officialshave altered some of the drivingpatterns as to not disturb theneighboring communities.

The primary entrance is nowalong South Green Road near theRegina site. Prior to the Reginapurchase, Notre Dame typicallywas known as the “college behindthe high school,” Dr. Roth said, because not much of the campuscould be seen from the road.

The Regina acquisition allowsthe college to better orientate itsfront entrance along South GreenRoad and build an entryway, suchas a fence or some sort of arch, tobetter identify the college. The

admissions office, which is currentlylocated in the main administrationbuilding, will also move to the Regina facility to welcome prospec-tive students.

“It will make a statement thatyou’ve arrived at Notre Dame

College,” Dr. Roth said. Upgrading the Regina facility to

make it usable could cost about $2million, Dr. Roth said, but the costto completely upgrade and renovatethe facility and turn it into a “state-of-the-art collegiate building” couldcost as much as $11 million.

“We will use the building as it is,but we’ll incrementally remodel itas we go along,” Dr. Roth said.

To help finance the Regina up-grades and others around campus,Dr. Roth said the college is puttingtogether a capital campaign thatwould run over the next three to

five years. Though a final dollaramount has yet to be set, Dr. Rothnoted, on the high end, the collegewould like to raise as much as $12million.

Behind the Regina site, collegeofficials would like to construct another building that mirrors theold high school, which could costan additional $10 million. To payfor that, the college likely wouldtake on debt. Because the newbuilding would likely include student housing, there would be abuilt-in revenue stream to pay backthe debt, Dr. Roth said. ■

Regina: Notre Dame eyesmore visible entryway continued from PAGE 11

PHOTO PROVIDED

Notre Dame College plans to use the nearby Regina High School facility for more classroom and office space.



NORTHEAST OHIO REAL ESTATE INVESTMENT TRUSTSRANKED BY TOTAL SQUARE FOOTAGE OWNED IN NORTHEAST OHIO(1)

Rank

Name of firm/Ticker

Headquarters addressPhone

Web site CEONE Ohio squarefeet owned(2)

2009 funds fromoperations(millions)

Change in fundsfrom operationfrom 2008 (%)

2009revenue

(millions)(3)

Change inrevenue

from 2008(%)

Equitymarket cap

(millions)(4)

NE Ohiopropertiesowned(5) Property focus

1Simon Property Group Inc./SPG225 W. Washington St.Indianapolis, Ind. 46204

(317) 636-1600www.simon.com David E. Simon 4,675,486 1,748.3 (5.6) 3,797.6 (0.2) 28,981.5 6 Regional mall

2Developers Diversified RealtyCorp./DDR3300 Enterprise ParkwayBeachwood, Ohio 44122

(216) 755-5500www.ddr.com Daniel B. Hurwitz 4,160,004 (102.4) NM 971.9 3.8 3,378.8 17 Shopping

centers

3Kimco Realty Corp./KIM3333 New Hyde Park Road, Suite 100New Hyde Park, N.Y. 11042

(516) 869-9000www.kimcorealty.com David B. Henry 1,595,354 287.1 (45.1) 911.5 (16.8) 6,941.8 13 Shopping

centers

4Lexington Realty Trust/LXPOne Penn Plaza, Suite 4015New York, N.Y. 10119

(212) 692-7200www.lxp.com T. Wilson Eglin 1,384,007 (56.0) NM 353.3 (26.7) 1,109.5 5 Diversified

5Duke Realty Corp./DRE800 E Ninth St., Suite 100Indianapolis, Ind. 46240

(317) 808-6000www.dukerealty.com Dennis D. Oklak 1,324,147 13.3 (96.6) 948.2 (0.1) 2,811.2 14 Office

6U-Store-It Trust/YSI460 E. Swedesford Road, Suite 300Wayne, Pa. 19087

(610) 293-5700www.u-store-it.com Dean Jernigan 1,194,278 55.9 (8.6) 218.0 (7.9) 863.0 22 Self-storage

7Associated Estates Realty Corp./AEC1 AEC ParkwayRichmond Heights, Ohio 44143

(216) 261-5000www.associatedestates.com

Jeffrey I.Friedman 1,172,700 19.8 (9.4) 131.7 (2.4) 629.6 7 Multi-family

8First Industrial Realty Trust Inc./FR311 S. Wacker Drive, Suite 3900Chicago, Ill. 60606

(312) 344-4300www.firstindustrial.com Bruce W. Duncan 1,056,116 113.0 504.4 415.8 (21.2) 528.7 8 Industrial

9CBL & Associates Properties Inc./CBL2030 Hamilton Place Blvd., Suite 500Chattanooga, Tenn. 37421

(423) 855-0001www.cblproperties.com

Stephen D.Lebovitz 980,494 282.2 (25.0) 1,097.9 (4.3) 2,445.4 2 Regional mall

10General Growth Properties Inc./GGP110 N. Wacker Drive, Suite 3900Chicago, Ill. 60606

(312) 960-5000www.ggp.com

Adam SpencerMetz 913,443 (421.4) NM 3,143.8 (8.8) 14,308.2 1 Regional mall

11Sovran Self Storage Inc./SSS6467 Main St.Buffalo, N.Y. 14221

(716) 633-1850www.sovranss.com Robert J. Attea 778,938 54.5 (23.1) 195.3 (4.0) 1,013.3 13 Self-storage

12Gladstone Commercial Corp./GOOD1521 Westbranch Drive, Suite 200McLean, Va. 22102

(703) 287-5800www.gladstonecommercial.com

David J.Gladstone 758,427 13.5 0.0 42.8 4.0 160.1 4 Diversified

13CommonWealth REIT/CWH400 Centre St.Newton, Mass. 02458

(617) 332-3990www.cwhreit.com NA 645,000 300.8 (0.5) 878.1 4.9 1,781.8 19 Office

14Vornado Realty Trust/VNO888 Seventh Ave.New York, N.Y. 10019

(212) 894-7000www.vno.com

Michael D.Fascitelli 520,000 640.5 (24.2) 2,891.6 6.0 14,997.3 1 Diversified

15Apartment Investment andManagement Co./AIV4582 S. Ulster St., Suite 1100Denver, Colo. 80237

(303) 757-8101wwww.aimco.com Terry Considine 504,900 177.3 (20.3) 1,174.4 (4.4) 2,936.4 5 Multi-family

16Regency Centers Corp./REGOne Independent Drive, Suite 114Jacksonville, Fla. 32202

(904) 598-7000www.regencycenters.com Martin E. Stein Jr. 474,886 85.8 (67.5) 490.5 (2.3) 3,369.7 1 Shopping

centers

17Extra Space Storage Inc./EXR2795 E. Cottonwood Parkway, Suite 400Salt Lake City, Utah 84121

(801) 562-5556www.extraspace.com Spencer F. Kirk 332,589 90.3 (0.7) 322.0 9.2 1,532.1 5 Self-storage

18Cedar Shopping Centers Inc./CDR4 S. Bayles Ave., Suite 304Port Washington, N.Y. 11050

(516) 767-6492www.cedarshoppingcenters.com Leo S. Ullman 332,250 24.6 (56.8) 182.8 7.4 408.3 10 Shopping

centers

19Public Storage/PSA701 Western Ave.Glendale, Calif. 91201

(818) 244-8080www.publicstorage.com

Ronald L. HavnerJr. 279,100 1,154.8 2.5 1,685.1 (3.3) 16,918.4 4 Self-storage

20Inland American Real Estate Corp./IRC2901 Butterfield RoadOak Brook, Ill. 60523

(630) 218-8000www.inlandrealestate.com Mark E. Zalatoris 192,321 68.2 (19.9) 179.9 (11.2) 755.9 2 Shopping

centers

21Piedmont Office Realty Trust Inc./PDM11695 Johns Creek Parkway, Suite 350Duluth, Ga. 30097

(770) 418-8800www.piedmontreit.com Donald A. Miller 187,000 239.3 (18.9) 612.0 (2.5) 2,617.9 2 Office

22Monmouth Real Estate InvestmentCorp./MNR3499 Route 9 North, Suite 3-CFreehold, N.J. 07728

(732) 577-9996www.mreic.com Eugene W. Landy 164,085 9.2 (19.7) 43.2 5.9 283.4 2 Industrial

23National Retail Properties Inc./NNN450 S. Orange Ave., Suite 900Orlando, Fla. 32801

(407) 265-7348www.nnnreit.com Craig Macnab 135,443 96.9 (32.0) 245.4 4.4 2,177.2 12 Retail; Other

24Entertainment Properties Trust/EPR909 Walnut St., Suite 200Kansas City, Mo. 64106

(816) 472-1700www.eprkc.com David M. Brain 98,052 4.9 (96.8) 271.8 (6.0) 2,204.4 2 Specialty

25Realty Income Corp./O600 La Terraza Blvd.Escondido, Calif. 92025

(760) 741-2111www.realtyincome.com

Thomas A. LewisJr. 51,102 190.4 2.7 327.6 (0.7) 3,996.2 40 Retail; Other

Source: SNL Financial, Charlottesville, Va., (434) 977-1600, www.snl.com/real_estate. To qualify for this list, a company must be a publicly traded U.S. REIT that ownscommercial property in the Northeast Ohio area. Mortage REITs are not included. Hospitality Properties Trust (HPT), HCP Inc. (HCP) ,UMH Properties Inc. (UMH), Equity LifeStyleProperties (ELS), Nationwide Health Properties (NHP), Getty Realty Corp. (GTY), Ventas Inc. (VTR), LTC Properties Inc. (LTC), ProLogis (PLD), and Health Care REIT Inc. (HCN)reported exposure to the Northeast Ohio area but did not report square footage data. Property count and square footage reported include properties with both majority- andminority-owned equity interest. Square footage has been reported by total building size, and not adjusted for minority ownership interest. Revenue figures are for calendar year.Executives may have additional titles.Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to ourlists and will include omitted information or clarifications in coming issues. Business lists and The Book of Lists are available to purchase at www.crainscleveland.com.(1) Includes the following counties: Ashland, Ashtabula, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Stark, Summit, Trumbull, and Wayne.(2) Based on most recently reported square footage figures for properties owned as of Dec. 13, 2010. Average size for multifamily units has been estimated at 900 squarefeet.(3) Figures have not been adjusted for discontinued operations in 2009.(4) As of market close on Dec. 13, 2010.(5) As of Dec. 13, 2010. Includes properties under development.

RESEARCHED BY Deborah W. Hillyer



Solon LED specialist triples sales with help from acquisitionEnergy Focus ‘a radically different company’By CHUCK [email protected]

Energy Focus Inc. is about tobreak its losing streak, according toCEO Joseph Kaveski.

An acquisition helped the Solon-based producer of energy-efficientlighting make money from its continuing operations during thethird quarter of 2010, which Mr.Kaveski cited as a major turningpoint for the company.

Energy Focus has been losingmoney for years. The publicly tradedcompany, formerly known as Fiber-stars Inc., used to focus on selling

fiber-optic lighting systems forpools and spas. It changed its namein 2007, however, as part of an effortto broaden its customer base andproduct lineup. Today, the companyfocuses mostly on developing lighting systems powered by light-emitting diodes.

The company, which employs 80,further broadened its capabilitieson Dec. 31, 2009, when it boughtlighting services firm Stones RiverCos. of Nashville in a deal valued at$5 million.

With the acquisition, Energy Focus’ balance sheet immediatelychanged for the better. Stones River,

which retrofits public buildingswith energy-efficient lighting, wasprofitable when it was acquired.That income stream helped EnergyFocus generate $600,000 from itscontinuing operations during thethird quarter of 2010, enough tomake it cash flow positive for theyear.

The acquisition also helped EnergyFocus triple its sales: The companybrought in $26.4 million in revenueduring the first three quarters of2010, up from $8.8 million duringthe first nine months of 2009, whichMr. Kaveski described as a “horren-dous” year.

“We are a radically different company than we were in 2009 andearlier years,” he said.

The company still lost $1.56 million in the third quarter on $9million in sales. Mr. Kaveski wouldnot say when the company expectsto reach profitability, but it doeshave a plan to get there.

Energy Focus is working to expand Stones River’s retrofittingbusiness into new parts of the country.The acquired company previouslyfocused on the southeastern UnitedStates. The expansion also will helpEnergy Focus sell more of the tech-nology it develops because StonesRiver now sells the company’sproducts.

New products scheduled for release this year should help boostsales as well, said Energy Focuspresident John Davenport.

Though the company has just $2.7million in cash reserves, in March2010 it struck a stock purchaseagreement with Lincoln Park CapitalFund LLC of Chicago. Through theagreement, Energy Focus can directLincoln Park Capital to purchase upto 20,000 shares of its common stockevery five business days, accordingto a registration statement the company filed in April 2010 with theU.S. Securities and Exchange Com-mission.

Energy Focus can direct LincolnPark Capital to buy a total of 3.65million shares, which excludes othershares and warrants the Chicago investment firm will receive as partof the agreement. The company’sstock closed at $1.10 on Friday, Jan.14.

Energy Focus has used the purchaseagreement “sparingly,” Mr. Daven-port said. That shouldn’t change,unless Energy Focus decides to acquire another retrofitting businessto speed up its expansion, Mr.Kaveski said.

“We believe that we have suffi-cient capital,” he said.

In with the newOver the long term, the company

is focusing on what it believes is theproduct with the greatest potential:The Intellitube, an LED tube designedto replace the fluorescent tube lightsthat illuminate most offices.

The Intellitube would use onlyone or two LEDs that would shootlight into an acrylic tube, whichwould distribute the light evenlyacross its surface. Using so few LEDswould make the Intellitube less expensive than typical LED tubelights that use dozens of them.

A similar tube Energy Focus devel-oped for the military was installed ona Virginia Class submarine in earlyJanuary. The company aims to offerit for sale in about a year, though Mr.Davenport admits it will take longerfor LED costs to come down to thepoint where it would be a mass-market product.

“A year will open up certain markets that will keep us busy …while costs drop further,” Mr. Dav-enport said.

The Navy plans to install its version of the technology on addi-tional submarines after testing it onthe first one, said Edward Markey,lighting life cycle manager for theNavy’s Ship Systems EngineeringStation in Philadelphia. The Navywanted to use LEDs instead of fluorescent tubes partly becausethey last longer and are mercury-free, he said.

The product was “competitivelypriced” and passed a grueling seriesof tests that judged it on durabilityand performance, Mr. Markey said.

“It bodes well that their hardwareis working as well as it is,” he said.

The military, however, is not your typical consumer, said TerryMcGowan, director of engineeringand technology for the AmericanLighting Association in Dallas.

Today, LED tubes cost far morethan fluorescent tubes and produce“nowhere near the output of a fluo-rescent tube of the same size,” Mr.McGowan said.

It would be difficult for a companyto sell a cost-competitive LED tubelight anytime soon, he said. Overtime, however, LEDs are projected toimprove dramatically, Mr. McGowansaid.

“The potential for this stuff is stillremarkable,” he said. ■


Crain’s Cleveland Business Custom Publishing

CORPORATE GROWTH and M&A S-2 January 24-30, 2011 Advertisement

Delivering Solutions

to the Global Middle Market MICHAEL E. GIBBONS

Senior Managing Director & [email protected]

SCOTT T. BERLINManaging Director

& [email protected]

ANDREW K. PETRYKManaging Director

& [email protected]

EFFRAM E. KAPLANDirector & [email protected]

KEVIN H. SARGENTDirector & [email protected]

Serving the global middle market for over 20 years, Brown Gibbons Lang & Company offers a broad range of financial advisory services including:

M&A Advisory Restructuring Capital Raising Fairness Opinions

As a leading independent investment bank advising middle market companies in the U.S. and internationally, BGL provides strong negotiating skills, specialized industry experience and a shared entrepreneurial spirit that can help you increase and preserve your company’s value throughout the transaction process.

216.241.2800 or visit www.bglco.comTransactions involving securities are completed through Brown, Gibbons, Lang & Company, Securities, Inc., an affiliate of Brown Gibbons Lang & Company LLC and member FINRA.

We could tell you about our years of experience, our impressiveteam of attorneys, our focus on client service.

But perhaps you’d rather hear it from someone else:

• Best Lawyers® ranked Benesch first in Corporate Law in Cleveland for the past two years.

• Best Lawyers® named Benesch attorneys CorporateLawyers of the Year in Cleveland for the past two years:IRA KAPLAN in 2010 and GEORGE ARONOFF in 2011.

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LETTER FROM THE PRESIDENT

ACG Cleveland: Education, networking for dealmakers By THEODORE A. WAGNER

“It was the best of times,it was the worst oftimes …” The currenteconomic environment

feels a little like a Dickens novel.We face an exhausting list ofchallenges that includes high levels of unemployment, massivegovernment deficits, soaringhealth care costs and lingeringreal estate troubles, just to namea few.

But as businesses and employees

adjust to this “new normal,” there are somerays of hope on the horizon in NortheastOhio.

In addition to themuch-publicized storiesof the new medical mart,convention center andcasino development,transaction activity conducted by the area’sprivate equity and professionalservice firms picked up in 2010.As elegantly showcased in the

October issue of The Deal Magazine, thesebusinesses are unique assets of the region andvaluable resources to betapped to drive economicgrowth.

With more than13,000 members world-wide, the Association forCorporate Growth (ACG)is the pre-eminent orga-

nization where mergers-and-acquisition professionals whowork in public and private

companies, private equity, corpo-rate and investment banking, finance, accounting, law, and related service fields come together.ACG Cleveland is one of thelargest and most vibrant chaptersin ACG, and 2010 was a busy yearfor our chapter.

In addition to strong atten-dance at our regular programs, theDeal Maker Awards event wasagain sold out in January, and thesecond annual Great Lakes CapitalConnection held in September attracted more than 650 M&Aprofessionals from across thecountry.

We also joined 22 other ACGchapters in playing host to anMBA case study competition involving more than 100 top MBA programs.

The winners of Cleveland’scompetition received scholarshipsto attend ACG’s national confer-ence in Miami. This was a tremen-dous learning opportunity forthese students and a strong recruiting tool for the region.

Members join ACG Clevelandfor two primary reasons:

1To attend educationalevents that help them buildvalue in their companies

and for their clients;

2For the opportunity to network with a diverse andinfluential community of

business people. Chapter member-ship includes access to the fullsuite of ACG Global benefits andservices.

If this sounds like an organiza-tion for you, we encourage you to attend one of our events or toapply for membership.

Visit www.acg cleveland.orgor call me at 216-373-2500, andI’ll be happy to talk with you.

Theodore A. WagnerPresident, ACG ClevelandShareholderLibman, Goldstine, Kopperman & Wolf

2011 ACG Cleveland

eventsAll events at The Union Club

unless otherwise noted

FEBRUARY 8DinnerRichard Smucker, president &Co-CEO, J.M. Smucker Co.

FEBRUARY 17BreakfastDan Hurwitz, president & CEODevelopers Diversified RealtyEvent is at DDR

MARCH 17Breakfast Awaiting confirmation

APRIL 14Breakfast Awaiting confirmation

MAY 5Afternoon Panel DiscussionTopic to be announcedThe Ritz-Carlton, Cleveland

MAY 19Breakfast James F. Kirsch, chairman,president & CEO, Ferro Corp.

JUNE 14Evening Social & NetworkingThe Shoreby Club

SEPTEMBER 12-13Great Lakes ACG CapitalConnectionJW Marriott – Indianapolis

SEPTEMBER 266th Annual Golf OutingFirestone Country Club

JANUARY 26, 2012Deal Maker Awards DinnerMarriott at Key Center

For more information contact ACGCleveland at 216-696-8484 or www.acg.org/cleveland

THEODOREWAGNERAACCGG PPRREESSIIDDEENNTT



CORPORATE GROWTH and M&A Advertisement January 24-30, 2011 S-3

We are proud to have participated in decades of deal-making withthese well-deserving winners, including Mal Mixon’s original buyoutof Invacare and the incredible 2010 transaction by Fairmount Minerals. We salute these entrepreneurs.

Calfee, Halter & Griswold LLP | Calfee.com1400 KeyBank Center, 800 Superior Avenue, Cleveland, Ohio 441141100 Fifth Third Center, 21 East State Street, Columbus, Ohio 43215

We also congratulate our other client winners Fairmount Minerals, Ltd.

Shearer’s Foods, Inc.and all the other 2011 Deal Maker Award Winners

Calfee is proud to join ACGin recognizing our

long-standing client,

Mal Mixonfor all he has accomplishedfor Invacare and Cleveland

Mergers & Acquisitions• For healthy, good performing companies• Sell side and buy side advisory• Private placement of debt and equity, including bank loans,subordinated debt, and various forms of equity

Restructuring• Distressed M&A; Sec. 363, Article 9, Receivership• Financial restructurings• Private placement of debt and equity, including DIP and other financings

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Hot in Cleveland

Shaking off the doldrumsof the past two years, pri-vate equity nationally ispoised to shine in 2011,and Cleveland will be no

exception. Citing a pickup in activity

toward the end of 2010, a contin-ued economic turnaround andavailability of capital, dealmakersare forecasting a robust year forM&A opportunities — particularlyin the middle market.

“Across the country, there is a lotof positive buzz that deals arestarting to flow again,” says GregFine, vice president of marketingand communications for the Association for Corporate Growth(ACG). “It’s nowhere near 2007

levels, of course, but 2010 wasbetter and we are very optimisticabout 2011.”

The second annual Great LakesCapital Connection, hosted byACG Cleveland in September,proved a harbinger of the turn-around. More than 650 attendees(two-thirds from outside the area)converged to exchange ideas, network and stimulate the flowfor potential deals.

Northeast Ohio is home to asubstantial number of private equity firms and a disproportion-ately strong deal community — alegacy of its history.

“Northeast Ohio has a strong,well-developed private equity

Region’s middle-market private equity activity gathers steam

By CHERYL HIGLEY

See OUTLOOK Page S-10

Attendees gathered in September to network and exchange ideas during the opening receptionof the second annual Great Lakes Capital Connection, hosted by ACG Cleveland. The eventwas held at the Rock and Roll Hall of Fame and Museum.

Nominate your favorite Deal Maker Nominations for the 2012 ACG

Cleveland Deal Maker Awards may besubmitted at any time during the year. The deadline is November 1, 2011. For a nomination form, contact ACGCleveland at (216) 696-8484 or [email protected].




What dealmakers can expect from lenders in 2010 and beyond.

The tumult in the banking industry has changed the face of private equity deal-making. Lenders will be performing more due diligence than ever before, and firms that are well-positioned stand to benefit the most. In addition, an increasing number of distressed deals are expected to come down the pike, creating opportunities to buy debt that can be converted into equity when the company is restructured.

Grant Thornton offers you a broad perspective for private equity firms with an enlightening new whitepaper, The debt effect, which explores the current environment of private equity dealmaking, including dealmaker expectations from lenders in 2010 and beyond. To get a copy, contact Tom Freeman, Partner, Tax and Transaction Advisory Services, at 216.858.3700 ([email protected]) or visit GrantThornton.com/PEWhitepapers.

Find out how it feels to work with people who love what they do!

Grant Thornton refers to Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd, an organization of independently owned and managed accounting and consulting firms.

Chikol is a leading middle market consulting firm to companies facing critical organizational, financial and operational challenges . Our teams ofprofessionals provide consulting services in all financial & operational areas and can assist in the changes needed to preserve and enhance enterprise value. In these critical times , there is no substitute for detailedanalysis providing a roadmap for immediate action and an experiencedteam in support that has been there before.

www.chikol.com

Companies find pride in “Made in Ohio”Expanding markets, strong employeeshelp businesses thrive in down economy

By CHERYL HIGLEY

Northeast Ohio has takenits share of hits duringthe recent economicdownturn. But Ohio-

proud middle-market companiesfrom the Amish countryside toYoungstown and Mentor are farfrom down and out. They arethriving, thanks not only to thehigh-quality, innovative productsthey deliver, but also to their em-ployees, whose vision, pride in work-manship and relationship buildingare making all the difference.

Turning TechnologiesAs the world’s largest manufac-

turer of audience response systemtechnology (think “ask the audi-ence” on Who Wants to be a Millionaire), Youngstown-based Turning Technologies constantly has to be in tune withtechnological advances in its industry.

Yet, CEO Michael Broderick says,it’s the people — not the product— who define the nine-year-oldcompany’s success. Turning Tech-nologies, which was acquired in2010 by Brockway Moran & Part-ners, Inc., a Florida-based privateequity firm, in partnership withthe company’s management, saysTurning Technologies is Ohio.

“We are a technology companywith teams of engineers, developersand specialists who live in andare committed to Northeast Ohio.We wouldn’t be the same companywithout them,” Broderick says.“This company’s intellectual talent is its greatest asset.”

That talent faced its biggest testduring the fourth quarter of2008, when Turning Technolo-gies — which quadrupled its revenue from 2005-2010 — expe-rienced its only year-over-yearsales decrease in its history.

Broderick says Turning Tech-nologies learned to better com-municate its value proposition to

its markets (primarily education,but also businesses and govern-ment agencies worldwide) and toexpand its customer base. The

result was 20% growth in 2010. “Kids today expect to be

engaged in ways that traditional education hadn’t done, and itseems schools are finally gettingpast implementing ‘technologyfor technology’s sake’ and lookingat technology that can make adifference,” Broderick says.

Libra IndustriesBuilding strong customer

relationships is key for Mentor’sLibra Industries, which is cele-brating its 30th year in business.Those relationships, says Presi-dent and CEO Rod Howell, were instrumental in helping thecompany weather the recessionfallout.

“As an electronic manufacturingservice, we own no intellectualproperty — our customers own it.Our success comes from our ability to work with our cus-tomers, to listen and to under-stand their needs and chal-lenges,” Howell explains.“Everyone looks at our manufac-turing technology because it’scool and fascinating. But it is ourpeople who are the core of whoand what we are. Our most suc-cessful relationships are forgedwhen clients view us not just as amanufacturer, but as an exten-sion of their business.”

That’s not to say the technologyisn’t important, of course. Rela-

tionships will only get you so far,Howell says, which is why LibraIndustries continually reinvestsmillions in state-of-the-art robotics, software and IT systems.

“Everything is centered aroundbecoming more lean,” he says.“The only way we can justify ourbusiness is if we can do it betterand provide solutions that makeour customers more profitable. If we don’t do that, we cease toexist.”

Striking a balance between people and machine was instru-mental in helping Libra turn thepage on 2009, when business declined about 35% as its customers suffered through theeconomic meltdown.

“We thought our diversifica-tion would make us recession-proof, but we were wrong,” Howell says. “But as we saw therecession coming, we focused our efforts on expanding our customer base and looking at newregions and markets.”

Libra’s existing customer basehas since been revitalized, and withthe addition of the new business,the company grew almost 75%last year and has added 65 jobs.

“By holding onto our existingcustomers (even at reduced levels)and nurturing new prospects, wewere able to weather the storm,”Howell says.

Mentor-based Libra Industriessays it hasweathered therecession by emphasizing relationshipswith its customers andby continuing toinvest in itsbusiness.

See SPOTLIGHT Page S-9




ACG Clevelandcongratulates

the winners of the15th Annual

Deal Maker Awards

216-696-8484 • 216-696-2582 [fax]1120 Chester Avenue, #470 • Cleveland OH 44114

www.acg.org/cleveland • [email protected]

2011 Award Recipients

SPONSORS

CORPORATE

A. Schulman, Inc.

Fairmount Minerals Ltd.

Shearer’s Foods, Inc.

BUYOUT FIRMThe Riverside Company

LIFETIME ACHIEVEMENT AWARDA. Malachi Mixon, III

PPrriivvaattee eeqquuiittyy hhoonniinngg iinndduussttrryy ffooccuussBy STEWART KOHL

W hen Riverside startedout in 1988, everyonein the private equityindustry seemed to be

a generalist investor. Today, mostevery firm in the country seems to bea specialist — or at least has special-ized areas of focus. So what changed?

Many factors drove the trendtoward specialization. We’re confi-dent it will continue, and we’vebeen active in building out ourspecialized areas of focus. Most ofour peers in Northeast Ohio haveindustry specializations that bothmirror ours and include other verti-

specialties operating within ourgeneralist framework. This allowsus to “comparison shop” andmake sure that our industry specialty buys are at appropriatevaluations and with equally attractive risk-reward propositions.

As the private equity industrycontinues migrating towardgreater specialization, we’ll keephoning and expanding our ownspecialties. It’s an increasingly competitive and complex world,and we need to keep up. But considering that specializationhelps drive growth, create jobsand make investors more money,we’re believers. ■

Stewart Kohl is co-CEO of The RiversideCompany. Contact him at 216-344-7614or e-mail [email protected].

cals like manufacturingand retail.

A cynic might see specialization as the new“special sauce” for privateequity, but it’s far from agimmick. We have greatreasons for buildingteams of highly trainedexperts with unsurpassedindustry experience.These reasons tend tofeed into one another:

■ More experience meanssmarter bids, more growth, highermargins and/or more clever exits.In short, it means better returns.

■ Investors, lenders and invest-

ment bankers increasinglylook for sponsors withindustry experience.

■ Deals and targetcompanies are gettingmore complex. Many in-dustries involve challeng-ing regulatory, technicaland legal aspects. In afast-moving bid process,we need people who understand those issues

from the start to get to the closing. But specialties don’t endthere. We need them on board asexperts and operating partnersproviding guidance.

After completing nearly 250

acquisitions, we still considerourselves industry-agnostic butwe’ve become experts in healthcare (50-plus acquisitions) and training and education (20-plus acquisitions), and have had con-siderable and repeated success inareas like franchising and software.

Industry specialization permeateseverything we do. We market ourskills and focus deal originationefforts in these verticals. Ourtransactors become specialistsand our operating partners bringindustry experience to complementour investment experience anddrive growth.

Riverside operates as a set of

STEWARTKOHLRRIIVVEERRSSIIDDEE CCOO..

ACG laudstop dealmakers

ACG Cleveland will honorthe area’s top dealmakersduring the 15th annual DealMaker Awards ceremony

Jan. 27:

A. Schulman, Inc.A. Schulman, Inc. (ASI) is a

publicly traded international supplier of high-performance plasticcompounds and resins used as rawmaterials. In 2010, ASI closedthree strategic acquisitions to support its growth: McCann Color,Inc.; ICO Polymers, Inc.; andMash Compostos Plasticos.

Fairmount Minerals Ltd.Fairmount Minerals is one of the

largest producers of industrial sandin the U.S. In August 2010, Fair-mount sold a majority interest,which included an equity contri-bution, plus senior debt financing of$775 million, to American Securities.

Shearer’s Foods, Inc.Shearer’s is an international

manufacturer and distributor ofsnack foods. In March 2010, Shearer’sacquired Snack Alliance, Inc. Since 2006, Shearer’s has increasedrevenue more than 300% andadded over 1,000 employees.

The Riverside CompanyThe Riverside Company is the

world’s largest global private equityfirm focused on the smaller end ofthe middle market. Since 1988,Riverside has grown to managemore than $3.4 billion in ninefunds and has completed morethan 200 deals. Over the last twoyears, Riverside has completed 36acquisitions, and has realized 14 investments, including three ofthe five largest gains ever for thefirm.

A. Malachi Mixon, IIIMixon is chairman of the board

of Invacare Corp. He has led thecompany since 1979. During histenure, Invacare has grown to 30factories, 6,000 associates and netsales of $1.7 billion.




Fairmount Minerals would like toextend a sincere thank you to our

Fairmount family members, our valuedpartners in business and communityand to the Association for CorporateGrowth/Cleveland Chapter for the

2011 Deal Makers AwardFairmount Minerals is committed to exceeding customers’

expectations while fulfilling our economic, social and environmentalresponsibilities. We work to ensure that our actions positively

impact all three pillars of our sustainability focus: People, Planet, Prosperity

800-237-4986 • www.fairmountminerals.com

Scott McRill, CPA

Carol McNerney, CPA Ken Levine, CPA

Mark Mussig, JD Steve Goykhberg, MBA, CBA

Floyd Trouten, CPA Patty Rubin, CPA

Robert Littman, CPA, MT

Paul Woznicki, CPA

Whether it’s a buy-side transaction, sell-side transaction, recapitalization, or refinancing transaction, SS&G has the experience to see

you through to a successful outcome.

In our continuing commitment to provide the best client

service, SS&G welcomed Scott McRill, CPA, as director

of our transaction advisory services (TAS) practice.

McRill has nearly 25 years of experience, including more than

a decade of full-time, dedicated transaction experience,

and oversees TAS activities throughout SS&G.

To learn more about how our dedicated, full-time

TAS team can assist you, contact Scott McRill at

440-248-8787 or via e-mail at [email protected].

SSttaarrttiinngg uupp iiss eeaassyy;; ssttaarrttiinngguupp rriigghhtt iiss kkeeyy ttoo ssuucccceessssBy JOE JUSTER

Americans are entrepre-neurs at heart, starting anew business about every10 seconds. While starting

a business is easy, starting a businessright is hard. Approximately 25%fail within two years, and 75% failwithin 10. Entrepreneurs must takeinto consideration a range of legalissues involved in starting up right.

Protect your idea Companies rise and fall on the

strength of their ideas. Trade secrets,copyrights, patents, trade names,trademarks and web site domainnames can protect those ideas, aswell as your brand and corporateidentity. A patent will protect an invention if it is truly new or “novel,”but patents require complete publicdisclosure of your invention and taketime and money to obtain and defend.Trade secret laws protect ideas thatcannot be patented or that you donot want to disclose. Registeredcopyrights for written material, tradenames and trademarks for corporateand product names and logos, anddomain names for web sites are notas expensive to obtain as patentsand are usually a good investment.

C-corp or LLC? When organizing an entity, the

primary concerns are avoidingpersonal liability for businessobligations, minimizing taxes andraising capital. Profits are taxedtwice in a C-corporation (at thecorporate level and the share-holder level). Limited liabilitycompanies combine one level oftaxation at the member level withlimited liability. If your businesscan be financed by friends andfamily, a limited liability companyis a good choice. But if you fore-see multiple financing rounds,choose the C-corporation.

Money mattersBanks generally will not finance

startups because of their speculativenature. Therefore, you’ll need to sell equity to family, friends and, perhaps, “angels” — wealthy individ-uals who invest in and advise startups. Be sure to comply with, or get an exemption from, federal and state securities laws. In all instances, you must fully dis-close the risks of the investment, including the very real possibilitythat everybody could lose their money.

Getting outThe demands of running a busi-

ness leave little time for planningyour exit, but you must do so tomaximize your company’s value.Run your business as if it were always for sale.

This mindset will help you focuson doing those things that will drivethe highest value if and when youdecide to sell. ■

Joe Juster is chair of the General Corpo-rate group at Calfee, Halter & GriswoldLLP. Contact him at 216-622-8433 ore-mail [email protected].

When to organize If you will operate largely within

Ohio with a few owners, incorporatein Ohio. Ohio corporate laws aresufficiently established and deferen-tial to the decisions of officers anddirectors. Organize as soon as possible to facilitate contracting inthe name of the corporation so as toavoid personal liability. Early incor-poration also will justify a low valueon your company shares, helping youavoid being taxed on “cheap stock.”

Sellers should monitormanagement, businessBy MICHAEL F. PAPARELLA

One of the mostfrequent ques-tions posed bycompany owners

over the last two years is,“When will be a goodtime to sell my company?”Each company is unique,and the answer will de-pend on the characteris-tics defining its situation.

Underneath the surface of thequestion, however, lies the fear ofthe unknown as it relates to theuncertainty of the economy, theindustry, the credit markets andM&A cycles.

For most healthy, good-performing companies, those unknowns should not greatly impact the value of a business. AsRalph Waldo Emerson once said,“Can anybody remember whenthe times were not hard and money not scarce?”

When selling a business, valuetends to be driven not by the vagaries of tertiary markets andeconomies but by three control-lable attributes: quality of theManagement team, historical Performance of the business andthe three-year Growth plan forthe business (collectively MPG).

Certainly, the industryin which the companyoperates will dictate somerange of value; but by focusing on MPG, man-agement can influencegreatly the outcome of abusiness sale, regardlessof external conditions.

The reality is that evenin today’s difficult eco-nomic environment, theFortune 500 companies

collectively have more than $1 trillion in cash on the balancesheets, and U.S. private equityfunds have more than $450 billionin uninvested capital. These buyersare looking for good companies toacquire and are willing to pay forquality.

Indeed, the top five transactionsfor each of the past three years(down years for M&A and transac-tion values) have occurred in 10industries (pharmaceutical, tele-com, and oil and gas are the repeat industries), with a transac-tion value range of 5.5x EBITDAto 32.9x EBITDA, an average EBITDA multiple of 12.8x and amedian multiple of 10.1x.

These numbers compare favorably to the overall transac-tion values for deals in the same

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See SELLERS Page S-9




ulmer.com

POWER OFATTORNEY?Make that a double yes.

ulmer.com

We’re not your typical law fi rm. Sure, we’re a Fortune 500 “Go-To Law Firm,” a member of the 2011 BTI Consulting Group “Client Service A-Team,” a 2010 U.S. News & World Report - Best Lawyers “Best Law Firm,” and our attorneys are routinely ranked as “Best Lawyers in America” and “Super Lawyers.” But more importantly, we’re passionate dot connectors who know the power of relationships. We like to get to know you and your business. Imagine that.

Chicago Cincinnati Cleveland Columbus

PETER ROME

[email protected]

BRIAN O’NEILL

[email protected]

ulmer.com

Buyer beware: Don’t bestar-struck by every dealBy LLOYD BELL

In an environment with lowinterest rates, changing demo-graphics and what hopes to bean improving economy, buying

a business can be a life-changingexperience. With apologies to TheMiracles, “Try to get yourself abargain, son … Don’t be sold onthe very first one …” Good advicefor the aspiring business owner:You’d better shop around.

■ Profile: One of the biggestmistakes an aspiring owner canmake is to look at every possibledeal. Buyers should take the timeup front to define the profile ofthe companies they will target.Profile includes the industry, thesize of the company, the locationand, most importantly, what skillsthe buyer brings that will increasethe value of the target.

■ Purchase price in multiples:Published multiples are averages.Ignore the multiples and workwith your advisers on developingan accurate financial model. Thecompany’s expected performancewill dictate the multiple, not theother way around.

■ Due diligence: Even whenbuyers are familiar with an industry,other professionals — be it legal, financial, operational or techno-logical — need to be brought in to conduct due diligence. Buyers

need to be prepared to spendmoney on the investigation withthe understanding that it is not uncommon to spend time andmoney and still have no deal.

■ Financing: Getting a dealfunded is easier now than it was ayear ago, but it still can be a diffi-cult undertaking. An experiencedadviser can point the buyer to financing sources more likely to fund a particular transaction.

■ Patience: Buying a com-pany can be frustrating for anindividual used to thingsfollowing a stricttimeline. Expectthat the processwill take longerthan expected, andthat the deal may seemingly die once or twicebut eventually come back andget closed.

If that business for sale does notfit the profile established or some-thing serious gets discovered during due diligence, it’s better tolook for a better fit than to changethe acquisition plan to fit the target.“Pretty girls come a dime a dozen… I’ll try to find you one who’sgonna give you true loving.” ■

Lloyd Bell is the director of the corporatefinance practice at Meaden & Moore.Contact him at 216-241-3272 or [email protected].

Three mistakes not to make when conducting due diligenceBy ELIZABETH EVANS

In any merger or acquisition, abuyer needs to conduct duediligence before it commits topurchasing a target company.

Due diligence assists in testing andproving the economics of a trans-action. A buyer needs to receive

accurate and adequateinformation so

that it can negotiate apromisingtransac-tion, andmost

importantly,avoid surprises. Items

uncovered through the due-diligence process — such aspurchase price adjustments,negotiating different repre-sentations and warranties, or

requiring specific indemnities or escrows — can have a serious impact on a transaction.

The following are common mistakes that buyers should avoidwhen conducting due diligence:

1Not asking the right questions.Beginning with a basic due-diligence request list is not

enough. A buyer must tailor therequest list to the target companyand industry. A buyer and its teamshould research the target company

and the industry in which it operates— particularly any regulatory orother critical customer information.The due diligence request list shouldthen be revised based on what isapplicable to the target company.

Knowing what to ask is key to conducting effective due diligence. If the request list is either too general or too broad,the seller may not understandwhat the buyer is looking for. Bemore specific in order to obtainthe right information.

2Not asking the right people.Due diligence should consistof more than asking for and

reading documents from a targetcompany. Visit the target companyand talk with management.Knowing which members of management to reach out to regarding specific due-diligence requests not only will assist a buyer in obtaining the informa-tion, but the buyer may also receive more accurate — and moretimely — information.

Due diligence also should incor-porate interviews and interactionswith management. The people ofa target company are an integralpart of its history and information.A buyer should understand theobjectives of each party it interactswith and extract the key informa-tion from the person and situation.

3Not having the right team.Each transaction is differentand, as such, a buyer must

determine which team membersare essential in analyzing the specific transaction. Generallyspeaking, a team would consist of legal, business, accounting and tax specialists. It may also be necessary to retain outside consultants, such as regulatory, insurance or environmental specialists.

The team members should provide a buyer with expert guidance on due diligence that isuncovered and assist in exploringpotential liabilities or risks. Failureto do so may result in overpayingfor the target company, delayingthe closing, or incorporating inad-equate provisions in the purchaseagreement.

Having the appropriate team inplace will allow a buyer to feelconfident and comfortable thatthe transaction is being properlyevaluated.

A well-organized due-diligenceprocess can help prevent a buyerfrom unhappy surprises post-closingand lay the foundation for a successful acquisition strategy. ■

Elizabeth Evans is an associate in theCorporate & Securities Practice Group ofBenesch’s Cleveland office. Contact herat [email protected].




www.melcappartners.comSecurities offered through Burch & Company, Inc. Member FINRA / SIPC.

MelCap and BurchCo are not affiliated entities.

5164 Normandy Park Drive • Suite 285 • Medina, Ohio 44256Phone 330/721-1990 • Fax 330/721-1991

Al MelchiorrePresident

[email protected]

Sean DemlowVice President

[email protected]

Tim O’TooleVice President

[email protected] Pacholewski

Vice [email protected]

Marc Fleagle Analyst

[email protected]

MelCap Partners is an investment banking advisory firm specializing in providing highquality and innovative financial advisory services to middle market companies. For moreinformation on the above transactions, or how we may be of assistance, please contact:

The operating assets of

Akron, OH have been acquired by

Total Distribution, Inc.a subsidiary of

Canton, OH

The undersigned initiated the transaction, assisted in the negotiations, and served as financial advisor

to Terminal Warehouse Incorporated.

The operating assets of

STERIS Corporation’sHausted® Patient Handling Business

Montgomery, AL

have been acquired by

Pittsburgh, PA


to STERIS Corporation.

East Liverpool, OH

has been acquired by

Newell, WV


to The Hall China Company.

The assets of

Thayer Power & Communication LineConstruction Co., Inc.

Fairview, PAhave been acquired by

Bloomfield Hills, MI

The undersigned initiated the transaction & acted as exclusivefinancial advisor to Thayer Power & Communication LineConstruction Co., Inc., Debtor-in-Possession, in this sale

transaction.

What do You Value?

Creating Value.

To reach our Cleveland Office call 216.241.3272 or visit www.meadenmoore.com

Certified Public Accountants

Audit and Tax

Business Solutions

Corporate Finance

Employee Benefits Audits

Investigative Accounting

Management Development

Wealth Center

Managing legal costs of M&ABy JEFFREY A. FICKESand TERRENCE H. LINK II

“How much is thisdeal going to costme in legal fees?”Many executives

and business owners have askedthis question, often receiving theanswer “It depends.” This answeris impractical when creating budgetsor advising shareholders, investorsand other stakeholders. To obtaina more comprehensive, useful answer, consider the following:

Where are the warts? Whileproper due diligence is critical to investigating a seller’s organization, it also can be used to estimate legal fees. An environ-mental remediation business, forexample, is heavily regulated, requiring a significant amount ofdue diligence. An initial review of the seller’s permits and licensesand other environmental compli-ance matters provides counselsome level of predictability regarding legal fees. Additionally,product recalls, lawsuits, tax disputes and other business“warts” that increase legal costscan often be found, and related legal costs estimated, in early stagedue diligence.

Attitude is everything. Buyers,sellers and their attorneys oftendirectly correlate the purchaseprice of a deal to the anticipatedlegal fees. Instead, the sophistica-tion and attitude of the buyer,seller and their respective counselshould be indirectly correlated toestimating legal fees. A buyer experienced in M&A transactionscan perform due diligence on theseller’s business with less involve-ment from outside counsel. An attorney without M&A experiencemay not be efficient or effective inrepresenting a seller in negotiatingkey purchase agreement concepts.While this attorney should be involved in the transaction as theseller’s trusted adviser, he or sheshould not have primary negotiating

Tax legislation to the rescuethe final quarter.

However, President Barack Obama on Dec. 17 signed into lawthe sweeping 2010 Tax Compro-mise, which extended capital gainrate reductions through 2012.Business owners will look to liqui-date their investments prior to2013 to take advantage of the lowcapital gains rate.

100% depreciationThis provision permits businesses

to expense 100% of “qualifying”property purchased from Sept. 8,2010, through Dec. 31, 2011.While this should spur some companies to increase capital expenditures during 2011, manycompanies already have capital-expenditure restrictions in placeby their lenders and may look foroutside equity to fund these purchases.

Estate and gift taxesWhile death and taxes are

certainties, they shouldn’t neces-sarily coincide. Before the passageof the 2010 Tax Compromise, estate and gift tax rates were set toreturn to 55% with an exemption

of $1 million. The 2010 Tax Compromise pro-

vides an estate tax rate of 35% and$5 million exemption through2012. Like the capital gains rateextension, business owners maylook to transfer investments to thenext generation to take advantageof the low estate and gift tax rates.These types of transfers often require outside capital and shouldprovide an opportunity for privateequity.

Another pending legislativechange of note is that Congresshas had repeated discussions surrounding taxing carried interests as ordinary income. Ifpassed, this measure would subjectthese interests to a much higherrate of tax. While nothing hasbeen passed at press time, the issue will likely resurface. Industryexperts fear that such legislation, if passed, will discourage future investment. ■

Sean Kelly is tax manager at Grant Thorn-ton LLP. Contact him at 216-858-3717or e-mail [email protected]. TomFreeman is tax practice leader at GrantThornton LLP. Contact him at 216-858-3700 or e-mail [email protected].

and drafting responsibility. Theseller could reduce legal costs andlikely receive more qualified legalcounsel by engaging M&A coun-sel. Finally, the parties’ relativemotivation to complete the trans-action and level of trust is impor-tant. Lack of trust or professionalismcan prolong or terminate deal negotiations.

Third parties. Banks, investmentbankers, consultants, regulatoryagencies, landlords, customers andother parties may be involved inany deal. Typically, counsel nego-tiates the terms of those arrange-ments, so the extent to whichthird-party contracts or consentsare required affects fees. Finally,the negotiation of non-competi-tion and/or employment agree-ments with the seller’s employeesand others impacts fees.

Alternative fees. Alternative feearrangements allow the buyer orseller to manage M&A fees, partic-ularly when the buyer or seller hasmultiple planned acquisitions ordispositions. Some examples include fixed/flat fees, capped feesand discounted hourly billing rateswith a “results-based” fee or “successfee.” Alternative fee arrangementsare often fluid in nature, requiringopen lines of communication between counsel and client.

While there may be additionalfactors specific to each deal thataffect M&A legal costs, an analysisof the above factors with your at-torney will help you plan for andbetter estimate your legal fees. ■

Jeffrey A. Fickes and Terrence H. Link IIare partners for Corporate and BusinessServices, Roetzel & Andress. ContactFickes at 330-849-6613 or e-mail [email protected], or Link at 330-849-6755 or e-mail [email protected].

By SEAN KELLY and TOM FREEMAN

In the wake of the economicdownturn over the past twoyears, many companies revamped growth plans as a

means of cutting costs to ensuretheir continued existence.

As cost-cutting measures havetaken hold and the economy has begun to rebound, many companies are re-evaluatinggrowth opportunities. With additional liquidity available oncompanies’ balance sheets, plusslowly increasing access to credit,decisions will be made evaluatingorganic growth and growth-by-acquisition strategies.

Several passed and proposed taxlaw changes have been enactedduring the past year that will impact the landscape of growthand acquisition decisions, including:

Tax breaksA cornerstone of the 2001 and

2003 tax breaks was a reduction in the capital gain tax rates to amaximum of 15% for individuals.The tax cuts, set to expire at theend of 2010, caused a flurry ofmerger and acquisition activity in




Based in Cleveland With a Window to the WorldRiverside has been investing in and building small businesses since 1988.

To learn more about Riverside’s strategies to grow companies with $1 million -

$30 million in EBITDA, visit riversidecompany.com or contact Scott Gilbertson,

Principal, Origination at [email protected].

riversidecompany.com | phone: 216 344 1040

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Focused on investments in high value manufacturing and proprietary business services companies with transaction values from $25 - $250 million.

Helping to write success stories in the middle market for more than four decades

Our passion is partnering with management teams to build top performing businesses. That’s why we’re proud

to recognize our investment in one of Northeast Ohio’s most innovative industrial companies, .

www.morgenthaler.com

Amish MillsFor Chris Karman, chairman

of Amish Mills, surviving the recession was only half the battle.The company had to reinvent itself to survive a “dying” industry.

Karman and his brother, Ted,bought the company — thencalled Country Curios — fromowners David and Daniel Yoder in2003. Craftsmanship was never indoubt; in fact, it is the company’sbiggest selling point. It was perception (‘country’ and ‘curios’)that was thwarting growth.

The challenge was to tell its“handcrafted by Amish” story andto find the right markets for asmall player in a $50 billion furniture industry to showcase itsmade-in-Ohio talent.

“When people think of Amishfurniture, they often think of sturdybut big, chunky furniture. But‘Amish’ isn’t a style, it’s the pride in

Amish Mills has gained market share over the years by creating quality furniturethrough hand craftsmanship.

Spotlight:‘Made in Ohio’a selling pointfor local firms

Sellers: Solid team a benefit

Continued from Page S-4

hand craftsmanship,” Karman says. A name change to Amish Mills

was the first step in the company’stransformation from bit player toindustry dynamo.

Amish Mills, which sells tomore than 700 independent dealers across the U.S., expandedits line to include bedroom andoffice furniture, and sells kitchencabinets through its Amish MillsCabinetry line.

Its strong Amish craftsmanshipniche, diversified product lineand well-honed sales messagehave paid off. In three shortyears, Amish Mills has grown froma 12-employee, $800,000 company

to 90 employees, a new three-acremanufacturing facility in Millers-burg and $6 million in sales.

“We never want to lose track ofquality and our customers, sowe’re carefully managing ourgrowth,” Karman says. “We areblessed to be in Ohio where thereare so many fantastic craftsmen,who are respectful and fun —that is reflected in their work. It’swhat sets us apart. We really believe the sky is the limit.” ■

Cheryl Higley is a freelance journalistbased in Cleveland and serves as a section coordinator for Crain’s ClevelandBusiness Custom Publishing.

size range for all of 2006 (9.9x) and 2007 (10.7x), the so-calledhigh-water marks for recent M&Avalues. Further research showsthat the acquired companiesboasted a good MPG.

In addition to a good MPG, the one trait each of those trans-actions likely had in commonwas a good transaction team, including an accounting firm,

legal counsel and an investment banking firm that believed intheir story and could drive valueno matter how difficult the timeswere or how scarce money wassupposed to have been. ■

Michael F. Paparella is managing director for Candlewood Partners, LLC. Contact him at 440-264-8007 or e-mail [email protected].


By DANIEL G. BERICK and GREGORY K. GALE

Private equity investmentsin publicly traded compa-nies are nothing new. Private Investment in

Public Equity (PIPE) transactionshave been around for years, andhedge funds long have used pri-vate funds to invest in publiclytraded securities.

More recently, though, wehave been seeing traditional private equity sponsors — evensponsor groups that do not havesignificant experience with investments in public equity —find creative ways to take advantage of opportunities withpublic companies.

Many of these investment opportunities are found in publicly traded companies thatare relatively thinly traded andhave credit facilities that are indefault or are nearing maturity.Even with the thawing creditmarkets and a relatively robusthigh-yield market, many of thesecompanies do not have access todebt on attractive terms and arenot readily able to make new public offerings of equity or debt.

In addition to traditional PIPEinvestments and subordinateddebt transactions, private equitysponsors can purchase outstandingdebt or equity, which may betterposition the target public companyto raise replacement or additional

financing. We have recently seen private

equity funds provide backstopcommitments for rights offerings.In these transactions, the publiccompany distributes rights topurchase additional equity to its stockholders, and the privateequity fund commits to purchaseany equity that is not acquired by the stockholders through exer-cises of the rights.

In this way, the public companyissuer has assurance that it will be able to raise the financingeven if there is a limited or uncer-tain market for the rights being offered.

In exchange, the private equityfund can receive transaction feesand an equity stake (and a posi-tion of influence) in the target.This equity position is often either freely tradable immediatelyor subsequently registered to allow the private equity sponsorliquidity.

In an increasingly efficient marketplace for the sale of privatecompanies, investments by private equity funds in publiccompanies provide another avenue to achieve returns to limited partners. ■

Daniel G. Berick is a partner withSquire, Sanders & Dempsey. Contacthim at 216-479-8374. Gregory K. Galeis a partner with Squire, Sanders &Dempsey. Contact him at 216-479-8098.

Public marketplace ripefor private opportunities




Go for it. We’ve got your back.At Roetzel, our attorneys are like our clients - entrepreneurial, innovative and results-oriented. Just ask Al Salvatore.

To learn more, call Al directly at 216.615.4845 or visit ralaw.com/business_services.

N E W Y O R K

Our Business Services Group focuses on maximizing opportunities and minimizing risks so you can focus on your business. We partner with our clients to serve as trusted advisors and extensions of their management teams. Team members, including , ,

and , have your back.

MCM Capital PartnersWould Like To Congratulate One Of Its Founders:

A. Malachi Mixon III

On His Lifetime Achievement Award

MCM was founded in 1992, with the support, guidance, and vision of Mal Mixon, one of northeast Ohio’s premier business leaders.

MCM Capital Partners is a Cleveland, Ohio based private equity firm focused on acquiring niche manufacturers, value added distributors and specialty service companies that generate up to $75 million in annual revenues and having enterprise values of less than $50 million.

216-514-1840 | 216-514-1850 [fax]

25201 Chagrin Blvd. Suite 360 | Cleveland, OH 44122

web: www.mcmcapital.com | email: [email protected]

ABOVE, BELOW: Attendees gathered in September to network at the Great Lakes Capital Connection,hosted by ACG Cleveland, at the Rock and Roll Hall of Fame and Museum.

Outlook: Market presents valuesector,” says Stewart Kohl, co-CEOof The Riverside Company. “It’s agreat place to do business. Thefirms continue to become betterowners and help drive perfor-mance and provide valuable resources and assistance to theirportfolio companies.”

Keys to activityLocal private equity firms such as

Riverside and investment bankingfirm MelCap Partners cite severalfactors that are coming together tospark a resurgence in M&A activity:

Dry powder surplus. With closeto $500 million committed to pri-vate equity that has yet to be in-vested, the improving economy

will have firms looking for gooddeals. Riverside’s Kohl already isseeing the pipeline opening. “Weclosed 11 acquisitions in fourth-quarter 2010,” he says. “We antici-pate a bit of a pause in the firstquarter, but we expect 2011 to bea very good year for Cleveland private equity.”

Healthy deals returning.Al Melchiorre, president of MelCap Partners, says the firm hada record year in 2010 by focusingon healthy M&A transactions.

“While we continue to see activity in the distressed market,we’re seeing healthy deals startingto come back, in large part due tothe improving economy,” he says.While deals are starting to rampup, unrealistic expectations on thepart of the seller could throw ahiccup into the recovery. Accordingto the ACG-Thomson Reutersyear-end 2010 DealMakers survey,the greatest drag on M&A activitycontinues to be the seller’s unwill-ingness to sell at multiples offered.

Banks coming back in. Lendersare conservatively venturing backinto the market.

“Banks have done a good job of cleaning up their portfolio andare looking to add assets to thebalance sheet, but the amount ofleverage is still conservative,” Melchiorre says. “You may be ableto borrow a little less than you’dlike and pay a bit more than you’dlike, but debt is available for gooddeals,” Kohl adds.

Clearer tax picture. Some 2010activity was spurred by the uncer-tainty of whether the federal gov-ernment would act on tax breaks

that were set to expire. The tax compromise passed in December clarifies the picture, andshould help stimulate additionalactivity, Melchiorre says.

Middle market popularity

According to ACG’s Fine, theoverwhelming majority (60%) ofprivate equity deals completed inthe last two years were in the middle market, with 85% of thedeals valued at under $1 billion.The middle market, he says, is abreeding ground for smart, entre-preneurial companies.

Kohl agrees: “High-quality companies that performed wellthrough the downturn are ingrowing industries and have somecompetitive advantage that thebusiness will continue to growand perform are prime candidatesfor deals.”

Middle-market private equity isattractive, particularly in today’seconomic climate, to both sellersand buyers.

Private equity firms can leveragetheir size to benefit the individualcompanies within their portfolio— from purchasing to consultingand access to capital that mightotherwise be out of reach for acompany on its own.

“Companies that are owned byprivate equity have an advantage,”Kohl says. “Of the 72 companieswe own, they have access to resources that similar companiesof their size would never have access to — that is significant.”

Whether a seller is looking toexit the business or just take it tothe next level, private equity canmake it possible. More private equity firms are holding onto assets longer, according to the ACG-Reuters survey. That requiresa different investment and man-agement strategy and shows thatthe firms aren’t in the deal for aquick flip on the investment.

“Private equity provides non-traditional, non-banking capitalresources that can help companiesstimulate growth, which creates jobsand other opportunities in North-east Ohio,” Melchiorre says. ■

Cheryl Higley is a freelance journalistbased in Cleveland and serves as a section coordinator for Crain’s ClevelandBusiness Custom Publishing.





When It Gets Down to Business…Solon Gets It!The City of Solon welcomes these new businesses:BIZ Quality Sales

Divalicious Boutique

Fastenal

Greenes Fence Co. Inc.

Pile Dynamics, Inc. / GRL Engineers, Inc.

Wrap-Tite, Inc.

And thanks these real estate professionals for bringing new business to Solon: Matt Beesley - CRESCO Real Estate

Simon Caplan - CRESCO Real Estate

Bob Garber - CRESCO Real Estate

Joseph Greenberg - Greenberg Real Estate Advisors

Eliot Kijewski - CRESCO Real Estate

David Stecker - Greenberg Real Estate Advisors

Solon’s Got It!Prime industrial, office and retail sites at www.solonohio.orgCity of Solon • 34200 Bainbridge Road • Solon, Ohio 44139 • 440.337.1313 Peggy Weil Dorfman, Economic Development Manager • [email protected]

The Solon Select is a distinguished group of more than 800 businesses that have chosen to locate in the City of Solon.

Squire, Sanders & Dempsey corporate securities lawyers have the knowledge and experiencenecessary to help our clients reach their goals. In fact, The Best Lawyers in America namedDan Berick 2011 Cleveland Securities Lawyer of the Year.

An Experienced Corporate Securities Team

Squire, Sanders & Dempsey refers to an international legal practice which operates worldwide through a number of separate legal entities.Please visit www.ssd.com for more information.

ACG Cleveland 2010-2011 Board of DirectorsPRESIDENTTheodore WagnerLibman, Goldstine, Kopperman & Wolf

PRESIDENT ELECTRandy A. MarkeyCapital Acceleration Partners

IMMEDIATE PAST PRESIDENTPatrick GallagherFahlgren Mortine

EXECUTIVE VICE PRESIDENTSBrandDavid HadleySegmint

ResourcesJeffrey LeonardThe Leonard Legal Group Co.

ProgrammingSean McCauleyPNC Business Credit

TreasurerJoseph F. MaslowskiRoetzel & Andress

ASSISTANT TREASURERScot R. SmileyScott R. Smiley, CPA

SECRETARYM. Joan McCarthyMJM Services

VICE PRESIDENTSACG CupEric M. KuhenMarsh

Thomas FreemanGrant Thornton

Douglas K. WingetFirst Merit

Deal Maker AwardsMurad A. BegLinsalata Capital Partners

Economic DevelopmentMoses R. JhiradPNC Bank

Donald W. MajcherOhio Aerospace Institute

Thomas ZuckerEdgePoint Capital

Golf EventRudy BentlageChase Business Credit

Great Lakes Capital Connection

Al MelchiorreMelCap Partners

James M. HillBenesch, Friedlander,Coplan & Aronoff

Timothy G. HealyLinsalata Capital Partners

MembershipMartin S. GatesCalfee, Halter & Griswold

James P. MarraBlue Point Capital Partners

Henry E. SiebertPorter, Wright, Morris & Arthur

NominationsTrent MeteerTriState Capital Bank

Public RelationsBrad KostkaRoop & Co.

Programs — RegularJohn Saada, Jr.Jones Day

Programs — SpecialScott SeelbachPrimus Capital Funds

Karen TuletaMorgenthaler

Women in TransactionsDenise CarkhuffJones Day

DIRECTORS AT LARGEGuy A. FabePricewaterhouseCoopers

Wendy S. NealInternational Commodity Alliance

Social media partof new age of deal originationBy ROBERT KINGSBURY

As I was responding toposts on my Facebookpage last week, I beganto contemplate the

impact social media have had onour lives. Become a fan, like us,follow me, friend me, tweets,posts, tagging, news feeds, statusupdates … it seems that’s all kidsare worried about these days.Then I balked at my thoughtprocess … kids?

Social media (blogging, podcasting, online video, social networking and wikis) are nolonger just for teenagers and college students. More than 112million users on Facebook are between the ages of 25 and 64,and LinkedInhas grown tomore than 80million profes-sional profiles(35 million in the U.S.) indi-cating social media have penetrated all aspectsof the business world and aretransforming the ways in whichwe communicate.

The Center for Marketing Research at the University ofMassachusetts Dartmouth’s mostrecent study of the Inc. 500, a listof the fastest-growing privately-held companies in the U.S.,found that most businesses arebeginning to recognize the importance of leveraging socialmedia, with 91% reporting theincorporation of at least one socialmedia service or tool in 2009. Respondents believe social mediaprovide a competitive advantage.

Below are five compelling reasons to consider using socialmedia tools to promote your firm:

■ Find your audience. Peopleare going to find you where theyare, not where you want them tobe. Your target audience is con-stantly communicating on socialmedia sites. Find and identifywhat sites they frequent and develop a social media strategybased upon your research.

■ Brand recognition. Using social media allows your companyto reach a broad audience of poten-tial investors and acquisition targets. It augments effective andefficient communication of yourbrand, which is invaluable fordeal flow, fundraising, recruitingand investing.

■ Search engine optimization.Search engines like Google andMicrosoft Bing are increasinglyusing information from social mediasites to influence the rankings insearch results. Thus, establishinga presence on social media siteswill enhance your visibility.

■ Brand management. Havinga social media presence allowsyou to better understand whatcurrent and potential clients aresaying about your firm. Throughactive social media monitoring,you have the opportunity to address negative comments andcorrect false or inaccurate infor-mation about your brand.

■ Niche marketing. Social media allow you to cost-effectivelyreach specific subsets of individuals

based on theirpersonal prefer-ences and interests,which allows youto create uniquesocial media pro-files and strategiesbased on your

target audience. MCM Capital Partners

launched a comprehensive socialmedia campaign about sixmonths ago. Each communica-tion method employed and itscontent is viewed through thelens of “how does this help ourfirm?” and “how does this im-prove the likelihood our targetedaudience will find us?”

Private equity investing is a relationship business encompassinga relatively small number of LPs,entrepreneurs, executives and intermediaries. As more personalrelationships move online, socialmedia become a very cost-effec-tive way to strengthen a firm’scorporate relationships and increase deal flow.

Successful deal origination, webelieve, will no longer be restrictedto attending industry or networkingconferences, following up onpublished reports, marketingmeetings with intermediaries,mailings, or cold-call campaigns.Going forward, successful origina-tion will also be measured bynumber of visits, impressions,comments, connections, subscribes, likes, shares and re-tweets. Is your firm ready? ■

Robert Kingsbury is a vice president atMCM Capital Partners. Contact him at216-514-1843 or e-mail [email protected].

Your target audienceis constantly communicating onsocial media sites.



REAL ESTATEContact: Genny DonleyPhone: (216) 771-5172Fax: (216) 694-4264E-mail: [email protected]

Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card

AUCTION

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* 62 Lots in the Colonies at Martin’s Run

* Additional Undeveloped Land in 4 Parcels

Pre-Reg./Information Open House,Tues., Jan. 25th, 11am-2pm

SELLING REAL ESTATE? CALL IMMEDIATELY!1-877-BID-ROSEN 1-877-243-7673

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Upcoming Sales: 2/10 12.7 Ac. Brimfield, OH,2/24 House and 18.64 Ac., plus more!

GO TO BIDROSEN.COM FOR TERMS, CONDITIONS AND DIRECTIONS

Hollywood Movie Being made in ClevelandWriter/Director with “A list” script credits is seeking investors to fund a“G” rated film to be shot in Cleveland this summer.

Already in Place: Proven Writer/Director, Experienced Hollywood Assoc.Producer, Discussions with Distributor for Theatrical Release, Script, Ac-tors, State of Ohio Tax incentives, Site Permits, cameras, cranes, SpecialEffects staff and equipment.

Low Cleveland cost film for lucrative “G” market. Offers high return oninvestment – Full or percentage of film investments available.

For Details Contact Keith Kornell440 951-166 [email protected]

TENNIS CLUB INVESTMENT OPPORTUNITY - CHAGRIN FALLS AREA

For further information, please call:R. M. “Mac” Biggar, Jr., SIOR, CCIM

216-839-2020 or [email protected]

Rare opportunity to own an operating first rate Tennis, Swimming Club with an Active Membership!

• 10 Tennis Courts (5 Indoor)• Indoor/Outdoor Pool• 4 Paddle Tennis Courts• 13,000 SF Clubhouse on 10 Acres

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Newer A1, 18800 sq ft, 60+parking 440-333-0000x777

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Are you the best at what you do? Why not be in the best building in Cleveland too?www.independencecorporatecenter.com

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INDEPENDENCE CORPORATE CENTER7100 E. Pleasant Valley Rd.

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SUBURBAN MEDICALCENTER

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CLASSIFIED

BUSINESS SERVICES

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RADIO ADVERTISING SALESAn Account Executive position is open at WCLV, Cleveland’sClassical Music Station. Commission-based compensation.Candidate must have outside sales experience; radio salesexperience strongly preferred. Knowledge of classical music a plus.Send resume to [email protected] or to WCLV, Idea Center, 1375Euclid Ave. Cleveland, 44115. Equal Opportunity Employer.

EXECUTIVECATERERS

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FLYNNENVIRONMENTAL

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BUSINESS OPPORTUNITY – NE OHIOWell established, SCRAP METAL BUSINESS

Owner retiring after 20+ years.Serious Inquiries Only. Reply in confidence to:

[email protected]

Stys Inc, since 1962!Fork Lift need extensions?

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Liquor LicenseFor Sale

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CrainsCleveland.com/Daily

For instance, Optima Real Estateof Miami Beach bought Penton MediaCenter, 1300 E. Ninth St., in down-town Cleveland for $46.5 millionlast August. Meanwhile, HilltopPlaza, the grocery-anchored shop-ping center at 5100 Wilson MillsRoad in Richmond Heights, sold toFlorida-based Richmond CenterLLC in November for $27 million.

“We saw market deals resumelast year,” Mr. Pacella said of thePenton and Hilltop sales.

Market deals are arms-lengthtransactions between willing buyersand sellers. Experts consider marketdeals better indicators of propertyvalues than so-called distressedsales where an owner must shed aproperty or a lender is unloading it.

In 2009, market sales were scarceas distressed sales dominated theday. However, market deals weresprinkled among distressed sales in2010, with Mr. Pacella and othersexpecting to see more of the formerthis year.

The best example of last year’sdistressed sales was the $25 millionan affiliate of Real Estate Resourcesof America Inc. of Philadelphia paidfor the Bingham Apartments buildingat 1278 W. Ninth St. in downtownCleveland. The deal came after the340-unit apartment slid into defaultunder the prior owner, Chicago-baseddeveloper Burnside Construction.

REITs also became factors in the commercial market again, Mr.Pacella said. Philadelphia-basedSTAG Capital bought the Chrysler

warehouse at 9777 Mopar Drive inStreetsboro for $10.9 million lastOctober and Phillips Edison Co. ofCincinnati last month purchasedParma’s Snow View Plaza, 1765Snow Road, for $12 million as itformed a REIT.

However, the pace of deals remainsfar below what it was before the recession and the real estate creditfreeze shut business down. As recently as 2007, there were 175deals with a total value of $1.3 billion in Northeast Ohio.

Mr. Pacella estimates there maybe $400 million of such sales in 2011,based on the properties already onthe market and a continued marchtoward a better economy and morenormal underwriting standards.

However, the key factor to themarket resuming a shred of normality depends on job creation.Mr. Pacella said the region willneed more jobs to boost demandfor real estate and push up rents to attract capital from outside thearea. ■

Sales: ‘Market,’ or non-distressed, sales better indicate property valuecontinued from PAGE 3


Al Ratner remains oneengaged octogenarian■ Albert Ratner, co-chairman of Cleveland-based Forest City Enterprises Inc., says he isoptimistic about the future of Northeast

Ohio, in part because therecession has so chal-lenged the rest of thecountry that it gives theregion a chance to regainits footing.

“Without the recession,we’d have been wipedout. A lot of people have problems now,” Mr. Ratner told the Interna-

tional Council of Shopping Centers NextGeneration group last Thursday, Jan. 20, inCleveland.

Mr. Ratner said he’s enthusiastic aboutNortheast Ohio business efforts to improvethe regional education system, a drive tofight obesity to pare health care costs and efforts to boost lagging foreign immigrationin the region.

Mr. Ratner said the new Republican stateleadership looks ready to reform state lawson education — he disparaged Ohio requiringteaching certification for college grads toteach in public schools — and he expectsGov. John Kasich and House SpeakerWilliam Batchelder to remake unproductiveeducation laws in short order.

At 83, Mr. Ratner retains his sharp wit. Referring to Cuyahoga County’s decision toput the new medical merchandise mart andconvention center at the current Clevelandconvention site rather than near Forest

City’s Tower City Center, he said, “We canbuild a city hall for Las Vegas but can’t pricea convention center.”

Being a CEO is “not a good job today,” Mr.Ratner said, as far-flung operations stretchchief executives thin. As a result, efforts tochange Cleveland need to be at a grass-rootslevel.

“Get off your duffs,” Mr. Ratner told thetrade group focused on young people infields associated with the shopping centerbusiness. — Stan Bullard

A textbook case of underestimating■ The number of college bookstores offeringtextbook rental programs last fall was muchhigher than originally expected, accordingto research from the Oberlin-based trade asso-ciation representing collegiate book retailers.

The National Association of CollegeStores reports that about 2,200 collegestores offered textbook rental programs of some kind last fall. The group originally estimated, based on anecdotal evidence,that the number was around 1,500.

During the fall of 2009, only about 300stores offered such programs. Textbookrental programs allow college students torent course materials for 33% to 55% of thecost of buying textbooks outright, accordingto the trade association.

Many college bookstores in NortheastOhio offer such programs. Among them arethose at Cleveland State University, KentState University, Lorain County CommunityCollege, University of Akron, Baldwin-Wallace College and Oberlin College.

In addition, the trade association saidtwo-thirds of the bookstores surveyedplanned to expand the number of titles offered for rent over the next year. Last fall,many of the programs allowed students toonly rent books for entry-level courses. —Timothy Magaw

U of Akron’s new Ph.D. isn’t easily mimicked■ Students involved with the University ofAkron’s doctoral degree in integrated bioscience now can focus on biomimicry —a burgeoning field that studies how nature’sproven processes can be applied to the chal-lenges of science and industry.

Academics involved with the program believe it to be the first of its kind in thecountry, and say those who graduate withthe Ph.D. and focus their research on bio-mimicry can be of great value to the busi-ness community.

“The people would come versed in techniques and paradigm of biomimicry as a source of innovation,” said PeterNiewiarowski, a professor of biology at theUniversity of Akron involved with the degreeprogram.

Building on millennia of nature’s own innovations, the idea behind biomimicry isto look to nature to solve problems efficientlyand effectively. For instance, scientists havestudied gecko feet to design new kinds ofadhesives and the bumps on whale fins toproduce more efficient wind turbines and fans.

“(Biomimicry) is a thread that runsthrough a lot of research programs,” Dr.Niewiarowski said. — Timothy Magaw

WHAT’S NEW

COMPANY: Aerodyne, Chagrin FallsPRODUCT: GPC Dust Collector

Aerodyne says its new cyclone dust collectoris designed for customers with limited floorspace or overhead clearance.

Unlike conventional cyclones, the GPCDust Collector “uses an innovative ground-plate design that increases efficiency in a morecompact unit,” Aerodyne says. The product’sdesign provides a high-efficiency, compactunit that is available in horizontal or verticalconfigurations.

Aerodyne says the GPC Dust Collector reduces particulate emissions at processingplants, reclaims useful material from air/gaswaste streams and serves as a pre-filter infront of baghouse filters.

A conventional cyclone dust collector con-sists of a tangential inlet and a long, taperedbody, according to Aerodyne. This design relies on gravitational force to direct the dirtygas stream downward. As the gas streambecomes constrained in the narrow end ofthe cyclone body, a phenomenon known as“vortex reversal” occurs, in which a sec-ondary inner vortex is generated and movesupward through the center of the dust collectorand is exhausted from the top.

For more, visit www.AerodyneUS.com.

Send new product information to managingeditor Scott Suttell at [email protected].

REPORTERS’ NOTEBOOKBEHIND THE NEWS WITH CRAIN’S WRITERS

THEINSIDER

THEWEEK JANUARY 17 — 23

The big story: The latest figures for invest-ment in health care startup companies acrossthe Midwest show 2010 was a better year for venture investment in Cleveland and Ohio than2009, though still not what it was before the recession took hold. The Midwest Health CareVenture Investment Report produced by Bio-Enterprise Corp. indicated that $135.1 millionwas invested in 33 companies in the Clevelandarea last year. The dollar figure is double the$66.3 million in investment in 21 health carestartups that BioEnterprise reported for 2009.However, it was down 17% from investment of$163.5 million in 31 companies in 2008, and wasoff 44% from investment of $241.8 million in 28companies in 2007. (See related editorial, Page 8.)

Material event: Brush Engineered MaterialsInc. soon will be no more. The producer of beryl-lium and advanced materials that for most of last

century was known as BrushWellman will change its nameonce again — this time toMaterion Corp. — and willunify all its businesses underthe new name effectiveMarch 8. The company’s

common stock will continueto trade on the New York Stock Exchange, butunder the symbol MTRN. Concurrent with thename change, the company also will unveil anew web site and brand identity.

At least the price is right: Year-end homesales figures from the Ohio Association of Real-tors show 2010 was an even more challengingyear than 2009, though prices statewide pushedup slightly. The trade group said 100,980 homessold statewide in 2010, a decline of 4% from105,237 homes sold in 2009. The average saleprice of the homes, though, rose 2.6% to$132,676 last year from $129,281 in 2009. Resultsin Northeast Ohio were somewhat better. Inwhat the association calls the Northeast OhioReal Estate Exchange, there were 31,649 homessold in 2010, down only 1.9% from 32,262 in2009. The average sale price in Northeast Ohioshot up 6%, to $126,536 from $119,343.

Howdy, partner: Case Western Reserve Uni-versity and China National Offshore Oil Corp.signed an agreement to form a bi-national entity toresearch new energy efficiency techniques andmethods of lowering greenhouse gas emissions.The new entity is one of two new EcoPartner-ship programs between the United States and China that the U.S. State Departmentannounced last week. The new partnership willuse the strengths of both Case Western Reserveand China National Offshore Oil to develop research, technologies and green jobs.

Out of the woods: Robinson Memorial Hos-pital in Ravenna proposed that Portage Countytransfer operational control of the Woodlands atRobinson — a 99-bed county-owned nursinghome — to the hospital, which would retain allincome generated by the facility. The hospitalproposed that the county lease the Woodlandsto the hospital for a five-year term with renewalprovisions. The annual lease payment to thecounty would equal the debt payments on thenursing home, which are about $570,000 per year.

Branch managers: KeyBank plans to addfive branches and about 30 branch jobs inNortheast Ohio during the next 15 months, whilealso relocating three Northeast Ohio branchesinto new buildings this year. When completed,Key will have 122 branches in Northeast Ohio,up from 105 branches four years ago.

To keep up with local business news as it happens, visit www.CrainsCleveland.com.


Excerpts from recent blog entries on CrainsCleveland.com.

BEST OF THE BLOGS

Ohio stands to gain fromIllinois’ taxing problems■ Big tax hikes in Illinois are creating opportunities for other states, includingOhio, to grab the mantle of business-friendlydestinations in the Midwest.

So argued Wall Street Journal columnistKimberly A. Strassel, who wrote that Illinoisis “drifting further into the abyss of tax andspend” while states such as Wisconsin andOhio try fresher approaches. (Illinois islevying a 50% increase in corporate incometaxes.)

By the end of this month, Ms. Strasselwrote, “29 GOP governors will sit in office,17 of them newly elected on promises toend out-of-control spending and grow jobs.In Ohio, John Kasich’s Republican legisla-ture has already introduced legislation tokill the state death tax. Illinois just reim-posed its own.”

Indiana GOP Gov. Mitch Danielstold Ms. Strassel that the combinedforce of reformers in Wisconsin,Ohio and Michigan is creating a “divide that could operate long-termin the Midwest’s favor.”

Give him some spaceto fulfill his dreams■ There’s probably a little bit of R.J.Musat in all of us.

Mr. Musat, a 56-year-old computer systemsspecialist at Cuyahoga Community College,was among the people featured in an ABCNews story about the prospects of a humanmission to Mars.

Last October, the Journal of Cosmologyconcluded that such a mission could happenwithin 20 years, though the complexity, riskand cost of getting astronauts there makes

it exceedingly difficult to do.“So a few scientists proposed an uncon-

ventional idea: send astronauts — but simplifythe flight by making it a one-way trip,” ABCNews reported. “The astronauts would besettlers as well as explorers. A return trip ismassively more difficult than the voyagethere because every pound of fuel and suppliesto get home would have to come from Earth.”

Editors of the Journal of Cosmology thenreceived more than 500 e-mails from peoplearound the world offering to be the firstMars colonists. One of those people was Mr.Musat. “It’s going to happen some way oranother sometime,” he told ABC News. “Itmay as well happen now. I don’t see anysense in delaying it.”

Cleveland should be happyabout this magazine ranking■ Cleveland is very gay.

So said The Advocate, which rankedCleveland as the 12th most gay-friendly

city in America.It’s a “completely unsci-

entific — but still strangelyaccurate” ranking basedon factors such as thenumber of gay bars, en-

tries in YellowPages.com with“gay” in the business name or

description, and openly gayelected officials, the maga-zine said. It declared Cleveland“is about to become a major

gay stomping ground.”The city won the bid to host the

2014 Gay Games. The Advocate said “thingsare changing quickly” for gays in Cleveland.“The city council added protections fortransgender people to Cleveland’s antidis-crimination laws in housing and employ-ment, and there’s a country line-dancinggroup, the Rainbow Wranglers, which meetsevery Thursday at the Mean Bull.”

Ratner


colleges set to wield scalpels inside · susan jaranowski, 313-446-6024 ([email protected])...

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