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services to retailers and other businesses. For the most part, it sells services through 500 independent companies and individuals.
An urge to merge FTS makes a small amount of money whenever someone uses a payment card to buy a product through a merchant in the company’s portfolio. After passing along payments to other businesses involved in the payment process and taking care of its own expenses, FTS earned about $10 million before interest, taxes, depreciation and amortization in 2010, Mr. Shanahan said. He estimates that earnings grew by nearly 40% in 2011, noting that he did not yet have a dollar figure for last year. The company keeps expenses down by keeping its staff small, though Mr. Shanahan said the Cleveland office should grow as the company makes acquisitions. FTS also has offices in Detroit, Chicago and Pittsburgh, where Brian Shanahan works. Over the next few months, FTS plans to acquire two “good size” resellers of payment processing services in Texas and Florida. It also aims to buy a company in New
Jersey with a system that would allow FTS merchants to take payments without a credit card terminal, which would allow them to take online payments. He would not identify those three companies.
The means to an end The company’s appetite for acquisitions increased in September 2010, when FTS received a $50 million equity investment from FTV Capital, which has offices in San Francisco and New York. The private equity firm owns a majority stake in the company. Since then, FTS has acquired another reseller, Efficient Payment Processing LLC of Chicago, which brought about 200 merchants into the FTS portfolio last August. It also has bought the merchant portfolios of five other independent sales organizations, which remain separate companies but now funnel their transactions through FTS, Mr. Shanahan said. The Highland Hills company spent about $20 million on those six transactions, he said, declining to be more specific. The investment from FTV Capital, which invests in companies in the payment industry, has made it easier for FTS to do acquisitions,
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with these skills to take our place,” said Andrew Tanner, Kennametal’s director of advanced engineering for the Americas. Auburn and Kennametal have come up with a program that combines 350 hours of training at the career center with 320 hours of training at Kennametal’s Solon plant. Students can finish the program in less than a year and, at the end of it, will have the skills they need to work at Kennametal or nearly any other advanced manufacturing plant, Mr. Tanner said. The program costs $4,700 for adults, but high school students are eligible to take it for free if they attend one of the 11 area school districts affiliated with the career center, said Auburn superintendent Margaret Lynch. Ms. Lynch said her school could not have offered the program alone. For one thing, it could not afford to buy the expensive machines required to train students fully, but which Kennametal already uses in the production of the metalworking tools and accessories that the company makes. Her challenge now is to find students. The career center in 2009 shut down a program teaching similar skills, Ms. Lynch said, because it could not attract students. Ms. Lynch has not changed that reality quite yet — only four students are enrolled in the Kennametal program, which began Jan. 23 — but she has big plans.
Meet the parents In addition to equipment and the time its people will spend training students, Kennametal is donating $10,000 to Auburn to put toward scholarships for the new program. Meanwhile, Ms. Lynch said she’s marketing it heavily, beginning with
a mailer going out to 200,000 households. She’s also taking a page from the recruitment playbook of many successful college football coaches. Instead of going after just students, Ms. Lynch often is recruiting them via their parents. That’s because, as a survey financed by Kennametal found, parents are the ones often steering their children away from manufacturing careers. “We have to change our recruiting strategies,” Ms. Lynch said. “Recruitment is now a family affair. You have to get the parents’ support.” The program does not guarantee students a job at Kennametal, though Mr. Tanner said he’s always looking for new qualified employees and is sponsoring the program in order to get new hires. However, it does promise students they’ll be well prepared to work in advanced machining, or even be prepared for an engineering program.
‘It has to work’ Kennametal’s shop is wall-to-wall with advanced machining cells, some costing more than $500,000. Students will be trained on some of the most advanced equipment available, Mr. Tanner said. Will it work? It’s too soon to say how many students the program ultimately will attract, but Mr. Tanner said it had better work, for the sake of Kennametal and other area manufacturers. Demand for employees only is rising, as more companies bring foreign work back home and the boom in natural gas drilling in the United States keeps plants such as Kennametal’s busier than ever. Mr. Tanner already is working his 300 employees on three shifts — and he needs more of them. “It has to work,” he said. “There’s no other option.” ■
and not just because of the $50 million, Mr. Shanahan said. The deal also gave FTS credibility, which has helped the company build trust with potential partners, he said. “All the outsiders know, to get that deal done, you’ve gone through major due diligence,” he said. Brian Shanahan, who has founded four other financial services companies, started FTS with a few other payment card industry executives in 2006. The company grew in Northeast Ohio because its original president lived here. Today, FTS has about 25,000 merchants in its portfolio, Jeff Shanahan said. That number would put the company on the border between the smaller and midsize independent sales organizations that are registered to do business directly with banks, said Tom Goldsmith, director of communications and public relations for the Electronic Transactions Association of Washington, D.C. FTS will rise through the ranks fairly quickly if it continues adding 1,000 merchants a month, Mr. Goldsmith said. “A thousand accounts a month from a base of 25,000 is a pretty good growth rate, even for our industry,” he said. ■
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BRIGHT SPOTS Bright Spots is a periodic feature in Crain’s Cleveland Business highlighting positive business developments. Send information for inclusion to managing editor Scott Suttell at ssuttell@ crain.com. ■ South University, a for-profit college with campuses primarily in the southern part of the country, plans to open a 40,000-square-foot campus in Warrensville Heights. Classes at the college, which will be located on Richmond Road near U.S. Route 422, are expected to begin April 7. The for-profit college will offer degrees in criminal justice, paralegal studies, legal studies, business administration and other fields. South University has several campuses across the country, including sites in Austin, Texas; Richmond, Va.; Montgomery, Ala.; and Novi, Mich. Education Management Corp. in Pittsburgh, the college’s parent company, also runs Brown Mackie College, which has campuses in Akron and North Canton. ■ The Chesler Group in Cleveland
recently won an international award from Wallpaper* magazine in London for the much-lauded renovation of the headquarters in Novelty of ASM International, a nonprofit involved in materials science. Chesler Group, a firm that specializes in historic renovations, received the Best Architectural Renovation award in the magazine’s 2012 Design Awards. The renovation encompassed interior and exterior improvements that included new mechanical, electrical and plumbing systems, ADAcompliant restrooms and egress, window restoration and refurbishment of the headquarters’ exterior stainless steel solar shades, repair of steel columns and concrete structural elements, and a vegetative green roof. The work was done in compliance with the U.S. Department of the Interior’s Standards for Rehabilitation of historic buildings. The headquarters, known best for its geodesic dome, was listed on the National Register of Historic Places in October 2009. Renovation construction by Chesler Construction began in April 2010 and was completed in June 2011.