Crain's Cleveland Business

SPORTS4CLE Sports show focused on Cleveland finds its voice after Les Levine’s death last year.

EDUCATION: Most colleges plan return to in-person offerings this spring. PAGE 4

PAGE 3 CRAINSCLEVELAND.COM I JANUARY 17, 2022

Each new year, Crain’s Cleveland Business recognizes the people behind the biggest stories of the year that was. You remember the headlines — now get a closer look at the 16 movers and shakers who made them. PAGE 8

‘She’s a force to be reckoned with’

For developer Gina Merritt, a blighted building in Hough is an open door

BY MICHELLE JARBOE

On Dec. 6, Cleveland City Council agreed to allocate $8 million in federal stimulus money to rehabilitating a vacant housing tower in Hough.

That’s the largest sum pledged to any real estate project, so far, from Cleveland’s $511.7 million pool of American Rescue Plan Act funds.

It’s also the most consequential birthday gift that Gina Merritt has ever received.

Merritt, who turned 55 that day, is the lead developer and 51% owner of the project. The founder of Northern Real Estate Urban Ventures LLC, based in Washington, D.C., she has spent much of her career working in development and affordable-housing finance.

But managing other people’s deals left her struggling to build her own balance sheet. For Merritt, the boarded-up building at 9410 Hough Ave. is an open door — an opportunity to bolster both a community and her company.

See MERRITT on Page 49

BY KIM PALMER

After 50 years of working together, the co-founders of Nottingham Spirk — John Nottingham and John Spirk — still share an office.

Outside, in the hallway of the renovated First Church of Christ, Scientist, building that overlooks the campus of Case Western Reserve University, the walls are lined with plaques embossed with the trademark number and description of the company’s 1,300ish patents.

Those plaques, as Nottingham tells it, represent the company’s 95% patent-to-commercialization rate.

“The national average is 5%,” he quickly adds.

The sprawling, 60,000-squarefoot domed building, retrofitted with offices and a state-of-the-art engineering lab, is quite an upgrade for the duo, who graduated Gina Merritt stands outside 9410 Hough Ave., a long-vacant apartment building on Cleveland’s East Side. She’s leading a joint venture that plans to revive the property as workforce housing. | MICHELLE JARBOE/CRAIN’S CLEVELAND BUSINESS

VOL. 43, NO. 2lCOPYRIGHT 2022 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED

NEWSPAPER

Nottingham Spirk marks 50 years with new direction

THE

LAND SCAPE

See 50 YEARS on Page 48

A CRAIN’S CLEVELAND PODCAST

HEALTHCARE IS ABOUT MORE THAN MEDICINE. IT’S ABOUT HOPE. The MetroHealth System is redefining healthcare by going beyond medical treatment to improve the foundations of community health and well-being: access to affordable housing, a cleaner environment, economic opportunity and access to fresh food, convenient transportation, legal help and other services. That’s why we’re devoted to hope, health, and humanity. Find out more at metrohealth.org.

SPORTS BUSINESS

‘Sports4CLE’ finds its voice — and its audience Les Levine’s impact is still felt at Classic Teleproductions nearly a year after his death

BY JOE SCALZO

Around 4:30 p.m. on Wednesday, Jan. 12, as a pre-taped segment rolled on the nearby TVs, David Bacon stepped away from the “Sports4CLE” broadcast desk, walked into the Classic Teleproductions break room in Twinsburg and started talking about permanently replacing one of Cleveland’s most beloved broadcasters, Les Levine.

Ninety seconds later, he started a sentence with “Everyone was pretty receptive …” then was forced to stop.

He paused for 10 seconds and gathered himself.

“Uh, toward me taking over,” he said, fighting back tears. “Even his kids. So …”

He coughed, paused, then started again.

“So that did mean a lot.”

Levine’s show, “More Sports & Les Levine,” began broadcasting on cable TV in 1996. In August of 2013, Classic Teleproductions started producing the show, first for Time Warner Cable and then Spectrum Cable before moving it online in 2019. It was averaging 250,000 unique views a month on YouTube and cleveland.com when Levine died at age 74 on Feb. 3, 2021.

Bacon had been filling in for Levine as he battled Parkinson’s disease and diabetes, but he said he still wasn’t prepared for his death, which he called “pretty sudden.”

“I was stunned,” he said. “About 15 minutes before I was getting ready to go on the show, they said, ‘Les isn’t doing well.’”

The show’s producers had already planned on tweaking the show when Levine returned, moving from a radio-on-TV format to one more digital-friendly, with more (and shorter) segments that viewers could consume either live or through online clips.

But when Levine died, they weren’t sure whether they should continue the show or move on.

“There was a lot of stuff on Facebook from people who wanted us to keep the show going, but I was like, ‘There’s no way in hell; there was only one Les Levine,’” said Classic Teleproductions GM Mike Bacon, David’s brother. “I love my brother, but his background is very different.

“So we looked at it and asked ourselves, ‘How can we continue this?’”

They kept circling back to a 2019 Pew Research study that examined 31 TV markets (including Cleveland) and found that more than one-third of viewers felt local sportscasts were neither important nor interesting.

Cleveland broadcasts only had a few minutes to devote to sports news, and while there were several sports talk-radio outlets, there was no regular broadcast providing in-depth sports news with a Cleveland focus.

So the Bacons decided to move ahead with a daily, one-hour show modeled after ESPN’s “First Take” or FS1’s “Undisputed,” providing more depth and analysis than fans would find on local newscasts. Bacon, a former reporter for Channels 19 and 43 and a longtime Cleveland broadcaster, became the permanent host. Mike Bacon argued in favor of a 4 p.m. broadcast time, since it’s an unpro-

David Bacon has hosted Sports4CLE for nearly a year, taking over for legendary Cleveland broadcaster Les Levine, who died in February of 2021. | CLASSIC TELEPRODUCTIONS

And it took off. In 10 months, “Sports4CLE” has already surpassed 10 million unique views, including a record 1.59 million between Oct. 18 and Nov. 24. The show has basically quadrupled Levine’s “More Sports” audience, with about 20% watching live and the rest later watching segments online.

“If you had told me last year that we’d get a million unique views per month, I’d be like, ‘Really?’” David Bacon said. “I am surprised about that.”

Les Levine’s impact — and his bobblehead — can still be seen at Classic Teleproductions nearly a year after his death. The company began producing Sports4CLE in March of 2021, with David Bacon as the full-time host. | JOE SCALZO/CRAIN’S CLEVELAND BUSINESS

ductive time for office workers who are often just killing time online until 5 p.m.

“I see it around here this time of day — we’re just looking to go home,” he said.

Once they had the format and the start time, they still needed a name.

(One of the early leaders was “Clickbait Sports.”) Two weeks before the March 15 premiere, cleveland.com editor Chris Quinn suggested “Sports4CLE,” which works on its own but is also a nod to the 4 p.m. start.

“We ran with it,” Mike Bacon said.

reason” on his show. Because they don’t have access to highlights, the show isn’t as visually interesting as, say, “SportsCenter.” But the producers do what they can, mixing photos with tweets and available footage from press conferences or national shows.

The show has a strong connection to cleveland.com, which gives “Sports4CLE” carte blanche to use its content — and their reporters — on the air, while helping with its promotion. But “Sports4CLE’s” producers want to expand their guest list beyond lo“WE WANT AS MANY DIFFERENT mainstays to inPERSPECTIVES ABOUT WHAT’S GOING cal clude more national perspectives on ON AND THEN LET PEOPLE DECIDE. Cleveland sports and WHO DO YOU AGREE WITH? WHO DON’T more younger voices.

(To the latter end, YOU AGREE WITH? IT’S OK NOT TO WEWS’ Camryn JusAGREE WITH ME. I EXPECT THAT. I LIKE tice, 92.3’s Mac Robinson and FOX THAT.” Sports’ John Fanta are — David Bacon frequent guests.)

And while “SportsWhen asked where he’d like to see 4CLE” devotes much of its time to the the show in a year, he said, “You Browns and the resurgent Cavs, it know what? I want to maintain it, first also makes time for Ohio colleges of all. We’ve done it once. Let’s see if and other topics. we can sustain it. That was the beauty “We kind of want to be where peoof Les. He was on the air since the ple come at 4 o’clock to get informa’70s. He had a sustained audience. tion and intelligent conversation on Let’s see how we sustain it.”

Cleveland sports,” David Bacon said.

Bacon’s Jan. 12 show featured “We want as many different perspecseparate Browns-heavy Zoom inter- tives about what’s going on and then views with Associated Press reporter let people decide. Who do you agree Tom Withers and WTAM 1100/106.9 with? Who don’t you agree with? It’s FM radio host Dennis Manoloff, a OK not to agree with me. I expect former Plain Dealer reporter. But it that. I like that. also had a Zoom interview with “I mean, we talk sports for an hour Cleveland State men’s basketball a day, Monday through Friday. coach Dennis Gates and “Voice- What’s not to like about that?” mails of Truth and Reason” from fans, a nod to Levine being the Joe Scalzo: joe.scalzo@crain.com, self-proclaimed “voice of truth and (216) 771-5256, @JoeScalzo01 JANUARY 17, 2022 | CRAIN’S CLEVELAND BUSINESS | 3

P003_CL_20220117.indd 3

1/14/2022 11:52:02 AM

IT’S COOL

EDUCATION

TO CALL YOUR LOCAL CREDIT UNION FOR YOUR COMMERCIAL REAL ESTATE LOANS!

Interest rates at all time lows!

• Loans up to $15 Million • No Prepayment Penalties • As Little as 10% Down Your Business Lending Partner SM CONTACT JONATHAN A. MOKRI

440.526.8700 jmokri@cbscuso.com www.cbscuso.com Hiram College is one of only a few colleges in Northeast Ohio starting the semester remotely. | HIRAM COLLEGE FILE PHOTO

REAL ESTATE

AUCTION

FEB 24TH

INDUSTRIAL DEVELOPMENT SITES

Cochran Rd

Solon Industrial Pkwy

Beaver Meadow Pkwy 1.22 Acres, Division St., Mentor, OH

4.49 Acres, Beaver Meadow Pkwy, Solon, OH

To Be Offered with a Published Reserve Price of Only: $35,000

To Be Offered with a Published Reserve Price of Only: $125,750

Ideal locations with close proximity to several major highways.

Call for complete Due-Diligence Package.

FOR BROCHURE & TERMS

CALL MIKE BERLAND

216.861.7200

HANNA COMMERCIAL • CHARTWELL AUCTIONS • MICHAEL BERLAND, AARE, OH AUCTIONEER

Advice for the life you lead Let your goals be your guide Ruggiero Wealth Management UBS Financial Services Inc. 600 Superior Avenue East 27th Floor Cleveland, OH 44114 216-736-8317

Modesto “Moe” Ruggiero Managing Director– Wealth Management Senior Portfolio Manager Wealth Advisor modesto.ruggiero@ubs.com

ubs.com/team/ruggiero

As a firm providing wealth management services to clients, UBS Financial Services Inc. offers investment advisory services in its capacity as an SEC-registered investment adviser and brokerage services in its capacity as an SEC-registered broker-dealer. Investment advisory services and brokerage services are separate and distinct, differ in material ways and are governed by different laws and separate arrangements. It is important that clients understand the ways in which we conduct business, that they carefully read the agreements and disclosures that we provide to them about the products or services we offer. For more information, please review the PDF document at ubs.com/relationshipsummary. © UBS 2020. All rights reserved. UBS Financial Services Inc. is a subsidiary of UBS AG. Member FINRA/SIPC. CJ-UBS-2031105874_2 Exp.: 10/31/2021

In-person campus offerings return to majority of Northeast Ohio colleges

BY AMY MORONA

As yet another semester in the COVID-19 era begins, the majority of colleges in Northeast Ohio are planning a return to in-person campus offerings this spring amid the high number of cases related to the Omicron variant. The move comes after a fall semester where most saw a drop in full-time enrollment, mirroring a national trend.

But the tone around how to handle the pandemic and its myriad logistics seems to be shifting for college officials.

“How do we help our students, faculty and staff realize that they are going to have to live with this, that we all are going to have to live with this?” said Liz Okuma, vice president and dean of students at Hiram College.

Hiram is one of just a few local campuses that are beginning the semester remotely, though according to one count, roughly 80 colleges across the country adopted related plans.

Okuma said Hiram officials came to that decision after looking at a rise in coronavirus cases after students returned to campus, which has a full-time enrollment of about 1,000 students, after Thanksgiving.

They figured that trend would continue after the new year began, so instruction will be delivered remotely for the first two weeks. Room and board fees, a lucrative income stream for colleges, will be adjusted this spring to reflect the time students aren’t on campus.

Vaccines and boosters are required. Many of Hiram’s peer institutions adopted similar policies after the Pfizer-BioNTech dose received full FDA approval in late 2021 for use in those 16 and older.

In addition, at Hiram, faculty, staff and students will be required to have a negative PCR test within three to five days of returning to campus or a positive COVID-19 test result from the last 90 days. This will allow officials to get a sense of “who is coming back to campus with what,” Okuma said.

College officials pride themselves on clear communication with their community, Okuma said, adding that many students seem relieved to begin this way.

“They don’t want to come and have an interruption,” she said.

“They don’t want to come and go remote; they don’t want to have to go home; so if there’s a way that we can start as safe as possible and then not have to disrupt their semester later, they’re ready to do that.”

Case Western Reserve University is also starting the semester online for undergraduates, though students are currently on campus right now. The campus has 100% compliance with its vaccination mandate, president Eric Kaler said on a recent episode of the Crain’s Cleveland Business podcast The Landscape, yet positivity rates are clocking in at what’s believed to be an all-time high of around 10%.

“As omicron hits its peak, test result notifications will take longer than they once did,” CWRU officials wrote to students last week. “Health services will not be able to provide many of its routine services. And only those students on campus who share a bedroom — or are immunocompromised — will be moved to other isolation space. The numbers will be too high to responsibly do anything else.”

Other institutions across Northeast Ohio are readying for a return to in-person offerings. Now-common precautions, like wearing a mask and limited capacities, are set to continue.

There are other protocols, too, as at Kent State University, where dining services food is currently available for takeout only. Seating options are set to resume in February, though officials added an asterisk to its announcement: This date subject to change due to the ongoing surge of COVID-19 infections.

Leaders at Baldwin Wallace University recommend using more protective KN95 masks over cloth facial coverings. The University of Akron is highlighting free counseling services to deal with challenges leveled

by the pandemic.

The pandemic and its reverberating effects have had a big impact on college students’ mental health. An Ohio State University survey found students’ rates of anxiety, burnout and depression increased from August 2020 to April 2021.

This return to campus, though, doesn’t come without pushback.

The comments section got heated during a Cleveland State University town hall livestream with its president and provost on Thursday, Jan. 13.

“Huge disconnect between leadership and the actual student/student employee experience,” one student commented.

Out of the hundreds of messages left, many asked officials to consider a remote option. Students shared safety concerns, too. They wrote that mask enforcement is lax and called out the school’s vaccine requirement, which currently extends only to those who live in its residence halls.

But provost Laura Bloomberg pushed back, saying a “huge” number of students have said they’re glad to be returning back in-person.

“The students who chose an on-campus experience and want to be on campus also are voices that we need to hear, and that’s why we’re working so hard to create the safest possible environment,” she said.

A group of Kent State students created an online petition to ask the university adopt what they’ve called “Students Safe Six,” a list of requests that includes two weeks of remote instruction for the majority of classes, as well as implementing regular PCR testing. There’s a similar petition from CSU students, too.

And elsewhere in Ohio, the Columbus Dispatch reported that students and employees at Ohio University, Bowling Green State University, the University of Cincinnati and Miami University have filed lawsuits against current COVID-19 policies at those public institutions.

Amy Morona: amy.morona@crain. com, (216) 771-5229, @AmyMorona

4 | CRAIN’S CLEVELAND BUSINESS | JANUARY 17, 2022

P004_CL_20220117.indd 4

1/14/2022 11:54:39 AM

MANUFACTURING

New coalition aimed at recycling vinyl siding gets its start in Northeast Ohio

BY RACHEL ABBEY MCCAFFERTY

Ohio is big in the vinyl industry.

According to pre-COVID data, Ohio had more vinyl processors — more than 200 — than almost any other state, said Domenic DeCaria, vice president of technical and regulatory affairs at the Vinyl Institute in Washington, D.C. The region has a number of large companies in materials more generally, like GEON Performance Solutions and Lubrizol Corp., and some large recycling companies like Return Polymers. And Akron and Cleveland have long been known as a “hub” for plastics, he said. There’s academic support in this space in the region, on top of the industrial knowledge.

“There’s just a nice, core base of people that know how to do this stuff,” DeCaria said.

That makes the region the right spot for a new initiative: the Northeast Ohio Vinyl Siding Recycling Coalition.

The coalition is a pilot of the Vinyl Siding Institute, a Virginia-based trade association. Vinyl siding is a product that doesn’t produce a lot of excess waste, said institute vice president Matthew Dobson, but it can be easily ground up and turned into new products.

The coalition is made up of recyclers and collection sites, Dobson said, but also companies like contractors and manufacturers interested in raising awareness of the availability of vinyl siding recycling.

One of the members, Return Polymers in Ashland, has been doing this work for decades. The company grinds or pulverizes PVC products, turning them into a raw material for new products. And since the company’s acquisition by Azek Co. in early 2020, it even offers its own end products using that recycled material.

A lot of people don’t realize vinyl can be recycled, said David Foell, Return Polymers president. It’s often excluded from curbside recycling programs. But that doesn’t mean it’s difficult to recycle; it just means different types of plastics contaminate one another, he said.

They have to be processed separately. Efforts like the coalition will help to raise that awareness.

“It’s doing the right thing,” he said. “It’s finding a way to divert materials from landfills to an enduse application that’s not a short-

term use.”

David Montante, business development manager at remodeling contractor Mack and Sons Service and Supply and Vinyl Siding Recycling, said he thinks people don’t realize that so much vinyl material is going into landfills, when it could instead be getting reused to create products such as low-cost vinyl flooring.

Mack and Sons saw a need in the market about five years ago. Dumpster costs were high, Montante said.

And after the company started looking into it, they learned one of their waste products, vinyl, doesn’t degrade once it’s in a landfill. They wanted to find another way — a less expensive, less time-consuming way.

The company started Vinyl Siding Recycling, a free, 24/7 drop-off facility in Oberlin. Vinyl Siding Recycling, which takes the material it collects to a local siding manufacturer, is another member of the coalition.

The coalition, which launched in September, is still in its early days.

Dobson didn’t yet want to commit to the idea of starting similar programs elsewhere, saying the pilot’s current goal is to help the institute “learn and understand.”

The localized approach of the coalition — which gives participants an easy way to talk to each other, work out logistics and identify gaps — is key, said DeCaria of the Vinyl Institute.

Additionally, DeCaria said, Northeast Ohio’s housing stock is a little on the older side, making it ripe for the kind of renovations that generate the vinyl siding waste the coalition is looking to recycle.

“I feel like right now is the right time,” DeCaria said. “So there’s some momentum around this idea that, yes, we can do this. We need to do this. The industry needs to think beyond some of the barriers that have always inhibited the growth of recycling in the past.”

Ultimately, DeCaria, who is also head of the recycling task force at the Vinyl Institute’s Vinyl Sustainability Council, views the coalition’s efforts as bigger than vinyl siding.

It’s about creating “momentum” around doing a better job of sorting and reusing all kinds of materials, he said.

Rachel Abbey McCafferty: (216) 771-5379, rmccafferty@crain.com

Sleggs, Danzinger & Gill, Co., LPA

Reducing Real Property Tax Assessments Throughout Ohio And Across The United States

When you hire Sleggs, Danzinger & Gill, you work directly with Sleggs, Danzinger and Gill.

Each client is directly represented at all levels by a Partner of the firm with a combined 90 years of experience. No pyramid, no associates, no on-the-job training.

Our clients deserve the very best representation, so we structured our firm to allow each client, throughout the entire process, to work directly with Todd Sleggs, Robert Danzinger and Steve Gill. Our philosophy is to work cooperatively with school district and county officials to ensure that our clients pay the lowest possible real property tax obligations. If a fair resolution requires litigation, Sleggs, Danzinger & Gill have the depth of trial and appellate experience to handle the most complex valuation issues.

Whether the valuation relates to large industrial plants, apartments, shopping centers, warehouses, office buildings, hotels or any other type of commercial property, the attorneys at Sleggs, Danzinger & Gill will ensure that you receive the best counsel, legal advice and litigation expertise.

Most importantly, Sleggs, Danzinger & Gill wishes everyone continued health as we navigate through the Covid-19 pandemic.

Todd W. Sleggs, Esq tsleggs@sdglegal.net

Robert K. Danzinger, Esq rdanzinger@sdglegal.net

Steven R. Gill, Esq sgill@sdglegal.net

(216) 771-8990 www.sdglegal.net

Sleggs, Danzinger & Gill

820 West Superior Avenue, Seventh Floor Cleveland, Ohio 44113

Return Polymers has been offering PVC recycling in Northeast Ohio for almost 30 years. | RETURN POLYMERS JANUARY 17, 2022 | CRAIN’S CLEVELAND BUSINESS | 5

P005_CL_20220117.indd 5

1/14/2022 11:51:09 AM

PERSONAL VIEW

What is to be done in Cuyahoga County?

BY LEE WEINGART

This Columbus building is home to the Supreme Court of Ohio. | SUPREME COURT OF OHIO

EDITORIAL

Try again Fairness and accountability.

Is that too much to ask for? Apparently it is, when it comes to trying to apply those standards to Ohio's redistricting process.

The Supreme Court of Ohio last Wednesday, Jan. 12, struck down newly drawn district maps that had retained Republican supermajorities in both the state House and Senate. (On Friday, Jan. 14, the court also rejected maps for congressional districts.) In doing so, the court sided with voting rights advocates who argued that the maps so favored the Republican Party that they violated the state constitution.

The court's 4-3 ruling sent the maps back to the Ohio Redistricting Commission to try again to comply with provisions of constitutional amendments passed in 2015 and 2018 to discourage gerrymandering by requiring greater input from the minority party while encouraging more compact, rational districts by limiting how lawmakers can split up counties and cities.

The redistricting commission — a seven-member panel with five Republicans, including Gov. Mike DeWine, and two Democrats — had 10 days from the court's ruling to come up with maps that pass constitutional muster. The court said it will retain jurisdiction "to review the plan that the commission adopts for compliance with our order."

This mess was entirely predictable. DeWine voted for the maps that were struck down by the Supreme Court, but when the commission passed them, he noted, “What I am sure in my heart is that this committee could have come up with a bill that was much more clearly, clearly constitutional. I'm sorry we did not do that." Even so, DeWine signed the plan that made it through the Statehouse. The Ohio House map adopted by the commission favored Republicans with 67 seats to 32 Democratic seats, and the Ohio Senate map favored Republicans 23-10.

In a statement last week, the governor said, "Throughout this process, I expected that Ohio’s legislative maps would be litigated and that the Ohio Supreme Court would make a decision on their constitutionality. I will work with my fellow redistricting commission members on revised maps that are consistent with the court’s order."

Here's a thought: How about just starting with the premise of drawing maps that are constitutional, rather than plowing

ahead with an approach that significantly favors one party and then hopes for some good fortune in court?

The commission’s Republicans maintained that the statewide preference can be calculated using the percentage of the winning candidates in statewide elections. Thy argued that since Republicans won 13 of 16 (81%) statewide elections in the decade, the maps were constitutional because the new districts’ voting preferences would fall between 54% — Republicans' share of the vote in elections during the past decade — and 81% of the statewide preference. The court, though, ruled calculations had to be based on statewide votes cast by voters, not election victories.

Is the commission up to fixing this? In the short term, the court will force it to do so, since the maps will be used to conduct the 2022 elections, and primary elections are scheduled for May 3. Candidates' filings of signatures to get on the primary ballot are due next month, so the last-minute nature of the map process is causing unnecessary chaos.

Chief Justice Maureen O’Connor, a Republican who joined Justice Melody J. Stewart's majority opinion and wrote a separate concurring opinion, is skeptical of the commission structure.

“Having now seen firsthand that the current Ohio Redistricting Commission — comprised of statewide elected officials and partisan legislators — is seemingly unwilling to put aside partisan concerns as directed by the people’s vote, Ohioans may opt to pursue further constitutional amendment to replace the current commission with a truly independent, nonpartisan commission that more effectively distances the redistricting process from partisan politics,” she concluded.

In a perfect encapsulation of a political era in which no one admits fault or takes responsibility, Ohio Republican Party chairman Bob Paduchik issued this statement after Wednesday's ruling: “It’s a failure of leadership for the Chief Justice to take 90 days to make this decision and leave only 10 days for the commission to clean it up. She is responsible for this mess.”

The mess is entirely of the making of one party that is determined to secure nearly insurmountable advantages for its candidates, to the detriment of voters expressing their preference at the ballot box.

Executive Editor: Elizabeth McIntyre (emcintyre@crain.com) Managing Editor: Scott Suttell (ssuttell@crain.com) Contact Crain’s: 216-522-1383 Read Crain’s online: crainscleveland.com

Cuyahoga County is a great place, with a historic city at our core and a host of suburban communities. We are home to world headquarters, countless small businesses and more than 1.2 million people. But we are not without our challenges, the greatest of which is persistent poverty driven by a lack of economic opportunity in the urban core.

Poverty and lack of opportunity are closely correlated to crime, hunger and poor health Weingart is a outcomes. Compared to other counties of Republican similar size in the Midwest, Cuyahoga County candidate for is the most unemployed, poorest and hungri- Cuyahoga est. This poverty fuels rising crime, making County Cleveland the seventh most dangerous city in Executive.

America, and placing Cuyahoga County in the bottom 25% of all U.S. counties for safety.

For nearly 60 years, we have tried to end poverty through government social welfare programs. Based on the statistics stated above, it should be clear that social welfare programs alone are not going to end the deep generational poverty experienced by far too many of our residents. We cannot continue to double down on status-quo solutions that fail to deliver tangible, sustainable benefits to Cuyahoga County families.

What is to be done? We need a strategy to create wealth that starts and stays in the most impoverished neighborhoods in the county. This is a big part of my vision for the county, Cuyahoga 2030, which focuses on expanded private homeownership, targeted economic development, and support for urban entrepreneurship and small business formation and growth.

We can create wealth through private homeownership. I propose “10,000 Homes for Cuyahoga County,” a $600 million initiative that will help 10,000 families in the urban core and first ring suburbs build, buy, renovate or repair a home. The program will include $100 million from Cuyahoga County to support down payments, which will leverage $500 million in private capital for mortgages. This program will correct historic inequity in government-assisted private homeownership, stabilize urban neighborhoods and create wealth.

We can create wealth through targeted economic development policies that incentivize companies to expand and locate in our urban core, where most unemployed people live and where access to transit options is greater.

We can create wealth through urban entrepreneurship and small business formation and growth. I propose a $10 million fund for urban entrepreneurial growth, supported by government and private sector partners. In 2021, I worked with the United Black Fund and U.S. Sen. Sherrod Brown to secure $500,000 in federal funding to start a prototype entrepreneurship program, which will provide 15 weeks of intensive training and startup capital for 50100 urban entrepreneurs to build more resilient businesses — ones that will thrive in the next crisis.

These initiatives can be funded with the $240 million in federal pandemic relief funding available to Cuyahoga County through 2024, in addition to federal funding it received in 2020. These initiatives will benefit each of our communities, as Cuyahoga County cannot fulfill its potential and prosper if its urban core continues to erode. Cuyahoga County cannot be a great place to live for some of us until it is a great place to live for all of us.

So, look at the status quo in Cuyahoga County today — the poverty, the health disparities, the hunger and the inequities — and answer honestly the question: “What is to be done?” As suggested by the 1863 book of that title, we need real solutions to inequity and grinding poverty. We will only make progress ending poverty and crime by creating wealth that starts and stays in our urban core. That will be my primary focus when I serve as your next County Executive.

Weingart’s vision for the county, Cuyahoga 2030, can be found at tinyurl.com/cuyahoga2030.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.

6 | CRAIN’S CLEVELAND BUSINESS | JANUARY 17, 2022

P006_CL_20220117.indd 6

1/14/2022 1:24:10 PM

OPINION

Call us today!

PERSONAL VIEW

Akron 330.535.2661

Why I’m proud to tell the private equity story PAM HENDRICKSON

Tate’s Bake Shop started as a small, local bakery on Long Island. With the help of private equity, their cookies now occupy grocery-store shelves around the country. Tate’s holds a special place in my heart because our firm, The Riverside Co., worked closely with its founder, Kathleen King, to help transform this local baker with a loyal following into a national brand that engenders similar devotion.

These small-business investments are a big reason I am so proud to be in private equity. Our industry helps transform businesses, create jobs and strengthen retirements for workers across the country. I am grateful to help the industry tells its story as the incoming board chair for the American Investment Council (AIC), the industry’s leading advocacy and research organization.

I am excited to educate people about private equity’s contributions to the country’s long-term economic growth and the retirement security of American workers.

I joined Riverside in 2006, after 21 years as a banker at JP Morgan, and I’m extraordinarily proud of the work we have accomplished partnering with businesses of every size to help them grow and succeed. Last year, private equity invested more than $1 trillion in the United States economy. The overwhelming majority of those investments — representing 84% of the thousands of businesses that received private equity funding — went to companies with 500 or fewer employees. A third of those businesses employed 10 or fewer workers.

The American Investment Council provides our industry with an opportunity to tell its story to policymakers, the media and the workers and retirees who benefit from these investments. I first became involved with the AIC in 2011 when Riverside joined as a new member. At the time, the AIC was looking for someone to tell members of Congress how private equity firms like Riverside worked to support and grow small businesses. I have not forgotten how powerful it felt to tell our story before Congress. I have remained an active member of the AIC ever since and have seen our membership double in size. I urge more firms to join and share their stories.

We are working to make sure more policy makers in Washington understand how private equity provides companies with capital and management expertise to scale and to navigate difficult periods in their business

cycle. The American Investment Council also does the important work of compiling and publishing data and reports that show how private equity has a positive impact on the American economy. Its annual pension report continues to show how private equity delivers the highest returns for retirees and remains the strongest asset class year after Hendrickson is year. the chair of the The AIC also helps firms like ours board for the highlight our own work in local American communities. During the COVID-19 Investment Council and vice pandemic, we highlighted how Rivchairman of The erside-backed Bentley Laboratories, which traditionally produced cosRiverside Co., metics, shifted its production lines which is co-headquartered to manufacture hand sanitizer. In a short span, Bentley produced more in Cleveland. than 9,000 units of hand sanitizer critically needed for local first responders and health care workers in New Jersey amid shortages in the early stages of the COVID-19 pandemic.

The American Investment Council also works to educate policymakers about private equity’s impact in communities across the United States. For example, Riverside-backed Black Rock Coffee is a fast-growing business with 70 locations in seven western states. Like many food service businesses, Black Rock struggled to navigate necessary but difficult COVID-19 safety protocols. Fortunately, Riverside stepped in and provided capital and expertise to help the business keep its doors open. In an interview last year with The Hill, Black Rock Coffee CEO Jeff Hernandez stressed the benefits of private equity’s long-term investment strategy. “They saw through the madness and chaos of everything going on in the world,” he said.

As the incoming chair of the board for the American Investment Council, I want to help more people understand how private equity is all around them. In my personal experience, once people learn that private equity helps build better businesses, supports the jobs of millions of Americans and generates outsized returns for public pension funds, they come to realize how important our industry is for the American economy. I’m excited to help the AIC tell this powerful story.

Cleveland 216.831.3310

Who is managing

Medina 330.239.0176

your properties?

Our property management, facility management & maintenance teams are ready and able to respond to the urgent needs of our owners and tenants at any time.

www.naipvc.com www.pleasantvalleycorporation.com

Time to focus on repealing aluminum tariffs

BY MAX SORENSEN

We have seen the effects of the Section 232 tariffs on aluminum, many of them not good for the U.S. economy. The proposed Toomey-Warner bill is promising, however it needs more support. It is the perfect time for a renewed focus on the repealing of these tariffs. Supply chains are at historic lows and the demand for aluminum in the U.S. is reaching an all-time high, sparking the need for regulations and barriers on importing aluminum to be done away with.

Additional barriers and import fees only serve to raise aluminum prices. And if aluminum prices continue to rise, so will the prices of the products that are made out of it. As president of the Ohio Licensed Beverage Association, my concern is that we will continue to see these prices go up and up. The price burden will start with the large companies but eventually land on small business owners and consumers. The large majority of workers in Ohio have already felt the negative effects of COVID-19, with 59% of all employees working in sectors that felt an economic effect of the pandemic on some level. Small businesses also took a large blow with the onset of COVID-19, including the aforementioned supply chain issues and resulting increase in prices on many necessities — from energy costs to products.

Section 232 tariffs on aluminum affect so many aspects of everyday life for Ohioans, many that you wouldn’t even realize. One of the most common and widely used aluminum products is a simple can. Cans that hold your sodas, juices and alcoholic beverages. A large industry in Ohio is

the licensed beverage industry, and this industry is one that has felt these tariffs the most. In addition, restaurants and bars were a large portion of the small businesses that were hurt because of the pandemic alone. Matters are made worse by the tariffs on aluminum. These tariffs are driving up prices, and with restaurants and bars relying on the sale of beverages, Sorensen is this means they are purchasing president of the abundant amounts of aluminum Ohio Licensed products. Currently, aluminum pricBeverage es are up 59% from what they were Association. one year ago.

Already, CEOs of major beverage companies such as Monster and Heineken have spoken out on the dangerously high prices they are being faced with and the effects it will have on their businesses. There are also numerous aluminum production locations in Ohio that have experienced the same thing. Ball Corp., one of the largest can manufacturers in the U.S., has not been an exception in feeling the squeeze. Because of supply chain issues and price increases, they are now increasing the minimum order requirement for bars and breweries. As a result, independently owned businesses will have to spend more money on their order and eventually have to raise their own prices on customers so that they can keep up.

IN CASE OF CYBER ATTACK...

FULL SERVICE

INCIDENT RESPONSE Command & Control Digital Forensics & Investigations Disaster Recovery & Remediation Services Crisis Management

IR911.com CYBER ATTACK HOTLINE:

www.FortressSRM.com

See TARIFFS on Page 47 JANUARY 17, 2022 | CRAIN’S CLEVELAND BUSINESS | 7

P007_CL_20220117.indd 7

1/14/2022 11:50:35 AM

K

B

B

u c t l o

b a t r a l p o A

s

p s c c l

Each new year, Crain’s Cleveland Business recognizes the people behind the biggest stories of the year that was. In 2021, the city saw the election of its first new mayor in 16 years, a Northeast Ohio congresswoman was elevated to President Joe Biden’s Cabinet, hundreds of thousands of fans attended a successful NFL draft downtown, the storied I-X Center got a new lease on life, a major sports team adopted a new name and more. You know the headlines — now get a closer look at the 16 movers and shakers who made them.

JUSTIN BIBB

S

Cleveland native elected mayor

BY KIM PALMER

Justin Bibb had quite a task in front of him if he wanted to become Cleveland’s new mayor. Campaigning during a pandemic was tricky, as was going after a long-held seat as a relative newcomer occupied by an incumbent reluctant to announce he did not plan to run, in a city that is known for electing familiar, establishment candidates.

He began by being the first person to announce his candidacy in January 2021, before any of his challengers, some of whom wanted to wait to give the four-term incumbent Frank Jackson a chance to bow out of the race first.

The Cleveland native and nonprofit executive knew he faced an uphill battle as a field of battle-tested challengers grow to include charismatic Cleveland City Councilmen Zach Reed and Basheer Jones, City Council president Kevin Kelley, state Sen. Sandra Williams and former Cleveland mayor and U.S. Rep. Dennis Kucinich.

Bibb’s campaign manager, Ryan Puente, helped hammer home his message of change to the politically active downtown and near West Side voters who came out to back him.

He employed both a robust social media campaign and a wide-ranging in-person, on-theground citywide approach, attending countless neighborhood meetand-greets, with door-to-door visits eventually covering entire wards of the city with “Bibb for Mayor” signs.

Before the November election, Bibb had also snagged endorsements from the editorial boards of

both Crain’s Cleveland Business and The Plain Dealer/cleveland.com, and expressed his support for a Cleveland police oversight ballot initiative, which was passed by voters.

As the race continued, the young candidate, who had never before run for office, racked up a number of impressive political and civic endorsements, including those of former Mayors Mike White and Jane Campbell; U.S. Sen. Sherrod Brown; and the Rev. Dr. Otis Moss Jr. When the dust settled, the 34-year-old nonprofit executive and Mount Pleasant native bested all the candidates in the city’s September nonpartisan primary and then went on to eventually beat out Kelley in a head-to-head election in November with nearly 63% of the vote.

As he prepared to take office, the Trinity High School graduate, who left Cleveland to attend American University in Washington, D.C., and then the London School of Economics — returning to the area to get a law degree and an MBA from Case Western Reserve University — his first move was to name a diverse group of nonprofit and private business leaders to a series of transition committees and task

U TIMELINE

B

Jan. 12, 2021: Justin Bibb, who is the chief strategy officer at Urbanova, a startup focused on smart cities, announces he will run for Cleveland mayor in the upcoming election.

Sept. 14, 2021: As one of seven candidates running, Bibb receives 27% of the overall vote in Cleveland’s nonpartisan mayoral primary and will run against the second-highest vote getter, Cleveland City Council president Kevin Kelley, in the general election.

Nov. 2, 2021: After months of debates, canvassing and campaigning, Bibb defeats Kelley, making him, at 34 years old, the second-youngest mayor in the city’s history.

Dec. 1, 2021: Mayor-elect Bibb names 75 members to a transition team made up of 10 subcommittees and two task forces.

forces.

As mayor-elect, Bibb also followed through on his promise to join the Ohio Mayors Alliance, a bipartisan coalition of mayors in the state's larger cities, as a sign of a willingness to increase collaboration with other regional and state leaders.

It remains to be seen what his time interning for then-U.S. Sen. Barack Obama in 2007 and his connections within President Joe

Biden’s administration will mean for Cleveland, as federal economic development programs are flush with COVID-19 stimulus and infrastructure money. But the election proved that Cleveland's voters are eager to see what changes Bibb will bring as the city’s 58th mayor.

Jan. 3, 2022: Bibb is inaugurated in a small, semi-private ceremony held in a public library branch on the East Side of the city, where he spent time growing up.

U U U h g

n e s v b p i

a t b N a i i

d t t P 5 T c

l a G v i p

w e — m t n

Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive

8 | CRAIN’S CLEVELAND BUSINESS | JANUARY 17, 2022

P008_P009_CL_20220117.indd 8

t i o f

1/13/2022 11:04:05 AM

new NFL ser

KOFI BONNER Bedrock raises its profile in Cleveland

BY MICHELLE JARBOE

Since Dan Gilbert began buying up Cleveland real estate in 2011, the city has seemed like a bit of an afterthought for the Detroit-based billionaire and Cleveland Cavaliers owner.

Bedrock, the real estate arm of Gilbert's Rock family of companies, has amassed a vast portfolio in downtown Detroit, where the company is redeveloping landmark buildings and filling storefronts. But the landlord has maintained a much lower profile here, despite its acquisitions of key properties including the ailing Avenue at Tower City.

In 2021, Bedrock stepped into the spotlight.

Under new CEO Kofi Bonner, a planner and developer who once served as chief administrative officer for the Cleveland Browns, the company has hired a new local leadership team.

In July, Bonner announced a plan to liven up the Tower City mall. And in September, he joined then-Mayor Frank Jackson to unveil a vision for remaking 130 acres along the

east bank of the Cuyahoga River, including land that Bedrock owns behind Tower City.

"The riverfront is such an unknown gem, in so many ways, and many cities don't have that ability to tie into the riverfront," Bonner said at the time, in a video posted on the company's website.

Before joining Bedrock in September 2020, Bonner invested in real estate and technology on the West Coast and in his native Ghana. He previously held the position of co-chief operating officer at FivePoint, a California-based developer of mixed-use, master-planned communities.

Bonner moved to the United States to attend the University of California, Berkeley, where he obtained master's degrees in architecture and city planning. He later worked in the public sector, in areas ranging from affordable housing to economic development.

In Cleveland, he sees an opportunity for Bedrock to collaborate with fellow landowners and gov-

TIMELINE August 2020: Bedrock announces Kofi Bonner will be its new CEO. July 2021: Bonner reveals plans to reposition the Tower City mall as a "marketplace."

September 2021: Bedrock unveils a sweeping vision to remake 130 acres of riverfront land.

ernment officials, at a time when lots of federal cash is up for grabs. Bonner characterized the company's riverfront concept as a 30-year project — one that will require private money and public infrastructure support.

"We're going to spend our resources and our experience and our skill set really understanding what we need to do on the infrastructure ... to establish this area for a platform for all the necessary improvements that must come along," he said in Bedrock's online video.

"And those improvements clearly must include thousands of units, both rental and for-sale," he said.

"Those improvements must, of course, include more retail and amenities like hospitality and entertainment amenities. Because that really is what we're trying to do here. We're trying to create, or re-create, a 15-minute neighborhood in this area of downtown Cleveland."

Bedrock's local portfolio includes the May, the apartment-and-retail redevelopment of the former May Co. department store building on Public Square; an old May Co. annex building at 2025 Ontario St.; the 366,000-square-foot Tower City mall; and parking and office space at the broader Tower City complex.

Company affiliates have controlled riverfront parking lots since 2011. Once slated for a casino project, the property now is earmarked

for terraced pedestrian paths and sloping greenery, with new towers flanking a remade rear entrance to the mall.

That proposal dovetails with the city's Vision for the Valley plan, a sweeping framework for investments along a winding, 8-mile stretch of the river.

In November, Cleveland City Council authorized the city to ink a development agreement with Bedrock that will allow the parties to tackle a strategic planning process, including community engagement.

That process could take 18 months, according to an executive summary attached to the legislation.

Michelle Jarboe: michelle.jarboe@crain.com, (216) 771-5437, @mjarboe

SHONTEL BROWN U.S. congresswoman elected to replace Marcia Fudge

BY KIM PALMER

When President Joe Biden tapped U.S. Rep. Marcia Fudge to lead the U.S. Department of Housing and Urban Development, the race for her seat in Northeast Ohio’s Congressional District 11 began.

The big showdown, however, was not in November during the general election, but in August during the special primary election that was viewed by many as a national proxy battle between the moderate and progressive wings of the Democratic Party.

Cuyahoga County Councilwoman Shontel Brown, deemed the establishment Democrat, eventually beat out progressive challenger Nina Turner, a former state senator and aide to Vermont Sen. (and presidential candidate) Bernie Sanders, in a primary race for Fudge's seat.

Brown, who at the time — and despite the controversy — maintained her position as the chair of the Cuyahoga County Democratic Party, received slightly more than 50% of the vote, compared with Turner’s 44.5%, in the August special election primary.

She went on to defeat the Republican candidate, business owner and community activist Laverne Gore, by nearly 60,000 votes in November in the heavily Democratic-dominated district that encompasses Cleveland and Akron.

The Warrensville Heights native, who began her career as the founder of Diversified Digital Solutions — a marketing, printing and promotions company — first decided to enter public service in 2011 running for and winning a seat on the

Warrensville City Council.

From there, Brown, who earned an associate's degree in business management from Cuyahoga Community College, moved up the ranks, quickly winning a seat on the Cuyahoga County Council representing a district that includes much of eastern Cuyahoga County, including Warrensville Heights, Bedford, Shaker Heights, Orange and part of eastern Cleveland.

That move was followed in 2017

by her successful campaign to lead the largest Democratic county in the state as chairwoman of the Cuyahoga County Democratic Party. She beat out now-state Sen. Sandra Williams for the position, making Brown both the first woman and the first Black person to serve in that role.

The 2021 congressional race against Turner garnered Brown national attention, with a slew of comparisons of her role to Biden’s in the 2020 presidential primary race with

Sanders. This attention also brought in large amounts of out-of-state political action committee spending on behalf of both candidates.

Brown received the support of the Democratic Majority for Israel PAC, which spent over $1 million on advertisements attacking Turner, and endorsements from the likes of former U.S. Secretary of State Hillary Clinton, House Majority Whip Jim Clyburn, Ohio Sen. Sherrod Brown and other high-profile members of the Congressional Black Caucus.

Sanders’ Our Revolution PAC threw support behind Turner, as did national progressives, including New York’s U.S. Rep. Alexandria Ocasio-Cortez and Missouri’s U.S. Rep. Cori Bush.

In the end, Brown maintained her record of never having lost an election and overcame Turner’s superior fundraising and early lead in the polls, in part by vowing to steadfastly support the agenda of the newly elected Biden administration, eventually convincing more voters in the mostly urban district of Cuyahoga and Summit counties to come out to vote for her.

As one of the newest members of the U.S. House of Representatives, after being sworn in by Speaker of the House Nancy Pelosi, Brown cast a yes vote for the Biden administration’s massive bipartisan $1 trillion infrastructure bill. She has been assigned to the Agriculture, and Oversight and Reform committees and is currently a member of the Congressional Black Caucus.

TIMELINE Dec. 2, 2020: President Joe Biden picks U.S. Rep. Marcia Fudge to lead the Department of Housing and Urban Development, opening up her seat in Ohio’s Congressional District 11.

Dec. 9, 2020: Shontel Brown announces she will run for Fudge’s seat in the 11th Congressional District.

Aug. 3, 2021: Brown wins the Democratic primary against her main opponent, Nina Turner, with 50.2% of the vote.

Nov. 2, 2021: Brown defeats Laverne Gore, who ran as a Republican, after receiving 80% of the vote in the general election.

Nov. 4, 2021: Brown is sworn-in and votes yes on President Joe Biden’s $1 trillion infrastructure bill as one of her first acts as a U.S. congresswoman.

Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive JANUARY 17, 2022 | CRAIN’S CLEVELAND BUSINESS | 9

P008_P009_CL_20220117.indd 9

1/13/2022 11:04:42 AM

PAUL DOLAN

D

Guardians CEO guides team through name change

P h

BY JOE SCALZO

The video's opening shot shows a sunrise illuminating Cleveland’s skyline from the waters of Lake Erie, along with one of the most recognizable — and most beloved — voices in America intoning, “We are a city on the rise.”

America’s Dad — and noted Cleveland Indians fan Tom Hanks — was an inspired choice to announce the baseball team’s name change to Guardians in mid-July, ending a process that officially began in late December of 2020 but had seemed inevitable for at least a decade.

Soon afterward, Guardians chairman/CEO Paul Dolan sent a 500word letter to fans explaining the decision, emphasizing that “Indians will always be a part of our history just as Cleveland has always been the most important part of our identity.”

Dolan — a fifth-generation Clevelander who has been the team’s control person since 2013 — said the team surveyed more than 40,000 fans and conducted 140 hours of interviews with fans, community leaders and front office personnel before settling on Guardians, a nod to the winged Art Deco figures known as the Guardians of Traffic on the Hope Memorial Bridge entering downtown. The name was chosen over options such as “Spiders,” “Municipals,” “Rockers,” “Buckeyes” and “Cleveland

TIMELINE

B

December 2020: Cleveland's baseball team announces it will drop the name Indians following 2021 season.

b f

July 2021: Team chooses Guardians out of nearly 1,100 name considerations.

b

f s C a C t l j t n

November 2021: Club reaches "amicable solution" with local roller derby team, officially ushering in the Guardians era.

Baseball Club.”

To ease the transition, the Dolans opted to keep the team colors and its mascot, Slider, as well as its script lettering. It was the baseball team's first name change since 1915.

“It (Guardians) brings to life the pride Clevelanders take in our city and the way we stand for each other while defending our Cleveland baseball family,” Dolan wrote.

Public opinion was mixed — a national Seton Hall sports poll conducted in mid-December found that 30% of fans supported the new name, compared with 48% who opposed it — but one group in particular took issue with the change, the Cleveland Guardians men's roller derby team, which filed a lawsuit in late October trying to block the

baseball team from adopting its name. The two sides resolved the suit in late November, just in time for the Guardians to sell Black Friday merchandise and set the stage for the final weeks of 2021.

On Nov. 29, the Guardians gained City Council approval for their Progressive Field renovation package, which will keep the team in Cleveland through at least 2036.

On Dec. 2, MLB owners voted unanimously to enact a lockout, the league's first work stoppage since 1994-95 and its first lockout since 1990.

Then, five days before Christmas, Sportico reported that David Blitzer, the part-owner of the NBA's Philadelphia 76ers and the NHL's New Jersey Devils, was nearing a deal to acquire nearly 35% of the Guardians. The deal includes a path to majority ownership for Blitzer, which could lead to the team changing hands for the first time since it was acquired by the Dolans from Dick Jacobs in 1999.

The Indians' on-field results weren't quite as notable in 2021, unless you count setting a major league record by getting no-hit three times, but the hope is that ex-

citement about the new name, and Blitzer's cash, will lead to a big 2022 season ... whenever that begins.

"We are excited to usher in the next chapter of our franchise’s long history in this city, and I am looking forward to the next generation of memories that friends, families and this city will all make together," Dolan wrote. "Our fans and our community are the reason we exist, and as Guardians, we will continue to strive to unite and inspire this city through the power of team."

Joe Scalzo: joe.scalzo@crain.com, (216) 771-5256, @JoeScalzo01

m t o h m a s c e C

MARCIA FUDGE HUD secretary homes in on housing issues

BY SCOTT SUTTELL

Marcia L. Fudge in 2021 moved from the U.S. House of Representatives to the U.S. Department of Housing and Urban Development, as a member of President Joe Biden's Cabinet.

And back home in Cleveland, her transition to HUD secretary set up a competitive and expensive battle for her congressional seat in a special primary election.

Fudge, who is 69, initially hoped for a different job in the Biden administration. During her 12 years in Congress, Fudge developed significant expertise in the nation’s food and nutrition programs as chair of a House Agriculture subcommittee.

She angled to head the U.S. Department of Agriculture, a job that instead went to former Iowa Gov. Tom Vilsack, and Fudge became the nation's 18th HUD secretary.

At HUD, Fudge is the point person for advancing key Biden administration goals on eradicating homelessness; increasing funding for public housing; putting an end to discriminatory practices in the housing market; addressing lead abatement; and expanding homeownership to families who have not previously been able to experience that part of the American Dream.

Fudge, the former two-term may-

or of Warrensville Heights, is wellversed in housing issues. In Warrensville Heights, she adopted one of the first vacant and abandoned property ordinances in Ohio, and she worked with local officials to develop a task force to protect against predatory lending.

Under Fudge's leadership, HUD is being particularly aggressive on the issue of homelessness.

The department last April released $5 billion in American Rescue Plan money to fight homelessness, including $200 million for state and local governments in Ohio. According to HUD, Cleveland will get about $17.7 million of the money designated for Ohio, while Cuyahoga County will get about $9.9 million and Akron will get about $5.3 million. The state itself will get about $90.6 million.

At the end of October, Fudge came back to Cleveland for a Choice Neighborhoods groundbreaking in the Buckeye Woodhill neighborhood. The city of Cleveland and the Cuyahoga Metropolitan Housing Authority in May were awarded a Choice Neighborhoods Implementation Grant — an initiative that HUD says “supports the revitalization of communities through an emphasis on linking housing improvements with comprehensive social services and physical neigh-

TIMELINE March 10, 2021: Senate confirms Marcia Fudge as HUD secretary by a 66-34 vote.

April 8, 2021: Fudge releases $5 billion in funding to fight homelessness , a key priority of the new administration.

Aug. 3, 2021: Shontel Brown wins the Democratic primary in a special election to fill Fudge’s House seat in a heavily Democratic district.

Dec. 20, 2021: HUD awards more than $18 million in vouchers to 103 public housing agencies in 33 states to provide housing assistance to veterans.

borhood improvements."

When Biden announced Fudge as his pick at HUD, it led to a flurry of interest by potential contenders to fill her seat in the 11th Congressional District.

The two strongest contenders in the Democratic primary — which, in the heavily Democratic district, was essentially the election itself — were former state Sen. Nina Turner, a favorite of progressives, and Cuyahoga County Councilwoman Shontel Brown, who was endorsed

by Hillary Clinton and James Cly-

burn, the highest-ranking Black member of the House.

They and other candidates raised more than $6 million, making it the most expensive special House election this year, according to OpenSecrets.org.

Brown won the August primary and then the general election in November against Republican Laverne Gore.

Scott Suttell: ssuttell@crain.com, (216) 771-5227, @ssuttell

10 | CRAIN’S CLEVELAND BUSINESS | JANUARY 17, 2022

P010_P011_CL_20220117.indd 10

l v e $ e p t Th a t o p C t c m n s

1/13/2022 11:05:46 AM

m m

y o N C t N s L s M h a l h w d

d 2

e g g f d " r , e s

DAVID GILBERT

Get OnBase Certified in Just Two Weeks!

President and CEO of GCSC helps stage successful NFL draft

BY JOE SCALZO

Last April, the NFL draft brought thousands of football fans to Cleveland’s lakefront.

David Gilbert believes it brought something else, too.

“The word we kept hearing from a lot of people was hope,” said Gilbert, the president and CEO of Destination Cleveland and the Greater Cleveland Sports Commission. “Seeing people interacting with one another, both live and from a media standpoint, just seemed to bring a lot of hope to people after a winter of hibernation.”

About 160,000 fans attended last spring’s draft, providing Northeast Ohio with $42 million in economic impact, according to the GCSC. Those numbers are about onethird of what the organization projected preCOVID-19, but the event’s success shouldn't be measured in numbers, Gilbert said.

“It brought more national attention than it otherwise would have, because so many in the media were looking at it beyond the sports angle,” he said. “It was more about how a community pulls off a large-scale event during the darkest time of COVID. “In many ways, it was probably more gratifying than it otherwise might have been.”

Gilbert and his team spent years planning for the draft, most of it before the virus existed. The NFL awarded the 2021 draft to Cleveland in May of 2019, just on the heels of a successful draft in Nashville and ahead of what was supposed to be another one in Las Vegas in 2020. Then the sporting world shut down in March 2020, forcing the league to hold the draft remotely. Gilbert and his team weren’t sure Cleveland’s in-person draft would happen until about eight or nine weeks before the April 29 start date, but they stuck to one phi-

losophy: Plan for it to happen until it’s not.

“Nobody back then was testing people before events or looking at vaccination cards — this was all stuff being done on the fly,” Gilbert said. “The NFL was great and they were talking daily to the CDC, but we were sort of creating something for the first time. There were absolutely lots of contingencies and we were reliant upon a go or a no-go at the highest level.”

Last spring's draft included 14 NFL community events in Northeast Ohio, including a groundbreaking ceremony at Shaw High School as part of the Cleveland Browns’ football field refurbishment program. It also included more than 6,000 trees planted through the NFL Green initiatives, 3,000 meals distributed to those in need and the Cleveland Power of Sports Summit, which celebrated themes of diversity, equity and inclusion.

Oh, and it drew a viewing audience of 40 million who saw Cleveland “rock the clock in every way,” according to Peter O’Reilly, the NFL’s executive vice president of club business and league events.

“We could not have asked for a better partner than the Greater Cleveland Sports Commission to help us bring the 2021 NFL draft to life,” he said.

Gilbert said his team approaches every event with the same goal — for the event holders to come away feeling like Cleveland was the best host city they’ve ever had.

“I think we came out of it feeling that was the case,” Gilbert said. “We didn’t ask the NFL to say that or not to say that, but it really ended up being incredibly successful given all of the circumstances.

“Locally and nationally, it helped provide something very special.”

Joe Scalzo: joe.scalzo@crain.com, (216) 771-5256, @JoeScalzo01

TIMELINE May 2019: The NFL awards the 2021 draft to Cleveland.

April 2020: The NFL holds a virtual draft, due to the COVID-19 pandemic.

April-May 20201: Cleveland holds an in-person draft on the lakefront next to FirstEnergy Stadium.

OnBase® Certified System Administrators (OCSA) are in high demand. OnBase Training at Tri-C® can open up new career opportunities for you.

Program features include: • Immersive, hands-on experience • Completion in two weeks • Convenient 100% online classes

• Taught by Hyland Software training professionals • OCSA certification upon completion

Start Your Training Today! tri-c.edu/onbasecr or 216-987-4770

SHOWCASE YOUR INDUSTRY EXPERTI 20-0805

in this paid feature from Crain’s Content Studio – Cleveland.

20-0805 IT Center of Excellence_OnBase 2020-2021_Crains Ad_6x6.indd 1

10/5/20 5:29 AM

CRA IN ’S T HOUG H T L E ADE R FORU M

SHOWCASE YOUR INDUSTRY EXPERTISE in this paid feature from Crain’s Content Studio – Cleveland.

FOCUS: REDEFINING RETIREMENT

WHO WE WANT TO HEAR FROM:  Personal accountants  Investment managers  Financial advisers  Economic forecasters  Tax experts  Charitable donation advisers  Pension experts  Real estate brokers

Contact Conner Howard at conner.howard@crain.com to learn more about these opportunities.

CRAIN’S CONTENT STUDIO CLEVELAND

PUBLISH DATE: Feb. 21 | PARTICIPATION DEADLINE: Jan. 24 | CONTENT DUE: Feb. 7

JANUARY 17, 2022 | CRAIN’S CLEVELAND BUSINESS | 11

STU LICHTER & CHRIS SEMARJIAN Industrial developers revive Cleveland's I-X Center

BY MICHELLE JARBOE

After 20 months offline, Cleveland's I-X Center reopened in November, drawing crowds to a resurrected Christmas show.

The four-day event tested a new operating model for the facility, on the heels of the first change in control in decades.

That deal was one of the biggest local stories of 2021 — not only in convention circles but also in the real estate business. Now California-based Industrial Realty Group LLC and its joint-venture partner, Industrial Commercial Properties LLC of Solon, are preparing to reconfigure the 2.2 million-squarefoot complex.

On Aug. 31, an IRG affiliate acquired the stock of I-X Center Corp., the private operator of the city-owned property. That transaction offered a path forward for a well-known venue idled by the coronavirus pandemic in March 2020 and shuttered — for good, it seemed — late that year.

The hard-won acquisition hinged on months of delicate negotiations and trust-building between the key players: Stuart Lichter, IRG's president and founder, and Ray Park, the billionaire chairman of the Park Corp. business conglomerate.

Park had controlled the property — first as its owner and later, after a sale-leaseback deal with the city, its master tenant — since 1977. A

TIMELINE September 2020: I-X Center Corp. says it's getting out of the events business.

August 2021: A joint venture led by Industrial Realty Group LLC takes over the facility.

October 2021: Spectra steps in to manage 500,000 square feet for events.

November 2021: Consumer shows return, with the revival of the I-X Christmas Connection.

former bomber plant, the I-X Center is one of the nation's largest convention centers and occupies a prominent site next to Cleveland Hopkins International Airport.

As a Park Corp. subsidiary, I-X Center Corp. managed and staffed events itself, working with the producers of the Cleveland Auto Show, the Great Big Home & Garden Show, the Ohio RV Supershow and the Progressive Cleveland Boat Show. I-X Center Corp. also ran its own shows, including the I-X Christmas Connection, I-X Indoor Amusement Park and I-X Pison Powered Auto-Rama.

Lichter committed to bringing

popular shows back. But the busy real estate developer hired a professional manager, Philadelphia-based Spectra, to oversee events.

The transition and ramp-up came as a huge relief to major show producers, who were mired in contract fights with I-X Center Corp. and faced the challenge of relocating and downsizing their events. The stock sale put an end to that litigation.

The home show is set to return to the I-X Center in early February. The auto show will follow in late February and early March.

The boat show recently shifted its 2022 dates from mid-January to mid-March due to the rise of the COVID-19 Omicron variant.

Meanwhile, Terry Coyne of the Newmark real estate brokerage is marketing up to 1.2 million square feet of the complex for lease. IRG and Industrial Commercial Properties, owned by Chris Semarjian, are studying how to reorganize the building to accommodate a mix of high-traffic events and industrial tenants.

They also hope to develop the surrounding land, though any ground-up construction will require lease negotiations with the city. The current I-X Center Corp. lease term runs through August 2024, with extension options that stretch into mid-2039.

"The redevelopment plans for the building and the property,

thos wor nior uary "W sign con can a ve for t also indu ticsIn occu stre "W rup said

Mic mich (216

JOHN MORIKIS Sherwin-Williams’ CEO oversaw plans for new headquarters

BY RACHEL ABBEY MCCAFFERTY

THE

LAND SCAPE A CRAIN’S CLEVELAND PODCAST WITH DAN POLLETTA

NEW EPISODES EVERY TUESDAY AND FRIDAY

12 | CRAIN’S CLEVELAND BUSINESS | JANUARY 17, 2022

Sherwin-Williams Co.’s biggest story of 2021 is an unfinished one: the construction of its new, downtown Cleveland headquarters.

The announcement that the paintmaking giant would stay in Cleveland came in 2020, but the plans for the new headquarters officially went through the necessary approval processes last year.

Through it all, as chairman, president and CEO, John Morikis oversaw the business, leading it through the challenging market created by the pandemic.

Morikis added that president title to his role in March, when the company’s then-president left for a CEO role elsewhere. But he’s been at the helm of the company since 2016, when he became CEO. Sherwin-Williams first released site plans for its new, 1-millionsquare-foot headquarters and for a new research and development campus in Brecksville in February of 2021, about a year after it announced that it would stay in Northeast Ohio.

Together, the projects represent an investment of at least $600 million.

And the company has committed to keeping 3,500 jobs in the area and adding at least another 400.

Plans took a significant step for-

ward in July with conditional approval of the downtown plans by the Cleveland City Planning Commission and the Cleveland Landmarks Commission. The approximately 7-acre site between Superior and St. Clair avenues partially sits by Public Square, and the commissions wanted the paintmaker to think about adding more of a public space nearby, among other considerations.

Final design approvals for the headquarters came in late November. The date for a formal groundbreaking had not been set at that time. The headquarters will include three buildings: a parking garage, a pavilion and a 36-story office tower.

Sherwin-Williams expects to move into the building in late 2024. The Brecksville campus, on which construction has already begun, is expected to be complete by then, too.

Aside from the ongoing headquarters plans, Morikis oversaw a company working to balance the supply chain challenges started by the pandemic. In September, Sherwin-Williams cut its revenue forecast for the third quarter of 2021, citing the impact of Hurricane Ida in a market already struggling to supply necessary raw materials. Still, it was expected to be a small impact, causing a low single-digit increase or de-

crease over sales the year before.

Demand for the company’s products was strong, but the supply chain was a challenge.

Consolidated net sales ultimately grew by 0.5% in the third quarter to $5.15 billion.

“Demand remains strong across our pro architectural and industrial end markets; however, results in the quarter were significantly impacted by ongoing and industry-wide raw material supply chain challenges,” Morikis said in a news release about the results. “Consolidated net sales increased less than 1%, as raw material availability negatively impacted total sales by a high single digit percentage, of which approximately 75% of the impact was in The Americas Group. The raw material availability challenges combined with higher raw material costs significantly pressured gross margins in the quarter. We continue to implement price increases to offset higher raw material costs across the business and are confident margins will recover as inflation headwinds eventually subside. Despite the

T

F w s C i d

A a E b

S m t I

N w w

near gene qua term 19 n tion shar Th pean Sika

Rac 771-

STEVEN POTASH OverDrive CEO capitalizes on demand for digital reading materials

e d r-

BY JEREMY NOBILE

p r e X e

n n h. d its y to the

the e is uare IRG perare the x of trial

the any rethe orp. gust that

for erty,

s l e d w ” t s d y h n r l s e

those are still very much in the works," Peter Goffstein, an IRG senior vice president, said in early January.

"We're in a pre-development design stage now," he added, "trying to continue to learn how the building can best be subdivided to maintain a very functional, and flexible, space for the conventions — and to do so, also, for other kinds of warehouse, industrial, aviation and logistics-type users."

Interior renovations are likely to occur in the summer, during a slow stretch for events.

"We don't want to, in any way, disrupt the show season," Goffstein said.

Michelle Jarboe: michelle.jarboe@crain.com, (216) 771-5437, @mjarboe

For OverDrive CEO Steven Potash, who founded the lender of reading materials in 1986, the onset of the COVID-19 outbreak presented a market opportunity to further meet the needs of knowledge-hungry bibliophiles of all ages amid the lockdowns of schools and libraries.

With the pandemic continuing to linger, and OverDrive’s services continuing to resonate with an ever-expanding clientele, prospects for the private equity-backed company remain as promising as ever.

"Twenty-four hours a day, every second we are delivering 50 books around the world," Potash told Crain’s last spring. "I can't tell you how many authors come to us because we are an extraordinarily powerful channel to the institutional buyers in libraries and school systems."

OverDrive describes itself as a digital reading platform for libraries and school systems dedicated to a “world enlightened by reading.”

With millions of titles from thousands of publishers, OverDrive says it delivers the industry’s largest catalog of ebooks, audiobooks, magazines and various other digital media to a global customer network of at least

40,000 schools and libraries spanning 70 countries.

As libraries closed and schools shifted to remote learning in 2020, administrators pivoted to digital reading materials, which helped OverDrive achieve significant growth.

Checkouts, circulation, firsttime users, downloads and installations of its Libby app — which acts as a digital library card — all surged. The company has indicated that upward of 95% of public libraries in the U.S. and Canada are among its client base.

Annual revenue in 2020 spiked 54% to $420 million, which ranks OverDrive as the 35th-largest privately held company in Northeast Ohio, according to Crain’s research.

"The effect of the pandemic on our business was a significant spike to the consistent double-digit growth we've experienced over the past decade," Potash told Crain’s last year. "We accelerated several years of success into one, and now in 2021 serve thousands of new school and library partners and their communities of readers."

Helping it capitalize on a growing need for digital reading materials is private equity firm KKR, which invested in the company when it purchased it from its prior owner Rakuten in a deal complet-

TIMELINE June 2020: KKR completes acquisition of Steven Potash’s company, OverDrive, fueling a spike in company growth.

June 2021: The American Association of School Librarians names Sora to the 2021 edition of its Best Digital Tools for Teaching & Learning list.

October 2021: OverDrive announces the completion of the expansion of its Garfield Heights headquarters.

ed in June 2020. One industry observer told Crain’s that transaction was likely valued in the range of $775 million.

While Crain’s does not yet have a 2021 revenue figure, it was seemingly another big year for the business that carried on with the momentum from 2020.

One major highlight of 2021 was the 7,000-square-foot expansion of the company’s headquarters that sit on 18 acres in Garfield Heights.

The project drew at least $200,000 in workforce and economic development grants and created space for an additional 75 employees.

Approximately 400 employees, including 80 librarians and educators, work with OverDrive's worldwide customer base of some

73,000 out of its 100,000-squarefoot home base. The digitally powered business ranks as the third-largest software developer in Northeast Ohio today, according to Crain’s research.

Also in 2021, OverDrive was recognized by The American Association of School Librarians. The group highlighted the company’s student reading application Sora in its Best Digital Tools for Teaching & Learning list, which honors electronic resources that provide enhanced learning and curriculum development for school librarians and their educator collaborators, according to the AASL. It was the second time Sora had earned that honor, which falls among a bevy of industry accolades.

"Forward-thinking companies like OverDrive are leading the way to grow our information services industry in the Northeast Ohio region," Team NEO CEO Bill Koehler told Crain’s last fall.

Jeremy Nobile: jnobile@crain.com, (216) 771-5362, @JeremyNobile

HARLAN SANDS President plans an ambitious future for Cleveland State University TIMELINE February 2021: Sherwin-Williams shares initial site plans for its new Cleveland headquarters and its Brecksville research and development space.

August 2021: The company agrees to buy Sika AG’s European industrial coatings business.

September 2021: The next month, it announces plans to buy Specialty Polymers Inc. November 2021: Sherwin-Williams’ headquarters wins final design approval.

near-term margin pressure, cash flow generation remained strong during the quarter, enabling us to invest in longterm strategic growth initiatives, open 19 new stores, announce two acquisitions and purchase 1.675 million shares.”

Those acquisitions were of the European industrial coatings business of Sika AG and Specialty Polymers Inc. Rachel Abbey McCafferty: (216) 771-5379, rmccafferty@crain.com

BY AMY MORONA

2021 was a year full of some pretty big milestones for Cleveland State University and its president, Harlan Sands.

There was, of course, the men’s basketball team’s trip to the NCAA Tournament.

“Athletics is the front door to our university, and it's really, really important,” he told Crain’s Cleveland Business in March.

But that month also saw the university’s Wolstein Center become the home of Cleveland’s first mass vaccination clinic as well as the release of “Emerging From a Pandemic: A Blueprint for CSU 2.0.” University leaders called it an “aggressive, growth-oriented plan for emerging from the global pandemic as a stronger, more focused institution.”

“We are now getting statewide and regional recognition as Cleveland’s anchor public higher education institution,” Sands said during a public address unveiling the plan.

“How do we know this? The partnerships that are emerging, the way that we're working together with our city and our region to advance the number of students we educate. It's palpable.”

The so-called “blueprint” has four stated focal points for the university:

TIMELINE June 2018: Harlan Sands becomes president of Cleveland State University.

June 2020: CSU announces “2-for-1” tuition promise.

March 2021: Sands receives a three-year contract extension.

earning distinction as a leading public research university; differentiating on student success and engaged learning; strengthening its anchor mission and becoming a beacon institution; and building financial strength and strengthening the campus community.

Two of the most ambitious items tucked into the plan include hiring 200 new faculty members and enrolling 4,500 additional students by 2025.

Like other institutions both in the region and across the country, Cleveland State saw reductions in enrollment amid the pandemic. Its total full-time enrollment fell 1.7% this fall to 11,873 students. CSU’s

drop was less than the 4% decline Kent State University saw and the University of Akron’s 11% drop.

Cleveland State did report a 5% uptick of new first-year students, though. In a release, officials outlined a few reasons believed to be behind the boost, including a 40% rise in students from the Cleveland Metropolitan School District as well as the university’s “2-for-1” tuition promise deal. That initiative offers free spring tuition once other financial aid is applied for those first-time freshmen who complete their fall semester with a cumulative GPA of 3.0 or higher.

“Our unique brand of engaged learning continues to attract more and more students from our region and beyond — and not even a pandemic can slow us down,” Sands said in the release. “Now more than

ever, our community and the higher education marketplace are discovering the tremendous value of a CSU education and have made us a first choice for undergraduate and graduate programs.”

Sands, a Navy veteran who completed his undergraduate degree at the University of Pennsylvania, arrived in Cleveland to lead the university in 2018. Three years later, CSU’s board voted unanimously to extend Sands’ contract through June 2026. In a separate release, board chair David Gunning lavished praise onto Sands and said the extension showed the board has "full faith and confidence" in Sands’ leadership.

"Harlan is a dynamic leader, and there is no one our board would rather have leading us during this time of great change and challenge," Gunning said in the statement.

Sands called his time at CSU “an incredible privilege,” thanking the board, faculty, staff and students for their contributions.

"There is nowhere I would rather be than here at CSU representing and supporting our faculty and staff as they transform student lives every day," he said.

Amy Morona: amy.morona@crain.com, (216) 771-5229, @AmyMorona

JANUARY 17, 2022 | CRAIN’S CLEVELAND BUSINESS | 13

P012_P013_CL_20220117.indd 13

1/13/2022 11:09:32 AM

BAIJU SHAH

STEVEN STRAH

New president, CEO of Greater Cleveland Partnership promotes collaboration

FirstEnergy Corp. chief leads company through scandal

BY STAN BULLARD

Perhaps no other executive in Northeast Ohio had a bigger challenge in front of them in 2021 than did Steven Strah.

On March 8, Strah officially took on the big lift of turning around the reputation and fortunes of FirstEnergy Corp.

The Akron-based utility was still in the churn of the House Bill 6 scandal, which saw Strah’s predecessor, Charles Jones, fired as CEO and also saw the dethroning of former Ohio House Speaker Larry Householder.

Federal prosecutors said it was the largest bribery scandal in Ohio history and involved FirstEnergy paying Householder $61 million in bribes to pass beneficial legislation and more than $1 billion in subsidies for what were then FirstEnergy’s nuclear and coal plants.

Strah began serving as CEO after Jones was fired in October 2020, but in March 2021 his role at the head of the company became official.

Strah began earning it by cooperating with federal investigators in the case, which is scheduled to go to court this year with Householder on trial for charges alleging corruption.

Those efforts bore fruit when, in July, Strah announced FirstEnergy had reached an agreement with federal prosecutors under which the company would pay a $230 million penalty for its role in the alleged brib-

When Baiju Shah became president and CEO of the Greater Cleveland Partnership on April 12, he brought new leadership to the massive chamber of commerce that has a broad portfolio of business and civic initiatives.

However, he also came in as the ultimate insider. He was already an often-quoted, high-profile leader associated with multiple efforts to foster innovation, business and job development in the region. That was due to management experience at the business and nonprofit levels.

His volunteer board memberships alone, ranging from serving on boards as various as, in the past, St. Luke's Foundation of Cleveland to continued board service at Destination Cleveland — which promotes the region for tourism and conventions — gives Shah experience, an enviable network of business and civic contacts, and direct knowledge of area issues.

Known for promoting innovation in technology and medicine, he is quickly associating himself with a classic partnership term, collaboration. He's now promoting the phrase "All In" for joint efforts among government, civic groups and corporations to better the region. It's a freshening of the phrase "public-private partnership," prominent here since the late George Voinovich became mayor of Cleveland in 1980. However, it has new resonance following years of social unrest, a broad reawakening to racism in American society and a flock of new business and civic leaders in town.

Shah said in a Sept. 13 Crain's Cleveland Business article on the ascension of a new generation of leadership at many regional nonprofits taking over from retiring baby boomers that the area and the era's woes create "a huge moment for all of us and a huge opportunity for, I think, new leaders to forge alliances around these opportunities for our region."

Shah's last stop before taking the reins at GCP was the Cleveland Foundation, where he served as the Steven A. Minter Senior Fellow for Innovation as he worked on efforts to advance Cleveland’s innovation economy.

Despite taking on the demanding job at GCP, he retained his role leading the Cleveland Innovation Project, a GCP initiative in partnership with the Cleveland Foundation, the Fund for Our Economic Future, JumpStart Inc. and TeamNEO. Unlike many nonprofit executives, Shah has public-company board experience. He's a former member of Elyria-based Invacare's board and continues to serve on Cleveland-based Athersys Inc.'s board. Those are natural moves, for Shah capped seven years of service in 2019 as CEO of BioMotiv, a Cleveland-based company that works to accelerate breakthrough discoveries in medicine. Prior to that, from 2002 to 2012, he was president, CEO and founding executive of business accelerator BioEnterprise.

Moreover, talk about a business pedigree: He joined BioEnterprise after helping create the organization while he was at the McKinsey & Co. consulting firm. Shah holds a law degree from Harvard University and a bachelor's degree in history from Yale University.

The other distinctive part of Shah's rise to the prestigious GCP job is that, while he's local, he has a different take on the region.

Shah is a 1989 graduate of Mayfield High School. Additionally, his dad came to Cleveland for a job as his parents emigrated from India. Their experience as one of the few Indian families in Cleveland as he grew up shaped his participation in Global Cleveland. He served as a board member and founding chairman for the outfit that welcomes new immigrants to the region.

Stan Bullard: sbullard@crain. com, (216) 771-5228, @CrainRltywriter

TIMELINE July 8, 2002: Baiju Shah joining BioEnterprise Corp. is reported in Crain's Cleveland Business. He spends a decade as CEO of the effort to promote the formation and acceleration of health care companies and bioscience technologies.

September 2012: Shah becomes CEO of BioMotiv, a mission-driven business accelerator that invests in biotech companies.

July 2019: Shah is tapped as Senior Fellow for Innovation, the Cleveland Foundation.

April 2021: Shah named president and CEO, the Greater Cleveland Partnership.

BY DAN SHINGLER

ery scheme, continue its cooperation and submit regular reports on its ongoing compliance efforts.

Strah said then the agreement marked a “humbling moment” but would give FirstEnergy a chance to rebound.

The hits kept coming, though. In November, the Ohio Supreme Court ordered FirstEnergy to repay customers $306 million in excessive charges after ruling it improperly calculated its profits for state regulators.

But Strah has stayed on-message: FirstEnergy must remake its image via real, broad changes if it is to be successful.

A big part of delivering on that message has been Strah’s promises that the company will curtail its political activities.

So, has Strah delivered to his company, its shareholders and the public?

FirstEnergy’s shares, which plummeted from $52 per share to $28 during the unfolding of the Householder scandal, have reversed course.

Since Strah officially took the helm in March, the company’s share price has gone up more than 20%, from $33.37 per share to about $41 per share recently.

He’s done that while bringing in $3.4 billion in capital that Strah says will be used to upgrade FirstEnergy and its electrical grid, in part to accommodate future energy and efficiency technologies. The company sold a stake in its transmission busi-

ness to Brookfield Asset Management for $2.4 billion in Novemb er, when it also sold $1 billion in common stock to Blackstone Inc., which got a board seat at FirstEnergy.

He’s gotten mixed marks on cutting back on the lobbying and political spending.

In November, the CPA-Zicklin Center for Political Accountability, which monitors and scores S&P 500 companies on their political disclosures and accountability, named FirstEnergy among 87 companies it said were trendsetters for their high rankings for accountability and disclosure policies.

But also in November, the publication Energy News noted that FirstEnergy has not stopped its political spending entirely, at least at the federal level. (FirstEnergy operates in six states.) The publication found that the company spent $1.5 million on congressional lobbying through the first three quarters of last year.

Time will tell if Strah cuts that spending completely.

Meanwhile, he still has plenty of challenges ahead of him, including some related to the HB6 issue.

This year, he’ll be dealing with con-

F S c t a i

M F a n t d

J t f c $ m

N a s b c b

tinu tigat Com from

Dan (216

GINA VERNACI Playhouse Square leader cements legacy, prepares exit

BY JOHN KAPPES

In an era when job-hopping is more the rule than the exception, finding a business leader who rose through the ranks is becoming a rarer quantity. It’s certainly true of Playhouse Square president and CEO Gina Vernaci, but her story is not only about personal achievement.

As she moved from promotion to promotion in her nearly 40 years at the performing arts and downtown real estate anchor, the institution’s reputation and audience grew along with her — at least partly because of what she contributed.

Playhouse Square announced in early November that Vernaci would step down from her posts in February 2023, and that a national search would be launched to find her replacement.

“I got to grow up as a professional within an organization that went from dodging the wrecking ball to becoming a giant in our industry,” Vernaci said in a news release at the time. True enough, but it didn’t just happen; it was made to happen.

Vernaci joined Playhouse Square — the collection of stately theaters along Euclid Avenue that had been saved from demolition in the early 1970s by a hearty crew of preservationists — in 1984, fresh out of the University of Missouri in Kansas

City.

As she told The Plain Dealer in 2018, “The position was so transient that I don't even think they thought to give me a title. ‘Intern’ probably comes the closest.”

But the titles got bigger and better from there: vice president of theatricals, senior vice president of operations, then “executive producer,” responsible for all performances and community outreach, in the fall of 2014.

She “grew from an intern with the two-theater organization to executive producer overseeing programming in 11 performance spaces, with responsibility for more than 1,000 shows and almost $50 million in gross sales annually,” as the November release put it.

Critical to her success was the way she cultivated relationships with Broadway producers and directors that paid big dividends for Cleveland audiences.

Vernaci “led initiatives that have helped to position Playhouse Square as the region’s premier cultural and entertainment destination, including the expansion of Playhouse Square’s KeyBank Broadway Series from eight to 24 performances for each engagement and growing the season ticket holder base for the series to the largest in the nation,” according to a news release from 2019, when she was

TIMELINE September 2014: 30 years after joining Playhouse Square as an intern, Gina Vernaci is named the organization’s “executive producer.”

September 2018: Vernaci becomes president and COO. July 2019: Vernaci succeeds Art Falco as CEO. November 2021: Vernaci announces she will step down in February 2023.

named to succeed longtime CEO Art Falco.

Falco himself agreed. “Gina has incredible leadership,” he said in a 2014 statement. “Her work with the Broadway League and IPN (Independent Presenters Network) place her at the top of her field.”

The last two years have brought new challenges, with the COVID-19 pandemic shutting the theaters of the nation’ largest performing arts complex outside New York City for 15 months. Even then, Playhouse Square completed and opened The Lumen, a 34-story, 396-foot apartment tower downtown and then hosted the return of the national tour of “Wicked.”

Proof of vaccination was required

14 | CRAIN’S CLEVELAND BUSINESS | JANUARY 17, 2022

P014_P015_CL_20220117.indd 14

T

1/13/2022 11:12:47 AM

for mas beg arou cele A sear clea have big chai of t are e attra grat time help tran

John com

oard

cutoliti-

klin lity, 500 clomed es it high dis-

icaEntical fedn six that on the

that

y of ding

on-

CEO

has in a the ndelace

ught D-19 s of arts y for ouse The parthen onal

ired

BRIAN ZIMMERMAN Cleveland Metroparks wins national recognition TIMELINE Feb. 18, 2021: As acting CEO, Steven Strah tells analysts the company will cease making contributions to political nonprofits and be “much more limited” in its lobbying.

March 8, 2021: Akron-based FirstEnergy Corp. (NYSE: FE) announces Strah has been named CEO and appointed to the company’s board of directors.

July 22, 2021: In what he termed “a humbling moment” for FirstEnergy, Strah said his company had agreed to pay $230 million under an agreement with federal prosecutors.

Nov. 7, 2021: FirstEnergy announces it’s agreed to sell a stake in its transmission business and additional common shares to raise $3.4 billion for future investments.

tinuing shareholder lawsuits, an investigation by the Securities and Exchange Commission and continued questions from state and federal regulators.

Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler

BY LYDIA COUTRÉ

Cleveland Metroparks won a national gold medal for excellence in parks and recreation management in 2021 for the fifth time in the award's history and the second time during CEO Brian Zimmerman's tenure.

That honor alone — the highest national honor in the parks and recreation field — was big news for the park system. But the 2021 National Gold Medal “Best in Nation” Award for Excellence in Parks and Recreation Management was just one of a list of accomplishments last year for Cleveland Metroparks, which generates an annual regional economic impact of $873 million, according to a study by The Trust for Public Land.

On the heels of a record-breaking 2020 (with 19.7 million recreational visitors), the park system continued with its momentum in 2021, unveiling in the spring its vision to remake the city's East Side lakefront and ultimately securing a $985,000 award for the transformative shoreline project in November. The funds from the National Fish and Wildlife Foundation National Coastal Resilience Fund, along with matching funds from six project partners, will support nearly $2 million in design and engineering work for the first portion of the plans.

A separate federal grant also announced in November helped ad-

TIMELINE May 2021: Mandel Foundation donates $3 million to the Cleveland Metroparks Zoo. September 2021: MetroHealth partners with Cleveland Metroparks.

September 2021: Cleveland Metroparks named “Best in Nation” for parks and recreation management.

November 2021: Metroparks awarded $985,000 for transformative shoreline project.

November 2021: Metroparks receives federal grant for East Side trail projects.

vance other Metroparks efforts: $950,000 from the U.S. Department of Transportation will support the planning and design of four regional transportation projects, encompassing 5.7 miles of trail and bicycle connections on Cleveland’s East Side. The four projects are derived from the Cuyahoga Greenways Plan, a countywide trail and bikeway master plan that Zimmerman said, in an interview with Cleveland Magazine, the Metroparks system is focused on helping to implement.

"One of the over-arching themes is how do we connect the region?"

he told the magazine. "Cuyahoga County is a builtout environment. Partnerships are going to be the key to allow certain corridors and connections."

One notable partnership announced this year was with MetroHealth as the official health care partner of Cleveland Metroparks.

The health system's transformation of its 52-acre main campus on West 25th Street will feature green space, walking paths, gardens and access to the Metroparks' portion of the Towpath Trail. The partnership also builds on the new Cleveland Metroparks mobile app to encourage fitness and exercise. Metroparks launched the app in April alongside a "Find Your Path" campaign encouraging the exploration of its more than 24,000 acres of nature.

The Metroparks also continued to open new spaces and parks last year, including the 25-acre Brighton Park in Cleveland's Old Brooklyn neighborhood; the $500,000 Lindsey Family Play Space at Edgewater Park; and the Whiskey Island Trail

and Wendy Park Bridge (a link between downtown and the lakefront). It also completed major renovations at Huntington Beach in Bay Village.

The Cleveland Metroparks Zoo plans to renovate and construct a new auditorium with a $3 million donation it received last year from the Jack, Joseph and Morton Mandel Supporting Foundation. Also in the works for the Metroparks is a "pump track" — a looped track designed for BMX and mountain bike riders featuring small hills and banked turns — at the Ohio & Erie Canal Reservation.

Last year, the park district also purchased a pair of industrial buildings in the Flats (at 1045 French St. and 1725 Fall St.) for a total of $1 million for a service center owned by the parks system to replace nearby leased buildings on Columbus Road.

Cleveland Metroparks rounded out the year with another purchase, acquiring a parking lot at 1290 Old River Road along the Cleveland Flats riverfront, according to Cuyahoga County land records. The Metroparks purchased it to preserve local control of the riverfront, support public investments nearby and promote green space in the valley.

Lydia Coutré: lcoutre@crain.com, (216) 771-5479, @LydiaCoutre

KRISTIN WARZOCHA Greater Cleveland Food Bank president leads major expansion project

BY LYDIA COUTRÉ

for those performances, along with masking. But as the Omicron variant began to spread, a number of dates around Christmas had to be canceled.

As the organization begins its search for Vernaci’s replacement, it’s clear that whoever is tapped will have, as the saying goes, some very big shoes to fill. But as Amy Brady, chair of the Playhouse Square board of trustees, said in November, “We are extraordinarily well-positioned to attract top candidates, and I am grateful that Gina is giving us the time and personal commitment to help make a smooth and successful transition.”

The Greater Cleveland Food Bank broke ground last year on a new distribution hub on the East Side that will help the nonprofit continue to meet the challenge of hunger in the community.

Slated to open this year, the nearly 200,000-square-foot building on Coit Road in Cleveland's South Collinwood neighborhood will offer more space for the agency to combat food insecurity, a problem that's long plagued Cleveland and has skyrocketed since the pandemic and its economic fallout.

Kristin Warzocha, Greater Cleveland Food Bank president and CEO, told Cleveland Magazine in July that the organization is using off-site storage, leasing semi-trailers and even turning food away with nowhere to put it.

Even before the pandemic, the food bank was in need of more space than it had at its existing 127,000-square-foot building on South Waterloo Road. Community need and the food bank's reach had grown substantially since that facility opened in 2005. The organization had tripled food distribution

and quintupled meal production, and the pandemic added to the space constraints.

"We knew that if we continued on current trends, we were going to run out of space," Warzocha said in March. "We also knew that, at that time, we were serving more than 300,000 people a year — but more than 500,000 people were income-eligible for food from the food bank and our partners. …

Then the pandemic hit and made the need for this space all the more urgent."

The new facility will include more space for dry and cold food storage, a larger kitchen for meal preparation, volunteer spaces and areas for community work. Once it moves into the new space, the food bank plans to renovate its existing facility to be used for overflow storage, a food pantry where clients can shop at no cost and a place for nonprofit partner agencies.

Warzocha, who's been with the food bank since 2000, has been a fierce advocate for the organization and in the fight against hunger throughout her tenure with the organization.

Partnerships and community

TIMELINE April 2021: Greater Cleveland Food Bank breaks ground on new building.

September 2021: Cleveland City Council voted to donate $5 million to the food bank's capital expansion.

support have remained as important as ever for the food bank.

In September, Cleveland City Council voted to spend $5 million of the city’s $511 million in American Rescue Plan funds on a donation to the food bank to support its capital expansion.

Parker Hannifin donated $1 million to the food bank to support its growth, including the construction of the new facility, increasing capacity and renovating its existing facility. The KeyBank Foundation donated $1.5 million in support of the expansion project in Collinwood.

As surges, shutdowns, economic factors and other strains

ebbed and flowed in the past two years, Warzocha has led the food bank through the major adjustments needed to serve tens of thousands of new families in entirely new ways.

Recently, the rising cost of food has strained the hunger safety net.

The food bank's budget is $37 million for the year ahead, up from $24 million in fiscal 2019, according to cleveland.com.

The organization plans to spend $25 million over five years responding to COVID-19, which is possible because of donations, Warzocha told cleveland.com in November. “Northeast Ohio has been a generous community that wants to make sure no one goes hungry."

Lydia Coutré: lcoutre@crain.com, (216) 771-5479, @LydiaCoutre

John Kappes: john.kappes@crain. com, (216) 771-5359 JANUARY 17, 2022 | CRAIN’S CLEVELAND BUSINESS | 15

P014_P015_CL_20220117.indd 15

1/13/2022 11:13:17 AM

CUSTOM PUBLISHING SECTION

WELLNESS AND THE WORKPLACE We want to hear from forward-thinking business leaders in Northeast Ohio on strategies for ensuring employees are healthy and supported.

Create your own unique topic or choose from the list: • How to reward healthy behaviors

• Catered lunches and other perks

• Best practices in building benefits packages

• How to address mental health with accessible therapy

• Ways to incentivize continuing education

• When to bring in wellness consultants and guest speakers

• Flexible PTO approaches

• “Gamifying” fitness with exercise awards and more

• Holistic insurance options (pet, renters, etc.)

• Lunch-and-learn opportunities • How to help staff maintain a work/life balance • Charity programs that let employees give back • Team-building events that strengthen bonds and break ice

• Setting aside “Wellness Wednesday” events • Planning “happy hour” occasions and other chances to unwind • Providing healthy snacks in the break room • The value of standing desks and accommodating other physical health needs

• Connecting employees with local/regional health resources • Ways to incentivize smoking cessation • Bringing flu shots and blood drives to the office • Hosting on-site clinics and other health services • The importance of regular customer surveys to learn what’s working and what’s not • Setting aside dedicated space for mindfulness, decompression and rest • Showing employees appreciation with gifts, bonuses and other rewards

ISSUE DATE: April 11 | PARTICIPATION DEADLINE: Feb. 14 | ARTICLES DUE: Feb. 25 | AD CREATIVE DUE: March 28

Contact Conner Howard at conner.howard@crain.com to learn more about these opportunities.

roundtable for wellness full.indd 1

CRAIN’SCONTENTSTUDIO CLEVELAND

1/13/22 7:40 AM

SPONSORED CONTENT

January 17, 2022 S1

CORPORATE GROWTH & M&A PRESIDENT’S LETTER

ACG Cleveland: moving beyond your expectations

By CHERYL STROM

A

fter a remarkable year in the dealmaking community globally, I’m proud to say that Northeast Ohio continues to punch above its weight.

That’s largely thanks to the overachieving group of members, sponsors and stakeholders that make ACG Cleveland so STROM special.

With about 500 members, ACG Cleveland is the fourth-largest chapter in the nation. We have a great history and an incredible network of private equity groups, corporations, investment bankers, attorneys, accounting firms, lenders, advisers, and others dedicated to raising capital and growing businesses in the middle market.

That’s a great foundation for a wonderful chapter, but I think it’s something much more that makes

this such a strong dealmaking community – it’s that word “community.”

ACG is much more than a networking community. It is a place for professionals to meet, build relationships, develop professionally and help each other thrive, while we help companies grow.

As I reflect on why ACG Cleveland is such a strong chapter, I am sure it has to do with the unique culture of Cleveland itself. For example, I remember joining a group for dinner one night before the annual Deal Maker Awards. I sat with dozens of people, and we all had a great time.

Many were direct competitors, yet we were all happy to share our time, networks and insights with each other. Some guests to Cleveland pulled me aside in amazement, noting that such camaraderie doesn’t exist in their market.

That’s just one small slice of what makes Cleveland, and the ACG Cleveland chapter, so special: We understand that collaborating makes us all better — and makes working a lot more fun.

Speaking of Deal Maker Awards, it will take place later this year and we are thrilled to celebrate the 25th anniversary of this event.

Congratulations to the winners for standing out in this unusually high volume but competitive past year.

The Deal Maker Awards event is a great reminder of what makes ACG Cleveland such a big force for good in Northeast Ohio and beyond — it’s a celebration of members of our community and their biggest accomplishments. We hope to see you there!

ACG Cleveland is all about improving our dealmaking community and therefore, our broader region. I’m grateful for the opportunity to take part in it and to be leading this chapter. I’m looking forward to an active and promising 2022.

Cheryl Strom is chapter president of ACG Cleveland and principal at The Riverside Co. Contact her at 216-5352238.

ABOUT ACG ACG is a global organization focused on driving middle-market growth. Its 15,000-plus members include professionals from private equity firms, corporations and lenders that invest in middle-market companies, as well as experts from law, accounting, investment banking and other firms that provide advisory services. Learn more at www.acg.org. ACG Cleveland serves professionals in Northeast Ohio and has about 500 members. For more information, visit www.ACGcleveland.org.

CONTENTS S2

A record-setting year in private markets

S4

Finance relationships a bellwether for pandemic resilience

S6

Technology audits should involve a full sweep of business unit alignment

S7

Lessons learned while closing deals in a virtual environment

S8

Early planning will help drive productive business sale

S8

The challenges of baby boomer business succession

S10

Maximizing company value ahead of the sale

S11

Creativity is fueling a golden age for private equity

S12

M&A expected to continue its robust growth streak

S13

Motivating managers when facing a sale is key to easing transition

S13

Avoid closing pains by addressing HR, benefits issues

S14

Employee benefits due diligence should be at top of M&A checklist

S15

Buyer, seller tax benefits key to structuring M&A transactions

S16

Adapting to disruption in M&A deals in an era of volatility

S18

Programmatic acquisitions create sustainable value

S19

Private equity marketing success analytics

S20

Tax insurance a key risk management tool

S20

Shifting landscapes: legal due diligence is critical for PE buyers

S21

The evolution of due diligence in the wake of COVID-19

S22

Set actionable goals for growth

S24

Hyper-risk environment requires precise contract design

S25

Valuations are expected to remain on fire for top-tier companies

S26

Industries expected to drive the M&A market in 2022

S28

ACG Officers and Board of Directors

S28

Deal Maker Award Winners

S28

2022 ACG Events Calendar

This advertising-supported section/feature is produced by Crain’s Content Studio-Cleveland, the marketing storytelling arm of Crain’s Cleveland Business. The Crain’s Cleveland Business newsroom is not involved in creating Crain’s Content Studio content.

P017_044_CL_20220117.indd 17

1/13/2022 9:12:51 AM

SX January 17, 2022 S2

CORPORATE GROWTH & M&A

SPONSORED CONTENT

2021: A record-setting year in private markets

By PAUL BODNAR

P

rivate market activity was strong on all fronts during 2021. Fundraising and deal making set new records. Robust exit activity drove significant liquidity for limited partners. Venture investments that previously took a decade or more to generate liquidity exited much quicker, aided by a strong IPO market and BODNAR a resurgence in Special Purpose Acquisition Companies (SPACs).

Through the third quarter of 2021, 6,004 private equity deals closed for $787.6 billion, according to Pitchbook. This partial year dollar value was already at an all-time high.

In addition, bankers and private equity funds report that pipelines were robust for the end of the year.

Service providers’ capacity forced firms to prioritize what deals would get done in 2021 and what had to wait. In addition, potential tax law changes further fueled an already

SPO

for a year to d exit mar cont lowe A rem as th med For 2007 In aggr valu lateHig this. serv are u ther thes

booming market.

Venture deal activity increased even more, with $238.7 billion in value closed through September 2021.

This was significantly up from $166 billion and $143 billion for the full year in 2020 and 2019, respectively.

Mega deals — those worth more than $100 million — were the biggest contributor to this jump, with $136 billion worth closed through third quarter of 2021.

Funds coming back to market quicker and delayed 2020 fundraises helped drive elevated fundraising activity. In private equity, the average years between fundraises declined to 2.8 years from 3.5 years between 2020 and 2021. It was closer to five years in 2011. As a result, fundraising likely set a record in 2021, surpassing $1.2 trillion in private equity and venture easily exceeding $100 billion.

The volume of capital raised generated some concerns. Thirtyfive percent of respondents in Mergermarket’s 2021 survey cited the amount of money and the ability to put it to work as the private equity industry’s biggest challenge. Capital has become more concentrated as large, $1 billion-plus funds accounted

ac all

the m conc latepric room Th priv distr equi exit 101% the f activ and brea

Experience That Matters.

INT A fe histo trad

At Cascade Partners, our deal experience is extensive, but our operating and investing experience are unique. We have been where you are and want to help you make the

C

right decision for you and your company.

CONTACT US: info@cascade-partners.com 216.404.7560 Securities offered by Cascade Partners BD, LLC – FINRA/SIPC Member

ACQUISITIONS & DIVESTITURES | FINANCINGS | GROWTH CAPITAL | WWW.CASCADE-PARTNERS.COM

P017_044_CL_20220117.indd 18

1/13/2022 8:59:12 AM

ENT

SPONSORED CONTENT

for about 70% of money raised last year. The need for these larger funds to deploy capital has supported strong exit values for smaller, lower middlemarket funds. This is one reason CM continues to favor investing in the lower middle market.

Acquisition prices in buyout deals remain elevated on a historical basis, as they have in recent years, with a median EV/EBITDA multiple of 12.8x.

For scale, this multiple was 10.3x in 2007, and the peak was 14.3x in 2019.

In venture, valuations rose aggressively in 2021. Seed round values were up 54% from 2020, while late-stage rounds increased 168%.

Higher public multiples in part fuel this. For example, software-as-aservice (SaaS) company multiples are up 375% since 2016. While there are fundamental reasons why these companies are more valuable,

January 17, 2022 S3

CORPORATE GROWTH & M&A their toes into technology and software. They dove in further last year after the economic downturn from COVID demonstrated the resilience of those business models.

For example, there were 668 private equity-backed software deals through the third quarter versus 687 and 651 over the full years of 2019 and 2020, respectively. This trend will likely gain further momentum in 2022.

Environmental, Social and Governance, or ESG, was a trend that was hard to ignore in 2021. Most funds speak to it in presentations and

some, especially those in venture, may invest based on ESG themes. In North America, 60% of Mergermarket’s respondents noted a significant increase in LP scrutiny of ESG issues.

The challenge with ESG is that LPs that are ESG-focused do not all agree on the ESG standards they want. For example, some LPs also incorporate social justice into ESG while others almost exclusively focus on environmental impacts. Along those lines, 29% of respondents in the survey cited climate change as the single most important ESG issue. One apparent

effect is fundraising within the energy market, where it is challenging to raise capital for oil and gas investments.

CM Wealth Advisors continues to believe that private markets provide the best opportunity for outsized returns for investors. However, after such strong equity returns, valuations at near-record levels and rising inflation risks, it makes sense to add exposure to diversifying strategies within the private markets. For example, investments like real estate can provide a hedge on inflation. Additionally, idiosyncratic strategies targeting more esoteric

assets like legal claims and intellectual property can deliver strong returns by taking different types of risks than traditional equity investments. Returns from these esoteric assets are largely independent of an adverse change in equity valuations and are providing attractive returns to investors.

Paul Bodnar is senior director of Investments & Private Capital at CM Wealth Advisors.

Contact him at 216-831-4023 or pbodnar@cmwealthadvisors.com.

Private market activity was strong on all fronts during 2021. the move in prices is not without concern. This is particularly true in late-stage venture, where deals are priced closer to perfection with less room for error.

The elevated deal activity in private markets drove substantial distributions in 2021 in both private equity and venture for LPs. Venture exit value hit a new record and was up 101% though the third quarter versus the full-year 2020 numbers. M&A activity, shorter holding periods, IPOs and SPACs all contributed to record breaking venture distributions.

INTERESTING TRENDS FROM 2021 A few years ago, funds that historically focused on more traditional sectors started to dip

CRAIN’S CONTENT STUDIO

We have fresh ideas to move business forward nationwide.

November 2021

CONNER HOWARD Custom Content Coordinator conner.howard@crain.com KATHY AMES CARR Project editor JOANNA METZGER Graphic designer For more information about custom publishing opportunities, please contact Conner Howard.

P017_044_CL_20220117.indd 19

October 2021

has completed a sale to

September 2021

a portfolio company of

a portfolio company of has been acquired by in conjunction with its merger into

has been acquired by

has been acquired by

Sell-Side Advisor

Sell-Side Advisor

Sell-Side Advisor

Sell-Side Advisor

August 2021

July 2021

June 2021

March 2021

a portfolio company of

a portfolio company of

a portfolio company of

has merged with has been acquired by

CLEVELAND

AMY ANN STOESSEL Associate Publisher astoessel@crain.com

November 2021

has been acquired by

a portfolio company of

Sell-Side Advisor

Sell-Side Advisor

has been acquired by

and

Sell-Side Advisor

Sell-Side Advisor

Visit key.com/M&A Start the conversation: Jeff Johnston, M&A Group Head and Managing Director jjohnston@key.com KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital Markets Inc., Member FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. Key.com is a federally registered service mark of KeyCorp. ©2022 KeyCorp. 211208-1356366

1/13/2022 8:59:24 AM

S4 January 17, 2022

CORPORATE GROWTH & M&A

SPONSORED CONTENT

Finance relationships a bellwether for pandemic resilience

By DOUG WINGET AND JOE KWASNY

WINGET

KWASNY

T

he ongoing COVID pandemic continues to disrupt the business and lending environment for nearly all industries and sectors. While liquidity was an issue early on due to initial restrictions and lockdowns, businesses are now facing a range of additional headwinds, including labor market challenges, supply-chain bottlenecks, cost push inflation and economic uncertainty. As a result, many companies are turning to assetbased lending to help maintain and even grow their businesses during the pandemic.

NEED FOR LIQUIDITY At the onset of the pandemic, the Small Business Administration’s

(SBA) Paycheck Protection Program provided much-needed liquidity to eligible businesses through the U.S. banking system’s lending platforms. Huntington and other banks supported existing commercial customers by helping them leverage financial-relief resources to deliver liquidity during a time of need.

For most of 2020, the strategic focus for companies was to maintain adequate liquidity and, in general, banks worked with their customers to meet the need and manage through the hardships. However, the effects of the shutdowns were not consistent across all industries, and some companies thrived at record levels while others struggled to maintain operations. Certain technology, metals, lumber, commodities and manufacturing companies generated record earnings, while those affected most by the hardships of COVID restrictions had to actively manage operations to reduce costs.

bank whil shar tight incr and mar intri finan inclu rece spec asse of its seco

NEW Afte brou busi ram in th com oper and rebo term leve tren chai near

RESPONSE FROM BANKING INDUSTRY The bank lending and commercial finance markets also have performed disparately through this historically unique period. During 2020, certain

u co c

Does your business have a Virus?

Chikol started in the early 1980’s with the purchase of fifteen companies in the manufacturing and distribution space. Most if not all were in financial distress or bankruptcy - alread sick with the flu or worse, without a remedy in sight.

We’re thankful now for those days in med school, as we learned which treatments were effective and developed “Business Pr Prophylactics” to quickly return an ailing company to health.

Chikol specializes in working with small to medium sized companies that need assistance in developing strong leadership, and the experience required to deal with issues created by the current economic conditions or internal issues preventing the company from performing to its highest level. It was founded in 1990 after the managing partners combined their more than 30 years of experience as owner-operators and with purchasing companies di in financial distress.

Chikol’s top priortiy is value enhancingment and operational improvement.

Dennis & David Kebrdle are Managing Partners and Co-Founders of Chikol, a firm of 11 Professionals that create and execute recovery plans while working with senior management, stakeholding and other constituents to maximize a positive outcome. Visit our website at www.Chikol.com

P017_044_CL_20220117.indd 20

SPO

1/13/2022 8:59:52 AM

E ther open mor thei the U attra have incr sign Wor wor have face wor Sh busi mat the r dem have shor quan to ca mee inve been

ENT

SPONSORED CONTENT

banks became inwardly focused, while others sought to grow market share. Pricing increased and structures tightened in 2020 due to the perceived increased risk and uncertainty. HNB and HBC opportunistically acted on the market disruption to materially grow intrinsically through new customer financings and geographic growth, including a West Coast expansion and recent expansions in ABL Vertical specialties. Huntington also grew its asset-based lending business as a result of its acquisition of TCF Financial in the second quarter of 2021.

CORPORATE GROWTH & M&A The November Producer Price Index rose 9.6% compared to a year earlier, according to government figures, and the Consumer Price Index increased 6.8% in November — the largest increase in 39 years.

Inventory and commodity price inflation are also prompting many commercial businesses to maintain higher inventory order levels. Given this strategy, funding and liquidity have become critical, and most banks have been asked to increase revolving credit line amounts to support the

funding needed. An asset-based lending revolving borrowing base credit structure is a flexible solution to maintain adequate working capital funding and liquidity.

NEED FOR LONG-TERM CAPITAL With pending 2022 tax changes combined with strong capital fund levels and market liquidity, M&A activity also has been increasing. The fourth quarter of 2021 may have been one of the most active quarters in

history. Given this, the need for long term capital to finance acquisitions has increased and banks and nonbank funds have been supportive to finance. On the average, acceptable leverage levels and pricing have returned to pre-pandemic levels.

Given today’s unique challenges, a company’s banking or commercial finance relationships have become even more critical. Credit structures that provide adequate liquidity and covenant flexibility — and the opportunity to grow — are more

January 17, 2022 S5

important than ever to a company’s short- and long-term success.

Doug Winget is executive vice president at Huntington National Bank and president at Huntington Business Credit. Contact him at 216-515-0789 or doug.winget@huntington.com.

Joe Kwasny is senior vice president at Huntington National Bank and managing director of business development at Huntington Business Credit. Contact him at 216-515-0754 or joe.kwasny@huntington.com.

NEW CHALLENGES ARISE After weathering the initial disruption brought on by the pandemic, businesses were challenged with ramping up operations and competing in the COVID era. By 2021, most commercial companies had resumed operations at a more normal level, and the finance markets had generally rebounded with pricing and structure terms returning to pre-pandemic levels. However, through 2021, the trends of labor shortages, supplychain issues and inflation impacted nearly all commercial businesses.

Given today’s unique challenges, a company’s banking or commercial finance relationships have become even more critical.

Early in the fourth quarter of 2021, there were more than 11 million job openings in the United States, with more than 4 million workers quitting their jobs voluntarily, according to the U.S. Bureau of Labor Statistics. To attract or retain workers, businesses have experienced significant cost increases in labor rates, including signing bonuses for entry-level jobs.

Work-from-home, flexibility in hours, work-life balance and compensation have become challenges businesses face in maintaining a productive workforce.

Shipping delays are affecting businesses’ ability to acquire raw materials and finished goods to meet the robust rebound in consumer demand. Supply-chain disruptions have resulted in companies being short of inventory and ordering larger quantities. The result is the need to carry higher inventory levels to meet demand. In addition to higher inventory unit levels, prices have been rising sharply over the past year.

P017_044_CL_20220117.indd 21

1/13/2022 9:00:17 AM

S6 January 17, 2022

CORPORATE GROWTH & M&A

SPONSORED CONTENT

Technology audits should involve a full sweep of business unit alignment

By TRAVIS GRUNDKE

I

T platforms have the potential to drive profits when properly aligned with business needs.

Conversely, when the technology platform is out of step with business goals, the potential for financial loss increases significantly.

This is why prior to mergers, acquisitions, and add-ons, GRUNDKE information technology audits are critical steps in helping you to identify risks, develop budgets and understand areas of over- or under- investment.

Historically, technology due diligence audits tended to focus on the technology assets of a business,

firm’s ability to generate revenue?

Does the firm have contractual obligations in its sales agreements guaranteeing delivery?

• Are there regulatory/compliance requirements that could pose a financial or legal risk if not properly addressed?

• Are the members of the technology team the right people in the right seats, meeting the business needs of the organization?

RISKS AND OPPORTUNITIES Technology due diligence should result in a Business Technology Alignment Plan that highlights both risks and opportunities. As an example, the Ashton Solutions team evaluated a chemical services firm and found outstanding helpdesk support response. Unfortunately, the technology team was unable to deliver quality financial reporting

As part of the due diligence process, it’s critical to understand where this data lives and how it is protected: in the cloud? On premises? On company-owned devices or on staff-owned personal devices? How is the data controlled?

How do you know if or when it moves?

2021 Year in Review Creating Value Through Partnership

CW Industrial Partners is a family-backed private equity firm focused exclusively on investing in lower-middle market businesses. Our leadership brings unique industry experience, operational best practices and access to our Industry Advisor Network™.

acquired by

May 2021

(216) 781-3233

P017_044_CL_20220117.indd 22

acquired by

Steve Hruby

Sr. Associate

Andrew Foster Sr. Associate

CWIndustrials.com

Georgio Ronis

Associate

December 2021

1100 Superior Ave #1725, Cleveland, Ohio 44114

treating IT as a business “bucket” focusing on servers, switches and workstations. Most diligence audits then end here and ignore the far more valuable insights gathered by evaluating the technology support team, processes, security stance and potential value the technology platform could deliver.

To get useful answers, technology auditors must have an understanding of what the investment/ownership strategy is prior to performing their due diligence. For example, if your focus is on growth equity, then chances are that you’ll be making some strategic investments in the target firm and will need a multi-year budget for technology. Similarly, if your intent is to roll-up related businesses, then you will need data related to potential systems integrations/consolidation, etc. In any event, some of the most important questions to ask are: • Is the target firm investing appropriately to protect its intellectual property from data loss?

• In the event of a technology systems failure, what is the impact to the

in a timely manner from their ERP solution. The recommendation was to outsource the helpdesk support and to hire data analysts to clean up the data and make it more accessible and actionable. This reshuffling of budget and resultant improvement in financial reporting led to an immediate, positive impact on cash flow. The outside insight from a third-party technology provider also gave the IT director some much needed perspective and guidance.

WORKFLOW INEFFICIENCIES Technology due diligence can also provide a great deal of information about workflow processes and the way employees do or do not work well together. In one case, an Ashton audit revealed the technology platform was solid, but that there was a significant lack of trust between teams within the company. The lack of trust led to an immense amount of double checking and inefficiencies that accumulated as jobs moved from the order intake phase through to the shipping department. This unexpected insight helped the buyer

1/13/2022 9:00:28 AM

SPO

und to fo afte

DAT Busi to y lists and they As p it’s c data in th com own data or w

COM REG Ano to ev requ thes Data (Cal Act) com the i secu firew acce cybe insu audi

ENT

ly

ogy

of

n m

o

SPONSORED CONTENT

understand where they would need to focus their immediate attention after the closing.

DATA PROTECTION Business data in all forms is valuable to you and to your competition: sales lists, marketing campaigns, formulas and related intellectual property – they’re all a form of modern currency.

As part of the due diligence process, it’s critical to understand where this data lives and how it is protected: in the cloud? On premises? On company-owned devices or on staffowned personal devices? How is the data controlled? How do you know if or when it moves?

COMPLIANCE AND REGULATORY REQUIREMENTS Another major shift in focus relates to evolving state-level cybersecurity requirements. In some situations, these are currently voluntary (Ohio Data Protection Act), but in others (California Consumer Privacy Act), some businesses are forced to comply. Adding to this is a push by the insurance industry to require security best practices such as proper firewalls, endpoint security and data access policies prior to granting cyber, general or professional liability insurance. A proper due diligence audit will highlight potential risks

CORPORATE GROWTH & M&A and outline steps necessary for remediation.

A thorough alignment plan will point out specific systems, processes or people which may pose a material risk to ongoing, profitable operations.

As an example, we evaluated the technology for a consumer products firm targeted for a roll-up project.

The leadership team at the target were unaware of security compliance requirements for several of their contracts, and as a result had none of the required systems or necessary security solutions in place. We provided budget options to the buyers and outlined the solutions required to mitigate the risks and to help them more appropriately value the acquisition based upon the potential risks.

Shedding light on the technology platform during due diligence reveals far more about a company than just software and hardware. The results provide valuation guidance, staffing recommendations and budget planning to help ensure a smooth, profitable transaction.

Travis Grundke is executive vice president and director of operations at Ashton Solutions. He can be reached at 216-397-4080 or tgrundke@ ashtonsolutions.com.

al w n

up ble

t

h

ch

S so on

Lessons learned while closing deals in a virtual environment

By JAKE NICHOLSON AND ANDREW MEDORO

NICHOLSON

W

These factors magnified the level of stress that short deadlines placed on timely closings, and this will continue as flexible work models become permanent for certain organizations.

Between buyers, sellers, and their counsel, this means understanding

MEDORO

ith most transactions operating semi-virtually before March 2020, the shift to remote work did not force a complete overhaul of the M&A process. However, it demanded a heightened emphasis on timing, communication of expectations and organization in closing deals that will stick with buyers and sellers for the foreseeable future.

The pandemic’s fully virtual environment required deals to account for the logistical challenges presented by the work-from-home policies and staffing situations of all parties touching the transaction.

Buyers should not be surprised if a third party requests to meet or review financial statements before consenting to the deal. each other’s expectations for the content and timing of due diligence and other pre-closing deliverables is more crucial than ever.

Planning for longer third-party lead times is also a must. If a government agency such as the IRS will be involved, be prepared for call center service delays and longer processing times for filings. What

third-party consents will be material to closing? Buyers should not be surprised if a third party requests to meet or review financial statements before consenting to the deal. A commercial landlord, for example, might be more sensitive to tenant changes than in past years. Will any liens need to be released? Be prepared because a seller’s point of contact may no longer have the luxury of walking down the hall and handing a payoff letter to their legal department for quick review.

Proper communication and organization have always been basic elements of a successful deal, but shortcomings in these areas were much easier to overlook when the problems they created were easier to fix – when the safety net of in-office availability was a given.

Jake Nicholson and Andrew Medoro both are attorneys in Roetzel’s Corporate, Tax & Transactional Group. Contact Jake at jnicholson@ ralaw.com. Contact Andrew at amedoro@ralaw.com.

Investment banking and financial advisory services for the global middle market

?

P as

January 17, 2022 S7

Learn what BGL can do for your company at bglco.com Mergers & Acquisitions Capital Markets Financial Restructuring Valuations & Opinions Strategic Advisory Services

ut

e o

Business & Industrial Services • Consumer • Healthcare & Life Sciences • Industrials • Real Estate

m

s uyer

Transactions involving securities are conducted at the Chicago and Cleveland offices. Brown, Gibbons, Lang & Company Securities, Inc.,an affiliate of Brown Gibbons Lang & Company LLC, is a registered broker-dealer and member of FINRA and SIPC.

P017_044_CL_20220117.indd 23

1/13/2022 9:00:42 AM

S8 January 17, 2022

CORPORATE GROWTH & M&A

Early planning will help drive productive business sale

By JON DOEHR

a complete exit. Many companies are finding attractive capital solutions that allow them to take chips off the table while maintaining a majority or minority stake. In doing so, the owner gains financial security and an option for a second monetization event in the next three to five years.

If you have determined that a sale is the right path for you, be sure to evaluate the key fundamental drivers of value that can influence the price and process. While nobody has a crystal ball, near-term macroeconomic fundamentals generally do not change overnight (barring another global event.) Owners need to weigh how the following factors may impact the value of their business and should consult with trusted advisers for counsel on these issues.

The pandemic.

Hiring issues.

Supply chain troubles.

Historically high valuations.

T

hese are some of the leading reasons why many business owners are considering a sale of their company.

For many, however, selling 100% of the business may not fit your goals or objectives.

Fortunately, many alternatives DOEHR are available today for business owners who are seeking liquidity, but not necessarily

• Does the company have management depth, or is it entirely dependent on one person? So often, the founder or a key management employee is essential to the business, and the company may fail without them. If you can’t go on vacation or all your key clients want to deal with you only, that’s usually a sign that you need more depth on your management team. You need to begin a transition that includes leadership development at multiple levels before you start the sale process.

• Financial records should be clean and credible. The financial statements should be prepared according to GAAP (Generally Accepted Accounting Principles) with good supporting documentation, explanations and records. Missing or

Roetzel & Andress Corporate and Transactional The Roetzel Corporate and Transactional Group provides strategic and commercial guidance to a broad range of middle-market participants, including privately held and emerging growth companies, debt/equity participants, traditional/alternative lenders, financial advisors, as well as private investors, entrepreneurs and executives.

• Mergers and Acquisitions

• Corporate Governance, Disclosure and Compliance

• Joint Ventures and Strategic Alliances

• Tax Planning and Structuring

• Debt and Equity Offerings

• Labor and Employment

• Commercial Loan and Bond Financings

• Exits, Recapitalizations and Spin-Offs

• Private Equity Sponsor Transactions

• Intellectual Property, Trademark and Technology

incorrect accounting entries will cause delays and may kill a sale process as it raises unnecessary questions. Do not worry about those unique items and perks — those will get adjusted, just keep good documentation.

• Legal obligations need to be removed. Contingent liabilities, unclear contractual commitments and environmental risks are a few examples of potential legal roadblocks that can impact value and stall or terminate a deal. Your transaction lawyer will have a long checklist of diligence items, but the seller is responsible for ensuring that no financial or legal skeletons will be found in the closet when a buyer starts opening doors. Have your advisers help you do your own due diligence so you can address them and not have a potential buyer find them.

• Customer diversification is another key value driver. Imagine being a supplier to one large automaker. Any fluctuations in sales will affect your business, and a change in leadership at your customer could eliminate your business. Buyers will be wary of paying top dollar for a business whose success hinges on a few key customers, even if they have long track records with the company. Companies with diversified customers, vendors and end markets generally receive better valuations.

• Cybersecurity has moved to the forefront of selling processes and needs to be addressed before going to market. A key topic that has become top of mind with the increase in cyber-attacks involves technology security. Has the business invested in technology to develop a secure operating system and business continuity plan? The expertise may be in-house or outsourced but must be credible and proven.

T

he Boomer generation is the second-largest American generation, born between 1946 and 1964, with a population of about 72 million people. The baby boomers hold one of the largest pools of wealth, much of which was generated KEBRDLE from privately owned businesses — and about 40% are small business owners. This will create a massive

222 S. MAIN STREET I SUITE 400 I AKRON, OH 44308 Terry Link tlink@ralaw.com

Chris Reuscher creuscher@ralaw.com

1375 EAST NINTH STREET I ONE CLEVELAND CENTER, 10TH FLOOR I CLEVELAND, OH 44114 Robert Humphrey humphrey@ralaw.com

Albert Salvatore asalvatore@ralaw.com

ralaw.com

R&A_2021-018_Crains_Ad_r5.indd 1

P017_044_CL_20220117.indd 24

SPO

• Finally, a company should have a strategic plan that shows how the business can generate sustainable revenue and EBITDA growth in the next three to five years. Buyers need a return on their investment and thus will pay more for a business with a defendable growth plan than one that has limited growth potential. Evidence that the company can drive sustainable revenue with good margins is a key element of perceived value.

The best advice I can provide is that business owners need to determine their objectives and priorities (financial, family, employees, legacy, etc.) and start planning as early as possible to lay the groundwork for a successful sale or recapitalization. It’s never too early to start planning and discussing your options.

As you begin this process, get help from those that have been there and have done it before.

Selling a company is a unique, once-in-a-lifetime experience for most. Find an investment banking partner that will help you evaluate strategic alternatives and lead the transaction process along with a mergers and acquisition lawyer, not a general corporate attorney. If you are not sure where to find these resources, ask for referrals from your trusted adviser (attorney, banker, accountant, financial adviser). Look for a firm with a solid track record that has completed a wide variety of transactions and will put your best interests at the forefront. Industryspecific expertise used to be essential to know the buyers, but in the age of technology and social media, this is far less critical than finding an adviser that you can trust and has experience driving success across a range of industries, transaction types and business dynamics.

time that very to m selli pers bidd the n will bred expe to p curr neig shar pres W com and is so they and on a and and so a cont

Th on

w fr

a bu w

Jon Doehr is a managing director at Cascade Partners. Contact him at jond@cascade-partners.com.

The challenges of baby boomer business succession

By DENNIS R. KEBRDLE

NORTHEAST OHIO OFFICES AND KEY CONTACTS

SPONSORED CONTENT

business shift. It is more important than ever for family owners to prepare for the future.

Many are multi-generational firms, which started 40-plus years ago, with the second generation doing what many of us did — they sent their children to colleges and assisted them in “moving up” by becoming a doctor, lawyer or another education-based professional. Rarely are the boomers’ children planning to return to the small local company that replaces gutters, cleans furnaces or sells fishing bait. They have, with family support, moved “up” and will not be there to take over for the next 40 years.

With market valuations at all-

12/10/21 7:21 AM

1/13/2022 9:00:53 AM

bou equi profi relat issu valu I the emp mak expe buy to p or h lifel com on t real will on h vast toda shor and the com maj than or th

ENT

a

e the ed us

hat nce able

that e

cy,

a It’s nd

g e

If se our

ok d of st ytial

his

a pes

SPONSORED CONTENT

time highs, most owners believe that exiting the business will be very lucrative whenever they decide to move. They quickly learn that selling your business is much more personal than just finding the highest bidder. Without the leadership from the next generation in place, who will preserve the behaviors that bred the success which new buyers expect? Existing owners also hope to provide opportunities for the current team, who might even be neighbors. Existing customers also share concerns about behaviors that preserve value.

Who can we count on at this company to ensure continued quality and timely delivery if your place is sold? Customers often note that they’ve worked with “the family” and can even call them directly on any supplier issue! Customers and suppliers both come to trust and depend on current ownership, so a huge question is: “Should we continue with a supplier being

CORPORATE GROWTH & M&A to be paid. Providing a method to maintain the performance by keeping the “flavor” of the company after sale has become one of the most challenging selling features.

We recently supported a small company with this issue by allocating a percentage of profitability to a handful of key employees and formalized it into a contract with extended terms. As the company is now going up for sale, buyers will have a solution to the issue of holding on to the key staffers while the family retires out after a few years. The biggest impact is

that although the funds paid are “bonus,” they must be subtracted from EBITDA. This adjustment is a material factor, large enough to hold the key staffers and one that might, to some degree, bring the pricing down a bit to what was seen before the run up driven by the low interest rates — but the sale process is moving along as hoped!

These boomer businesses to be sold rather than passed on to the next generation are being seen at a growing rate. The challenges for the lenders, suppliers and customers of the baby boomer generation business

owners will continue for the next 10 to 15 years.

When interest rates start their next climb, which we all know will happen, the prices will again be impacted as cost of funds are a big factor. Turmoil is seldom valuable for businesses, and as the American business landscape evolves, boomer companies will be directly impacted.

The need and role for mezzanine players will increase where larger private equity firms can’t make it work. The call will include new “family business” owners, perhaps the current managers, who will

January 17, 2022 S9

carry on the American dream. The American small business landscape will be very different for the next generation and will provide a series of new opportunities for those with an entrepreneurial mindset. Get ready!

Dennis R. Kebrdle is managing partner at Chikol Equities, Inc. Contact him at 574-360-5279.

The baby boomers hold one of the largest pools of wealth, much of which was generated from privately owned businesses — and about 40% are small business owners. This will create a massive business shift.

t

t

ms, ith

hem ctor, d ers’

hing ort, o

bought by someone like private equity that only cares about profits today and not our historic relationship?” This can be a material issue in demonstrating enterprise value to the buyer.

In most cases, ownership built the company with family and employees at the heart of decisionmaking and did not plan for the expectations or need of today’s buyers. Owner motivation is usually to provide a “good living” for his or her family and to “take care” of lifelong employees who are in the community. Many become soured on the idea of selling externally upon realizing the extent of changes that will be coming. Adding to the focus on having key staff retained is the vast shortage of “capable people” in today’s markets. We all see the staff shortages — imagine how important and valuable the key staffers are for the sale of the baby boomer small company. It is becoming one of the major hurdles for acquisition, more than access to the funding needed or the multiple that is expected

P017_044_CL_20220117.indd 25

1/13/2022 9:01:05 AM

S10 January 17, 2022

SPONSORED CONTENT

CORPORATE GROWTH & M&A

Maximizing company value ahead of the sale

By JOSEPH M. HERMAN

A

s the saying goes, you get one chance to make a great first impression. When selling a business, that first impression impacts the price, how many and what kind of potential buyers compete for it, how long the sales process takes and even whether a sale takes place at all.

Doing everything you can up front to demonstrate your company’s value, rather than allowing potential buyers to drive the conversation, will enable you to negotiate HERMAN from a position of strength. Preparing your business and preparing your deal team appropriately will pay dividends when the deal successfully closes.

PREPARING YOUR BUSINESS: THE RIGHT TEAM An effective pre-sale preparation team will comprise two groups of people. The first group consists of the company’s own C-suite, general

counsel and talent management.

This team should conduct a business risk evaluation and identify the most material risks to the company’s ongoing performance and success — risks that could take the business off course. These are the critical areas to actively manage especially well during the sales process.

The second group consists of external third-party experts that will help you look at your business through the eyes of potential buyers.

Their role is to help you uncover any problems before they negatively impact the sale process (will a change of control cancel any sales contracts?), to make sure your sales story is supported by your data (do our loss reports truly indicate a safe work environment?) and to help you value your company appropriately (how will carving out certain assets affect our potential value?).

This team should consist of legal experts, investment bankers and accountants. Additionally, risk managers — often forgotten in this process — can play a critical role in helping you identify, mitigate or transfer risks before you become involved in a sale. Examples of areas a

risk manager might look at include: • Cyber: How safe is your network?

How is your client data protected?

• Employee benefits: Are you compliant with applicable laws?

• Property coverage: Do you have gaps?

• Safety: Have known issues been addressed?

• Environmental risks: Are there

As the saying goes, you get one chance to make a great first impression. concerns that merit more study before a potential sale?

• Supply chain strength: Does the business rely on too small a pool of suppliers or clients?

• Business continuity: Has your plan been reviewed and tested recently?

The goal is to uncover and address any issues that could hurt your valuation or trigger questions that slow down the sales process.

Sometimes companies decide to avoid the expense and effort of working with an external pre-sale team because they know buyers will do their own due diligence. However, this is an opportunity for you as the seller to set the tone for the entire transaction.

A thoughtful, comprehensive and transparent (warts and all) presentation will instill confidence in buyers that they are targeting a well-run company that is valued appropriately. Even if potential buyers discover something unexpected during the due diligence process — and something almost always does pop up — they are more likely to feel that it was truly something innocently overlooked rather than intentionally hidden after seeing your preparation process.

Once the pre-sale team has conducted its assessments, prepared its reports and identified and addressed any risks that could upset a sale, it’s time to prepare your internal deal team to tell your company’s story accurately, efficiently and consistently when addressing prospective buyers.

PREPARING YOUR PEOPLE: A CONSISTENT, EFFECTIVE PRESENTATION

As with any important business presentation, it’s critical to practice the delivery. Conduct dress rehearsals to prepare. Consider not only the information you plan to share but also the questions potential buyers might ask. Make sure everyone on the team is aligned in how to respond.

The goal is to tell your story while avoiding any awkward conversations during the sales process.

Also consider what your employees might say if someone asks questions during a facility tour. Keep in mind that buyers may not directly ask the questions for which they want answers.

They may ask questions that allow them to infer answers. For example, rather than asking your shop manager if safety is important or whether the company culture is positive, a buyer may ask employees how long they have been with the company. Is the answer likely to be in line with what has been presented? If there are discrepancies or gaps, how will your team address them?

LEARN MORE To discover how Hylant can help you reduce the uncertainty that often surrounds complex transactions, visit hylanttransactionsolutions.com/.

Joseph M. Herman is chief operating officer at Hylant M&A|Transaction Solutions. Contact him at 419-7248713 or joe.herman@hylant.com.

GROWTH MARKETING FOR PRIVATE EQUITY FUNDRAISING

Looking to accelerate the growth of your portfolio companies? Need to tell a compelling story to investors?

Or perhaps you require more qualified deal flow?

We can help. For decades, Roop & Co. has generated top- and bottom-line results for private equity firms.

PORTFOLIO COMPANY GROWTH

DEAL SOURCING LEARN MORE AT ROOPCO.COM/PE

P017_044_CL_20220117.indd 26

1/13/2022 9:01:26 AM

SPO

C

By S

T

stre S the sust has L revo brou othe achi the deca of o con in to lot o inno T

e sals

SPONSORED CONTENT

Creativity is fueling a golden age for private equity

By STEWART KOHL

the

ons

es

ers.

ger

ave er n or em?

ften isit

g n

CORPORATE GROWTH & M&A

January 17, 2022 S11

T

he longest bull market of my lifetime is driving a remarkable era for private equity. It’s easy to point to across-the-board growth and assume the rising tide is lifting all boats, but a closer look reveals the industry has been incredibly KOHL innovative in this stretch as well.

Seeing all this creativity applied by the private equity industry to drive sustainable long-term growth in value has been incredibly inspiring.

Low interest rates, technological revolutions, the forced innovation brought on by the pandemic and other macro factors have made achieving rapid growth easier, but the private equity industry is now decades old with a long history of outperformance. That history continues with outperformance even in today’s frothy markets. Credit a lot of that to the industry’s spirit of innovation.

To be sure, some of that innovation

is financial. For example, singleasset funds, continuation funds, secondaries, GP stakes and the like are new ways that firms are deploying capital. There’s more and more capital being deployed, with some firms approaching about one new deal a day.

That said, the best PE shops learned a long time ago that financial capital is only part of the equation. Human capital is a bigger part. Human capital

The best PE firms have built sophisticated teams with deep industry knowledge and operating experience dedicated to improving the companies they invest in. is what determines the types of companies to buy, where to buy them and – crucially – how to grow them.

Much of that capability is built on a foundation of hard-won experience.

The image of PE firms piling debt onto a company and sucking the wealth out of it decades ago is simply not how the industry works today. The best PE firms have built sophisticated teams with deep industry knowledge and operating experience dedicated to improving the companies they invest in. These deep resources identify and integrate add-on opportunities, drive commercial growth through sales excellence, improve operations, invest in technology and new products, revolutionize marketing and more.

Top PE firms only succeed when the companies in which they invest thrive.

It’s that kind of experience and expertise in a given industry that is driving outperformance in PE today.

A good example is software-as-aservice (SaaS). A decade ago, it was barely a blip on the radar of many private equity firms. Riverside, for example, has completed dozens of SaaS investments, and they represent some of the firm’s strongest growth stories.

Perhaps more surprising is finding growth where the average person – or investor – might never think to look.

You’d probably be surprised to learn that the plumbing business is flush with PE competition, but it is. It’s profitable, offers new technologies

tied to efficiency and is ripe for innovation.

Applying industry experience and expertise to companies where they have a lot of experience allows PE firms to move with speed and conviction to accelerate growth and add value in ways that are simply not possible for an independent owner.

When done well, private equity results in a win-win-win, where an owner of a business can partner with a private equity firm to gain financial capital and the resources to take the business to the next level, increasing employment opportunities and value along the way. So the business owner, investors and employees and even the

community all come out ahead.

The net result of all this PE activity is more competition in economy and more opportunities for everyone. And even if you’re not working in PE or working for a PE-backed company, you should care about it. According to the American Investment Council, the industry employs nearly 12 million Americans and represents about 7% of GDP. PE is increasingly relevant to our lives and businesses.

I believe that’s a good thing.

Stewart Kohl is co-CEO of The Riverside Company, a global private equity firm.

M&A Risk Management & Human Capital Strategies

Providing a world of protection around your investments.

Due Diligence and Human Capital Assessment Risk Management & Property & Casualty Insurance Employee Benefits 401(k) and Retirement Plan Services Key Person Life Insurance and Executive Compensation Reps & Warranties Insurance (RWI) Portfolio Program Management

© 2020. Oswald Companies. All rights reserved. DS2371

ENT

OswaldCompanies.com/PrivateEquity 855.4OSWALD

P017_044_CL_20220117.indd 27

1/13/2022 9:01:39 AM

S12 January 17, 2022

CORPORATE GROWTH & M&A

TMA Northern Ohio Chapter announces 2021 Lifetime Achievement Award winner!

M&A expected to continue its robust growth streak

By ALBERT D. MELCHIORRE

2

The Northern Ohio Chapter of the Turnaround Management Association congratulates John Lane, Inglewood Associates, winner of the 2021 Lifetime Achievement Award.

We thank John for his leadership and the contributions he has made both in the turnaround industry and in our community.

2021 TMA.indd 1

12/10/2021 12:36:11 PM

SPONSORED CONTENT

021 was the best of times and the worst of times. All businesses have been impacted by the challenges of COVID; some to a great extent and some to a lesser extent. More importantly, our families and loved ones have been impacted as well. In order to help businesses and families, the government has provided several stimulus packages in the form of PPP loans, Employee Retention Credits and extended unemployment benefits to name MELCHIORRE a few. One of the unintended consequences of all this stimulus is inflation (and hopefully not stagflation). Prices are rising across the board, from raw materials to wages. In order to maintain margins, businesses are trying to pass these price increases along to their customers, but trying to keep up with the next round of price increases is becoming more and more challenging.

mid-2020, PE markets have been on fire. According to PitchBook, through the first three quarters of 2021, nearly 300 funds have raised a combined $238 billion, compared to $270 billion in all of 2020.

PitchBook expected fundraising to continue at a rapid pace through the fourth quarter of 2021. From a “dry powder” perspective, PitchBook estimates total uninvested capital in the U.S. to be approximately $829 billion, which is up 8% compared to $766 billion at year-end 2020 and up approximately 12% as compared to year-end 2019.

PE firms have announced more than $940 billion in buyouts in the U.S. in 2021, which is nearly 2.5 times the same period last year, according to Dealogic. Mega deals have been a big factor, as demonstrated through several completed deals in excess of $10 billion. Investors are seeking ways to capture increased returns, and PE is a great place to achieve superior returns compared to other alternatives.

From a pure corporate or strategic buyer perspective, there are several ways to increase shareholder value, including investing in new property,

2021 was the best of times and the worst of times.

You deserve a wealth management partner who goes beyond the numbers.

As a trusted partner and advisor to individuals and families for more than 65 years, Glenmede Private Wealth empowers our clients to confidently pursue their purpose, passion and legacy through personalized, integrated wealth and investment management. Our team of specialists tailors strategies intended to help you reach your lifestyle, legacy and philanthropic goals.

What are your wealth objectives? We welcome the opportunity to learn more about your passions and your goals.

To begin the conversation today, kindly contact: Linda Olejko

216.514.7876 go.glenmede.com/cleveland

P017_044_CL_20220117.indd 28

From an M&A perspective, however, it has been another record year in the U.S. Through November 2021, total deal volume in the U.S. has surpassed all of 2020. According to S&P CapIQ, total deal volume of closed deals through November in the U.S. was 18,976, which is up approximately 24% compared to 15,260 in all of 2020.

Based on transactions where deal values were disclosed, total deal value in the U.S. was up approximately 82% in 2021 to $2.78 trillion, compared to $1.53 trillion in 2020, according to S&P CapIQ. Drilling down closer to home, deal volume in the Great Lakes region through November increased approximately 27% to 4,852 from 3,827 in all of 2020. Great Lakes deal value also increased about 72%, to $667 billion from $388 billion in 2020. In addition, there has also been a “flight to quality” for the acquisition of businesses and management teams that have performed well during the past 12 months.

There are several key drivers for this boom in M&A activity, including low interest rates and high stock prices. The biggest driver is liquidity.

This primarily comes from two sources: private equity “dry powder” or uninvested capital and record levels of cash on corporate balance sheets.

After a brief slow down during

plant, and equipment or paying dividends, but one way to really move the needle is to make strategic acquisitions. With a record level of cash on balance sheets in the trillions of dollars, strategic buyers are using this war chest to make strategic acquisitions. This, combined with the liquidity in the PE markets, is creating a “perfect storm” environment for sellers. As a result, it continues to be an excellent time to be a seller.

As we look forward into 2022, we expect this level of M&A activity to remain robust, although somewhat tempered. Liquidity in the market should remain strong from the PE overhang and cash on corporate balance sheets for the next 12 to 18 months, as well as banks’ willingness to support M&A activity. With inflation continuing to rise, we may see the Fed begin to raise interest rates, which could have a dampening effect, but probably won’t have any significant impact on the M&A markets until mid-to-late 2023. It’s a good time to be in the M&A business, whether you are a seller, buyer, or adviser.

For the moment, and in the words of the ’80’s rock band the Cars, “Let the good times roll.”

Al Melchiorre is president and founder of MelCap Partners, LLC. Contact him at al@melcap.com.

1/13/2022 9:01:50 AM

SPO

M a

By D

C

20 y bein com

HO

to na own Man pres the c an e A enga invo a wa valu

ENT

SPONSORED CONTENT

k

Motivating managers when facing Avoid closing pains a sale is key to easing transition by addressing HR, benefits issues

on ugh arly

lion

h

ok n

to up o

mes g a h

g

By DICK HOLLINGTON

C

W Industrial Partners, LLC has invested in lower middlemarket businesses for more than 20 years. In our view, the key factor to being a successful owner is the quality, commitment and engagement of senior management teams, in particular the CEO. When you are the first institutional owner of a private company, it can HOLLINGTON be a challenge for management to navigate the uncertainty of PE ownership that will lead to another sale.

Managers are not only faced with the pressure of leading the company, but the challenges and unknowns related to an exit.

A best practice for motivating and engaging managers for exit doesn’t involve a special plan. The approach is a way of life that follows certain core values:

CORPORATE GROWTH & M&A

Collaboration. Treat your managers as business partners. Collaborate on strategy and motivate management to execute. In order to align interests economically, provide wealth creation opportunities through direct investment and equity incentives.

A best practice for motivating and engaging managers for exit doesn’t involve a special plan. The approach is a way of life that follows certain core values.

Humility. Support management teams as opposed to directing them.

Serve your managers by creating likeminded advisory boards and

introducing resources that support continuous improvement.

Family. Maintain perspective on what is most important.

Integrity. The foundation of partnerships is based on acting with integrity. Encourage management to make decisions in the best long-term interest of the business.

By partnering with management to create a shared vision for the business, fostering an atmosphere of trust and maintaining honest lines of communication, managers will be motivated and engaged throughout the term of your ownership. While an exit stage is demanding and stressful, teams have faith in a process governed by values.

Dick Hollington is managing partner at CW Industrial Partners. Contact him at dhollington@cwindustrials.com.

For informational purposes only.

r

gic l , y,

s.

January 17, 2022 S13

By BRIAN STOVSKY

I

n today’s employment market, employee benefits have become a leading consideration to attract and retain top talent. As such, it is important to make employee benefits a key focus as M&A activity continues to rise and businesses continue to transition through acquisition. Postclose planning performed during due diligence can mitigate and avoid disruption to employees, STOVSKY which is often a pain point for buyers.

Shortcuts taken during employee benefits due diligence will create issues for the new ownership as issues will go overlooked. A common oversight during a transaction is not

discussing the following questions in relation to benefits: What is the structure of the transaction and what is the timing of close?

The successful analysis of benefits plans during due diligence will create a more seamless closing process as well as mitigate future risk for the buyer. Buyers must be cognizant of how the transfer of ownership will impact the treatment of health insurance and benefits plans based on how a deal is structured.

The continuation of coverage for employees, as well as opportunities to create more cost-efficient benefits plans as the result of a deal are often overlooked.

ASSET TRANSACTION GUIDANCE Under an asset purchase structure, the selling entity (oldco) may either roll

(Continued on next page)

Don’t Skip this Critical Step when Assessing an Investment

ic

Information Technology Audits Provide Critical Investment Insights

ons g

the ting

Ashton Technology Solutions performs IT Audits that inform investors with a Business Technology Alignment Plan that details...

be

e

• Risks and opportunities • Workflow inefficiencies

ss to on Fed

• Data storage and protection protocols • Compliance issues and risks Learn what a thorough IT Audit by Ashton Technology Solutions can reveal by downloading our white paper: www.ashtonsolutions.com/ITaudit

o be are

ds t

der him

CONTACT US

P017_044_CL_20220117.indd 29

|

sales@ashtonsolutions.com

|

216.397.4080

|

ashtonsolutions.com

1/13/2022 9:02:04 AM

S14 January 17, 2022

under an existing holding (owned by buyer) or, alternatively, the buyer will form a new company (newco) that is created prior to or at closing. This creates a scenario where various items connected to the seller, including the employee benefits plans, may not transfer to the buyer post-close.

Among other risk-related items, the primary concern around employee benefits is ensuring the continuation of attractive benefits and coverage for the seller’s employees through close and beyond. Health insurance policies are “left behind” during an asset transaction because they are tied to the former company’s name and Tax Identification Number (TIN). Therefore, the buyer must determine which TIN and policyholder is tied with the goforward benefits plans (existing holding/ platform, or newco). Additionally, coordination between the buyer’s advisers and the seller’s payroll and benefits administration vendors must occur as the seller’s TIN is tied to payroll.

Regarding continuation of benefits plans, there are two standard options for a buyer which should be compared during due diligence.

CORPORATE GROWTH & M&A 1) Maintain separate health plans for buyer and seller. Although the oldco policies are left behind during the asset deal, it is possible to generate new policies that mirror the existing plans under newco on a go-forward basis. How do you determine if this is feasible? The benefits adviser performing due diligence should compare the benefit

maintain separate plans for the two entities, conversations must be had with the carrier partners to amend existing policies to reflect the new policyholder/TIN. Oswald’s carrierpartner relationships often allow us to ensure continuity of benefits with separate policies under the time constraints of a deal.

carriers (buyer) to ensure successful enrollment of employees and transfer of existing deductible and out-ofpocket (OOP) credits from seller to buyer’s plan, so employees are not left with unnecessary OOP expenses.

Additionally, although carriers often have “continuity of care” clauses within their policies to ensure treatment in process is not disrupted,

In today’s employment market, employee benefits have become a leading consideration to attract and retain top talent. plans of both buyer and seller and determine if it is more cost efficient to leave the plans as-is or consolidate.

Considerations include whether the benefit levels (deductibles, out-ofpocket, coinsurance, etc.) are similar enough to avoid disruption through consolidation and understanding the broadness of networks of current carrier partners to avoid provider disruption. If the findings show that it is more effective to

2) Consolidate benefit plan options.

There may be immediate value available to the buyer by merging plans if the analysis shows this is a viable option. If there is enough alignment amongst buyer and seller plan designs and networks, the adviser and buyer would need to work together to transition the seller employees to their new plan. This includes coordination between the incumbent carriers (seller) and new

SPO

SPONSORED CONTENT

the adviser would need to obtain pre-existing provider approvals in the event of a carrier change to mitigate ongoing disruption. The key is to confirm continuance of coverage for employees. It may also make sense to market the existing plans, depending on the timing of close in coordination with renewals.

This can be accomplished pre-close to determine if cost savings are available.

STOCK TRANSACTION GUIDANCE Stock transactions typically allow the seller to transfer ownership to the buyer without much disruption to health insurance and employee benefits as the selling entity will remain intact, with its policies and TIN through close. Although the same decisions on separating or consolidating benefits discussed for asset deals are still relevant to post-close strategy, these decisions can often be made post-close without issue. However, incumbent carriers may need to be notified of a change in ownership by the seller or their adviser, which could change compliance requirements of the seller moving forward (most likely due to number of commonly owned employees).

the t vari plan Act has see t leve Wh adeq we o inde

2. R plan targ mul are c emp issu Thes by s cont for l unc emp with the q are m Add allow info mul resp

Brian Stovsky is a business development leader at Oswald Private Equity. Contact him at 216-777-6114 or bstovsky@oswaldcompanies.com.

Employee benefits due diligence should be at top of M&A checklist

By JEFF SMITH AND MELISSA DIALS

EXIT STRATEGY

SOLUTIONS...

WITHOUT THE USUAL OBSTACLES SMITH

“

Our partnership with Elvisridge Capital provides us with financial backing and industry experience critical to expanding our distribution footprint.”

— John Daly, Founder, SurfaceLogix

HOW WE HELP

We are a resource for business owners looking to retire or to take some equity “off the table” by being a partner who can help the business continue to grow.

We seek control buyouts in partnership with management teams.

INVESTMENT CRITERIA EBITDA Range: $200,000 to $3 million Holding period: Long Term Preferred Sectors: Sportfishing Products and Landscape Products CONTACT DETAILS 25201 Chagrin Blvd., Suite 300 Beachwood, OH 44122 601 S. Fremont Avenue Tampa, FL 33606 Phone: 216-678-9900 Email: info@elvisridgecapital.com Website: elvisridgecapital.com

P017_044_CL_20220117.indd 30

H

DIALS

istorically, personnel and employee benefit issues were not given much attention during the diligence process when employers and investment groups contemplated acquisitions. Focus has shifted more recently, in large part because of: • the rise of class and collective action litigation; • the emergence and increasing popularity of “Reps & Warranties” insurance products and; • the resulting scrutiny of employment law issues by insurers and the broad application of successorship liability principles to employment matters in both asset and stock purchase transactions.

Regardless of the structure of the transaction, when it comes to employment-related liabilities, the buyer must conduct meaningful diligence. Potential liabilities can be handled through various mechanisms, whether by establishing

a substantial escrow for liabilities, negotiating protection through a strong indemnification or other mechanisms. No matter how the buyer seeks to limit its potential liability, however, the days of ignoring employee benefits and other employment-related issues in the diligence process are history. These issues matter in terms of legal liability, deal valuation (and evaluation) and post-acquisition integration of operations/policies/assets.

Our due diligence focuses on the need for assessing compliance to minimize unnecessary expenses and distractions, as well as

3. E agre

C

M

Y

CM

MY

Employee benefits issues sometimes take the backseat to corporate issues in mergers and acquisitions. providing insight into possible cultural challenges that need to be addressed to ensure a successful integration. Three common areas for benefits planning in mergers and acquisitions are health and welfare plans, retirement plans and executive compensation arrangements.

1. Health and welfare plans. The buyer will need to determine whether

1/13/2022 9:02:17 AM

CY

CMY

K

SPONSORED CONTENT

ENT

the target’s plans comply with various laws affecting group health plans, including Affordable Care Act compliance. Although the ACA has been in place for many years, we see target companies with varying levels of compliance with the ACA. When target employers cannot adequately prove ACA compliance, we often suggest additional, specific indemnification language.

n

2. Retirement plans. Retirement plan concerns are directed at target company plans, as well as multiemployer pension plans, which are contributed to by many unionized employers. We tend to see more issues in the multiemployer plan area.

These plans are often misunderstood by smaller employers, even though contributions have been made for long periods of time. It is not uncommon for a small, unionized employer to know nothing about withdrawal liability, and often times, the questions asked during diligence are met with surprise by employers.

Addressing these plans early on will allow adequate time to gather needed information, especially when many multiemployer plans cannot quickly respond to information requests.

s

nt

r ge

ed

ate 14 .

e t

3. Executive compensation agreement.RS-HALF-PAGE-Ad-2021_v1.pdf The buyer will need

January 17, 2022 S15

CORPORATE GROWTH & M&A to evaluate whether executive employees of the seller will be retained following the sale, and under what terms and conditions.

However, even if a buyer decides not to retain high-level employees, the buyer will want to carefully review any executive employment contracts.

Many such agreements contain “change in control” language that trigger expensive payouts should the company be sold or acquired by another entity. For example, many executive employment agreements contain “incentive retirement compensation” provisions that provide for retirement payments, which kick in at a determined retirement date or age. However, it is very common for such agreements to contain a “change in control” clause to require expensive payouts to be made immediately upon a sale of a business. Buyers will want to carefully review any executive employment contracts for any similar triggering provisions.

All of the foregoing underscores the critical reason for buyers to conduct an accurate due diligence review prior to making any decision to merge with or acquire another company. Conversely, by understanding the concerns of buyers, a seller can anticipate, address, and in some circumstances even remedy these concerns pre-acquisition, 1 11/4/21 2:13 PM

leading to a more successful sale.

Employee benefits issues sometimes take the backseat to corporate issues in mergers and acquisitions.

Turning this process around and focusing on employee benefits issues at the outset can lead to fewer and smaller surprises down the road. We recommend that a comprehensive diligence request list include detailed questions about employee benefits issues. This should be followed with early communication with seller and its counsel, and further follow-up as needed. Simply dumping documents in a data room tends to lead to confusion and poor answers.

A good due diligence review will analyze the issues discussed above and evaluate any potential liabilities the buyer may be taking on. Nothing can sour a deal like learning (after the fact) that not only did you acquire a new company, but you also picked up several millions of dollars in liabilities. A due diligence review should be done early on to determine how these issues may impact the buyer’s desire to complete the transaction, and how these issues might affect the purchase price.

Jeff Smith and Melissa Dials are partners at Fisher Phillips LLP. Contact Jeff at 440-740-2124. Contact Melissa at 440-740-2108.

Buyer, seller tax benefits key to structuring M&A transactions

By JAMES B. SKAKUN

A

properly structured transaction can provide tax benefits to both the buyer and the seller. Typically, buyers want a deductible step-up in basis while sellers want capital gains treatment.

Proper planning is crucial to achieving both.

Tax SKAKUN considerations are important factors in how transactions are structured. The buyer needs to determine which type of acquisition vehicle, e.g., corporation or partnership, will be used, and which type of investment vehicle currently holds the target business.

There are several options at the

buyer’s discretion, depending on the seller’s structure, to ensure it receives a step-up in basis that, in part, would be eligible for immediate expensing with the remaining step-up deducted over time. The immediate expensing can provide significant tax savings in the first year for the buyer and result in increased cashflow.

One common structuring tool for pass-through entities such as an S corporation is an F reorganization.

This allows the transaction to be treated as an asset purchase with the buyer acquiring the legal entity.

The seller will still have capital gains treatment, the buyer will receive a step-up in basis, and there is an added layer of protection to the buyer from a tax exposure standpoint.

Tax considerations can also affect the timing of transactions. In

(Continued on next page)

Through 30 Years and more than

800 Investments,

her

we’re proud to call Cleveland home!

e lity,

f C

M

To learn more about Riverside’s strategies to invest in companies ranging from breakeven profitability up to $400 million in enterprise value, contact:

Y

CM

MY

CY

CMY

Cheryl Strom, ORIGINATION

K

+1 216 535 2238 cstrom@riversidecompany.com

nd e ive

50 Public Square, 29th Floor | Terminal Tower | Cleveland, Ohio 44113 | riversidecompany.com

her

P017_044_CL_20220117.indd 31

1/13/2022 9:02:29 AM

S16 January 17, 2022

September 2021, Congress released legislative text that contained several significant tax changes, including a significant capital gains tax rate increase and effectively eliminated the small business stock tax strategy.

Although this proposed increase in capital gains tax was not ultimately passed, the legislation may have

Typically, buyers want a deductible step-up in basis while sellers want capital gains treatment. Proper planning is crucial to achieving both. caused sellers to move more quickly than originally planned.

Although taxes tend not to drive business decisions of whether to sell, anticipated changes, especially to capital gains rates, could impact when sellers go to market.

James B. Skakun, CPA, is senior manager at Bober Markey Fedorovich.

Contact him at 330-255-2429 or jskakun@bmf.cpa.

CORPORATE GROWTH & M&A

Adapting to disruption in M&A deals in an era of volatility

By CHRISTOPHER J. HEWITT AND JAYNE E. JUVAN

HEWITT

A

JUVAN

s disruptive as the current M&A landscape has been, deal practitioners have seen and successfully navigated similar disturbances before. Doing so is never easy, however, especially during dark days like March 16, 2020, when the Dow Jones Industrial Average sharply dropped 2,997 points due to COVID-19. Many presumed that deal activity would grind to an extended halt. While volume initially plummeted, a “V-”shaped recovery ensued even as the pandemic raged on.

Perhaps similar to a wartime period, today’s challenges are daunting. The world continues

to fight an ever-changing, deadly virus that is outmaneuvering the medical community’s efforts at eradication. Couple that with supply chain disruptions, an inflationary environment and jockeying over U.S. tax policy, and headwinds are the only thing that seem bountiful. But while brighter days seem lost or far off, history has proven at least one thing is for certain – they always return.

Executives who study the current situation to identify opportunities for their businesses, have the audacity to execute on them, and do so in an intelligent way have a jump on those who take themselves out of the game.

The following are a few of the issues to understand to position yourself for a lucrative outcome.

GOVERNMENTAL REGULATION Mask and vaccine mandates, social distancing, capacity restrictions, COVID-19 testing, contact tracing, quarantines, travel restrictions, border closings, facility shutdowns, stay-at-home orders, and other COVID-19 protocols are unique

to the current pandemic. These measures have caused hiring problems, supply chain issues, and production problems, and they have cost companies hundreds of millions of dollars in lost sales and increased expenses. They also have created additional legal exposure.

While these particular measures are unique to this pandemic, government regulation is not. Sarbanes-Oxley and Dodd-Frank are just two examples of reactionary regulation that created additional responsibilities and legal exposure. Beyond these types of seminal regulatory developments, governments at all levels, and in all countries, are continually tweaking their regulatory regimes.

Understanding how target companies have managed and complied with these new and ever-changing regulations — and the associated exposure — is a key feature in a thorough due diligence process today.

Any material exposures identified should be addressed through adjustments to economic terms, indemnification and escrows.

SPONSORED CONTENT

SPO

SUPPLY CHAIN RISKS It is an understatement to say that recent supply chain issues have created a material disruption to business. Worse yet, before the current challenges, legal teams may not have mitigated supply chain risk when contracting. We have seen numerous situations in which companies have contractually promised to deliver goods even under exigent circumstances, only to find that their suppliers contractually may back out at the first sign of trouble.

Contract due diligence should not simply be “check the box,” but should aim to gain a thorough understanding of supply chain risk and the legal exposure created by failing to take a holistic approach to contracting.

ORD OPE N In m purc does fina and inte cove the “ “ord duri exam extr peri selle prac with a wh Sho Part cove activ

RIS Dela the m for m selle spec buye mac mar but s to al desi

Congratulations to all ACG Cleveland Deal Maker Award nominees and honorees!

Calfee celebrates the accomplishments of Dan T. Moore, the ACG Cleveland Lifetime Achievement Award recipient!

We are grateful for the opportunity to have worked for decades alongside Dan T. Moore who has achieved the highest level of sustained success, personally and professionally, over a lifetime of deal making.

Calfee also congratulates Blue Point Capital Partners and Cleveland-Cliffs Inc. as ACG Cleveland Deal Maker Award recipients! Calfee is honored to represent many companies and private equity funds, including the Dan T. Moore Company, Blue Point Capital Partners and Cleveland-Cliffs Inc., that generate employment and economic success in our region and beyond.

Calfee’s Corporate and Finance Group Leaders Thomas M. Welsh | Jennifer L. Vergilii | Karl S. Beus

CALFEE.COM | 888.CALFEE1 | INFO@CALFEE.COM

©2021 Calfee, Halter & Griswold LLP. All Rights Reserved. 1405 East Sixth Street, Cleveland, OH 44114. ADVERTISING MATERIAL.

P017_044_CL_20220117.indd 32

1/13/2022 9:02:41 AM

ENT

y

h

der d may .

uld ding a

SPONSORED CONTENT

January 17, 2022 S17

ORDINARY COURSE OPERATIONS NEW FACES IN NEW PLACES In many deals, parties will sign a purchase agreement, but the closing does not occur immediately due to financing delays, regulatory approvals and other outstanding items. In the interim period, the seller will often covenant to operate the business in the “ordinary course.” But what does “ordinary course” mean, especially during these uncertain times? For example, can the seller engage in extreme cost-cutting measures if a perilous situation surfaces? If the seller deviates from its own past practices, but its actions are consistent with those taken by the industry as a whole, is the seller in compliance?

Should the buyer have consent rights?

Parties should clearly define this covenant so the nature of permissible activities is without ambiguity.

transaction and needs to retain the ability to back out of the deal, the buyer may want to attempt to reallocate nonbusiness risks to the seller. While we are in a seller’s market, buyers should take an educated and thoughtful approach to these provisions and not simply adhere to the supposed “norms” that Delaware courts and other deal attorneys have created.

RISK-SHIFT WITH MACS Delaware courts have suggested that the most economic allocation of risk for material adverse changes is for the seller to retain responsibility for risks specific to the business, and for the buyer to bear all other risks (such as macro-economic risks, risk of a stock market decline and industry risk), but sophisticated parties may agree to allocate these risks in any way they desire. If a buyer is undertaking a riskier

Christopher J. Hewitt is partner and co-chair of the Tucker Ellis M&A and Corporate Governance practice groups at Tucker Ellis LLP. Contact him at 216-696-2691 or christopher.hewitt@ tuckerellis.com.

CONCLUSION Buyers, sellers, and deal practitioners need to continually adapt to the environment in which they do deals. Unanticipated disruptions share characteristics with both prior unanticipated and anticipated changes. Savvy deal practitioners will be able to identify these similarities and apply lessons from the past to keep the deal engine humming.

Jayne E. Juvan is partner and co-chair of the Tucker Ellis M&A and Corporate Governance practice groups. Contact her at 216-696-5677 or jayne.juvan@ tuckerellis.com.

d

e s

P017_044_CL_20220117.indd 33

1/13/2022 9:02:55 AM

S18 January 17, 2022

CORPORATE GROWTH & M&A

SPONSORED CONTENT

Programmatic acquisitions create sustainable value

By JASON STEVENS

deliver better returns for shareholders.

According to research ompanies looking to conducted and recently grow through M&A updated by McKinsey, should consider programmatic acquirers looking at deal making not have delivered about 2% as a one-off event but rather more in excess total returns as a sustained, systematic STEVENS to shareholders annually strategy. as compared to non-programmatic Although large, isolated deals have acquirers. Moreover, these premium their place in the M&A playbook, a returns are shown to come with lower programmatic approach is proven to

C

levels of risk, persist during periods of economic volatility and span multiple sectors of the economy.

A single, targeted acquisition can be perfect for firms looking to expand with a defined strategy involving organic, selective or large deals. However, a programmatic approach can really boost value creation when the systems and processes are in place to integrate target companies, giving programmatic acquirers an edge relative to their peers.

EMBRACING PROGRAMMATIC M&A The programmatic approach has been shown to deliver better shareholder returns across most sectors.

McKinsey found that companies employing the programmatic strategy outperformed other approaches (selective, large deal, organic) across advanced industries; transport, logistics, and infrastructure;

Tenacity and Creativity to Respond to Extraordinary Challenges

Our experienced, savvy corporate team helps our clients navigate tough times to maximize opportunities as they arise.

CLEVELAND: Tod Northman | tod.northman@tuckerellis.com | 216.696.5469 CHICAGO: Arthur Mertes | arthur.mertes@tuckerellis.com | 312.256.9407 LOS ANGELES: Kristen Baracy | kristen.baracy@tuckerellis.com | 213.430.3603

tuckerellis.com

P017_044_CL_20220117.indd 34

consumer packaged goods and retail; financial services; energy and materials; pharmaceutical and medical products; and healthcare systems and services.

Programmatic M&A also pays off during periods of greater economic volatility, including amid the COVID-19 pandemic.

Between January 2019 and December 2020, programmatic M&A among companies with market caps greater than $2 billion delivered median excess total returns to shareholders of 2.9%, compared to -1% for organic strategies, -0.2 % for large-deal strategies, and 0% for selective strategies. We find similar results playing out among middlemarket companies.

Additionally, the consistent nature of programmatic M&A allows acquirers to hone their deal making abilities.

When M&A is treated as an ongoing commitment rather than

Acquirers can achieve better results with a dedicated and disciplined approach to deal sourcing, due diligence and integration planning.

a one-off occurrence, outcomes are maximized. Like professional athletes honing their natural abilities with physical training, acquirers can achieve better results with a dedicated and disciplined approach to deal sourcing, due diligence and integration planning.

In the same way that acquirers should be developing a business strategy and executing daily to sell products or services, they should be in the weeds every day evaluating M&A opportunities. Even deals that do not come to fruition are beneficial, as you can learn just as much from those deals as from the ones you close.

With a programmatic approach, acquirers become accustomed to thinking through all the details of a transaction, such as how to redefine roles and combine processes with the target company. In a 2018 report, McKinsey found programmatic acquirers were better prepared: more likely to estimate revenue and cost synergies as well as designate personnel to manage every step of the process.

We find that the most successful acquirers view the deal making process as part of ongoing operations,

1/13/2022 9:03:07 AM

SPO

allow relat opp mak C app lead have succ und reso a tra und can only the inte targ the simp prop purs targ frus

PLA M& The iden adva sour acqu find dilig busi “Thr

• Co Prog mor they com

• Co acqu proa

• Ca are 1 agre and

Adv A tr to cl buil full com adva prov stru sear and han part P cons desi advi syste valu sect

Jaso and him copp

ENT

ber

r cess %, gies, 0% ilar

ows g

ve

h

g.

ies

h d

l be

e

SPONSORED CONTENT

allowing the organization to establish relationships, pursue off-market opportunities, and sharpen their deal making capabilities.

Conversely, a more passive approach to M&A typically leads to subpar results. We have seen otherwise savvy and successful businesses dramatically underestimate the process and the resources necessary to complete a transaction. Inexperienced and undisciplined buyers believe they can finalize a deal by contacting only one or two targets, despite the fact that it can take dozens of interactions with dozens of potential targets to push a single deal across the finish line. Many of these buyers simply have not established the proper procedures to go about pursuing deals and following up with targets; they will inevitably become frustrated and walk away.

PLANNING PROGRAMMATIC M&A The best results come when a buyer identifies its own competitive advantage, shows conviction in sourcing and following-through on acquisitions, and has capacity to find opportunities, complete due diligence and integrate an acquired business. McKinsey calls these the “Three Cs”: • Competitive Advantage: Programmatic acquirers are 1.4 times more likely to strongly agree that they understand how to meet the company’s goals.

• Conviction: Programmatic acquirers are 1.4 times more likely to proactively reach out to targets.

• Capacity: Programmatic acquirers are 1.9 times more likely to strongly agree that they have the right tools and talent to execute their strategy.

Advisers are critical at all three levels.

A trusted adviser works with a client to clarify what sets them apart while building an acquisition pipeline full of opportunities to enhance or complement a company’s competitive advantages. A good buy-side adviser provides a clear framework and structure around an acquisition search, bolstering buyer conviction and providing external capacity to handle the most time-consuming parts of the process.

Programmatic M&A is about consistent investment in a welldesigned plan. Acquirers and their advisers should establish a sustained, systematic approach to maximize value and reduce risk, regardless of sector or macroeconomic conditions.

t,

e

nnel

l

ons,

Jason Stevens is chief operating officer and a partner at Copper Run. Contact him at 614-888-1786 or jstevens@ copperruncap.com.

P017_044_CL_20220117.indd 35

January 17, 2022 S19

CORPORATE GROWTH & M&A

Private equity marketing success analytics

By BRAD KOSTKA

A

s competition for investors and deals has grown more fierce, having a strong digital marketing strategy is crucial for private equity firms when it comes to sourcing acquisition targets, raising capital for new funds or accelerating the growth of their portfolio companies. Whether you have years of experience using digital marketing to tell your story or are just dipping your toes in the process, here are the primary analytics you should be using to gauge how well your marketing initiatives are meeting your KOSTKA objectives.

EMAIL MARKETING CAMPAIGN SUCCESS In the digital space, email marketing is one of the most cost-effective tactics. Once you’ve built a list of email subscribers, you can keep your private equity firm and investment criteria top of mind with investors, business owners and referral sources by regularly distributing news about your funds, platform investments, add-ons and partners.

While developing engaging content is integral to your email marketing program, perhaps just as important is tracking what happens after you hit send. Tracking open rates and unsubscribe requests will help you understand if your content is hitting the mark — in terms of being engaging and interesting — and reaching the right audience. An additional key indicator of interest is the email’s click-through rate. Your email should provide just enough content to interest your readers and entice them to click on links to learn more. Linking back to additional content will drive traffic back to your site, providing additional opportunities for you to engage with your target audiences.

SOCIAL MEDIA METRICS An effective social media strategy offers a variety of benefits — from building greater brand awareness and boosting the visibility of your business to increasing website traffic. Once you have finalized your strategy and posted to appropriate social media channels, it’s time to see how well your posts engaged your targets.

You can track that performance through a few metrics, including the number of likes, comments and new followers gained after each new post. However, the best measure of success is when your followers share your content with their own social media circle. This expands the reach to hundreds, if not thousands of additional viewers with a single click — resulting in an exponentially increased audience reading about your experience and expertise, opening your

private equity firm up to a bevy of new investors and deal opportunities.

DIGITAL ADVERTISING CAMPAIGN CONVERSION A highly measurable and dynamic tool for any business, digital advertising can be used to build brand awareness, generate highquality leads and drive product sales — even with a limited budget.

There are five main types of digital advertisements that can be useful for your private equity firm, including search (text ads in search results), display (image ads on websites), social media sponsored posts, video and retargeting ads. With retargeting, tracking code (called a cookie) is placed on the computers of your website visitors. After they leave your website, the code will allow you to retarget them with your firm’s advertisements as they continue to browse other sites on the internet.

The aim of advertising is to build

greater awareness for your brand and earn a prospect’s trust with tailored content — such as webinars or e-books — that will draw them to

In today’s digital landscape, your website is the very first impression that prospects will have of your private equity firm. your site where they become leads when you capture their contact information. By nurturing these leads, you can convert them into investors, acquisitions or customers.

WEBSITE TRAFFIC In today’s digital landscape, your website

is the very first impression that prospects will have of your private equity firm.

And, if your marketing emails, social outreach and digital advertising succeed, it’s where your audience will go to learn more about your performance, platform attributes, industry sector focus and transaction types.

Some key indicators of the effectiveness of your site include number of visitors, including unique and returning visitors. Once visitors find your site, it’s helpful to know how long they stick around. This is where your bounce rate — a percentage calculated by dividing the number of single-page sessions by the number of total sessions on your website — is helpful. If your website has a bounce rate of 56% or greater, this could be an indication that users are finding your website difficult

(Continued on next page)

Unique Solutions for Complex M&A Issues Securing Investments & Enhancing Returns Aon’s M&A and Transaction Solutions team is with you throughout the life of your deal - from structuring coverage that optimizes results on the front end, to helping you navigate client negotiations and settlements on the back end - we pride ourselves on providing unparalleled service and advice, all on deal time.

We can help protect your investments from unknown risks through the use of representations and warranties insurance and help you ring-fence potential tax risks through tax insurance. We can also help mitigate exposure to known issues and pending litigation through a suite of contingent liability solutions.

To learn more about Aon M&A risk management, human capital and transactional insurance solutions, Please go to aon.com/m-and-a-transaction/index

or contact us Tyler Adkerson

+1.773.401.0660

tyler.adkerson@aon.com

1/13/2022 9:03:19 AM

S20 January 17, 2022

to navigate, experiencing technical errors, or that your website features low-quality or under-optimized content, which could drive prospects to a competing firm to get the service they desire.

KEEP IT ORGANIZED Implementing a marketing automation platform can help your business centralize your digital marketing efforts and analytics.

Platforms like Hubspot, SharpSpring and others allow you to build or customize email templates, maintain audience lists, score leads and track performance of your email, social and advertising campaigns. This provides you with the intel you need to continuously improve your marketing outreach.

For private equity marketing resources, visit www.roopco.com/pe.

Brad Kostka is with Roop & Co. Contact him at 216-902-3800 or bkostka@roopco.com.

SPONSORED CONTENT

CORPORATE GROWTH & M&A

Tax insurance a key risk management tool

By JESSICA HARGER

T

ax reserves for uncertain tax positions maintained by U.S. companies are substantial and can negatively impact earnings.

Companies reserve funds when auditors cannot get comfortable with the potential for a tax authority challenge of a tax position, and this balance sheet liability can create a drag on earnings, which will continue until the tax authority review HARGER period expires.

Tax insurance protects companies against a transaction or tax planning failing to qualify for its intended treatment, resulting in an unanticipated loss. It is a proven, efficient and cost-effective tool to

bring certainty to the treatment of a tax position. Traditionally used in a transactional context, such as in an M&A deal with a pre-closing tax-free restructuring, there is a broader

provided Aon with guidance on the proper accounting treatment of tax insurance and its impact on the financial statements. They confirmed that tax insurance can

Companies can transfer tax risk to insurers, neutralizing the reserve and creating a credit to income, potentially resulting in higher earnings.

application that can be accretive to a company’s earnings due to favorable accounting treatment under U.S. GAAP in addition to cash flow certainty.

A Big Four accounting firm

positively impact corporate earnings and balance sheets, where uncertain tax positions have been reserved for under FIN 48. Companies can transfer tax risk to insurers, neutralizing the reserve and creating a

“Benesch was extremely responsive at a critically important time as we were completing two platform investments.

The fact that they have both transportation industry knowledge and a strong M&A practice really helps them understand the full set of issues and how they interconnect.”

By JASON KLEIN AND CHRISTOPHER HAWLEY

MARK FORNASIERO Managing Partner Clarendon Capital, LLC MICHAEL RAUE Partner Clarendon Capital, LLC

KLEIN

T MY TEAM PETER K. SHELTON CHRISTOPHER D. HOPKINS MARC S. BLUBAUGH DARYLL V. MARSHALL RYAN J. WILLIAMS JONATHAN R. TODD JESSICA N. ANGNEY GEORGE STOWE RICHARD A. PLEWACKI

Complex M&A transactions often require different law firms to handle different aspects of the deal—adding even more complexity as well as costs. But for private equity investor Clarendon Capital, Benesch’s deep transactional expertise and nationally renowned Transportation & Logistics Practice eliminate the need for multiple representation.

Clarendon also gains access to useful introductions and exposure to potential opportunities through Benesch’s extensive transportation, logistics, private equity, and investment networks. It’s a winning combination of legal and business capabilities that is helping Clarendon and its portfolio companies grow and thrive.

Can we do the same for your business? Learn more about our relationship with Clarendon Capital at beneschlaw.com/myteam.

www.beneschlaw.com © 2021 Benesch Friedlander Coplan & Aronoff LLP

ClarendonCap4c_6x8Ad.indd 1

P017_044_CL_20220117.indd 36

Jessica Harger is managing director at Aon M&A and Transaction Solutions.

Contact her at 914-572-2422 or jessica. harger@aon.com.

Shifting landscapes: legal due diligence is critical for PE buyers

MY BENESCH

Featured team (left to right)

credit to income, potentially resulting in higher earnings. Tax insurance has become a versatile and impactful risk management tool, with tax risks unrelated to M&A routinely covered.

Tax insurance is not used to avoid reporting and disclosure requirements under U.S. GAAP, and many aggressive positions requiring reserves are not insurable. However, where companies have conservatively posted a tax reserve, tax insurance offers a means to avoid or reverse the financial statement impact of such positions. Companies should consult with their tax advisers and Aon for advice on the applicability of tax insurance.

HAWLEY

he sprawling impact of COVID-19 has touched every industry and has ripple effects that will continue to be felt for years.

Companies are experiencing difficulties and setbacks across industries, most recently in the labor market and in various supply chains. In light of the dynamic environment brought on by the pandemic, private equity buyers should be targeted and thorough with their acquisition processes. The legal due diligence process is vital for private equity buyers to ensure they are wellequipped to face this shifting landscape.

This is true now more than ever.

In order for PE buyers to remain flexible with their portfolio companies post-closing, it is imperative to become even more critical of every target’s material contracts used in their business. Concerns raised during a PE buyer’s review of material contracts likely would not prevent the deal from closing. However, the negotiation process can allow the PE buyer to have a full understanding of the scope of customer and vendor obligations. The outcome may require revised contracts with key customers

or suppliers to be closing deliverables from the seller.

In the current corporate environment, the following are key concepts that every PE buyer needs to analyze in a target’s material customer and vendor agreements: force majeure, requirements and forecasting, and price flexibility.

FORCE MAJEURE With every one of the target’s material customer and supplier agreements, it is crucial to understand whether they have effective force majeure clauses. Given the current commercial environment, PE buyers need to ensure that they will not encounter events of default for delays in compliance with the agreements outside of their control. These force majeure clauses ideally will cover situations specific to COVID-19, uncontrollable delays in the global supply chain and availability of required raw materials as they are particularly applicable today.

REQUIREMENTS AND FORECASTING With the constraints present in the global supply chain and the challenges associated with high-demand, lowinventory products and raw materials, PE buyers need to fully understand and measure a target’s obligations and rights associated with supplying or purchasing products. For a target’s agreements with key customers, PE buyers should look for provisions in which the target is obligated to supply the customer with their full requirements of certain products or provisions in which the target is bound

11/17/21 12:29 PM

1/13/2022 9:03:31 AM

SPO

by c may the a or co thes diffi targ defa the c even

PRI Priv part targ the s can thei raw part into to in thei Idea fluct base outs or la prod inde whic econ cert that a ce figu

ENT

ing

ful ks ed.

nd ng er, vely

the

ult r

r at ons. sica.

SPONSORED CONTENT

January 17, 2022 S21

CORPORATE GROWTH & M&A

by certain forecasts the customer may deliver throughout the term of the agreement. If the raw materials or component parts associated with these products are in high demand, but difficult to source, this could put the target in an unenviable position where default is inevitable. Understanding the customer’s available remedies in an event of default is equally important.

PRICE FLEXIBILITY Private equity buyers need to be particularly aware of not just their target’s pricing structures, but also the situations in which the targets can institute price increases with their customers. The prices of certain raw materials and scarce component parts have driven many companies into economic uncertainty due to inflexible pricing provisions in their material customer contracts.

Ideally, targets will have the ability to fluctuate pricing with their customers based on material increases in outside costs such as raw materials or labor. The pricing for certain products may even be tied to a global index for certain raw materials, which can allow targets to remain economically flexible. Additionally, certain provisions can be drafted that if such outside costs increase by a certain percentage above historic figures, the target is able to institute

a corresponding price increase with the customer. No matter how the agreement provisions read, PE buyers need to ensure that post-closing their acquired target can remain flexible with pricing.

While it may not be the most exciting part of the acquisition process, thorough legal due diligence in today’s environment is paramount. Paying particular attention to a target’s material customer and supplier contracts can allow PE buyers to avoid constraints post-closing and allow them to be flexible in the future. Whether a PE buyer uses due diligence to simply better understand the target’s material obligations and rights or begins negotiating with customers and vendors as a part of the acquisition process, due to the unsteady commercial landscape, the legal due diligence process is more important now than ever.

Jason Klein is a member in the Mergers and Acquisitions Practice Group at McDonald Hopkins LLC. Contact him at 216-348-5817 or jklein@ mcdonaldhopkins.com. Christopher Hawley is an associate in the Mergers and Acquisitions Practice Group at McDonald Hopkins LLC. Contact him at 216-348-5469 or chawley@ mcdonaldhopkins.com.

The evolution of due diligence in the wake of COVID-19

By MICHAEL S. SOUTHARD

C

OVID-19 has affected the financial performance of many companies, and buyers are treading cautiously during due diligence to determine the true impact of the pandemic on performance.

Here are five ways due diligence has evolved following COVID-19: SOUTHARD

they driven by the pandemic? It’s important for buyers to discern whether businesses struggled or thrived through the pandemic or because of it.

Due diligence in a remote world has its challenges.

• Expanded EBITDA analysis.

Buyers look at EBITDA, but they are examining trends before and after the pandemic. What items have a onetime impact versus others that may be permanent?

• Closer examination of debt-like items. Has a demand drop caused inventory to age? Does historical working capital reflect current needs?

How is a company accounting for the Paycheck Protection Program (“PPP”) funds? Has the PPP loan been forgiven? If not, it must be accounted for and possibly paid off by the seller before close.

• Top line impact. Buyers are looking for COVID-related losses or windfalls. Were such changes to revenue permanent? Or were

• Vendor and supply chain scrutiny.

Buyers should carefully examine how a company’s supply chain has been impacted by the COVID pandemic.

Have the negative changes such as delivery times, increased costs, etc. been accounted for in the forecast?

• Tax evaluation. While the Coronavirus Response Act, CARES Act, and other legislation helped many, they left taxpayers and accountants with lingering questions.

Buyers will want to ensure aggressive tax positions will not create future liabilities.

Due diligence in a remote world has its challenges. Thankfully, the use of virtual data rooms and video conferencing services have greatly helped to facilitate the process. As transactions increase in the wake of COVID-19, sellers should brace themselves for increased scrutiny and a new category of questions borne from the pandemic.

Michael S. Southard is managing director at Elvisridge Capital, LLC. Contact him at 216-678-9900 or michael@elvisridgecapital.com.

s

bles

y s

ial

ial ure

o n lity

ges

ls,

EXCEEDING EXPECTATIONS. EVERY DAY. Hahn Loeser provides tailored solutions for our clients looking to grow. We have years of experience representing businesses selling to private equity, and our responsive team is committed to getting the deal done for our clients. Whatever your legal needs are, we are here to help.

g ’s

HAHN LOESER & PARKS LLP | HAHNL AW.COM | 216 .621.0150 20 0 PUBLIC SQUARE | SUITE 28 0 0 | CLE VEL AND, OHIO 4 4114

CLEVEL AND

und

P017_044_CL_20220117.indd 37

|

CHICAGO

|

COLUMBUS

|

FORT MYERS

|

NAPLES

|

SAN DIEGO

1/13/2022 9:03:42 AM

S22 January 17, 2022

CORPORATE GROWTH & M&A

Set actionable goals for growth

By BRANDON FREDERICKS

B

usiness owners have likely seen the statistics stating how many small businesses won’t survive past the first two, FREDERICKS five, or even 10 years from origination. The fight to

overcome these statistics can be an excellent motivator and energizer, but how do leaders ensure their energy is directed at the “right” strategies that will succeed?

There is also a difference between sustainability and growth. A common leadership quote rings true: “If you’re not growing, you’re dying.” Taking the leap from sustaining marginal profits to achieving substantial growth can occur with the proper

strategy in place.

Growth doesn’t happen accidentally. A clear, actionable plan for growth is essential to remain strategic and intentional at every step and to ensure your business has every chance of long-term success. Organizations can achieve growth through a plan that is clearly communicated, that puts purpose ahead of profits and creates a culture of accountability.

There are a variety of paths to growth, from expanding current markets and product offerings, to acquiring another business to take advantage of synergy opportunities.

The question is: which is best for the company? There’s no cookiecutter answer — success will be to each business owner’s unique needs.

Before thinking about any specific growth aspect, such as acquiring a competitor, organizations should take a deeper look into the core of why great growth companies are always able to succeed.

MelCap Partners would like to thank everyone who helped us to continue to grow over the last two years, which empowered award-winning performance. Below, please view some of the deals completed and awards received.

has been sold to

a division of has been acquired by

has received an investment from

has been sold to

a portfolio company of

SPONSORED CONTENT

SPO

SHARPENING THE “WHY” As Simon Sinek has said, “All organizations start with why, but only the great ones keep their why clear year after year.” How sharp and in focus is the organizations’ “why”? What is the businesses’ purpose? Without clarity, any strategic growth plan will struggle to be achieved and/or sustained long term. Before jumping into any growth idea, business owners should take a moment to really ask why they do what they do. It is amazing what this exercise can do for an organization and the clarity it can bring to any future growth ideas.

or lo envi and stop yest buil they bett spec

WINNING ON TALENT The ongoing pandemic has shined a huge spotlight on any organization’s most precious asset — their people. Whether a company is a manufacturer in multiple states, or a small service provider for the local community, business leaders are all looking to find, develop and retain great individuals. Without people that believe in the company’s “why,” live the business’s values every day, and are committed to something bigger, very little can be accomplished. Before

has acquired

has been acquired by

Fidelis Holdings, LLC

has been acquired by

has been acquired by has been acquired by

has been acquired by

has been acquired by

has been acquired by

Peerless Management LLC

Business owners have likely seen the statistics stating how many small businesses won’t survive past the first two, five, or even 10 years from origination.

The Foodservice Division of

a portfolio company of has been acquired by has been acquired by

has been acquired by

has been acquired by has been acquired by

Summit Machine Solutions, LLC

a portfolio company of

Recent Awards

5021 Ridge Rd, Wadsworth, OH 44281 www.melcap.com (330) 239-1990 al@melcap.com

2X Award Winner

2X Award Winner

2X Award Winner

2019 & 2020 Boutique Investment Banking Firm of the Year 2021 Finalist

2020 & 2021

Best Investment Banking Advisory Firm of the Year Ohio, USA 2019 & 2020

Services: Sell Side M&A Buy Side M&A Private Placement Agent Corporate Restructuring Business Valuations Feasibility Assessment

Award Winner

Securities offered through M&A Securities Groups, Inc. | Member FINRA / SIPC. MelCap and MAS are not affiliated entities.

P017_044_CL_20220117.indd 38

Outstanding Restructuring Firm for Boutique Investment Banking Firm of the Year 2021

Honoree

business owners can achieve growth in a traditional sense, they should first reflect on whether their company has the right people in the best roles.

DIGITAL TRANSFORMATION Today’s world is very interconnected and interdependent. Industries are rapidly changing. Customers’ needs and wants are evolving. And because of that, to remain relevant and thrive, organizations must be designed in a manner to change just as quickly. Whether it’s preventative maintenance on a key piece of machinery to make a customer deadline or identifying an alternative raw material source to head off supply chain issues, building an organization around data and information puts business owners in a stronger position for growth.

INNOVATING AND INVESTING FOR TOMORROW Creating a culture of continuous improvement that breeds innovation and change are what can propel an organization to the next level.

Whether its new product designs, a change in the customer experience, a state-of-the-art piece of technology,

1/13/2022 9:03:57 AM

TOP LEA As b strat eval team posi jour less rath Gro mon be c fina on i stee fina grow

D phas com

Bran at A him

ENT

to

wth a

his n

a n’s

r al ll n that ve d r, fore

SPONSORED CONTENT

CORPORATE GROWTH & M&A

TOP TIER FINANCIAL LEADERSHIP As business leaders round out a strategic growth plan, they need to evaluate how the company’s finance team will put the business in a position of strength throughout the journey. Today’s finance leaders are less about the debits and credits, and rather a key strategic component.

Growth takes time, energy and money. A strong finance team will be critical for managing cash flow, financial modeling, assessing return on investments, securing capital and steering the organization around any financial headwinds that could slow growth.

Discover how to achieve the next phase of growth – visit applegrowth. com/advisory.

Brandon Fredericks, CPA, is principal at Apple Growth Partners. Contact him at bfredericks@applegrowth.com.

Our newly enhanced data offering now provides the following high-level business intelligence services to fill your lead-generation and market research needs:

Customized executive contact lists and company data sets.

More executive contacts than ever before.

d

st ve

ive pply ion

Must-read Crain’s lists with enhanced display options.

Enhanced intel.

CRAINSCLEVELAND.COM/DATA PLEASE NOTE: If you are currently a Crain’s Cleveland Data Member, you will automatically begin receiving all enhanced features and benefits at no additional charge. Should you have any questions or concerns we’d love to hear from you.

Contact us at 1-877-824-9373 or customerservice@crainscleveland.com.

BUSINESS INSURANCE EMPLOYEE BENEFITS PERSONAL INSURANCE

r m

N ted

ANNOUNCING THE AND IMPROVED [DATA MEMBER LO Our newly enhance data offering now p vides the following high-level business telligence services your lead-generati market research ne

or lowering the company’s environmental footprint — great and growing companies never stop seeking ways to improve from yesterday. Thus, as leaders begin building out a strategic growth plan, they should ask how the company is bettering for tomorrow and in what specific ways.

e w es

th first has

January 17, 2022 S23

INSURING INVESTMENTS. Enhancing Returns.

In complex business deals, what you don’t know can hurt you. Our experienced M&A and Transaction Solutions team can help you reduce the uncertainty of these transactions, protect your investments and enhance your returns—even in today’s volatile, complicated market.

Learn more by downloading our free white paper, Transaction Risk Management: Strategies for Protecting Owners and Capital Investors.

tion

NG

on

a e, a y,

P017_044_CL_20220117.indd 39

1/13/2022 9:04:09 AM

S24 January 17, 2022

CORPORATE GROWTH & M&A

SPONSORED CONTENT

Hyper-risk environment requires precise contract design

By CRAIG OWEN WHITE AND CALEB P. OHRN

WHITE

OHRN

S

uccess in business is frequently determined by how effective the enterprise is at identifying and managing risks. Risk, simply put, arises from any factor, event, or occurrence that has the potential to interfere with a desired outcome. Business lawyers help their clients identify, quantify, and price each risk based on the likelihood and consequences that would result from its occurrence. No matter how much Wall Street tries to

convince the market, risk cannot be eliminated. There is no such thing as an inherently good or bad risk, there are only mispriced risks.

The dynamics of dealmaking have and continue to change. With each technological breakthrough or geopolitical event comes new risks that must be quickly evaluated, priced and allocated among the parties, or off boarded to insurers or other third parties. Allocation of these risks

must be appropriately documented to ensure enforcement. It is more essential than ever for the business lawyer to understand his or her client’s business model, industry dynamics and transaction objectives to develop a true appreciation of that client’s true risk profile.

Clients generally adapt and are comfortable dealing with an array of traditional risks falling into certain buckets that include compliance,

reputation, competition, operational, and now, supply chain. Information necessary to evaluate these risks is extracted through due diligence and disclosures in the form of representations and warranties from the counterparties with exceptions being set forth on schedules. Deal terms could be adjusted to respond to the disclosed risks, a process that was cumbersome but generally worked in a world where risks were static and slow changing. Consequently, parties can be lulled into a false sense of complacency wherein the formal contract is never again addressed until the contract was set to expire.

Today’s new hyper-risk environment demands more nimble contracts designed for timely administration and action. New risks such as cyber-hacking that shut down production facilities; the imposition of tariffs and trade restrictions and unchecked inflation that unexpectedly spike the cost of critical inputs; travel restrictions that limit access to foreign-based consultants to repair machinery, to name a few, can quickly threaten core operations.

Further complicating matters, the interconnectivity within a business’s own operations and with its customers and suppliers add an additional level of complexity in spotting, containing and resolving risk factors.

The solution is to first build a dynamic negotiating framework that clearly identifies known risks, that if were to occur, could materially impact a business’s model and pricing assumptions.

And, in a worst-case scenario, would that impact likely be transitory or permanent? For each risk, identify which counterparty is in the best position to prevent it from occurring and, thus, should bear all or a portion of the loss or additional cost should the risk materialize. In some instances, the parties may be able to shift the risk to a third party, such as an insurer, with the focus of the negotiations pivoting to how much coverage to acquire and who will pay the corresponding premium.

Whether dealing with traditional risks or new, novel risks, two considerations are frequently overlooked: • Any issues that went wrong must be fixed immediately. Assigning blame and financial responsibility can wait, but a business’s customers and limiting the harm to its name and reputation cannot. Clearly establishing this principle in the agreement is as critical as defining the process the parties will follow in escalating issues. Determining how problems will be resolved is worth the time in negotiations. When it matters, it matters.

• The ability to properly evaluate and price various risks depends on timely access to accurate information. Decide what information is needed and which party has it. If your counterparty has access to the information, your contract should provide you with

P017_044_CL_20220117.indd 40

1/13/2022 9:04:25 AM

SPO

imm duri Th natu requ that the b com revis if ne pred betw Th prov prov ince the r doin risk a so your to co coun chan bigg

Crai part Park Ohr They Corp Crai Cale

ENT

n

al, n

m

to as in a ow n be ency r was

ment

and king ;

t ants

s.

s ers l of nd

SPONSORED CONTENT

CORPORATE GROWTH & M&A

January 17, 2022 S25

Valuations are expected to remain on fire for top-tier companies

immediate access to it, especially during a crisis situation.

The dynamic and ever-changing nature of risks in commercial contracts requires adopting business protocols that move signed contracts from the back shelf to the front, with a commitment to periodically review, revise and enforce agreements, if necessary. Doing so enhances predictability and increases reliability between the counterparties.

The goal is to ensure that contract provisions align with reality and provide clear economic and financial incentives (and disincentives) to lessen the risk or severity of disruptions. In doing so, negative outcomes when a risk turns pricey can be mitigated by a sound working relationship with your counterparty. In the end, failing to communicate timely with your counterparty when you see signs that change is on the horizon may be the biggest risk factor to your business.

OT, HOT, HOT. Coined as an M&A market “awash with liquidity,” this PETRYK tinder has lit the spark for robust valuations, with purchase price multiples rising to historic highs in many industries. It is a battle between strategic and financial buyers for the most sought-after assets. Sellers are enjoying the rewards of more aggressive pricing and terms.

Craig Owen White, Esq., is the partner-in-charge of Hahn Loeser & Parks LLP’s Cleveland Office. Caleb P. Ohrn, Esq., is an associate at the firm.

They both are members of the firm’s Corporate Practice Area. Contact Craig at cow@hahnlaw.com. Contact Caleb at cohrn@hahnlaw.com.

UNLEASHING OF PENT-UP DEMAND Generally, private credit markets continue to be highly active since the COVID-19 pandemic has subsided and the broader global economy has strongly recovered. High levels of private equity activity, fueled by low interest rates, availability of credit, and growth in dry powder, have created

By ANDREW K. PETRYK

H

an increasingly “borrower-friendly” market for many industries.

Financial buyers are coming to the table in droves to deploy capital into quality deals. PitchBook reports a breakneck pace for U.S. private equity dealmaking, with record-setting deal volume and value through the third quarter of 2021. The total 6,004 closed deals ($787.6 billion) recorded for the nine months is above the highest-ever full-year numbers, and deal pipelines were reportedly bursting through year-end with carryover expected into 2022. Valuations are equally strong, according to PitchBook metrics, illustrated by a median purchase price multiple of 12.8x EBITDA for the period.

Middle-market issuance (including syndicated and direct lending) surpassed $78 billion in the third quarter of 2021, nearing a quarterly record set in 2018 and boosted by an ever-expanding direct lending market.

Leverage multiples in the broader middle market rose to 5.7x total debt (total debt/EBITDA) in October, with a purchase price multiple of

10.9x EBITDA for all leveraged buyouts, according to S&P Leveraged Commentary & Data (S&P LCD).

For lower middle-market private equity deals (transaction values of $10 to $250 million), average valuations reached 7.6x EBITDA in the third quarter — the highest quarterly level in GF Data’s 16-year history — with the deal valuation premium increasing with transaction size. Average lower middle-market leverage rose to 4.1x total debt during the quarter.

Strategic buyers have clearly defined acquisition interests and are showing selectivity, but when a high-quality deal comes to market, they are moving faster and are aggressive on valuation and deal terms. S&P LCD metrics for strategic buyer transactions highlight healthy valuations across the size spectrum and little variation between the lower (less than $250 million in transaction size) and upper ($500 million or greater) middle market, with EBITDA multiples of 10.6x and 10.9x, respectively.

QUALITY PREMIUM IS UP Due to the sheer amount of deal activity, the market has continued to experience a “barbell”-shaped distribution in terms of valuation and leverage. High-quality companies operating in defensive sectors receive significantly more interest and capital than companies with more nuanced business models and financial performance, or those operating in industries perceived to be more “cyclical” or experiencing disruption or long-term threats from the COVID-19 pandemic. COVID has affected a firming of “have” and “have not” businesses, with aboveaverage performers achieving outsized valuations. Sixty-two percent of the completed deals by sponsors in the third quarter met GF Data’s quality premium standard— compared to a historic average of 56% of the deals.

The premium for the above average deals was 28% above the other deals that did not fit those parameters.

(Continued on next page)

at

ing

ory fy

ng on d the the to th ng

g

l

be

, ing

cal ill ning rth

nd ely cide hich

Employee Benefits Can Make or Break Your M&A Deal If they’re not carefully evaluated, employee benefits issues can sink a proposed transaction. Our lawyers help buyers and sellers with all benefits planning aspects of business transactions to make sure clients’ deals proceed on track and on time, with every angle covered. We’ll team with you to plan, evaluate, mitigate risk, maximize protections, and integrate all pertinent benefits packages.

• Proactive planning

• Compliance

• Negotiations

• Qualified and Non-Qualified Plans

• Analysis

• Executive Compensation

• Cultural impact

• Communication

We’ll help you minimize surprise and disruption— and get on with the exciting new business ahead.

Jeffrey D. Smith

Melissa A. Dials

jdsmith@fisherphillips.com

mdials@fisherphillips.com

Partner, Cleveland

200 Public Square | Suite 4000 | Cleveland, OH 44114

P017_044_CL_20220117.indd 41

Partner, Cleveland

fisherphillips.com

1/13/2022 9:04:36 AM

S26 January 17, 2022

CORPORATE GROWTH & M&A

Larger transaction size and EBITDA size (i.e., larger scale deals) also factor into higher valuation premiums paid.

Buyers and lenders have also been focused on understanding companies or industries that may have experienced a “COVID bump” and look to mitigate the risk by normalizing EBITDA to be more reflective of “steady state” earnings, or structuring deals more conservatively.

OUTLOOK Notwithstanding any unforeseen geopolitical events, we expect the M&A market to remain active into 2022, with economic growth and buoyant capital markets to sustain deal flow. As deal volume regresses to more normalized levels, demand and supply of capital should move closer to equilibrium, resulting in more lender-friendly terms.

Valuation multiples should stay strong, but any material upside is unlikely given current pricing levels.

Andrew K. Petryk is managing director and head of industrials at Brown Gibbons Lang & Co. Contact him at 216-920-6613 or apetryk@bglco.com.

Kenneth B. Liffman, President

Jennifer R. Hallos, Principal

Industries expected to drive the M&A market in 2022

By J.R. DOOLOS AND JEFF JOHNSTON

DOOLOS

T

JOHNSTON

he last 24 months have proven to be a unique and exciting market in M&A resulting in a remarkable increase in transaction activity in almost every industry.

This historic increase was the result of several factors, the most prevalent being the release of pent-up activity that was deferred in 2020 as the world was adjusting to the COVID-19 pandemic. In addition to clearing

Kimon P. Karas, Principal

the 2020 deal backlog, there was a shift in macro-dynamics, resulting in a disconnect in global supply and demand dynamics. The environment afforded several industries to achieve outsized growth. The result has been increased valuation multiples, encouraging more sellers to market while building momentum throughout 2021 and into 2022.

Almost all industries are experiencing transaction volume growth, but for different reasons.

Increased deal activity by industry can be more broadly characterized and understood in two categories: 1. Historically cyclical industries that have managed to skip the normal downturn cycle 2. Industries driven by technological advancement and change.

David A. Lum, Principal

Sometimes the BEST ideas can be as simple as knowing when to surround yourself with Exceptional Talent...

Michael D. Makofsky, Principal

Danielle G. Garson, Principal

Our Corporate Transactional Attorneys have the EXPERIENCE your business needs to get the RESULTS you deserve.

John S. Seich, Principal

Jonathan C. Wolnik, Principal

Andrew S. Perry, Principal

Kyle P. Graham, Associate

Adam L. Glassman, Associate

E. Roger Stewart, Principal

Expect More. Get More.

It’s more than a tagline — it’s our solemn promise to you that we will deliver exceptional legal service that gives you peace of mind and confidence that someone is watching out for your best interests.

Whether you need help negotiating the financing terms for your new distribution center, or you need advice about restructuring distessed business assets to maximize their value, or maybe you’ve got your eyes set on a prospective acquisition target, or maybe you’re ready to sell your business and need an experienced M&A attorney to help you close the deal -- our team has you covered.

Our team get deals done. Period.

Visit www.McCarthyLebit.com or call 216-696-1422 to request a consultation.

P017_044_CL_20220117.indd 42

CYCLICAL INDUSTRIES These industries have historically tended to ebb and flow with cyclical forces, whether it be commodity pricing, consumer sentiment, administration / regulatory changes, and / or construction spending.

Illustrative examples include building products, metals and mining, chemicals, business and consumer services, paper and packaging and certain real estate sectors.

The brief COVID-19 recession and subsequent surge in demand created global challenges and imbalances in supply and demand dynamics for manufacturing businesses, while a historic labor shortage has brought about continued inflationary pressures. As an example, prior to the pandemic, housing starts and construction spending had been hovering at a consistent level for the previous six years, forming the expectation of an imminent cycle, or at a minimum, muted growth trajectory. These forces fostered the opposite, shining a spotlight on decades of underinvestment and driving a majority of commoditydriven inputs to surprising levels while supporting downstream

Although the pandemic will continue to linger and many unknowns remain, 2022 will continue to generate significant M&A activity across a number of attractive industries with the potential to be yet another record volume year. investment and construction demand.

Global stimulus policies buoyed many small businesses and consumers, which encouraged a return to normal and drove spending to consumer staples in goods and services. Industries within this category are experiencing the most notable growth as 2022 gets underway, often with extended backlog commitments and unrelenting demand as companies struggle to catch up. Due to muted activity in 2020 and early 2021, these industries are likely to experience substantial M&A volume growth in 2022.

TECHNICAL CHANGE These industries have been significantly influenced by technological change that has either shifted consumer preferences or created an entirely new industry segment. Examples include automotive, distribution,

SPONSORED CONTENT

transportation and logistics, energy, consumer and the general technology sector.

Although extremely disruptive, the pandemic accelerated the advancement and proliferation of technology in the way we communicate, work, purchase goods and services and live our everyday lives.

Industry experts are predicting that over 25% of the entire workforce in the U.S. was working in at least a partially remote environment at the end of 2021. This fundamental change in environment required upgrades in communication technology and demand for a new form of virtual communication and connectivity beyond what has been previously experienced.

Stay-at-home orders accelerated the persistent shift in consumer buying preferences away from traditional brick-and-mortar locations to online options. This shift also encouraged more spending through the directto-consumer channel and has driven significant investment in broader distribution infrastructure and related transportation and logistics companies. Another significant trend from 2021 that continues to drive M&A deal activity heading into 2022 is the focus on alternative energy and sustainable technologies. This trend is most evident in the significant uptick in 2021 electric vehicle investments and continued capital commitments to large battery and wind and solar projects. Industries within this category will continue to show meaningful M&A growth in 2022, although investors are likely to be more selective after significant transaction volume in 2020 and 2021.

These macro factors complement an already supportive deal environment with significant dry powder available from both private equity (over $1 trillion available) and strategic buyer sets, in addition to an abundance of debt capital in both the independent and traditional leverage markets. Although the pandemic will continue to linger and many unknowns remain, 2022 will continue to generate significant M&A activity across a number of attractive industries with the potential to be yet another record volume year.

Jeff Johnston is a managing director and Group Head of the Mergers & Acquisitions Group of KeyBanc Capital Markets. Contact him at jjohnston@ key.com. J.R. Doolos is a managing director in the Mergers & Acquisitions Group of the KeyBanc Capital Markets.

Contact him at 216-689-7674 or jdoolos@key.com.

This article is for general information purposes only and does not consider the specific investment objectives, financial situation, and particular needs of any individual person or entity. KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp® and its subsidiaries, KeyBanc Capital Markets Inc., Member FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed.

Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A.

1/13/2022 9:04:49 AM

ENT

y, ogy

he ment he ase

rce a e nge

Cash Flow and Asset Based Solutions for Private Equity Sponsors With dedicated expertise, our national Business Credit and Sponsor Finance teams are ready to help bring your next deal over the finish line.

the g

ne

en

s nd

22 nd d

s to

Copper Smelting $25,000,000 Growth Financing Senior Secured Credit Facility provided by Business Credit

Pasta, Sauces and Cheese Manufacturer and Marketer

Trucking Logistics Firm

$101,300,000

Refinancing

Syndication Loan Senior Secured Credit Facility provided by Sponsor Finance

$10,000,000 Senior Secured Credit Facility provided by Business Credit

nt 21. nt

e

n

nal

Electrical Services Provider

nd

&A ve yet

$19,000,000 Administrative Agent Senior Secured Credit Facility provided by Sponsor Finance

Stamped Components and Welded Assemblies Provider

Healthcare Information Technology

$15,000,000

$60,000,000

Refinancing

Growth Financing

Senior Secured Credit Facility provided by Business Credit

Senior Secured Credit Facility provided by Business Credit

pital @

ons kets.

ses

d

t and c., al . by d

cts

Find out why these companies trust us to help them grow their businesses.

Doug Winget Executive Vice President Huntington Business Credit Phone: 216-515-0789 doug.winget@huntington.com

Ed Ryczek Senior Vice President Huntington Sponsor Finance Phone: 312-696-8808 edward.j.ryczek@huntington.com

Loans subject to credit application and approval. Member FDIC. ⬢®, Huntington® and ⬢ Huntington® are federally registered service marks of Huntington Bancshares Incorporated. © 2021 Huntington Bancshares Incorporated. p/n 221651

P017_044_CL_20220117.indd 43

1/13/2022 9:05:01 AM

S28 January 17, 2022

SPONSORED CONTENT

CORPORATE GROWTH & M&A

Northeast Ohio’s top deal makers to be honored

A

CG Cleveland, Northeast Ohio’s leading organization for merger and acquisition and corporate growth professionals, will recognize the winners of its 25th Annual Deal Maker Awards. The event was scheduled to be conducted on Thursday, January 20, but the event has been postponed due to the Omicron variant of COVID-19. Please stay tuned for the new date which will be announced at www.acg.org/cleveland.

The Deal Maker Awards are a tribute to Northeast Ohio’s leading corporate deal makers for their accomplishments in using acquisitions, divestitures, financings and other transactions to fuel sustainable growth. Here are this year’s winners:

Blue Point Capital Partners

Blue Point Capital Partners teams up with entrepreneurs and managers, investing in and growing lower middle-market companies. Blue Point manages over $1.5 billion in committed capital across its second, third and fourth institutional funds, and its principals have been investing together for more than two decades.

The Riverside Co.

The Riverside Co. is a global investment firm focused on being one of the leading private capital options for investors, business owners and employees at the smaller end of the middle market by seeking to fuel transformative growth and create lasting value.

Cleveland-Cliffs traditionally has been recognized as the largest and oldest independent iron ore mining company in the U.S. Today, they are now the largest flat-rolled steel company and the largest iron ore pellet producer in North America.

EXECUTIVE OFFICERS

Terrence Doyle, Calfee, Halter & Griswold

President Cheryl Strom, The Riverside Company

Michael Ferkovic, Sunvera Group

President Elect Tricia Balser, CIBC Executive Vice President — Annual Events Jonathan Ives, SCG Partners Executive Vice President — Branding Matthew Roberts, First Brands Group Executive Vice President — Governance Charles Aquino, Citizens Capital Markets Executive Vice President — Innovation Beth Haas, Cyprium Investment Partners

Lifetime Achievement Award: Dan T. Moore, The Dan T. Moore Co. Cleveland-Cliffs, Inc.

2021-22 Officers and Board of Directors

Throughout his life, Dan T. Moore has applied his innovative mind across the industrial spectrum: from the semi-conductor industry to basic materials science to the big five automotive companies. In addition to continually starting and growing new businesses, Moore has found his way into managing multiple companies in turnaround and distressed situations. His style has always been hands-on and working directly with management and engineering to build a solution that can bring a company back to life.

Executive Vice President — Membership Bryan Fialkowski, J.P. Morgan Chase Executive Vice President — Programming Thomas Libeg, Grant Thornton Treasurer Mark Heinrich, Plante Moran

Sarita Gavhane, Edgewater Capital Partners Nicholas House, Vorys, Sater, Seymour and Pease LLP Margaret Jordan, KIKO Matthew Kolman, Deloitte John Kramer, RPM International Mindy Marsden, Bober Markey Fedorovich Thorne Matteson, PwC Martin McCormick, FNB Mezzanine Finance Ryan McGovern, Star Mountain Capital Corrie Menary, Kirtland Capital Partners Jay Moroscak, Aon Risk Solutions

Immediate Past President Thomas Welsh, Calfee, Halter & Griswold

Katie Noggle, Align Capital Partners

BOARD OF DIRECTORS

Wes Perry, ADP

John Allotta, BakerHostetler

Jim Rice, Ernst & Young

Mark Brandt, RSM

Robert Ross, Benesch

J.R. Doolos, KeyBanc Capital Markets

Michael Yee

2022 ACG EVENTS CALENDAR DATE

EVENT

LOCATION

TIME

Feb. 15

Joint Event with Financial Executives International

The Union Club

4:00 PM

Feb. 17

ACG Cleveland Presents the Finance Farm League

The Union Club

7:30 AM

Mar. 10

ACG Cleveland Regional Central, “The Positive Impact of Green Spaces in Metropolitan Cities”with Brian Zimmerman, CEO of the Cleveland Metroparks

TBD - Independence

5:30 PM

Mar. 15

YACG March Social

Wild Eagle Saloon

6:00 PM

Mar. 24

ACG Cleveland Regional West, “Big Things on the Horizon as Viewed from the Lorain Port Authority” with Tom Brown, Executive Director of the Lorain Port Authority

Lakewood Country Club

5:30 PM

Spring 2022

ACG Cleveland Presents the 25th Annual Deal Maker Awards

Hilton Cleveland Downtown

5:00 PM

Apr. 26

ACG Cleveland Breakfast Event, “Cleveland’s Renaissance” featuring Kerry McCormack (Ward 3 City Council Member), and Joe Cimperman (President, Global Cleveland

The Union Club

7:30 AM

May 19

ACG Cleveland’s Spring Panel Event, “SPACS from Acquisition to Zcash”

The Ritz-Carlton

4:00 PM

June 21

ACG Cleveland Summer Social at The Shoreby (jt. With TMA Northern Ohio)

The Shoreby Club

5:30PM

Fall 2022

ACG Cleveland’s 40th Anniversary Event

The Silver Grille

5:00 PM

P017_044_CL_20220117.indd 44

1/13/2022 9:05:14 AM

New FOR 2022 NETWORKING WITH CRAIN’S

S

Notables in Law | February Notables in Finance | April Notables in Manufacturing | July Notable Immigrants | August Notable DEI Executives | October Notables in Technology | December

An exclusive opportunity to meet the region’s leaders.

Learn how to get involved!

Contact Associate Publisher Amy Ann Stoessel at astoessel@crain.com.

All in-person events are subject to change to a virtual setting or cancellation based on latest recommendations regarding gatherings as a result of the ongoing pandemic.

Notable networking.indd 1

1/5/22 3:31 PM

CRAIN'S LIST | SBA LENDERS

CRAIN'S LIST | SBA LOANS

Ranked by dollar value of Northern Ohio 7(a) loans approved in FY 2021

Ranked by dollar value of loans approved in fiscal year 2021

RANK

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

LENDER HQ LOCATION

VALUE OF APPROVED LOANS FISCAL 2021 1-YEAR CHANGE

NUMBER OF APPROVED LOANS FISCAL 2021 1-YEAR CHANGE

JOBS SUPPORTED 1-YEAR CHANGE

HUNTINGTON NATIONAL BANK Columbus

$176,965,300 56.0%

1,086 33.1%

6,307 22.5%

LIVE OAK BANKING CO. Wilmington, N.C.

$34,257,000 140.9%

21 162.5%

334 735.0%

KEYBANK NA Cleveland

$22,434,900 26.1%

68 100.0%

421 -35.4%

PREMIER BANK Youngstown

$20,822,200 167.4%

25 177.8%

408 3,300.0%

CONSUMERS NATIONAL BANK Minerva

$16,795,700 206.1%

43 79.2%

912 170.6%

PEOPLES BANK Marietta

$12,654,300 36.4%

22 175.0%

603 258.9%

CELTIC BANK CORP. Salt Lake City, Utah

$12,105,300 122.5%

6 20.0%

53 -51.4%

NEWTEK SMALL BUSINESS FINANCE INC. Lake Success, N.Y.

$10,365,800 64.9%

9 80.0%

360 215.8%

FIRST COMMONWEALTH BANK Indiana, Pa.

$10,360,300 -14.9%

16 45.5%

338 0.0%

FIRST NATIONAL BANK Pittsburgh, Pa.

$10,035,300 98.2%

10 66.7%

214 143.2%

HOMETOWN BANK Kent

$9,213,200 972.5%

5 400.0%

117 5,750.0%

HOMETRUST BANK Asheville, N.C.

$7,016,000 —

4 —

96 —

FIRST WESTERN SBLC INC. Dallas, Texas

$6,827,000 79.5%

4 100.0%

37 68.2%

LENDINGCLUB BANK NA Lehi, Utah

$6,743,000 —

5 —

216 —

BUCKEYE STATE BANK Powell

$6,331,600 584.5%

7 250.0%

177 331.7%

READYCAP LENDING LLC Berkeley Heights, N.J.

$6,096,600 36.8%

5 150.0%

96 433.3%

U.S. BANK Minneapolis, Minn.

$5,903,200 444.5%

21 -19.2%

102 20.0%

CFBANK NA Worthington

$5,750,000 -39.0%

4 -20.0%

21 -70.0%

FIFTH THIRD BANK Cincinnati

$5,378,700 358.9%

9 28.6%

113 276.7%

TRANSPECOS BANKS SSB Pecos, Texas

$4,870,000 —

2 —

2 —

FIVE STAR BANK Rancho Cordova, Calif.

$4,155,000 1,285.0%

3 200.0%

89 1,680.0%

FOUNTAINHEAD SBF LLC Lake Mary, Fla.

$4,137,000 —

1 —

60 —

COMERICA BANK Dallas, Texas

$3,669,000 —

2 —

18 —

COLONY BANK Fitzgerald, Ga.

$3,610,800 —

1 —

63 —

COMMONWEALTH BUSINESS BANK Los Angeles, Calif.

$3,477,000 584.4%

1 0.0%

10 233.3%

FUND-EX SOLUTIONS GROUP LLC Syracuse, N.Y.

$3,206,100 —

4 —

33 —

CENTERSTONE SBA LENDING INC. Los Angeles, Calif.

$3,065,000 —

1 —

10 —

AQUESTA BANK Cornelius, N.C.

$2,988,000 —

2 —

38 —

HOME LOAN INVESTMENT BANK FSB Warwick, R.I.

$2,850,000 -61.7%

1 -50.0%

14 -54.8%

UNITED MIDWEST SAVINGS BANK NA De Graff

$2,698,000 -88.3%

13 0.0%

57 -72.9%

WELLS FARGO BANK NA Sioux Falls, S.D.

$2,517,000 -15.6%

2 -50.0%

34 -61.4%

CITIZENS BANK NA Providence, R.I.

$2,462,200 -56.0%

6 -25.0%

24 -83.1%

FIRST INTERNET BANK OF INDIANA Fishers, Ind.

$2,340,000 52.8%

2 100.0%

37 640.0%

THE STATE BANK AND TRUST CO. Defiance

$2,309,700 -26.2%

4 0.0%

50 28.2%

RANK

BORROWER (DBA OR OPERATION AT LISTED ADDRESS) 1

TOTAL LOAN/ SBA-GUARANTEED AMOUNT (MILLIONS)

NAICS CATEGORY

LENDER/ LOAN TYPE/ CERTIFIED DEVELOPMENT COMPANY (504 LOANS ONLY) 2

1

LEXY PROPERTIES LLC (WEST PARK ANIMAL HOSPITAL) 4117 Rocky River Drive, Cleveland

$10.77 $4.47

Veterinary services

2

1793 ENTERPRISE LLC (RUSSEL EQUIPMENT INC.) 1793 Enterprise Parkway, Twinsburg

$8.97 $4.05

Industrial machinery Westfield Bank and equipment 504 merchant Cascade Capital Corp. wholesalers

3

LODGING LLC (FAIRFIELD INN BY MARRIOTT) 5410 Milan Road, Sandusky

$8.52 $3.22

Hotels (except casino hotels) and motels

Croghan Colonial Bank 504 Growth Capital Corp.

4

WD BPI LLC (BPI INFORMATION SYSTEMS) 6055 W. Snowville Road, Brecksville

$4.55 $3.41

All other professional, scientific and technical services

Live Oak Banking Co. 7(a)

5

TOBER BUILDING CO. LLC 3351 Brecksville Road, Richfield

$4.28 $3.64

Commercial and institutional building construction

Newtek Small Business Finance Inc. 7(a)

6

CALIFORNIA PALMS ADDICTION RECOVERY CAMPUS 1051 N. Canfield Niles Road, Youngstown

$4.14 $3.72

Outpatient mental health and substance abuse centers

Fountainhead SBF LLC 7(a)

7

THE DEAN SUPPLY CO. 3500 Woodland Ave., Cleveland

$4.03 $3.63

Other commercial equipment merchant wholesalers

Hometown Bank 7(a)

8

INDUSTRIAL TUBE AND STEEL CORP. 4658 Crystal Parkway, Kent

$4.00 $3.00

Other commercial and service industry machinery manufacturing

Premier Bank 7(a)

8

FALLS STAMPING & WELDING CO. 2900 Vincent St., Cuyahoga Falls

$4.00 $3.00

Iron and steel forging

Transpecos Banks SSB 7(a)

10

GREAT LAKES TELCOM LTD. 590 E. Western Reserve Road, Youngstown

$3.70 $3.22

Telecommunications Huntington National Bank resellers 7(a)

11

INTECH COMMERCIAL HOLDINGS $3.66 $1.48 (K1 SPEED) 8373 Port Jackson Ave N.W., North Canton

All other Consumers National Bank amusement and 504 recreation industries Hamilton County Development Co.

12

GBC FACILITY SERVICES INC. 23611 Chagrin Blvd., Suite 245, Beachwood

$3.61 $3.25

Janitorial services

Colony Bank 7(a)

13

CSC BIRMINGHAM LLC 11012 Harrison Road, Birmingham

$3.56 $3.20

Dimension stone mining and quarrying

Huntington National Bank 7(a)

14

AMHERST BTS 58 LLC 7710 Leavitt Road, Amherst

$3.41 $1.44

Retail bakeries

Buckeye Community Bank 504 Growth Capital Corp.

15

FOOTHOLD LLC (PRIMROSE SCHOOL) 32135 Cook Road, North Ridgeville

$3.41 $1.61

Elementary and secondary schools

BBVA USA Bancshares Inc. 504 Growth Capital Corp.

16

LIONHEART II LLC (BUSCH & THIEM INC.) 1316 Cleveland Road, Sandusky

$3.31 $1.48

Electroplating, plating, polishing, anodizing and coloring

Civista Bank 504 Growth Capital Corp.

17

LILA INVESTMENT LLC (DUNKIN'/BASKIN-ROBBINS) Middleburg Heights

$3.30 $2.97

Limited-service restaurants

Huntington National Bank 7(a)

18

PRAMUKH STORAGE ENTERPRISES 11580 State Route 44, Mantua

$3.17 $2.86

Lessors of Hometown Bank miniwarehouses and 7(a) self-storage units

19

BROAD VIEW EYE CENTER 1261 E Royalton Road, Broadview Heights

$3.10 $2.79

Offices of optometrists

Live Oak Banking Co. 7(a)

20

MAHONING VALLEY ENTERPRISES (MAHONING VALLEY VETERINARIAN CENTRE) 3971 Main St., Mineral Ridge

$3.08 $2.77

Veterinary services

Huntington National Bank 7(a)

21

BHAU HOTEL LLC (BAYMONT INN & SUITES) 5335 Broadmoor Circle N.W., Canton

$3.07 $2.76

Hotels (except casino hotels) and motels

Centerstone SBA Lending Inc. 7(a)

22

HENSA NATIONS OH (RE) LLC (J.B. STAMPING INC.) 7413 Associate Ave., Brooklyn

$3.06 $1.39

Iron and steel forging

Lendingclub Bank NA 504 Growth Capital Corp.

KeyBank NA 504 Growth Capital Corp.

SOURCE: U.S. Small Business Administration; additional research by Crain's | Data spans the federal fiscal

SOURCE: U.S. Small Business Administration | Numbers are for the 12 months ending Sept. 30, 2021, and include 7(a) loans made throughout the 28 Northern Ohio counties in the SBA's Cleveland District.

year ending on Sept. 30 2021. List includes loans made in 15 Northeast Ohio counties: Ashland, Ashtabula, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Stark, Summit, Trumbull and Wayne. NOTES: 1. Address may represent the borrower's office or the project location. Addresses may consist of vacant land or facilities under construction. 2. The 7(a) loan program is the SBA's primary business loan program. 504 loans provide financing for major fixed assets only and are available through local SBA-certified nonprofits called Certified Development Companies.

Get 82 lenders. Become a Data Member: CrainsCleveland.com/data

Get 127 companies. Become a Data Member: CrainsCleveland.com/data

46 | CRAIN’S CLEVELAND BUSINESS | JANUARY 17, 2022

P046_CL_20220117.indd 46

1/14/2022 11:49:13 AM

AKRON

Immersive Care acquired by Texas virtual reality company

BY DAN SHINGLER

Jessica Benson built her business on virtual reality, but her success has become real.

The Akron entrepreneur recently sold her company, Immersive Care, to MyndVR, a company in Texas that, like Benson’s, uses virtual reality to improve life for seniors, veterans and other groups.

“I’m thrilled. … I am now the VP of market development for MyndVR,” Benson said. “It was really great to build something that was great and meaningful, have someone else who thought it was great and meaningful — and acquire it.”

Terms of the deal were not disclosed, but Benson said she and her investors, mostly from in and around Akron, profited from the sale.

But, more importantly, Benson said, she now has a wider audience for her technology and production assets, and a bigger base of support for her efforts.

“They’ve sold over 600 headsets, and they’re in more than 200 facilities,” Benson said of MyndVR. On top of that, she noted — and MyndVR CEO Chris Brickler confirmed — the company recently raised $2.8 million in venture capital via a seed-plus round of funding led by the virtual reality hardware company HTC of Seattle.

Benson had been nearly a one-woman show, though she said she had ample help from Akron’s Bounce Innovation Hub business incubator, with programs coordinated via the University of Akron Research Foundation. She also got help from Bill Myers, who founded the VR company New Territory at Bounce, which was sold in mid-2020 to Akron’s S3 Technologies, a company specializing in digital and video communications.

Benson had been selling subscription services to senior living facilities in and around Northeast Ohio. She

MyndVR acquired Akron’s Immersive Care because the companies have a common goal, their founders said: improving the lives of care-bound people by using virtual reality to give them experiences they could not have otherwise. | MYNDVR

mersive Care, Benson said she warmed to the idea quickly once she saw that their mission was the same as hers.

“Their slogan is ‘Putting smiles on faces.’ That’s their goal — they want to make seniors in facilities happy and smiling … and that’s exactly what’s important to me as well,” said Benson.

But joining the new and bigger company also means Benson has a bigger mission, one that goes beyond seniors. It’s also one she had already identified and begun developing content for, she said: veterans.

A lot of veterans are seniors, of course, and have many of the same needs and desires to experience things beyond their physical confines.

But they also have special needs that VR might be able to address, such as PTSD, and they sometimes hold dear places that might mean less to non-veterans, such as national monuments and military memorials.

developed a system she dubbed “RoVR,” which fit in a backpack and included VR goggles that accommodated glasses, a headset for sound, and VR programs offering both relaxation therapy and virtual visits to favorite local destinations that Benson had produced.

The technology enables seniors, or others who are unable to get out as much as they’d like, to travel virtually to places from their own past or places they’ve always wanted to visit in other parts of the world, Benson said.

Her business concept was working, but it was also slow going. Benson said she had deployed her technology to hundreds of seniors but only had a handful of facilities subscribing to the service, which cost $5,000 for a two-year subscription to a RoVR. A subscription to MyndVR is usually between $150 and $200 per month, she said.

When MyndVR wanted to buy Im-

Benson said she’d already made some inroads with veterans’ groups and facilities, as well as developed associated content, which Brickler said helped make her company an attractive acquisition.

“MyndVR is already a leader in providing subscription services to the Veterans Administration and veterans’ homes across the country,” Brickler said. “This merger, we think, will build our opportunity to serve veterans on a greater scale — that’s what that merger means — and also, hospice care.”

When Myers began working at S3 and COVID struck, Benson said she used her time to create veteran-specific content. Turns out, she said, the height of the pandemic was a great time to do production in normally crowded Washington, D.C. Those monuments have even more gravitas without crowds and the associated noise, she said.

Increases on SBA Lenders list driven by national rebound Northern Ohio 7(a) loan volume (inflation adjusted)

There are some flat-out huge percentage increases on our annual SBA Lenders list.

Small businesses in Northern Ohio benefited from a massive national rebound in SBA lending in 2021. The 82 lenders in the full Excel version of the list awarded 1,536 Northern Ohio loans through the U.S. Small Business Administration’s flagship 7(a) loan program during the federal fiscal year ending Sept. 30, 2021. That’s a 60.6% increase from 2020.

That total isn’t a record, but perhaps this one is more impressive: those loans were worth $478.6 million. That’s up 38% year-over-year, or 31% when accounting for inflation. It easily beats totals from at least the past decade even when factoring in inflation, according to a Crain’s analysis of SBA figures.

Thus, you get a bunch of big percentage increases on the list, which this year is running alongside a list showing the largest SBA Loans awarded in Northeast Ohio. That list only cover 15 counties and also includes fixed-asset loans made

$500M $400M $300M $200M $100M ’11

’12

’13

’14

’15

’16

’17

’18

’19

’20

’21

SOURCE: CRAIN’S ANALYSIS OF U.S. SMALL BUSINESS ADMINISTRATION DATA; CRAIN’S ADJUSTED FOR INFLATION USING THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS. CRAIN’S USED PRICES FOR SEPTEMBER OF EACH YEAR, REFLECTING THE END OF THE FEDERAL FISCAL YEAR. | CRAIN’S CLEVELAND BUSINESS GRAPHIC

through SBA’s 504 program.

Two factors had a huge impact on the increase in local 7(a) loans in 2021. First, COVID-19 forced the SBA to redirect much of its effort toward managing the Paycheck Protection Program and Economic Injury Disaster Loans. Though the total dollar amount of 7(a) loans it awarded in its 28-county Cleveland District grew 6.7% in fiscal 2020, the number of loans fell 21% that year.

Once it redirected its attention back

toward its traditional programs, they came back in force nationwide.

Second, Huntington Bank posted huge increases — which is important, since it’s always in the No. 1 spot by a mile on the SBA Lenders. Huntington gave out 1,086 7(a) loans in the Cleveland District in the year ending Sept. 30, 2021, up 33.1%. And those loans were worth $177 million, up 56% year from the prior year.

The smallest dollar volume in-

From Page 7

crease in the top five was KeyBank, with a 26.1% increase. Live Oak Banking Co. saw its dollar volume rise 140.9%, pushing it from No. 5 on last year’s list to No. 2 this year, just ahead of Key. But Key still had the second-highest number of loans with 68.

Nationally, the 7(a) loan program saw a 62% increase in dollars approved in fiscal 2021, beating the 38% local increase. That program accounted for 81% of the dollar volume awarded through the SBA’s traditional programs last year. Most of the rest consisted of fixed-asset loans made through its 504 loan program.

Those loans tend to be larger, so they account for three of the top five loans on our SBA Loans list, including the largest loan on the list. That one, for $10.8 million, went to Lexy Properties LLC, which owns West Park Animal Hospital — one of two veterinary facilities benefiting from the 22 loans in the print version of the list. The full Excel list includes 127 loans worth at least $1 million.

Chuck Soder: csoder@crain.com, (216) 771-5374, @ChuckSoder

Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler

TARIFFS

DATA SCOOP

BY CHUCK SODER

“We went to D.C. and shot all the monuments — and got it all while no one was there. It was great,” Benson said.

She’s likely to be part of an even bigger organization going forward.

Brickler, who said he currently has about 20 employees, said his company is growing quickly and preparing to raise another $5 million in new capital this year. Its seed-plus round in 2021 was meant to raise $2 million, but it was oversubscribed by 40%, he said.

VR is perfectly suited to the mission being assigned to it by MyndVR and Benson, said Myers, a local virtual-reality and augmented-reality expert who has produced work for various businesses involved in marketing, advertising and communications.

“VR enables people to feel like they are outside the walls of their care facility and provides moments of respite and calm through the use of virtual experiences,” Myers said via email correspondence.

And the technology that’s coming out now, including from MyndVR investor HTC’s VIVE Flow brand, is only getting better and will make the technology more accessible, with broader applications in care environments, he said.

“We’re starting to see a shift in how head-mounted displays are introduced into the health and wellness market. A headset called the VIVE Flow, for example, is sold as an onthe-go wellness device, while smart glasses can be used to provide remote assistance for care workers needing help with a patient using hands-free two-way video conferencing,” Myers said. “At S3 Technologies, we currently use this type of assisted reality tech to help our junior technicians out in the field with the ability to reach senior techs at our HQ for remote support.”

It is clear why the Bicameral Congressional Trade Authority Act proposed by U.S. Sen. Pat Toomey and U.S. Sen. Mark Warner is necessary for state economies and our country as a whole. With the requirement of any tariffs intended to address national security issues to be subject to Congressional review before they go into effect, it will allow time for the proposed tariff to be fully evaluated. With more time for evaluation, we will be able to see the effects said tariffs will really have on our economy and citizens. Perhaps we can avoid material shortages and price inflation in the future if this were to be adopted. In addition, this bill would benefit all industries, not just aluminum.

In addition to supporting this bill, we also need to focus on lifting the tariffs specifically on low carbon imported aluminum. Currently, the U.S. is importing most of its aluminum from China for cost saving reasons, however China uses less than desirable methods to produce their aluminum.

If tariffs were lifted on imports from countries in Europe that have the technology to produce clean, low carbon aluminum, we would be able to support our own clean energy standards and goals as well.

JANUARY 17, 2022 | CRAIN’S CLEVELAND BUSINESS | 47

P047_CL_20220117.indd 47

1/14/2022 2:21:08 PM

50 YEARS

design with relatively efficient dollars,” Zak said. “You compare that to if I was on one of the coasts — it would be double to triple the cost.”

The other company, TecTraum, is set to be the first FDA-approved therapeutic device to treat concussions.

The device cools the head and neck, replacing the current therapy, which consists of three to four weeks of “brain rest.” The two 30-minute treatments shorten the recovery period from multiple weeks to a few days, Zak said.

Although the device is set to be used initially in clinical settings, Zak said the Nottingham Spirk designers developed a consumer-focused product that eventually could be used outside the hospital — for example, in schools by nurses or athletic trainers.

“It may not seem a natural evolution to some,” Zak said of Nottingham Spirk’s transition to the medical device field. “But historically, medical devices are these archaic, industrial-looking things without a thought to what the user interface or the user experience would be.”

From Page 1

from the Cleveland Institute of Art in the early ‘70s with industrial design degrees. Then they began a business in a carriage house on the CWRU campus rather than design cars for one of the big automakers.

“At the time, traditionally, industrial designers go into careers at places like the automotive or appliance companies,” Nottingham said. “Designing for an automotive company was then considered the gold standard.”

But the two wanted to do more than just “style” the latest car, Nottingham said, and instead took a chance on their own, starting the eponymous firm where for five decades they have envisioned, designed, engineered, prototyped, tested and marketed innovative business and consumer products.

A billion served The decision has paid off. During those five decades, Nottingham Spirk upgraded offices twice, created products for hundreds of startups and partnered with Fortune 500 companies, and built and sold off a handful of successful companies, all while crafting some of the most popular consumer products on the market.

Among those: the Crest Spinbrush, one of their most successful and disruptive ideas.

The industry’s first $5 motorized toothbrush sold 10 million units in the first year with a spinoff company and was eventually acquired by Procter & Gamble, where it generated billions in an otherwise staid toothbrush market.

“There are not too many products out there that anyone can say they designed and has been used by a billion people,” Nottingham said.

But the key to Nottingham Spirk’s growth goes beyond just the next big idea, Spirk said.

“The difference between us and some other firms is that when you look at this innovation world, it’s gotten fragmented, and everyone has become very specialized. They work in individual silos,” Nottingham said. “We have become more integrated in our process.”

The company, Spirk points out, operates in an open-concept office, where designers sit in the same room with engineers and marketing officials to encourage collaboration and keep ideas from being lost in translation.

This process is how things stay on task, true to design concept and consumer-focused in a world where advances in technology have shrunk development schedules from years to months.

“We started out using drawing boards, magic markers and models,” Spirk said. “You would do drawings, send them to a tool maker. We would then take these parts and put them together and find problems and do more drawings.”

The back-and-forth with model makers could take weeks or months. Any significant delay might mean the product was not ready for a once-a-year trade show or by the time an annual catalog was printed, leading to lost sales.

The introduction of 3D printers, modeling software and photorealistic design capabilities over the last few decades has significantly altered the time needed to take an idea from

Tailored to needs

The former First Church of Christ, Scientist building, now the Nottingham Spirk headquarters in University Circle. | THOMAS TOKMENKO

Left: Nottingham Spirk co-founders John Nottingham, left, and John Spirk.

Above: The Twist and Pour container was developed by Nottingham Spirk in partnership with Sherwin-Williams for its Dutch Boy brand. | COURTESY PHOTOS

concept to market.

“What would take three years you can sometimes do in three months,” Spirk said. “It’s a huge advantage for development and engineering capabilities. The simulations we can do that would before have taken weeks and weeks to solve, we (now) can do in a few keystrokes and find out instantly if there’s a flaw in that particular design.”

This means that the two Johns have had to keep up with the staggering pace of change that demands everything they design is at the same time technologically advanced, user-friendly and affordable.

“The key to success over time is to keep a balance between knowing what the trends are without getting

too far ahead,” Nottingham said. “We are always questioning if what we are working on answers a problem that is a big enough problem to solve. Is the market big enough? And do we have the skill set to pull it off?”

Branching out One of the answers to those questions involves the firm’s recent strategy to move into the medical device market by either taking an equity position in an existing medical tech company or funding a startup anchored by a Nottingham Spirk design.

In 2016, Nottingham Spirk partnered with two companies headed

by John Zak: TecTraum Inc., which is

developing a concussion therapy device, and XaTech Inc., a hand-held blood testing device based on technology that originated out of CWRU. Both technologies have been awarded Breakthrough Device designation by the U.S. Food and Drug Administration, a process that fast-tracks certain products to get them to market quicker.

Using Nottingham Spirk for the engineering, consumer testing and marketing to create a hand-held, portable, Bluetooth-enabled machine that requires only a finger-prick for testing kept costs down for XaTech, Zak said.

“It allowed me to take a complex medical device and reduce it down to a very marketable, commercial-ready

The move to the medical device industry allows Nottingham Spirk to take advantage of what is a fundamental shift in health care delivery, said Tom Burchard, director of Life Sciences, MedTech and Product X.O at Accenture.

“There is a big push to getting products to market that offer lower cost of care with a higher engagement with patients, who will be more involved in their own health care,” Burchard said.

According to a report by Accenture, the size of the U.S. home health care market will more than double from $100 billion in 2016 to $225 billion in 2024, driven by major increases in telehealth services and a massive shift to virtual patient care.

With home health care demands increasing, consumers and patients are looking for products that fit into the home environment and “don’t feel like a hospital backed up and was placed in their house,” Burchard said.

Established medical device companies often are working with technology that is decades old, due to the arduous process of wining FDA approval, opening up a field for technology improvements.

“Many medical device companies still have a very intrinsic engineering approach to developing these products. This is what the consumer product companies do much better. They try to figure out first what consumers need and then they tailor it to that need,” said Stefan Kalla, managing director, consulting, Life Sciences and MedTech R&D at Accenture.

Going beyond Neither Nottingham nor Spirk have any plans to scale back or slow down after 50 years, as evidenced last October with the ribbon-cutting for the firm’s new EY-Nottingham Spirk Innovation Hub, a collaboration with giant consultant EY that offers manufacturing firms from around the world the ability to evaluate and test new products and processes using state-of-the-art technology.

“We’ve been doing this for 50 years, but the most important thing is what we’re going to do beyond that,” Nottingham said.

Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive

48 | CRAIN’S CLEVELAND BUSINESS | JANUARY 17, 2022

P048_CL_20220117.indd 48

1/14/2022 2:14:24 PM

MERRITT

From Page 1

“I’m a small, minority developer,” Merritt said over coffee on a cold December morning. “If I screw this up, that’s going to follow me everywhere.

I’m not one of those big, multibillion-dollar developers where they screw up and, whoosh, it just gets swept under the rug.”

People who know Merritt say any bet on her is well-placed.

“She’s a force to be reckoned with,” said Seth Whetzel, business development officer at Capital Impact Partners, a nonprofit community development financial institution in the nation’s capital.

“She doesn’t feel entitled to a damn thing,” he added, “but, boy, does she pay it forward.”

With her partner, Texas-based SLSCO Ltd., Merritt plans to restore the 116-unit property in Hough as workforce housing. The one- and two-bedroom units will serve households earning 60% of area median income — or $33,060 to $42,480 a year.

Construction could start in July and will wrap up in 2024.

The $36.6 million project includes a new, two-story community center next door, where residents and neighbors will have access to basic health screenings and other services, including help for job seekers and entrepreneurs. A second phase of development will bring 44 additional homes, also income-restricted rentals, to nearby land.

The tower, originally called Community Circle I, is condemned. It has been sitting empty since 2008, despite its location only a half-mile from the Cleveland Clinic’s front door. But it’s a solid structure, built in the early 1970s as part of a broader urban renewal effort championed by neighborhood groups and nonprofit University Circle Inc. Restrictive covenants placed on the site years ago by the U.S. Department of Housing and Urban Development limit the use of the property to affordable housing. Those covenants drove off other potential developers, who wanted to refashion the tower as luxury apartments — in one case, with a heated swimming pool, a private movie theater and a rooftop bar.

Merritt’s approach to projects is as much about people as bricks and mortar.

She grew up in affordable housing, though she didn’t realize that as a child living in the Bronx. Her mother died when she was 13, and she helped raise her younger siblings.

She vowed early on that she would be financially independent, that she wouldn’t rely on a man to get by.

The apartment building at 9410 Hough Ave. has been vacant for more than a decade. Developers plan to gut and renovate it as a 116-unit apartment project, with help from $8 million in American Rescue Plan Act funds. | MICHELLE JARBOE/CRAIN’S CLEVELAND BUSINESS PHOTOS

For Gina Merritt, the boarded-up building at 9410 Hough Ave. is an open door — an opportunity to bolster both a community and her company.

moved to the West Coast and back.

She reconnected with, and married, her high school boyfriend. And she walked the tightrope of being a mother and a business owner, while pursuing a career where she usually was the only Black woman in the room.

A decade ago, she crossed paths with Meg Manley Garrett, an affordable-housing developer and consultant who eventually brought Merritt to Northeast Ohio.

The women bonded “TO REALLY FIX THE HOUSING common frusPROBLEMS AND THE INEQUITY IN THIS over trations and similar stories about their COUNTRY, IT TAKES A VILLAGE. IT experiences in a TAKES PEOPLE WHO ARE WILLING TO male-dominated industry.

GO THE EXTRA MILE. IT TAKES “She doesn’t give FOUNDATIONS. IT TAKES COMMUNITY. ” up. She has a tremendous amount of in— Meg Manley Garrett, an affordablehousing developer and consultant tegrity. And she’s hilarious,” said Garrett, She studied business administra- who recently left her role as director tion at Howard University, worked on of development services at RDL ArWall Street and obtained an MBA. chitects in Shaker Heights to launch a Then she transitioned into real es- consulting firm called SpringCreek tate, working for a series of develop- Advisors. ers on everything from low-income In early 2021, a Florida investor housing to condominium deals. approached RDL about that blighted Along the way, she married, had a building in Hough. He was the high daughter and got divorced. She bidder for the tower in an online auc-

nority developer, he said. The grant won’t flow to the project until the rest of the financing, including tax-exempt bonds and noncompetitive Low Income Housing Tax Credits, is in place.

Merritt started visiting Cleveland in July and meeting with residents in Hough. She didn’t want to publicize the project until she heard about what neighbors needed — and until she told them about herself and Project Community Capital, an economic-empowerment initiative that she dreamed up in 2010 and formally branded in 2017.

Working with Merritt is exciting and different, said Khrys Shefton, director of real estate development for Famicos Foundation, a nonprofit development corporation that serves a stretch of the East Side. Famicos will manage Ninety-Four Ten Hough.

“It’s coming into the conversation with the residents in your mouth before they’re in mine,” Shefton said of Merritt’s style. “That this isn’t cute for you, or cute for your company, in terms of putting residents to work.

It’s a part of the model already. It’s ingrained in the work.”

Shefton envisions that pocket of Hough becoming a true mixed-income neighborhood. There’s abundant low-income housing. Developers are tying up vacant land for market-rate projects, such as the Axis at Ansel apartment building that opened in 2020 and the planned 77unit Park Lamont residences to the south. Merritt’s project will fill a gap in between.

“To really fix the housing problems and the inequity in this country, it takes a village,” Garrett said. “It takes people who are willing to go the extra mile. It takes foundations. It takes community. This is not a small problem that we face in our country. But if we do pull together, like this team is doing … we can make an impact.”

That’s an unusually large contribution, the culmination of a protracted sale effort by out-of-state owners tion for the city to make to a deal, he who had been saddled with the real acknowledged. But 9410 Hough was going to land at officials’ feet eventuestate since 2018.

That Florida buyer had no experi- ally, he said, possibly as a teardown ence with affordable housing — and that could require a huge chunk of no chance of living up to HUD’s re- the city’s annual demolition budget.

“At the end of the day, it’s a quesquirements, Garrett said. She suggested that he flip the project to tion of do we deal with this now — or do we get sucked into it later, and someone else.

“Gina immediately came to mind,” then we’re untangling a mess,” Garrett said. “As a Black woman, she Wackers said.

The federal infusion of pandemsits in a position right now where we so need diversity in the development ic-relief cash provided a unique community. We so need developers opening to clean up the wreckage, working in communities where they create much-needed affordable Michelle Jarboe: michelle.jarboe@ can directly relate to the people in housing and support a female, mi- crain.com, (216) 771-5437, @mjarboe that community.”

C R A I N ’ S C L E V E L A N D B U S I N E S S | S E P T E M B E R 3 - 9 , 2 018 | PA G E 2 9 SLSCO, a general contractor and construction manager that specializAdvertising Section es in disaster relief, was one of Garrett’s clients. The company had the cash to buy the real estate in June — and was willing to provide financial guarantees while letting Merritt take the lead.

“These guys, white dudes out of Texas, believe in me more than any other partner I’ve had,” Merritt said. To place your listing in Crain’s Cleveland Classifieds, “They believe in me, and then they show up.” contact Ainsley Burgess at 313-446-0455 The structure of that partnership positions her to make enough money or email ainsley.burgess@crain.com to hire more employees and secure more credit for her business. She sees the project, which the team is calling Ninety-Four Ten Hough, as the foundation for more deals where she can be the majority partner, rather than working for a small stake or modest fee.

She plans to open a satellite office in Cleveland by summer and already is pursuing other local projects. She’s BUSINESS OPPORTUNITY also talked about buying a house here.

“My husband’s now questioned C.W. JENNINGS GLOBAL ENTERPRISE INC. me as to whether we’re going to stay Manufacturing / Distribution Advising living in Baltimore County,” she told Industrial / Consumer Goods council members last month.

The legislation approved by counGlobal Expansion Financing cil spans the American Rescue Plan Construction / Acquisitions Act funds and the sale of a few parCorporate Partnering cels of city-owned land to make room for the community center. The $8 (216) 505 - 5049 / ( 855) 707 - 1944 million will be a grant to a nonprofit entity associated with the project, C.W. Jennings Global Enterprise Inc. said Michiel Wackers, the city’s interim director of community developA Unit of C.W. Jennings Industrial Empire ment.

CLASSIFIEDS

BUSINESS SHOWCASE

JANUARY 17, 2022 | CRAIN’S CLEVELAND BUSINESS | 49

P049_CL_20220117.indd 49

1/14/2022 2:15:33 PM

LAW

LAW

Benesch Law Benesch is pleased to announce that Barry J. Guttman has been promoted to partner in the Real Estate & Environmental Practice Group. Barry represents national, regional and local developers, owners, operators, lenders, and investors on a broad range of commercial real estate matters across all asset classes, including acquisition, disposition, development and debt and equity financing of single assets, and portfolios of assets and real estate companies, among others.

LAW

Benesch Law Benesch is pleased to announce that Warren T. McClurg has been promoted to partner in the Litigation Practice Group. Warren represents companies and individuals in all aspects of commercial litigation, including disputes related to contracts, consumer law, business torts, insurance, and product liability.

Warren’s experience includes cases involving the Uniform Commercial Code, Truth in Lending Act, Real Estate Settlement Procedures Act, and the Fair Debt Collection Practices Act, among others.

LAW

LAW

LAW

LAW

Benesch Law

Brouse McDowell LPA

Porter Wright

Ulmer & Berne LLP

Benesch is pleased to announce that Michael S. Weinstein has been promoted to partner in the Litigation Practice Group. Michael has significant experience litigating complex intellectual property matters in federal district courts nationwide and in inter partes review proceedings before the Patent Trial and Appeal Board.

He has represented clients in a variety of different fields, including pharmaceuticals, chemical compositions, consumer products, and medical devices, among others.

Brouse McDowell is proud to announce that Shelby Ranier of our Akron Office has been elected Partner.

Working in the Business Transactions and Corporate Counseling Practice Group, Shelby has represented clients ranging from publicly traded Fortune 500 corporations to small businesses and individual entrepreneurs on a variety of issues such as analyzing and negotiating different kinds of Transactional Documents, including Letters of Intent, Purchase Agreements, Buy-Sell Agreements and more.

Porter Wright welcomes Edmund (Ned) W. Searby to its Cleveland office as chair of the firm’s White Collar Criminal Defense Practice Area. Ned brings 25 years of global legal and business experience to the firm’s corporate investigations, white collar, antitrust and securities teams in Cleveland and throughout the Midwest. He is a former federal prosecutor who is highly-recognized in federal investigations and prosecutions and SEC enforcement actions.

Ulmer is proud to announce Katherine M. Poldneff has been promoted to Partner.

Poldneff is a litigator who focuses on complex commercial litigation and professional liability matters.

Her broad experience includes contract, trade secret, and non-compete disputes, the False Claims Act and pharmaceutical pricing, defamation, and fraud and breach of fiduciary duty in the health care receivables industry. She also handles significant injunction litigation and employment discrimination matters.

LAW

Justin M. Lovdahl has joined Benesch as an associate in the firm’s Litigation Practice Group. Justin focuses his practice on commercial and construction litigation, representing business owners, developers, contractors, and design professionals in all facets of construction law, including construction claims and management issues, surety bond disputes, mechanics’ lien claims, contract negotiations, and arbitrations.

LAW

Benesch Law Benesch is pleased to announce that Susan M. White has been promoted to partner in the Construction and Litigation Practice Groups. Susan focuses her practice on the construction industry providing counsel to subcontractors, contractors, suppliers, and project owners in both transactional and litigation matters. She is experienced in preparing and negotiating contract agreements and purchase orders on behalf of owners, general contractors, subcontractors, and suppliers.

Ulmer & Berne LLP LAW

Brouse McDowell LPA Brouse McDowell is proud to announce that Kyle Shelton of our Akron Office has been elected Partner.

Working in the Litgation Practice Group, Kyle has represented companies of all sizes on a variety of issues such as Real Estate and Title Insurance, Product and Tort Liability, Commercial Contracts, Protection of Business and Intellectual Property, and Corporate Governance of Closely Held Corporations and more.

LAW

Ulmer & Berne LLP Ulmer is pleased to announce that Daniel A. Gottesman, Partner and Co-Group Leader of the Health Care Practice Group, has been elected to the firm’s Management Committee, which is responsible for guiding the operations and strategic direction of the firm. Gottesman is a corporate attorney who applies his extensive mergers and acquisitions experience to advise health care clients on a variety of corporate, real estate, and transactional matters.

Ulmer is pleased to announce that Michael N. Ungar, Partner and Chair of the Litigation Department, has been re-elected to the firm’s Management Committee, which is responsible for guiding the operations and strategic direction of the firm. His practice focuses on complex civil litigation with an emphasis on commercial and financial services matters. He is also a highly respected mediator and arbitrator who is relied upon to help find solutions in contentious and complicated disputes.

LAW

Ulmer & Berne LLP

LAW

Porter Wright

LAW

Benesch Law

To place your listing, visit www.crainscleveland.com/people-on-the-move or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

LAW

Brouse McDowell LPA Brouse McDowell is proud to announce that Brian Coulter of our Youngstown Office has been elected Partner. Working in the Litgation Practice Group, Brian has represented clients ranging from publicly traded Fortune 500 corporations to small familyowned businesses on a variety of issues such as Tort Liability, Disputes, Adverse Possession, Zoning, and more.

50 | CRAIN’S CLEVELAND BUSINESS | JANUARY 17, 2022

Porter Wright welcomes Jennifer L. Stueber as an attorney in its downtown Cleveland office. She joins the firm’s Corporate Department and will serve clients in the areas of Banking & Finance and Real Estate. With both general counsel and private practice experience, Jennifer brings 25 years of strategic and solutionoriented legal acumen assisting organizations with transactions involving public and private finance, real estate, public law, general corporate law and securities.

LAW

Ulmer & Berne LLP Ulmer is proud to announce Steven P. Larson has been promoted to Partner.

Larson is a commercial real estate attorney who focuses on complex real estate and finance matters. In addition to traditional acquisitions, dispositions, and ground-up development, he has experience utilizing federal and state historic tax credits, assisting with complex low income housing tax credit transactions, and representing investors and operators in the acquisition and disposition of long-term care facilities.

Ulmer is proud to announce Adam R. Watowicz has been promoted to Partner.

Watowicz is a tax attorney who focuses on taxation, employee benefits, and executive compensation. He advises clients operating in a broad range of industries on federal, state, and local taxation issues that arise during business and real estate transactions. He also has experience representing clients before the U.S. Department of Labor and Preserve your career change Internal Revenue for years toService. come.

NEW GIG?

NEW NEW GIG? GIG?

Plaques • Crystal keepsakes Frames • Other Promotional Items

C O N TAC T

Benesch is pleased to announce that Nora Cook has been promoted to partner in the Litigation Practice Group. Nora represents clients in complex commercial litigation matters in state and federal court, and before various arbitration tribunals. Nora also has experience defending companies in consumer-related litigation involving the Telephone Consumer Protection Act, Fair Debt Collection Practices Act, and state law claims.

PEOPLE ON THE MOVE

Preserve your career change for years come.

Preserve your to career change for years to come.

Laura Picariello Reprints Sales Manager Plaques • Crystal keepsakes lpicariello@crain.com Plaques • Crystal keepsakes Frames • Other Promotional Items (732) •723-0569 Frames Other Promotional Items

C OCNOTNA TA C TC T

Benesch Law

Advertising Section

Laura Picariello Laura Picariello Reprints Sales Manager Reprints Sales Manager lpicariello@crain.com lpicariello@crain.com (732) 723-0569 (732) 723-0569

NOMINATIONS NOW OPEN

crainscleveland.com

Executive editor Elizabeth McIntyre (216) 771-5358 or emcintyre@crain.com Group publisher Jim Kirk (312) 397-5503 or jkirk@crain.com Associate publisher Amy Ann Stoessel (216) 771-5155 or astoessel@crain.com Managing editor Scott Suttell (216) 771-5227 or ssuttell@crain.com Assistant managing editor John Kappes (216) 771-5359 or john.kappes@crain.com Web editor Damon Sims (216) 771-5279 or dpsims@crain.com Assistant editor Rachel Abbey McCafferty (216) 771-5379 or rmccafferty@crain.com Art director Kayla Byler (614) 312-7635 or kayla.byler@crain.com Senior data editor Chuck Soder (216) 771-5374 or csoder@crain.com Cartoonist Rich Williams REPORTERS

Stan Bullard, senior reporter, Real estate/ construction. (216) 771-5228 or sbullard@crain.com Lydia Coutré, Health care/nonprofits.

(216) 771-5479 or lcoutre@crain.com Michelle Jarboe, Enterprise reporter.

(216) 771-5437 or michelle.jarboe@crain.com Amy Morona, Higher education.

(216) 771-5229 or amy.morona@crain.com Jay Miller, Government.

(216) 771-5362 or jmiller@crain.com Jeremy Nobile, Finance/legal/beer/cannabis.

(216) 771-5255 or jnobile@crain.com Kim Palmer, Government.

(216) 771-5384 or kpalmer@crain.com Joe Scalzo, Sports business.

(216) 771-5256 or joe.scalzo@crain.com Dan Shingler, Energy/steel/auto/Akron.

(216) 771-5290 or dshingler@crain.com ADVERTISING

Events manager Missy Chambless, (216) 771-5388 or missy.chambless@crain.com Integrated marketing manager Cody Smith, (330) 419-1078 or cody.smith@crain.com Sales manager Mara Broderick, (917) 612-8414 or mara.broderick@crain.com Sales and marketing coordinator Shannon Smith, (440) 281-6397 or shannon.smith@crain.com Account executives Laura Kulber Mintz, Loren Breen, Kaylie West People on the Move manager Debora Stein, (917) 226-5470, dstein@crain.com Pre-press and digital production Craig L. Mackey Office coordinator Karen Friedman Media services manager Nicole Spell Billing YahNica Crawford Credit Thomas Hanovich CUSTOMER SERVICE

Customer service and subscriptions: (877) 824-9373 or customerservice@crainscleveland.com Reprints: Laura Picariello (732) 723-0569 or lpicariello@crain.com

N

ominations are now open for Crain’s Cleveland Business 2022 Notables in Finance. This is a special editorial feature

within Crain's April 25 print issue and online that will recognize top executives in finance for their success and accomplishments during the last 18 months. We are welcoming nominations to help us determine those recognized in this feature.

Crain’s Cleveland Business is published by Crain Communications Inc. Chairman Keith E. Crain Vice chairman Mary Kay Crain CEO KC Crain Senior executive VP Chris Crain Secretary Lexie Crain Armstrong Chief Financial Officer Robert Recchia G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 (216) 522-1383 Volume 43, Number 2

CrainsCleveland.com/Nominate

NOMINATION DEADLINE:

FEB. 21

Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except no issue on 1/3/22, combined issues on 5/23/22, 6/27/22, 8/29/22, 11/21/22, at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230.

Copyright © 2022 by Crain Communications Inc. Periodicals postage paid at Cleveland, OH, and at additional mailing offices.

Price per copy: $2.00.

Postmaster: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, MI 48207-2912.

1 (877) 824-9373.

Subscriptions: In Ohio: 1 year - $79, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, MI, 48207-9911, or email to customerservice@crainscleveland.com, or call (877) 824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax (313) 446-6777.

JANUARY 17, 2022 | CRAIN’S CLEVELAND BUSINESS | 51

P051_CL_20220117.indd 51

1/14/2022 1:11:41 PM

CRAIN’S

SIGNATURE EVENTS 2022 EVENT CALENDAR *

MARCH 2022

Crain’s newsroom and top executives from the Cleveland Cavaliers and the Greater Cleveland Sports Commission will have a panel discussion on the business of sports.

JUNE 2022

Crain’s honors the dedication and achievements of Northeast Ohio’s top female business leaders who enrich our region with their professional talents and unique perspectives.

AUGUST 2022

Join Crain’s Cleveland Business as we salute the top nominated employers in NEO and beyond.

SEPTEMBER 2022

A tribute to Northeast Ohio’s leading human resources professionals who are building companies with the best people, talent, development and culture.

SEPTEMBER 2022

Industry experts will examine some of the top issues facing health care.

OCTOBER 2022

Crain’s journalists and local real estate experts will share their perspectives on the future of Cleveland’s real estate market and the economy in this morning panel discussion.

NOVEMBER 2022

A celebration to honor Northeast Ohio's best and brightest professionals who are scaling businesses to new heights, making decisions that put their organizations on the map and producing a stream of impactful work.

CrainsCleveland.com/Crains-Events *Please note all event dates are subject to change All in-person events are subject to change to a virtual setting or cancellation based on latest recommendations regarding gatherings as a result of the ongoing pandemic.

CLEV EVENTS 2022 full.indd 1

1/13/22 7:48 AM