Crain's Cleveland Business

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VOL. 36, NO. 49

DECEMBER 7 - 13, 2015

35th Anniversary

EDUCATION: Graduation rates Universities aim for improvement P. 4

NONPROFIT: Salvation Army Organization navigates a new era

Source Lunch We sit down with Charu Ramanathan P. 24

P. 4

FOCUS: Marketing/Creativity

CLEVELAND BUSINESS

Who to watch in 2016 P. 13-21

Commercial loans thriving in NEO market

The List Banks in Northeast Ohio P. 27

Business of Life

Strong economy, creative strategies keeping business loan growth steady jnobile@crain.com @JeremyNobile

A strong economy in Northeast Ohio is helping further the ongoing expansion of commercial loan portfolios as banks strategically target the larger business segment.

Some of the biggest regional banks in Cleveland are reporting loan growth even stronger here compared to elsewhere in their reach.

Fifth Third Bank’s commercial loan portfolio in Northeast Ohio has grown about 12% over the last year, said Jerry Kelsheimer, the bank’s CEO for Northeastern Ohio, compared with about 5% for the bank overall. The dollar amount of those loans, meanwhile, has grown 50%.

That growth underscores an ongoing trend of strong commercial lending activity among banks overall.

According to recent figures from the Federal Deposit Insurance Corp., the total dollars behind commercial loans are growing about 8% overall.

That generally means credit is available to companies, and that’s resulting in some creative means for capturing loan demand as banks compete.

But that’s just one factor at play.

M&A activity remains strong with large companies across various industries continuing patterns of buying and selling, which is driving up numbers for the Cincinnati-based bank, Kelsheimer said.

Strong health care, chemical and real estate industries are helping as those sectors thrive and grow.

There’s also more restructurings and recapitalizations going on as business leaders — particularly those eyeing retirements — act increasingly more thoughtfully about what they want to do with their business and wealth.

“They’re being more strategic with what they want to do with their capital structure, and we’re intentionally engaging in that dialogue with our customers,” Kelsheimer said.

A ‘good economy’ Community Banks are grabbing their share, too.

Joseph Gerzina, Farmers National Bank chief lending officer, said commercial loans are trending at a 15% increase over last year.

“What you’re seeing is a good economy,” Gerzina said. “The manufacturing industry has pulled back a little because of shale, but we are also riding some good times where we’ve seen a great deal of liquidity come into the market because of the shale industry or people leasing their land.

That money is being reinvested.”

Renee Csuhran, Huntington Bank Cleveland region interim president, said commercial real estate in Cleveland also is “hot” now.

The bank has its own stake in financing local construction projects in the city and is seeing high demand for commercial real estate as more companies target upscale accommodations downtown. Csuhran said the auto sector also is quite busy.

In this area, that focus on the commercial real estate business has

Entire contents © 2015 by Crain Communications Inc.

SEE LOANS, PAGE 8

REBECCA R. MARKOVITZ

BY JEREMY NOBILE

A thirst for craft beer is helping funnel interest to the increasingly popular hobby of home brewing. With an estimated 1.2 million home brewers in America and record participation in brew clubs, enthusiasts are buying into the home brew craze. — P. 22

Feds, lawyers go after Abakan Inc. Foreign companies could take control of MesoCoat

BY CHUCK SODER csoder@crain.com @ChuckSoder

Federal investigators are taking a close look at the Miami-based holding company that owns MesoCoat in Euclid.

And that’s just the beginning of the drama surrounding Abakan Inc. Strapped for cash, MesoCoat — a small metal coatings technology company — soon could be owned by two Panamanian holding companies that previously lended money to MesoCoat and Abakan.

But they also owe money to about 200 other creditors, some of whom are trying to force the businesses into a Chapter 11 bankruptcy filing.

Then there’s Abakan CEO Robert Miller. He not only opposes the plan, but he claims that the Panamanian companies are controlled behind the scenes by a man he

described as an international crook. He argues that they worked together to force Abakan to default on a loan, using legal maneuvers to make sure the company couldn’t raise capital.

However, Abakan’s record isn’t 100% clean.

The company fired chief financial officer Costas Takkas in May after he was indicted in the FIFA soccer corruption scandal. And one of Abakan’s former board members, Jeffrey Webb, pleaded guilty to money laundering, wire fraud and racketeering while serving as vice president of FIFA. And Abakan itself has received at least three subpoenas from the U.S. Securities and Exchange Commission since November 2014. Why? The SEC won’t comment, but its enforcement division has asked questions about Abakan and Miller, according to Robert Seiden, the court-appointed receiver who now oversees both Abakan and MesoCoat. Court documents also state that federal officials took photographs at Abakan’s Miami SEE ABAKAN, PAGE 26

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Small Business Matters i Want more information and resources on this week's topics, ideas and events? Go to www.cose.org/smallbizmatters.

PRESENTED BY

52 TIPS FOR YOUR BUSINESS

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By Kevin Goodman, BlueBridge Networks When it comes to cyber security, the small shops seemingly fare better than their bigger brethren. The old adage of “The bigger you are, the harder you fallâ€? seems to hold true in cybersecurity (at least in the press reporting) as larger stores seem to have more to lose HUK HYL H OPNOLY WYVĂ„ SL [HYNL[ :[PSS THU` studies show that approximately 75% of data breaches occur outside of large enterprise environments.

Limit exposure If you or your company is a victim of fraud, you want to limit your exposure and ensure your bank and others are on your side. Know `V\Y IHUR HUK P[Z WVSPJPLZ :OVW HYV\UK MVY cyber protection, not just interest rates. Your liability limit for credit vs. debit card is a consideration that must be understood.

(S[OV\NO [OLYL PZ YLHSS` UV VUL ZPaL Ă„ [Z HSS L LJ[P]L ZOVY[ SPZ[ VM JOLJRPUN H WYVWYPL[VY VY how to behave in the digital era, it is wise to look for and be a company that exhibits best practices. The best defense in controlling your destiny around cyber and mobile security is to clearly understand and know your risk exposure. As a culture, we put a lot of faith while impulse buying that our information and transaction is secure. The truth is we never know.

Think of the adage, “Nothing is truly free,� including mobile apps. Be mindful of the personal information you give mobile app providers. Many free apps sell your information to a wide range of companies,

Think before you write There is much that we can do on our own side to assure privacy, security, and mitigate risk. The fact is every person is vulnerable to hackers, as evidenced by the reputation KHTHNL Z\ LYLK I` ZL]LYHS :VU` 7PJ[\YLZ executives whose emails were leaked to the public. Things you may think are cute, funny or private, when exposed to a broader audience out of context, can paint a public picture of a person you are not. This can be disturbing and unfair. Remember: You should never put anything into an email – especially your work email — that you would not want the entire world to be able to see if that message is not encrypted.

some of which may have malicious intents. :[\KPLZ OH]L ZOV^U TVZ[ HWWZ KV UV[ OH]L many, or even any, security controls built in.

Check privacygrade.org to see if the app you want respects your privacy and has security built in.

Be smart about ‘smart’ devices Be cautious with new “smart� devices. A wide range of new and unique gadgets — from socks to smart cars — connect you directly to other entities (and even to the Internet) to automatically share information about your activities, location, and personal characteristics. Before using such devices, know which data they are collecting, how it will be used, and with whom it will be shared.

Consider outsourcing Be open to outsource to providers who are third-party audited and hold various JLY[PĂ„ JH[PVUZ" KV UV[ Y\U H J`ILYZOVW VU your own and without expert consultation and regular updates. Anti-virus companies V LY ZVM[^HYL [OH[ ^PSS ZJHU `V\Y ^LIZP[L for malware and alert you of any breach.

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Kevin Goodman is managing director and partner with BlueBridge Networks, a cloud data center and managed services business headquartered in downtown Cleveland.

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z DECEMBER 7 - 13, 2015 z CRAIN’S CLEVELAND BUSINESS

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NEO universities ta k to raise grad rates

BY RACHEL ABBEY MCCAFFERTY RMCCAFFERTY@CRAIN.COM @ramccafferty

The numbers vary, but the goals are the same — Northeast Ohio’s colleges are taking steps to increase the number of students leaving their campuses with degrees in hand. And the key to this, many say, is increasing retention.

“The first thing you have to do is you have to keep them,” said Dick Fletcher, senior vice president for Baldwin Wallace University in Berea.

Area colleges are trying a lot of tactics to make sure students come back from one year to the next, from student surveys to retention committees to more comprehensive orientation programs. Many of the programs come down to making sure universities are aware of the problems students face and finding ways to resolve them.

At Baldwin Wallace, the retention rate has hovered around 82% to 83%, Fletcher said, and the goal is to reach 85%. Its graduation rate has stayed near 70% in the past five years.

Baldwin Wallace is a “missiondriven” school with an extensive support system for students that watches for academic, emotional and financial difficulties that may need intervention, Fletcher said.

But for most, this mission isn’t going to be purely altruistic.

In Ohio, degree and course completion is tied to state funding, a for-

mula that was fully implemented for the first time in fiscal year 2015.

This funding used to be based on enrollment, but now there is a more tangible reason to want to improve graduation rates.

The college graduation rate made some headlines recently after the National Student Clearinghouse Research Center released a report showing that six-year graduation rates dropped for students who entered college in 2009.

The rate fell from 55% for students who entered school in 2008 to about 53% for the 2009 starters. These numbers are hard to directly compare to figures collected by local colleges, as many of those follow federal guidelines that only include full-time students.

The report also included students attending part-time.

Ohio tracks its graduation rate data based on the individual, rather than an aggregate cohort, so it’s also a bit different than those federal Integrated Postsecondary Education Data System (IPEDS) measures, said Jeff Robinson, director of communications at the Ohio Department of Higher Education, in an email.

For the cohorts of full-time students entering a university main campus in 2006, 2007 and 2008, about 58% graduated in six years.

There was a small drop in the sixyear graduation rate for the 2009 cohort to 56%.

The state also tracks a “success rate,” which accounts for students who were still enrolled at an institution in that year.

That figure was at 68% in 2006 and 2007 and at 67% in 2008. The 2009 cohort success rate figures are not yet available.

Mitigating risk Jennifer Spielvogel, vice president of evidence and inquiry at Cleveland-based Cuyahoga Community College, noted that the IPEDS data does not include transfer students or those going to school part-time. For Tri-C, that meant just 1,490 students were counted in the 2008 cohort and 2,124 in the 2009 group. Both groups saw six-year graduation rates of about 12%.

While the school considers other measures of success, like if a student has transferred or is still enrolled, it is doing more to get those IPEDS students to graduate. Tri-C offers completion scholarships and allows students in that cohort to register for classes early, Spielvogel said. It’s important to balance the needs of those students with others at the college, who may be working in addition to taking classes, attending part-time or enrolling in between jobs.

The IPEDS population of firsttime, full-time students has always been small at Cleveland State University, said Teresa LaGrange, vice provost for academic planning, but it has been growing. Many of Cleveland State’s students also work or care for family members, and many are first-generation college students.

“We have a very much at-risk student population,” she said.

The school has implemented pro-

Salvation Army gets cre a

BY LYDIA COUTRE LCOUTRE@CRAIN.COM @LydiaCoutre

With consumers shifting their shopping online and their in-store purchasing from cash to plastic, the Salvation Army’s familiar red kettle campaign isn’t the reliable source of donations it once was for the nonprofit.

Local Salvation Army chapters, which on average raise between 40% and 50% of their annual budgets during the holiday season, are facing mounting challenges in bringing in enough donations to meet growing needs.

The volunteers ringing bells outside businesses have historically brought in most of that crucial holiday fundraising.

But the kettles are harder to fill when 80% of consumers use debit cards for everyday purchases like gas and groceries, according to the nonprofit organization American Consumer Credit Counseling.

“It worked every year, and now we’re finding that every year we have to find innovative ways to keep the cash coming in at the same level that it did previously,” said Major Lurlene Kay Johnson, the Salvation Army’s divisional secretary for Greater Cleveland.

The Salvation Army’s Northeast Ohio Division, the umbrella organization for the Cleveland branch, typically raises between $3.5 million and $4 million during the holiday season through the red kettle campaign. This year, the chapter needs between $4 million and $4.5 million, said Major Evan Hickman, the divisional commander for the Northeast Ohio Salvation Army, which serves the region from Bellaire to Newark, up to Toledo and across to

Youngstown.

He said the number of people requesting assistance is up by about 50% to 60% just since last year.

“With the amount of people that are knocking on our doors for assistance compared to what we got in last year, to be able to meet the critical need with more people asking for help, it would be nice to get a bump in our red kettle income this year,” Hickman said.

But technology and shifting consumer habits demand innovative approaches just to maintain the historic fundraising levels, Johnson said. The Salvation Army offers red kettles online for electronic donations. Corporate partnerships allow customers to add a donation to their purchase total or buy red shields that hang on businesses walls.

Johnson said she believes all of the new fundraising avenues will begin to add up to what the Salvation Army needs, but that takes time.

A new era A number of factors beyond simple convenience have played into the shift toward credit cards, said Brendan Hickey, director of business development for Twinsburgbased Solupay, an electronic payment processing company.

Electronic payments offer security and often don’t hold card holders liable for fraud, he said. Credit card rewards can be a big draw and people don’t want to carry around thick wallets full of cash. Even not knowing where a dollar bill has been can push some germophobes to plastic payment alternatives.

“I just think that as we see more and more alternative

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a ke on challenge Facing pressure from the state, schools are doing a better job identifying, addressing students’ challenges sive and overhauling the “welcome weekend” and first-year class, Pringle said.

Kent also implemented an early alert program so the college has a defined way to check in on students who may be struggling, she said.

At Kent, the six-year graduation rate increased from about 55% to about 56% from the 2008 to 2009 cohorts.

Staying flexible

Talking about college graduation rates can be difficult for a variety of reasons.

First, it’s tough to compare schools that range from community colleges to public universities to small private schools, as they have different missions and serve different populations, both in terms of size and in terms of the types of students they enroll.

Second, the graduation rate measure that most schools have to report to the federal government — for the IPEDS, or the Integrated Postsecondary Education Data System — doesn’t include all students.

It only includes first-time, full-time undergraduate students who are seeking a degree or certificate. That means students who are going part-time, or students who started college in the past and didn’t finish concurrently, are not counted.

— Rachel Abbey McCafferty

grams to provide a “university safety net,” like extra advising, financial support and more flexible schedules, LaGrange said. The school has increased its graduation rate by 10% in the past five years.

According to information from the school, the six-year rate for both 2008 and 2009 was about 39%.

When Lester Lefton joined Kent State University, he made increasing retention rates a priority, said Eboni

Pringle, the school’s dean of University College.

The college put a priority on ensuring students got a good start to their education by making new student orientation more comprehen-

Smaller universities may have an advantage in these kinds of efforts.

John Carroll University’s size allows it to be flexible in scheduling, making sure students don’t get shut out of classes they need to graduate, said Brian Williams, vice president for enrollment and institutional analytics.

One of the less-tangible initiatives to increase retention at the University Heights college is the “CARE Team” implemented a few years ago.

It brings people together from across the campus to discuss students who may need an intervention, Williams said, giving as an example a student losing his or her mother. It’s a way to keep people apprised of what is going on in students’ lives outside of school.

These types of interventions seem to be gaining popularity among Northeast Ohio institutions.

At North Canton’s Walsh University, there’s a dedicated retention committee, made up of representatives from academics, athletics and

the administration.

The group, which meets regularly, has been around for at least three years.

“We have a pretty robust, comprehensive approach to our retention,” said vice president of enrollment management Alejandra Sosa Pieroni.

The school’s retention rate has increased about 6% in the past four years, from about 72% to about 78%.

The retention rate leads to the completion rate, Pieroni said, and she expects to see that increase, as well.

For the 2009 cohort, about 60% of the 489 students graduated in six years.

At Hiram College, the school had a six-year graduation rate of about 63% for the 2008 cohort, and about 60% for the 2009 group.

In addition to more traditional tutoring and advising programs, students at Hiram College take a MAPWorks survey in their fourth week to gauge how they’re feeling socially, financially and academically about their transition to college.

The survey gives them feedback, but it also allows the college to see if someone’s struggling, said Liz Okuma, Hiram’s vice president and dean of students.

This allows officials to help with early interventions.

For example, if a student reports that he or she isn’t sure they’re going to make it because they can’t find a work-study job, someone at Hiram can help them find one.

“We’re trying to take care of the hiccups before they become huge explosions, if you will,” Okuma said.

e ative as charity’s not a drop in bucket payment types were going to see more and more digital payments as things progress,” he said.

The Greater Cleveland division of the Salvation Army needs to raise $639,000 from the red kettle campaign alone, Johnson said. Cleveland will have a little more than 100 kettle locations this year, which has kept pace with past years.

Many of those kettles, however, are no longer in hightraffic areas that were important to the campaign. As locally owned stores are bought by national corporations and as companies change their solicitation policies, there are fewer and fewer high-traffic sweet spots available, Johnson said.

“It’s not just the Salvation Army,” Hickman said. “I think every nonprofit should have a chance to solicit, but it’s getting tougher and tougher for permission to stand.”

The Salvation Army’s national headquarters handles agreements with larger chains, and local chapters meet with local businesses to find ways to maintain red kettle locations, Johnson said.

“In many cases, we’ve known the owners for many years, and so they’ve kind of grandfathered the Salvation Army in, even if their policies have changed some,” she said.

But even those arrangements cannot overcome consumer habits. Many shoppers opt to avoid the crowds on Black Friday, which historically raises a lot of donations, and shop from the convenience of their living room on a computer or phone. For those who do venture out during the major shopping weekend, stores’ extended hours drive consumers to be out late at night or very early in the morning when volunteers aren’t out ringing bells, Johnson said.

Competitive field The holiday season is a critical time for the Salvation Army’s fundraising, but the same goes for other area nonprofits. Decades ago, the Salvation Army was the main street solicitor, but now, Johnson said, when the organization approaches a store to do a red kettle campaign, there may be 20 other people waiting in line to do something similar.

“We’re competing against other really wonderful nonprofits to do the same type of ideas,” she said.

This can also create an “ongoing battle” to recruit volunteers when there are so many organizations looking for help, Hickman said.

Although many people know the Salvation Army, many may not know what it does beyond housing the homeless and feeding the hungry, which Johnson said could be a barrier to bringing in donations. The organization also offers senior services, community art and learning centers and assistance to those with drug and alcohol dependencies.

Last year the Cleveland division served 143,000 people and that number climbs annually, Johnson said.

Every January, the division adjusts its budget based on the money raised over the holidays. If the Cleveland division doesn’t raise the money it needs, Johnson said she and her staff will have to come up with an immediate plan to fill the gap with other fundraising methods, “or we have to cut our budget, which means we cut programs.”

She hopes it won’t come to that.

Hickman was also optimistic. The iconic red kettle campaign offers a nostalgia that people tend to respond to, he said. “We’re hopeful, and we’re counting on that, and we’re needing that again.”

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z DECEMBER 7 - 13, 2015 z CRAIN’S CLEVELAND BUSINESS

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BY RACHEL ABBEY MCCAFFERTY

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The Boys & Girls Club of Cleveland is getting more involved in helping Northeast Ohio’s teens find and train for jobs in the community.

The group, which offers a variety of afterschool and Saturday programming, is embarking on a workforce development program that will create structured, ongoing interactions between local companies and young adults at the clubs.

The program is just getting underway, and many of the details are yet to be determined.

This isn’t the only change for the Boys & Girls Club in recent years.

The clubs have seen quite a bit of growth in the past three years, from five clubs to 14, most of which are in Cleveland.

“We’re doing the work in the areas the kids need us most,” said president Ron Soeder.

The program got its start six to eight months ago in a meeting with the Brooklyn-based Deaconess Foundation, Soeder said.

The group asked what the clubs were doing to help students who weren’t planning to go to college, and that question led the local Boys & Girls Clubs to start thinking about being more intentional about finding job pathways for the students.

With the help of the group’s board members, the clubs put together a framework for a pilot.

The Deaconess Foundation gave the group an additional $25,000 grant to get the program off the ground, and Dennis A. Kucler was brought on board to the Boys & Girls Club about a month ago to serve as the director of workforce development for the program.

He’s a fellow with the Cleveland Foundation’s Encore Cleveland program, which helps retired or nearly retired members of the community stay involved and share their skills.

The program pays for a portion of his stipend for the year-long commitment, while the foundation supplies the rest. According to a news release, Kucler had experience at companies including IBM and

Derome Houston works on homework at a Boys & Girls Club teen center. (David Liam Kyle) Hewlett-Packard Co. and has been an active volunteer since his retirement.

The program needs to match both the interests of the students with the needs of the companies, Kucler said.

The partnerships will ideally include some sort of training or shadowing opportunity at the company, along with a mandatory, scheduled program at the club.

“It’s got to work for the business partner,” he said. “It’s got to work for our kids.”

Tim Selhorst, CEO of American Spring Wire Corp. in Bedford Heights and vice chairman of the Boys & Girls Club of Cleveland, said his company has been hosting more informal events to get students in the plant, but this will provide more structure and routine to it.

Dustin Peugeot, operating partner for Liberty Ford and general manager for the Maple Heights location, said they’re constantly looking for young employees to grow into roles at the company.

He’s a board member at the Boys & Girls Club and saw a “mutual need and ability.” Liberty Ford is planning to have students fill roles in areas as varied as the office, the collision center and sales.

And, once a student meets all the requirements and successfully com-

pletes the apprenticeship-style program, there will be a job waiting for him or her.

Kucler said there are three things that will make this workforce development program stand out.

First, the program will truly engage the companies it’s working with. It’s going to consider the companies’ needs, Kucler said, while expecting them to provide concrete opportunities for students to learn.

Secondly, there’s going to be a focus on skills development, whether it takes place at the clubs or not.

For example, if the teenagers need a driver’s license, the program will likely find an outside resource with which to partner.

And, thirdly, the teenagers in the program will also bear some heavy responsibilities if they want to be involved.

They’re going to have to apply and interview with the companies to be accepted, Kucler said.

“We’re going to make this real,” he said.

The club is getting official agreements from companies.

The plan, Soeder said, is to have five to six corporate partnerships with about 45 to 50 teenagers in the pilot.

Kucler said he hopes to start recruiting students for the program in January.

Park Place Technologies sold to Chicago firm Park Place Technologies is being sold from one private equity firm to another.

The Mayfield Heights-based data center maintenance company is being bought by GTCR of Chicago.

The private equity firm plans to help Park Place fund acquisitions and other initiatives, according to a news release announcing the deal.

Park Place has grown substantially under its current majority owner, WestView Capital Partners of Boston.

The company has 362 employees, including 151 in Northeast Ohio.

That’s up from 240 employees (100 in Northeast Ohio) when it was bought by WestView three years ago.

And CEO Ed Kenty thinks the growth will continue with the help of GTCR. The investment firm “brings significant resources and experience in building industry-leading companies,” he stated in the release.

GTCR principal Larry Fey noted that the firm has “investment experience in outsourced business ser-

vices and deep domain expertise in internet and computing infrastructure.”

The deal is expected to close before the end of the year.

Park Place helps small and large companies maintain the computer equipment in their data centers after it has gone off warranty.

Last year, Park Place moved into its current headquarters from a smaller office near Chagrin Falls.

It also has been expanding its presence in Europe.

— Chuck Soder

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The Week

Crain’s 52

THE BIG STORY

ADVANCED SEARCH

Forest City Enterprises Inc. eliminated 45 jobs at its Terminal Tower headquarters and six others nationally. Jeff Linton, spokesman for the national real estate developer and owner, said the cuts are part of the company’s effort to streamline processes as it restructures operations. Forest City plans to become a real estate investment trust early next year. “It’s not about reducing head counts,” Linton said.

“It’s about improving processes.”

The layoffs stretch across the breadth of the company’s divisions.

At its iconic Public Square headquarters, Forest City has about 600 employees; another 100 are located throughout the region.

Terminated staffers receive severance and outplacement assistance.

Advance Partners, a Beachwood business-to-business services company, was acquired by New Yorkbased Paychex Inc. Terms of the deal were not disclosed. Paychex is a national provider of payroll, human resource, insurance and benefits outsourcing solutions for small to midsize businesses. Advance focuses on professional services for independent staffing firms, including payroll funding and outsourcing services.

The company, founded in 1998, has about 130 employees, all of whom are expected to join Paychex.

Crain’s 52 was held Nov. 4 at the Near West Theatre in the Gordon Square Arts District. There were more than 350 attendees; the 10 fastest-growing companies were announced at the event (above). The remaining companies were ranked in the Nov. 9 issue of Crain’s Cleveland Business.

Give employees the duck.

Anything else is just chicken.

SEE HOW IT RATES FirstEnergy Corp. filed a controversial electric rate plan with the Public Utilities Commission of Ohio. The plan would raise the cost of electricity for an average residential customer by $3.25 a month for the first year, though FirstEnergy contends that customers of its Ohio utilities — Ohio Edison, The Illuminating Co. and Toledo Edison — would save more than $560 million over the plan’s eight-year term if retail power prices increase over time. Opponents have called the power-purchase plan a “bailout” for FirstEnergy because it allows the power companies to recover the above-market cost of generating power from high-cost power plants, including several coal plants and the Davis-Besse nuclear plant.

The full PUCO board will have the final say on the plan.

70 percent of employees say they’d likely purchase voluntary insurance if it were offered by their employers.1

FRESH AIR

The question is, who will you choose?

In Parma, the developer remaking Parmatown Mall as The Shoppes at Parma is going all the way in its plans to remake it as an open-air shopping center. Rather than retain part of the former mall in the redo, the property’s owner announced that it will demolish the almost 170,000-square-foot portion of the mall that it kept last year when it razed most of the enclosed mall. In its place will go four buildings with a total of 120,000 square feet of selling space. The changes in the property at 7899 W. Ridgewood Drive will add about $15 million to the original $60 million to $80 million budget for the project.

Why not offer coverage from Aflac, the No. 1 provider of worksite/voluntary insurance sales for 14 consecutive years?2 And only Aflac offers One Day PaySM, which allows your employees’ claims to get paid in just a day when they submit online.* There’s no direct cost to you for offering Aflac, and getting started is as simple as adding a payroll deduction. That’s why small business owners like you have chosen Aflac for 60 years. It’s also why we’re so confident Aflac is the right solution for your business.

You can bet the farm on it.

BULKING UP The Riverside Co. sold Brandmuscle, a marketing technology and services company with 210 employees in downtown Cleveland, to another private equity firm, American Capital Equity III LP of Bethesda, Md. The deal will give Brandmuscle access to more capital, which will allow it to buy other companies — companies with expertise in digital advertising.

Examples could include search engine marketing, display advertising and social media. Though terms of the deal were not released, American Capital Equity typically invests between $25 million and $150 million per deal. Brandmuscle is based in Chicago, but about one-third of its 650-or-so employees are based in Cleveland.

Call your local agent and visit aflac.com/smallbiz

1

2015 Aflac WorkForces Report, a study conducted by Research Now on behalf of Aflac, January 20 - February 10, 2015. Includes somewhat, very and extremely likely; of those employees who are not currently offered voluntary insurance benefits by their employers. 2Eastbridge Consulting Group, U.S. Worksite/Voluntary Sales Report. Carrier Results for 2002-2015, Avon, CT. *One Day PaySM available for most properly documented, individual claims submitted online through Aflac SmartClaim® by 3 PM ET. Aflac SmartClaim® not available on the following: Short-Term Disability (excluding Accident and Sickness Riders), Life, Vision, Dental, Medicare Supplement, Long-Term Care/Home Health Care, Aflac Plus Rider and Group policies. Processing time is based on business days after all required documentation needed to render a decision is received and no further validation and/or research is required. Individual Company Statistic, 2015. Individual coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, individual coverage is underwritten by American Family Life Assurance Company of New York. Worldwide Headquarters | 1932 Wynnton Road | Columbus, GA 31999 Z150004R

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LOANS CONTINUED FROM PAGE 1

WE HELP

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helped contribute to the bank’s 7% increase in the commercial portfolio.

(The bank declined to discuss figures in the Northeast Ohio region specifically.) Banks and nonbanks alike, analysts say, are competing on loan terms across the industry, and underwriting has been loosened to seize the opportunity in today’s high-demand environment.

“In the commercial real estate space … we will do longer terms,” Csuhran said, adding, “I think we are comfortable” with that.

“We like to be able to lock in the interest rate and provide some term financing, and that is a good way to meet client needs.”

Banks generally have been much quicker to tweak standards for commercial clients because those loans are bigger, more profitable and easier to package and resell as compared to small business loans. The processes are also easier to automate versus smaller loans, which add to their appeal on the bank’s side.

“Growth has been pretty steady on the large loan side since the end of the recession where the small business side is a lot more muted,” said Ann Marie Wiersch, senior policy analyst at the Federal Reserve Bank of Cleveland. “Some banks are focusing more of their efforts with the larger businesses because it is more of a profit center for them.”

Wiersch also points to the rising prominence of nonbank lenders as another factor at play. Those lenders often target small businesses that

tend to be drawn to the easier loan process there despite higher costs.

That’s one reason demand on the smaller business front overall is stymied from a bank’s perspective.

“Some banks are focusing more of their efforts with the larger businesses because it is more of a profit center for them.”

— Ann Marie Wiersch, senior policy analyst; Federal Reserve Bank of Cleveland Cleveland’s largest bank is seeing some unique strategies pay off in the commercial lending sector.

KeyBank has logged 11% growth in commercial loans across the board.

But in Northeast Ohio, that’s more like 20%, said Cleveland market president Kip Clarke. That pace closely

mirrors the growth seen last year.

The loans are not only more diverse — manufacturing, in particular, is helping push that acceleration in growth over the last couple years, said middle market sales leader Matt Nipper, along with other focuses on niches like professional service and staffing companies — but some loans are being made to companies the bank wouldn’t have considered before. Some of those deals trace back to Key’s July 2014 merging of Pacific Crest Securities, an Oregonbased investment banking firm specializing in tech companies, into KeyBanc Capital Markets.

The unique combination is just one effort that underscores the bank’s strategy to develop business in niche sectors and deepen expertise in various verticals the bank can then promote to clients, Clarke said.

Pacific provides information on how technology itself is evolving and how the related industries are changing, which in turn helps raise capital and supports lending work.

The new data helps the bank target and consider loans to companies in the marketplace more broadly that it wouldn’t have considered before just because the insight on those industries, like those in the staffing and tech sectors, simply wasn’t there.

“The traditional approach is to go through referrals and calls to the marketplace,” said middle market sales leader Ernie Manuel. “You have to do both, there’s no question. But we want to continue to branch out and push the new model.”

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Matt Griswold, CFO/Partner; Ron Guenther, investor; Ed McNamara, CEO; and Ed Purcell, Executive VP/ Partner. (McKinley Wiley)

Insurance broker aims to make its mark on market

BY JEREMY NOBILE jnobile@crain.com @JeremyNobile

Scott Raybuck would be leery of backing a new insurance brokerage in an already crowded market.

But that was before he was approached by Armada Risk Partners founder and CEO Ed McNamara, a native Clevelander and 10-year veteran of the insurance world.

Raybuck is CEO of Clevelandbased Steamfire, which markets and sells medical devices and services to the healthcare industry. He also has purchased rights to launch seven Pita Pit franchises in Cleveland.

He’s a sharp investor and energetic businessman, but he’s far from an expert in insurance. In this case, though, “I’m betting on the jockey, not the horse,” he said. “If this idea had come from someone else, it would not excite me at all.”

Raybuck is among a core of nine investors behind the initial $1.5 million of financing that launched Armada into the commercial brokerage world in downtown Cleveland this month. He’ll also be a client.

McNamara transitions to his new business from Aon Risk Services, which he most recently served as senior vice president. (He worked at Oswald Cos. before that). McNamara also is the founder of Prayers from Maria, a charity named after his late daughter that funds childhood cancer research.

It was during his time spent working for large companies that helped fuel his vision for a new brokerage serving the middle market. He doesn’t want to be just a broker to clients, though, but also a business consultant.

Odds are, few companies would say their top business adviser is their insurance broker, but that’s McNamara’s goal. And while he’s probably not the first broker with that message, it helped win over investors like Raybuck.

“In the insurance world, it’s literally all about the dollar,” McNamara said. “We want to give the best coverage and price, but then we won’t disappear. We want to introduce you to vendors and clients to help grow

your top line. Even the smaller brokers aren’t doing that much. And it’s a belief I’ve been working on.”

But there’s more than a strong pitch at play.

Armada plans to position itself as a major acquirer of other brokerages and books of business to gain scale.

And he’s already got targets lined up; the first deal could come with the acquisition of a small Cleveland broker as soon as January.

“We’re looking for the firm that has the potential to agree with our ideas.

But we need to gain size in order to help clients.”

— Ed McNamara founder and CEO; Armada Risk Partners

The industry is ripe with M&A activity that can be partly chalked up to the graying of the industry. According to a report earlier this year by global management consultant McKinsey & Co., the average age of insurance agents in the United States is 59, and 25% of the overall workforce is expected to retire by 2018.

“It is a pretty heated market for brokerage operations right now,” said Paul Newsome, a managing director and senior insurance analyst with Sandler O’Neill + Partners, L.P. “The good news is there are a lot of brokerage operations to acquire.

Most are very small. But there’s plenty of room to make acquisitions.”

M&A activity on the brokerage front has been so hot, even private equity is getting increasingly involved. The downside? Valuations have been rising for years, so deals could be expensive.

There are some 30,000-plus brokerages in the country. Newsome said a typical valuation is around six to eight times earnings before interest, taxes, depreciation and amortization (EBITDA). Eight times is more common nowadays, though some high-profile deals have gone as high as 10 to 15 times EBITDA. But securing hasn’t been an issue for Armada so far. McNamara intends to finance any deals entirely through equity with the backing of investors.

Asked about a target number of deals to complete in the inaugural year, he said he wants to shoot for between one to four with the caveat that “we might do 10, we might do none.”

Armada would consider acquisitions anywhere. But McNamara has his sights set on targets that fall within pathways stretching from Detroit to Tampa and from Chicago to New York.

“We’re looking for the firm that has the potential to agree with our ideas,” McNamara said. “But we need to gain size in order to help clients.”

Armada investor Bruce Cassidy Jr., a founding partner at Cincinnatibased Excel Capital Partners, isn’t concerned about a crowded brokerage industry. Cassidy said he sees only opportunity considering the state of the aging market, “I think in any mature industry, saturation is always a concern,” Cassidy said. “But there’s always a place for best-in-class producers who do things a little differently.”

A new firm is able to implement new technology that long-established firms might struggle with because of issues like the costly and cumbersome process of switching over IT systems, which would be a significant undertaking for a large broker. That’s something a newly started firm can put in place from the beginning.

“This is still an investment,” Cassidy said, “and from that standpoint, I’m looking to beat the market.”

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Opinion From the Publisher

There’s still hope for the B+ Cleveland kid

Editorial

Healthy move MetroHealth is a much different place than it was in 2013.

The Cuyahoga County-subsidized health system’s finances were in the gutter, staff morale was at an all-time low and public confidence in the public hospital continued to wane even as the county corruption scandal cooled. Today, however, MetroHealth’s finances have rebounded, patient volumes are surging and the energy — excitement even — surrounding the health system is palpable.

Much of that is due to the finesse of MetroHealth’s president and CEO, Dr. Akram Boutros, who took the helm in the summer of 2013. The transparency with which he operates has been refreshing in an era of tightly controlled messaging.

So when news broke that the county was looking to trim $7.6 million from the $40.1 million annual subsidy the health system receives, some might have expected Boutros — never one to mince words (just ask University Hospitals) — to chide county officials.

However, cooler heads prevailed and Boutros accepted the reduction with grace, which we applaud.

In the grand scheme of things, the reduction is hardly crippling. It comes only a few years after the county increased the annual subsidy by about $4 million.

Moreover, in 2014, MetroHealth finished the year solidly in the black, having posted a 3.9% profit margin — about $35.2 million in operating income — on more than $905 million in operating revenues. Also, through the third quarter of 2015, MetroHealth’s operating income and revenue are both up compared to this point last year.

In spring 2014, Boutros said in his annual state of the system address that MetroHealth was poised to wean itself off

taxpayer support for its operations — something it’s now close to doing.

The wrinkle, of course, is that he was hoping to bank as much of that subsidy as possible to help foot the bill for MetroHealth’s ambitious and much-needed transformation project, which is expected to cost about $1 billion. Boutros knows he’ll need the county’s assistance to finance the project, and both parties say they’re working toward a solution.

Under Boutros’ watch, MetroHealth has been responsible with its taxpayer support, and its willingness to receive a smaller slice is even more evidence of that. The county should recognize that as it explores ways to assist the health system in rebuilding its aging main campus off West 25th Street.

MetroHealth’s value to the community is immeasurable.

The health system, which has traditionally (though not only) cared for the county’s poor, has been steadily and costeffectively expanding its services in the community through creative partnerships, such as those with the Cleveland Metropolitan School District and Discount Drug Mart. Since Boutros came on board, he’s been wise to forgo spending more on bricks-and-mortar in the suburbs and favored a leasing strategy to expand the health system’s footprint.

Surely, the massive health care expansion brought on by the Affordable Care Act has brought more money into MetroHealth’s coffers, but it’s hardly turned the health system into a cash cow. Northeast Ohio’s employers have shown resilience in their ability to do more with less in the wake of the Great Recession, and we’re confident MetroHealth can do the same.

PUBLISHER: John Campanelli (jcampanelli@crain.com) EDITOR: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

MANAGING EDITOR: Scott Suttell (ssuttell@crain.com)

You know the story, because the media loves to tell it: A kid from the ’hood overcomes the odds, graduates from the struggling public school system, gets into a great college, works like crazy and blossoms into a successful business leader.

These stories are inspiring, of course, but they also can warp our perception of reality. They imply that if this extraordinary person was able to do it, anyone can do it.

I don’t worry about the extraordinary people. The young women and men in the 99th percentile with drive to match their intelligence — they’re going to be fine.

I worry about the thousands of Cleveland kids who fall somewhere into the, say, 60th to 90th percentile. They may be late bloomers or yet-to-be-inspired all-stars. Or maybe they’re “only” destined to be solid, productive members of our workforce and region. No matter what, the B-plus kids are crucial.

They just need two things: opportunity John and hope.

Campanelli The high school senior with a 2.8 gradepoint average in Brecksville probably has hope and opportunity — and a future at college. But what about the 2.8-GPA student in Cleveland? That’s where Cleveland State and Tri-C should come in, right?

In theory, yes, but according to 2013 numbers from The Chronicle of Higher Education, just 1.4% of African-American students — yes, fewer than 2 out of 100 — finished their twoyear degree in three years or less at Tri-C. At Cleveland State, just 13.9% of black students received a four-year degree in six years or less.

“Local schools got a lousy, lousy, lousy, god-awful record.

People don’t graduate from college in your town. They don’t,” Antonio Boyle told me last week. Boyle is senior vice president of enrollment management and student services at Wilberforce University in Southwest Ohio.

This fall, Boyle helped launch a program at the nation’s oldest private historically black college that’s as simple as it is revolutionary. It’s called the Wilberforce Promise.

If you are a full-time student with financial need and you maintain at least a 2.5 GPA, participate in a Work-Study job and complete two internships or co-ops, you will leave Wilberforce with a degree and be debt-free.

Tuition, room, board and books are all covered.

The program requires no additional application, and qualified students are automatically enrolled.

This fall, 160 freshmen — roughly 30 from Northeast Ohio — are part of the first Wilberforce Promise class.

“You send them down here to us,” Boyle said. “I’m going to send them back home debt-free with two years of work experience, groomed and prepared to walk into jobs.”

Wilberforce has set aside $300,000 for the program this year, he said. The money will be pooled with the students’ federal financial aid to cover the costs.

The inaugural freshmen have completed their first semester and are back home, said Boyle, where people are noticing “a transformation in terms of how they approach life.”

Perhaps even better: More than 96% have enrolled in semester No. 2.

That’s a solid A. (Interested in supporting the Wilberforce Promise program or hiring an intern? Contact Antonio Boyle at aboyle@wilberforce.edu.)

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 letters@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.

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Web Talk Re: Browns worth 20 years of trouble?

Let’s not lose sight of the reason the Browns packed up and went to Baltimore in 1995. It was the inept negotiations by our then-mayor, Michael White, and his administration. We ended up giving (former Browns owner) Art Modell everything he wanted, but too little, too late. Hang in there, Browns fans!!

— Frederick Hunger Until fans demand better, expect nothing different. Money talks.

When support stops, only then will change begin.

— 209317 I think Cleveland and the Browns go hand in hand. I, for one, am glad they returned. Having a major sports franchise is always good for the city economically, no matter how bad the team is. The stadium is full every Sunday. On the other hand, the Indians have had decent seasons in the past couple of years and they are having a hard time getting fans in the seats. Why is that?

— Michael Vaughn And what was the reason for not building a domed stadium? A real NFL commissioner would pressure (Browns owner Jimmy) Haslam to build up the team or sell.

— Al Phillips Everyone wanted the team back, but no one could have envisioned the unconscionable mismanagement of the product on the field.

— Donald Templeman

Crain’s Nov. 30 story on the Browns does very little to analyze or compare the team’s deal with Cleveland to other NFL teams’ deals with their cities. Break it down — what does it really cost?

Is it worth it? What is the opportunity cost of the land on the lake, if it were used in another development?

— Mike Schumaker

Re: Tackling high prices of college textbooks Amen! The far-left money-printing machine is on the decline for a multitude of reasons, including this one. Less money for the liberal book monopoly. I love it!

— RippedOffStudent

Donate new, unwrapped toys at an official drop-off near you.

Re: Plans for downtown’s superblock

Re: Advisory group to counsel University of Akron

Cleveland continues to grow up.

Going back to the urban core rather than urban spread will help make downtown Cleveland even more viable. I wish this had existed 20 years ago when I moved back to Cleveland. A special thank you to the developers, Weston and Citymark Capital. Let’s do all we can to support this effort.

— Neil Dick

Perhaps the “additional points of view” the university seeks should include more females and minorities. And maybe people with experience in universities and education?

— Randell Mitchell

This project and the NuCLEeus project will catapult downtown into a destination city that can compete with both Chicago and New York.

These developments will spur even more great living choices downtown. Vibrancy creates more vibrancy.

— James Shellenburger

Re: OM Group HQ leaving Cleveland This situation, with OM Group leaving to be near the new CEO’s home in St. Louis, isn’t uncommon.

ConAgra Foods has been Omahabased company for many decades, and because its new CEO is a Chicagoan, that company is now moving its HQ to Chicago, and over 1,500 corporate positions in Omaha are being eliminated. Most people, including the IT department, got their pink slips just before Thanksgiving. That company has been destroyed by someone who took the CEO job but doesn’t want to move to where the company has successfully resided since its start.

— Brian Dunn

Re: FirstEnergy’s rate plan The proposed power purchase agreement is a bailout and amounts to nothing more than monopolies for FirstEnergy and American Electric Power in their respective territories. The end result will be an increased cost of doing business that ultimately will adversely affect business growth and development in Ohio.

— Eli Auerbach I’ve always found it tacky when people affect an Old English ‘E’ at the end of a word. This is a rat plan.

— andypie This is ridiculous. This deal is not in the best interest of the consumer.

Let’s see if the PUCO does the right thing.

— Powerless

Re: Why Clevelanders ride alone to work Build nothing but highways for decades and more people will drive to work. This is pretty straightforward “social engineering.” We helped move people into the most expensive, most environmentally costly, means of getting to work. Probably a lot of people would prefer a casual stroll to work or a breezy train ride, but that isn’t on the table for a lot of people thanks to poor planning.

High single-car commuting rates should embarrass us. Cities that are more competitive than us economically — like Seattle and Pittsburgh —- are moving in the opposite direction. With a plan and goals, we could be doing the same. Unfortunately, there isn’t a lot of leadership on this issue locally.

— Angie Schmitt

Re: The Trump effect on other Republicans Oh, please!!! Although maybe not the best candidate, Trump will not kneel down for any lobbyist unlike all others in office now. There needs to be change, and NOT the type Obama promised. There needs to be legit change in our government and those who hold positions within our government.

What politicians seem to forget is that being in office should be an honor and about the people of the United States. It’s not about lining their pockets and lobbyists’ pockets for BS bills that don’t accomplish anything but thousands of pages of earmarked crap.

This country used to be great, and it isn’t anymore. Stop worrying about a power struggle and worry about the American people!!

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Focus

WHO TO WATCH

Marketing & Creativity

CRAIN’S CLEVELAND BUSINESS z DECEMBER 7 - 13, 2015 z PAGE 13

Given that it’s the heart of the Rust Belt, Northeast Ohio might still be viewed by many as a region entrenched in traditional values and dominated by a blue-collar workforce. However, Greater Cleveland has a creative spark — and it’s getting brighter. In Crain’s latest “Who to Watch” feature, we’re highlighting up-and-comers and innovators in Northeast Ohio’s marketing, advertising and public relations fields. These individuals might fly under the radar now but could disrupt their fields — for the better — in the future. You might not know their names, but many of them work on some of the region’s — and even the nation’s — biggest brands.

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WHO TO WATCH: MARKETING & CREATIVITY

Samantha Beattie

Director of user research & engagement strategy; Point To Point

Samantha Beattie said stubbornness led her down a nontraditional career path into marketing.

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teaching job in Arizona and work as a legal liaison for the state of Georgia’s child and family services department.

When her husband, Kyle, was hired at the customer engagement firm Rosetta, the Beatties — including son, Jack, now 5 — moved to Cleveland.

She became more interested in the company and eventually secured an internship, working under Rachel Thayer, director of user research.

Thayer said Beattie came to her with “a broad set of skills” and a passion for user research.

She said Beattie has a “very natural talent” for uncovering insights with users by asking the right questions.

“What makes her good at marketing is not just looking at what she’s doing as marketing,” Thayer said.

“She comes from a great perspective of doing what’s best for the customer or user. She grounds herself not so much in what’s going to make the business better, but what will make a better experience or product for the customer.”

At Rosetta, Beattie conducted usability tests, in-depth interviews, focus groups, eye-tracking studies, heuristic evaluations and contextual inquiries.

She moved on to Sunstorm Games, a Cleveland-based gaming company, where she ran usability tests with children to help the company improve the gaming experience.

Today Beattie leads businessto-business firm Point To Point’s user research and engagement strategy team.

“A lot of research at Point To Point is finding out who are the people who make up an audience, what are their frustrations, what are they doing every day, how do they interact with each other, where are they going to find information, what information is important to them,” she said.

“When we come up with a marketing plan, it speaks directly to that audience.”

Her background, she said, helps her combine the best of science and the humanities to understand the psychology of users — the “what” and “why” behind the decisions consumers make.

“I do think my background really led me to where I am now, even if I didn’t recognize it at the time,” Beattie said.

“Things happened along the way — being really, really poor and learning what that was and getting a little bit of humility.

“Another was being a teacher.

That comes into play a lot in my professional life. It’s beneficial to be able to explain something to somebody, and I think that helps me grow a lot.”

— Kimberly Bonvissuto

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WHO TO WATCH: MARKETING & CREATIVITY

Andrew Burkle & David Hagen Founders; BurkleHagen Photography

ANDREW BURKLE

DAVID HAGEN

On the fourth floor of the Milk Factory building in Cleveland’s AsiaTown neighborhood, photographers David Hagen and Andrew Burkle have created a studio specializing in food photography that rivals any in New York or Chicago.

“The goal for us has always been that Cleveland is such a great city, and once we get people in here and show them it’s a great place to eat and work, they want to come here,” Hagen said.

“We’re really 100% shooting food here,” Burkle added. “We understand food, love to cook and have a studio space that’s ready for anything. Our competitive advantage is not only photography but also ease of production.”

BurkleHagen opened its 6,000-square-foot studio last year. The partners were looking for affordable space they could customize themselves.

“When we first came in, no one had been here for years,” Burkle said. “There was dirt on the floors and birds flying around. Two hundred mop jobs later — and I’m not exaggerating that number — we were able to seal the concrete, put in all new drywall and add new HVAC.” The partners work with major brands like Smucker’s, Hungry Jack, Pilsbury, Nestle and Vitamix. Their studio, outfitted with a beautiful contemporary kitchen and prop room that would make any cook jealous, has proved hugely attractive to clients. Similar space is difficult to come by in Chicago, New York and other major cities, and props often have to be rented.

“We have the space to do multiple sets,” Burkle said. “If this was in Chicago, it would be on a higher level. What we have is space that doesn’t affect their bottom line.”

With business continuing to grow, BurkleHagen has been bringing in more food stylists from Cleveland and other nearby cities. Food stylists are experienced chefs who know how to prepare and plate food to be photographed.

“These are people who know how to make cheese look good,” Hagen said.

On a recent shoot, Burkle and his team spent the day shooting for Hungry Jack. It took all day to get the right shots of the syrup dripping off the pancakes.

In the end, the image that will appear on the box is a composite of 17 shots.

The average day in the studio starts at about 6 a.m. and can easily go until 8 p.m. or 9 p.m., and clients often expect fast turnaround.

“We juggle the calendar a lot,” Hagen said, noting that Cleveland’s reputation as a food town has propelled their business. “We’re booked three months in advance because we’re the only ones in Cleveland who do this.”

Hannah Allozi, Vitamix’s visual design manager, described BurkleHagen as an “awesome team of people who have fun while they get the job done — and make sure we are, too.”

“The level of quality they provide has pushed our brand to new heights.”

— Lee Chilcote

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Heather Holmes Director of marketing & public relations Downtown Cleveland Alliance Heather Holmes grew up in Cleveland with a sense of hometown pride, a feeling nurtured by riding the Rapid downtown to go shopping or to see family members who worked in the metro area. After leaving for a decade, Holmes returned with that hometown pride intact. Not only that, she’s currently working to build the city as a beacon of hope and opportunity for others.

As director of marketing and public relations for Downtown Cleveland Alliance, Holmes and her team are responsible for the branding of a resurging metropolitan area, with an end goal of attracting and retaining businesses along with the young talent to fill them. During an average week, the Beachwood resident works with a network of property owners, organizational heads and city officials.

Among the other projects she’s taken on since joining DCA in February, Holmes recently produced the group’s annual marketing video. Titled “You Are Here,” the fourminute love letter to Cleveland highlights downtown’s diversity, dynamism and continuing growth. The short film, which took a year to make, is designed as a recruitment tool spotlighting what Holmes believes is the city’s promising future.

“We made a special attempt to capture the energy here,” Holmes said. “We want to evoke a feeling that will get people to check us out.”

Holmes has recaptured the good vibes Cleveland brought her during her childhood, though it took some time away to appreciate that sentiment in full. In 2006, Holmes left Northeast Ohio for Phoenix, partially due to frustration over what she deemed a lack of local opportunities for young professionals.

In Arizona, Holmes worked for a consulting group while also marketing and managing events for a local African-American chamber of commerce. The chamber work sent Holmes across the country, including a long-term stop in Washington, D.C. There she helped establish the United States Black Chamber, an umbrella group representing 118 chambers nationwide.

During her extensive travels, Cleveland was always on Holmes’ mind. She came home in November 2013 following the birth of her son, Grayson. After 18 months as a consultant with the Cleveland Museum of Art, Holmes was offered the director position at DCA. “I spread my wings for a while to develop myself, but I knew in my heart that at some point I’d be back,” said Holmes.

DCA president and CEO Joe Marinucci is glad for Holmes’ return. Her skills helped organize a sold-out annual meeting in October, as well as build a website portal detailing downtown’s many construction projects.

“Heather is a very good delegator who understands our partnerships well,” Marinucci said. “She’s always ready to jump into projects with both feet.”

When you’re this excited about Cleveland’s prospects, the willingness to bring them to fruition comes naturally, Holmes said.

“We want to reach all those amazing, talented people who grew up in Cleveland,” she said. “The contagious, positive energy here is its own motivation.”

— Douglas Guth

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WHO TO WATCH: MARKETING & CREATIVITY

Kate Davis, Allison Peltz, Michelle Venorsky Co-owners; Hello KATE DAVIS

LEFT: MICHELLE VENORSKY; ABOVE: ALLISON PELTZ

When engagement agency Hello was first getting started two years ago, it didn’t have an office to call its own. Co-owners Michelle Venorsky, Kate Davis and Allison Peltz worked from car dealership lobbies, coffee shops, parking lots and Venorsky’s porch until finding a space in Chagrin Falls.

“You name a coffee shop we haven’t been in,” Venorksy challenged. Their office today remains unconventional with no designated desks. Instead, staff members work around a long conference table or in a lounge area.

The company combines the trio’s respective backgrounds — a mix of public relations, strategic planning, social media engagement, marketing, digital strategy and even cultural anthropology — to help build relationships between brands and consumers.

Now a little more than 2 years old, Hello has grown to a team of eight serving more than 30 clients.

Their approach isn’t necessarily novel, Davis said, but their desire to stay small and only take on clients whose work and vision they believe in — and equally, clients they know they can help — is what makes Hello unique.

Before taking on a new client, Peltz said they review three questions: Will Hello be able to make a difference? Can their team and the client work collaboratively? And will they enjoy the work?

Venorsky describes Hello as “small by intent.” Although the agency has had offers from other companies to buy a portion or all of Hello, they’re happy with where they are, she said.

She’d like to see the company grow a bit, but she has no interest in having more than 15 to 20 people on Hello’s staff. Bigger than that, and the face-to-face work with clients would get handed to others on the team.

“We actually enjoy the work,” Venorsky said.

Their passion, background and fun ideas helped them retain The NRP Group, a Cleveland-based developer, builder and property management company. Nancy Arnold, NRP’s director of marketing, said Davis’ background in cultural anthropology has been a huge asset in identifying a demographic and getting to know what they’re looking for.

Plus, Arnold said, Hello is responsive. “They’re available 24/7,” she said. “I don’t think they sleep half the time.”

Venorsky, however, insists they have fun and plenty of downtime. Some staff members are moms, and in creating Hello, it was important that they be able to strike that work-personal life balance. They try to reward the team in unique ways and add fun into office life, Peltz said. When “Trainwreck” hit theaters, the staff took the afternoon off to go to the movies.

“I think we’ve created a culture that’s fun, that celebrates everybody,” Venorsky said. “But within that, everybody knows the work gets done, because the work comes first.”

— Lydia Coutré

Delanie West VP of product development & creative, Faber-Castell For the artistic mind, nurturing a vision into reality is its own incentive. Knowing your idea may make it into the hands of a future dream-maker provides another joy altogether, according to Faber-Castell’s Delanie West.

At Faber-Castell, West leads a 15-person team in the creation of the pens, pencils and art supplies that land on the shelves of retail chains like Michaels and Target. Her products also have been developed for licensed brands including Toys R Us and Sesame Street.

“Every project is really a passion project,” West said. “It’s great to provide the tools and material that up the dream aspect of being creative.”

West is responsible for Faber-Castell’s Creativity Center, a design hub for the parent company and its Creativity for Kids brand. Design Memory Craft, which targets the mixedmedia consumer, is another brand under the New Jersey native’s purview. Among other projects, West recently drove a redesign for the product line’s Gelato Colors pigment sticks.

The award-winning executive and her team rely on extensive customer research and their own artistic backgrounds in shaping a new product. Cashing in on the hottest trend, however, is not part of West’s creative equation.

“If you try and chase it, you become a ‘me too’ story,” she said. “We are perfect for this job, because we’re consumers, too.”

To germinate new ideas, West finds inspiration in travel or simply talking shop with other creatives. As a young girl, drawing was her sport — an activity supported by her mother Jacquelyn, who herself was fashion designer. West has fond memories of a “rainy day box” filled with craft materials her mom assembled.

Over her 17-year professional career, West has engaged in brand development, trend spotting and international product sourcing with businesses, including crafts industry supplier Wilton Brands. She joined Faber-Castell in July 2013, in the time since proving herself a valuable leader able to streamline product creation from concept to delivery, according to Heather Lambert-Shemo, director of marketing for children’s brands at Faber-Castell.

“Delanie is always thinking of the next idea,” LambertShemo said. “She’s really good at understanding what deliverables need to look like and getting everyone aligned with a product concept.”

West already is casting ahead to 2016, which will be filled with exciting new product launches as well as two books she’s writing about the creative process. Meanwhile, she hopes to continue to be a trendsetter in the industry she loves.

“The ultimate reward for a product developer is to share her excitement (for a creative endeavor) with the rest of the world,” West said.

— Douglas Guth

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Magda Gomez Manager of enrollment communications Cuyahoga Community College For Magda Gomez, working for Cuyahoga Community College is like coming home.

Her college career started with an associate’s degree at Tri-C before she transferred to John Carroll University for her bachelor’s degree. Today, she helps market the state, federal and foundation grant-funded programs that support youth and adult students at the school — some of which, like the Upward Bound program, she said she benefitted from as a Hispanic, first-generation college student.

She originally wanted to be an international journalist or news anchor, but she had two young children at home and didn’t want to subject them to the travel that would entail. Instead, she looked closer to home after graduation and started working as a community organizer at the Ohio City Near West Development Corp. She said she loved getting to meet so many people and connecting them “to resources they needed.”

Community organizing was a natural fit, as her father, who moved to Cleveland from Puerto Rico in the 1960s, was very active in the community. He held community meetings in their home and was a founding board member of the Spanish American Committee, she said.

“From a very young age, that was instilled in me,” Gomez said.

Gomez said she would have stayed in that role, but she needed room to grow. She became part of the first cohort in the Louis Stokes Fellowship in Community and Social Development program at Case Western Reserve University, earning a master’s degree in social administration. She remained active in the community at that time, serving a two-year term on the board of education for the Cleveland Metropolitan School District, while continuing her work in Ohio City.

After earning her master’s, she went on to work in communications for Invest in Children, an early childhood program in Cuyahoga County. During that time, she also worked on an effort that would make Spanish-language ballots in Cuyahoga County available to voters from Puerto Rico.

However, about three years ago, Gomez was offered the job at Tri-C. In addition to her work marketing the grant-funded programs, she also helps market recruitment and enrollment efforts at the college. And she said she loves being able to make connections at the college as the “go-to-person” for the Hispanic community.

Lisa Dobransky, director of content at Tri-C, has been Gomez’s direct supervisor for about two years. She called Gomez one of the college’s “shining stars.” She described Gomez as a great communicator who is also personable, organized and efficient.

Outside of work, Gomez enjoys cooking, gardening and spending time outdoors doing activities like hiking or canoeing with her husband, Jim O’Connor. Her children, Lissette and Brian, are college graduates themselves. And she’s still involved in the community as the president of the Hispanic Community Programs for the Hispanic Roundtable.

Gomez handles external communications for the Hispanic Roundtable, and was involved in planning the group’s convention, said chairman José C. Feliciano. And she does that all pro-bono.

“She’s a rare combination of talent, integrity and conscientiousness,” he said.

— Rachel Abbey McCafferty

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WHO TO WATCH: MARKETING & CREATIVITY

Joseph Hughes Art director; The Adcom Group Like fellow graphic designers, The Adcom Group’s Joseph Hughes fancies seeing his work “living” out in the real world — whether it’s a roadside billboard, in-store signage or a newspaper wraparound.

It just so happens, Hughes has also had the opportunity to see his work on a global stage. When Olympic gold medal-winning bobsledder Kaillie Humphries was preparing to defend her title in 2014 by training with football star LeCharles Bentley, the graphic identity he did for Bentley caught her eye.

Hughes worked with Humphries to craft a similarly bold emblem that played on her name by fitting both initials within a powerful “K” icon.

“It is kind of a feather in your cap to say you did a logo for someone who is a two-time gold medalist,” he said.

To be fair, Hughes has a number of feathers in his cap. By day, the Adcom art director oversees the design projects for big name clients like Cleveland Clinic, the Cleveland Browns, First National Bank of Pennsylvania and Destination Cleveland, which is in the throes of producing print and digital materials for the 2016 Republication National Convention.

By night, Hughes keeps the creative juices flowing through freelance design projects ranging from Wilco T-shirts and Ohio pride posters to the aforementioned logos for Humphries and Bentley. The latter was a match made in social media.

“We met through Twitter first and kind of hit it off,” Hughes said. “When (Bentley) was moving his training center to Arizona to take it to the next level, he knew he needed a designer and reached out to me via Facebook. He’s been one of my longer running clients.”

From an early age, Hughes wanted to be a writer. He credits his parents — who he described as “voracious readers” — for passing down the writing bug.

As a journalism student, however, Hughes skewed toward the design side of storytelling and an internship with the Cleveland Convention and Visitors Bureau — Destination Cleveland’s predecessor — after college sealed his destiny in visual communication. Not one to be boxed in, Hughes finds time to explore other creative outlets.

Most recently, the Cleveland native co-founded a newly launch podcast, Feeble Effort, with Mark Szczepanik and Adam Zuccaro. He is also a regular freelance contributor to How, a magazine targeted to design professionals — a choice not lost on his colleagues.

For as much as Hughes likes to see his own work, one of his chief interests is advancing the design field. In addition to the How articles, Hughes helps organize and promote the annual Weapons of Mass Creation Fest in Cleveland, where, according to Marcus Thomas associate creative director Stephanie Burris, “people come from all over the country just to worship creativity.”

“Some people lose their passion for writing or designing when they also do it as an occupation,” Burris said. “Not Joseph. His fascination with the craft of design, and his desire to share it with others, only seems to grow with time.”

— Judy Stringer

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WHO TO WATCH The first “Who to Watch” section of 2016, “Who to Watch in Health Care,” is scheduled for publication on Feb. 15.

It will highlight up-andcomers and innovators in Northeast Ohio’s health care sector.

They could be the ones discovering new cures, engineering new care models or raising muchneeded funds to advance patient care — basically anyone working to advance Northeast Ohio’s reputation as one of the best health care cities in the world.

If you think you know who will be among those leading Northeast Ohio’s health care space in the future, drop an email to sections editor Timothy Magaw, tmagaw@crain.com, or call 216-771-5359.

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Nader Ali-Hassan Director of digital & social marketing; Progressive From the viral “FloBron” meme to using unicorns to save people’s spots in line at the most recent New York Comic Con, Progressive’s Nader Ali-Hassan has always been at the forefront of his field.

Ali-Hassan’s entry into digital and social marketing was unconventional, much like everything else he does. His parents ran a shoe store in Boston when he was growing up, and he ended up attending law school at Case Western Reserve University. After graduation, he married a woman from Cleveland and joined FleishmanHillard as part of its crisis communications team.

“I loved it, I loved PR, it was great,” said Ali-Hassan. “Fleishman had started a digital practice, and the question came up, ‘Who wants to learn about the Facebook?’ When it was still ‘The Facebook.’

From that moment on, my career kind of went in a complete 180.”

A few years later, Ali-Hassan moved with his wife to Chicago to work for Razorfish, a large digital agency, on brands like Mercedes-Benz, Kraft and Delta.

“I was there for three years, and was number three on the social media team when I was hired,” he said. “By the time I left, it was 45-50 people.”

The most important thing Ali-Hassan learned while there is that consumers care more about transparency and customer service than branding.

“If you go back to 2007, you had TV, which pushed the message out to you, and PR, which did the same thing,” he said.

“There was never this back and forth. Now you can tweet at a company and five minutes later they tweet back at you and the screws that were missing from the packaging are being shipped to you. You can connect with the customer one-on-one.”

Ali-Hassan came back to Cleveland in 2012 to work for Rosetta, then made the jump to Progressive two years ago. He was excited by the company’s vision and knew he’d have a budget to try new things.

“I have the best toy chest any kid can want,” he said. “It’s like we’ll come up with an idea, and then we’ll call Instagram and do it.”

Whatever Ali-Hassan is doing, it’s apparently working. For example, the campaign to get LeBron to dress up as Flo quickly went viral and landed on SportsCenter.

“We did the shoot at St. Mary-St. Vincent (high school in Akron), and I caught rebounds for LeBron for like two seconds, so I was happy about that,” he said.

“Then this little social media test we had running ended up on SportsCenter.”

The #LineInsurance stunt at New York Comic Con also was a hit. The basic idea was that Protector-Corns — people dressed up as unicorns with Progressive aprons — would save your spot in line if you tweeted at them. They also carried iPads that helped create instant dance parties.

Progressive digital marketing specialist Katie Riley said Ali-Hassan’s enthusiasm for the job is critical.

“Nader always has his team’s back, and no matter how crazy a concept is, he’ll take it and run with it in a way that only he can,” she said. “#LineInsurance is a great example. Beyond just selling the idea of ‘insuring’ people’s spot in line, we needed Nader’s personality to convince people here at Progressive that, to maximize the concept, #LineInsurance could only be provided by unicorns wearing Progressive aprons.”

— Lee Chilcote

Lynn B. Johnson Director of marketing & communications; The Music Settlement In less than three years, Lynn Johnson has raised the public visibility of The Music Settlement to a level that may very well be the highest in the music school’s 103year-history.

Visits to themusicsettlement.org have doubled from last year to this year, according to school president and CEO Charles Lawrence. Click through rates, as a result of Johnson’s search engine marketing campaign, are also in the double digits. There’s bottom-line results, too. Summer camp enrollment was up 33% in 2015 from the previous summer.

“In a nonprofit — really for any arts association — it is hard sometimes to not only tell our story, but to show it, to prove our excellence. We can say we are an excellent organization, but it’s the job of marketing to show it,” Lawrence said.

Johnson joined The Music Settlement as the director of marketing and communications in July 2013. Following years of “getting parts of the show,” as an independent communications contractor, she said she was ready to “run the show” from an internal position.

“I really wanted to put together a complete campaign and make it happen,” she said.

Johnson first pushed through a four-month, startfrom-scratch website design project, which won a 2013 Cleveland ADDY (American Advertising Award) a month after its launch. She also raised the school’s social media profile and conducted plenty of face-to-face evangelizing on behalf of its programming and performance groups.

The biggest reward, Johnson said, is seeing the venerable organization take its place at the center of Cleveland’s arts stage.

“I was at the University Circle Inc. annual meeting (recently) and they were focusing on arts and culture, so they gave us a couple of very nice shoutouts,” she said, adding that a closing presentation of tweets included a photo of The Music Settlement’s ensemblein-residence. “I looked down and there’s our Gruca White Ensemble with our brand new 7.5-foot-tall contrabass flute. … It was a picture WCLV (104.9 FM) took and tweeted. There we were closing out the annual meeting with all the other tweets from all these other institutions. It was very exciting.”

Johnson has been known to take center stage herself, relishing opportunities to play the ukulele (which she has studied for 10 years) or stand-up comedy at the Bop Stop, a near West Side jazz club donated to The Music Settlement in 2013.

A journalism major with a concentration in photojournalism, she also freelances in her spare time, has written a book and recently wrapped up a two-month stint as a youth soccer coach.

“I guess you could say I like to dabble,” Johnson said.

Still, she said “making The Music Settlement more famous on a near-daily basis” is her current labor of love.

“When I can do something that lets people know that all these great things are happening right here in University Circle, it’s tremendous,” Johnson said.

— Judy Stringer

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z DECEMBER 7 - 13, 2015 z CRAIN’S CLEVELAND BUSINESS

Business of Life OFF THE CLOCK: Hobbies and interests Crain’s occasional look at unique and interesting activities happening in Northeast Ohio. Tell us what you do in your spare time: clevedit@crain.com

Crafting a home brewing craze

BY JEREMY NOBILE As a craft beer frenzy sweeps the country, Americans are drinking up the home brew craze.

According to the American Homebrewers Association, there are an estimated 1.2 million home brewers in the country, two-thirds of which are believed to have started in the last 15 years.

The hobby has changed a lot, though, compared to modern home brewing’s early days of the 1980s and 1990s, said Nathan Kovach, vice president of The Society of Northeast Ohio Brewers, a Cleveland home brew club otherwise known as SNOB. Those were the “dark ages,” Kovach said.

“The ingredients and materials just weren’t on par with where they are today,” Kovach said. “But they got into it because they like good beer, and maybe they couldn’t find or afford to buy good beer.”

Decades ago, home brewing often was the best way to sample a wide variety of unique beer styles — besides being a fun activity similar to cooking. But with the ubiquity of craft beers today and access to premium ingredients, no one really needs to produce their libations at home.

Yet, the appeal of home brewing only continues to grow despite easy access to good brew.

As interest in the hobby soars, so has participation in local home brew groups like SNOB. The group has 288 members today, a 190% increase compared with just six years ago.

Home brewing’s growing popularity has been witnessed first-hand at suppliers like Kent-based beer and winemaking wholesaler L.D. Carlson Co., which began as a retail store in Akron back in 1970 before transitioning to a business-to-business operation in 1991.

Today, L.D. Carlson’s supplying of retail stores across the country with ingredients, beer kits and equipment comprise nearly 70% of all sales, said Brian Wright, sales and marketing manager for L.D. Carlson.

“There was definitely a movement of craft beer and microbeer into Cleveland (in the late ’90s), and home brew spiked with that,” Wright said. “No one really came in at a nano level back then — they came with bank loans and new equipment to start as a decent size off the bat, and then there was some failure.” Back then, “craft beer” wasn’t generally a popular term in the lexicon, Wright said, and microbrewers marketed themselves to drinkers of popular mega-brews like Budweiser.

“Craft beer, at the time, wasn’t even used. It would just be looked at like it was too weird,” he said. “And so microbrewers were trying to be mainstream.”

That trend has flipped.

The popularity of craft beers and home brewing seem to mirror each other. The prior cycle tapered off as wine took over in popularity around the mid 2000s. We’re currently in the midst, if not near the tail end, of an up-cycle right now, experts say.

Home brewing itself has become more sophisticated.

Today’s home brewers increasingly are interested in all-grain brew methods, for example — the more complex and traditional brewing process compared to extract methods, which most kits are based on and use concentrated malt syrups for their fermentable sugars in place of steeping more pounds of grains per batch.

And while there will be some natural attrition of interest in the hobby and membership in home brew clubs, Kovach said, most expect the growth to continue, particularly considering today’s general consumer interest in artisan products and the do-it-yourself mentality.

“Some people might worry we might be headed toward that bubble again, but this seems to be a more natural growth,” Kovach said.

“I don’t think it’s going to bust.”

We don’t just see people for who they are; we see

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CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS z DECEMBER 7 - 13, 2015 z PAGE 23

In the past nine months,

94% of individuals served in United Way-funded healthy food access programs have increased their fruit and vegetable intake.

At left, Mark Rames and Nathan Kovach prepare ingredients, which include chocolate and roasted oats, to be used in a batch of home brewed beer. The two spent most of the day at Ramesâ&#x20AC;&#x2122; house, following a recipe and making notes about the process as they went. At top, Rames tests the gravity of his brew in a process that enables the measuring of the alcohol content of the finished beer. Below, a variety of beers that Rames has on tap, which he or members of the SNOB group participated in brewing. (Rebecca R. Markovitz photos)

them for who they can become.

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BUSINESS OF LIFE

Source Lunch Charu Ramanathan turned a master’s thesis project into a medical device company worth nearly $100 million.

But the process could have gone much faster.

Cleveland-based CardioInsight was acquired by Medtronic in a deal valued at $93 million this past June — more than eight years after Ramanathan and Ping Ya started the company.

And that doesn’t count the years they spent in graduate school at Case Western Reserve University, developing the technology — a vest that collects electrical data from a patient’s torso and software that converts the data into a map of the heart, as it beats. They also spent a few years trying to get the license from the university.

Today, Ramanathan wants to make sure things go a little smoother for the next CardioInsight. Read on to learn a few things that she picked up during her long — Chuck Soder entrepreneurial journey.

You came to Cleveland from India to go to graduate school and get a job. Why did you decide to become an entrepreneur?

But over the years, CardioInsight did end up raising millions of dollars in venture capital. Any tips on pitching investors?

Around the time when I was finishing up my master’s and starting on my Ph.D. … my husband joined a startup company — Athersys. I did a side job for them, some programming job.

My husband was one of the first four or five people, so I got to know (CEO) Gil Van Bokkelen very closely. … He was tenacious, he spoke well, he was passionate about what he did. It was never a question of, “OK, I’m going to take a defined role.” It’s almost like, “I’m going to make the road as I travel on it.” It was so exciting. I was really enamored with that.

At the end of the day, they are taking a chance on you. Really come strong and say, “You know what? There’s no Plan B for me.

This is it. This is my heart and soul. I’m asking you to share this dream with me. If I win, you win too, and I want to win.” … For me, culturally, it took me a while to get there. Because we don’t talk like that, right? Obviously American culture is very different. That’s what I like about it.

After licensing the technology, you admit that CardioInsight got a slow start. Why? For the first 18 months, we were lost … because we didn’t have a solid plan. We didn’t have guidance from a board who had done this before. We didn’t have contacts — manufacturing, product development. We didn’t have access to that level of talent. … We had two economic downturns, too. We had a really slow start and then we had trouble attracting capital.

What’s something you learned about entrepreneurship that most people don’t know until they try it?

The importance of a very focused business strategy.

You cannot be everything to everybody. Because every month you’re burning 300,000, 400,000 dollars toward oblivion.

And you’re not making a single penny. That focus, that killer app. … How are you going to make your first penny?

Charu Ramanathan

Was there a moment where the company risked losing its focus?

We had two applications — one in heart failure and one in atrial fibrillation. We had to pick one and put the other one on the back burner.

What can universities do to commercialize more technologies?

The president of the university, the board of trustees — they really need to bring in an entrepreneurial culture. … That intuition of saying, “yeah, I’m going to take a chance on that one, that one, that one,” doesn’t come out of a person that has an MBA. It comes out of a person who has done that before.

When small companies get acquired by big companies, they sometimes end up moving. Is there anything that can be done to increase the odds that they’ll stick around?

This team of 30 has worked very hard. They live here. …So it’s important that we show what we’re capable of and we expand our capabilities. And if it’s working, there’s no reason for Medtronic to move us. So it’s my job to make sure I’m here seeing this through, making sure the roots are setting in. … I do see that as part of my job. It’s not like, “OK, I made my money, goodbye people.”

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The bill $34.40, before tip

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ABAKAN CONTINUED FROM PAGE 1

headquarters.

Some of Abakan’s financial information might be hard to get: The company’s financial reporting processes suffered from “certain material weaknesses” as of May 31, 2015, according to its latest annual report.

Seiden said in court documents that he has been on the lookout for suspicious transactions “that may represent improper use of funds by persons associated with Abakan.”

Neither Seiden nor Miller re-

sponded to phone messages; all statements come from court document unless otherwise noted.

Back home U.S. District Court Judge Denise Cote put Seiden in charge of MesoCoat in August.

A month later, Seiden was put in charge of Abakan after the company was found in contempt of court for the second time.

Both times, the company announced equity transactions that

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were prohibited, in the court’s view, because MesoCoat’s assets were supposed to be under the receiver’s protection. Cote said that Abakan had shown “a history of contemptuous conduct,” according to a transcript of a hearing held in New York on Nov. 5.

Since Seiden was appointed receiver over MesoCoat, the company has laid off “a handful” of employees related to a suspended product line, as well as CEO Stephen Goss, according to a filing that Abakan made with the SEC in October. Seiden described Goss, who also is an executive at Abakan, as an “extremely ineffective” manager who only visited Ohio periodically. Now, however, MesoCoat is “almost cash flow break even” due to cost cuts and efforts to promote its PcomP metal coating technology, Seiden stated.

MesoCoat’s interim CEO, Richard Burns, served as chief operating officer for nine months before being fired in 2013. Miller stated that Burns was fired because he “was unable to grasp the nuances of this business.”

The business is still in a tough spot, financially: In total, MesoCoat and Abakan owe the Panamanian companies about $5 million in total.

MesoCoat — Abakan’s primary asset — was worth about $3.6 million as of Aug. 31, according to a consulting firm Seiden hired to establish its value.

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Seiden is considering proposals from a few companies that could fund MesoCoat and get it out of receivership; however, he favors a plan that would let the Panamanian companies, George Town Associates and Sonoro Invest, split MesoCoat’s shares evenly.

He said that the plan would be better for all creditors than a Chapter 11 bankruptcy reorganization.

His argument: The $1.78 million owed to George Town is secured by the assets of MesoCoat. And Abakan owes Sonoro the rest of the $5 million. If Abakan is forced into bankruptcy, Seiden argues that George Town would stop funding MesoCoat and win court permission to fore-

close on the Euclid company’s assets. Then Sonoro would get most of what remains.

The creditors behind the socalled “involuntary” Chapter 11 filing disagree.

They say MesoCoat is worth a lot more than the consultant’s report suggests. They noted that the report

“With an indicted CFO having served during fiscal year 2015, the Company still refused to allow the Audit Committee to perform its job.”

— Raymond Tellini, former Abakan board member

assigned a value of $0 to MesoCoat’s CermaClad technology, which was supposed to give the company a much faster way to clad steel pipe for the oil and gas industry and other sectors. Those efforts have run into technical problems over the years.

Miller stated that the laid off employees were developing CermaClad.

The creditors also argue that “nothing separates Sonoro from the other unsecured creditors or entitles” the company to half of MesoCoat — “an entity from which it does not even have a claim.”

The boards of Abakan and MesoCoat also want the companies to file for Chapter 11 bankruptcy. A resolu-

tion passed by Abakan’s board notes that “there is discontent with the Receiver’s handling of the assets and the business of MesoCoat.”

Accusations fly Miller was more specific.

He said Seiden is “significantly harming the company.” Miller described the decision to stop CermaClad development as “short-sighted,” and he accused Seiden of failing to pay health insurance bills on time, as well as other expenses. And he reiterated an argument he made months ago: He said that George Town and Sonoro are controlled by one man from his hometown of Vancouver: John Xinos. A lawyer for Xinos denied that claim in a conversation with Crain’s in August.

Miller claims that Xinos pushed Sonoro to use stalling tactics during a lawsuit against Abakan so that the company legally wouldn’t be able to move ahead with a deal to refinance its loan from George Town.

Xinos has been fined in the past for making unauthorized trades with offshore corporate accounts, and he previously led a company that invested in TCash Ads Inc. — which was deemed an “illegal virtual currency service” by the federal government.

But there are questions about Miller, too, if you believe Raymond Tellini.

The former Abakan board member publicly bashed Miller in a resignation letter he filed with the SEC in September. Tellini claimed that Miller would not show him the documents related to one of the equity deals that landed the company in contempt of court. Tellini also says that Miller regularly gave him mere hours’ notice of board meetings, with little documentation to review in advance.

Tellini, who was head of the Abakan’s audit committee, also was troubled by the fact that he served on a board with two officials indicted in the FIFA scandal.

“With an indicted CFO having served during fiscal year 2015, the Company still refused to allow the Audit Committee to perform its job,” he wrote.

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

***

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Volume 36, Number 49 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230.

Copyright © 2015 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, 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, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 212-210-0750 Subscriptions: In Ohio: 1 year - $64, 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, Michigan, 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.

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CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS z DECEMBER 7 - 13, 2015 z PAGE 27

The List NAME THIS ADDRESS YEAR PHONE/WEBSITE

BANKS IN NORTHEAST OHIO Ranked by NE Ohio Deposits NORTHEAST OHIO DEPOSITS (MILLIONS) 6-30-2015

6-30-2014

% CHANGE

OFFICES IN NE OHIO

EMPLOYEES (COMPANYWIDE) 6-30-2015 HOLDING COMPANY

TOP LOCAL EXECUTIVE

1

KeyBank NA 127 Public Square, Cleveland 44114 (216) 689-3000/www.keybank.com

$20,262.6

$15,001.9

35.1%

123

13,517

KeyCorp Cleveland

Beth E. Mooney chairman, CEO, KeyCorp

2

PNC Bank 1900 E. Ninth St., Cleveland 44114 (216) 222-2000/www.pnc.com

$11,249.2

$10,709.2

5.0%

134

50,270

PNC Financial Services Group Inc. Pittsburgh

Paul Clark regional president

3

FirstMerit Bank NA 106 S. Main St., Akron 44308 (888) 384-6388/www.firstmerit.com

$9,866.5

$9,299.5

6.1%

120

4,017

FirstMerit Corp.

Akron

Paul G. Greig chairman, CEO

4

Huntington National Bank 200 Public Square, Cleveland 44114 (800) 480-2265/www.huntington.com

$9,480.6

$9,299.4

1.9%

183

11,599

Huntington Bancshares Inc. Columbus

Renee Csuhran interim president, Cleveland region

5

Citizens Bank 1215 Superior Ave., Cleveland 44114 (216) 566-5300/www.citizensbank.com

$7,095.3

$6,481.3

9.5%

92

14,825

UK Financial Investments Ltd. London

Joseph D. DiRocco president, Citizens Bank Ohio

6

JPMorgan Chase & Co. 1300 E. Ninth St., Cleveland 44114 (877) 302-4273 /www.chase.com

$6,909.6

$6,616.8

4.4%

92

184,626

JPMorgan Chase & Co. New York

James R. Geuther, regional president and head, commercial banking business, NE Ohio

7

Fifth Third Bank 600 Superior Ave. E, Cleveland 44114 (216) 274-5300/www.53.com

$4,860.0

$4,643.9

4.7%

88

18,527

Fifth Third Bancorp Cincinnati

Jerry Kelsheimer president, CEO, Fifth Third Bank, Northeastern Ohio

8

U.S. Bank 1350 Euclid Ave., Cleveland 44115 (216) 623-9300/www.usbank.com

$2,652.8

$2,499.9

6.1%

84

66,067

U.S. Bancorp Minneapolis

Alan Zang president, Northeast Ohio market

9

The Farmers National Bank of Canfield (1) 20 S. Broad St., Canfield 44406 (330) 533-3341/www.fnbcanfield.com

$1,172.0

$769.7

52.3%

30

392

Farmers National Banc Corp.

Canfield

Kevin Helmick president, CEO

10

Talmer Bank and Trust 23240 Chagrin Blvd., Suite 600, Cleveland 44122 (800) 456-1500/www.talmerbank.com

$1,095.6

$1,087.4

0.8%

26

1,216

Talmer Bancorp Inc. Troy, Mich.

James R. Lynch Jr. region president, Ohio

11

First National Bank of Pennsylvania 166 Main St., Greenville, Pa. 16125 (800) 494-2265/www.fnb-online.com

$1,025.2

$768.6

33.4%

27

2,698

F.N.B. Corp.

Pittsburgh, Pa.

Boyd K. Pethel regional president, Cleveland

12

Civista Bank 100 E. Water St., Sandusky 44870 (419) 625-4121/www.civistabank.com

$648.9

$629.6

3.1%

12

322

Civista Bancshares Inc. Sandusky

James O. Miller chairman, CEO

13

Middlefield Banking Co. 15985 E. High St., Middlefield 44062 (440) 632-1666/www.middlefieldbank.com

$566.5

$528.8

7.1%

8

142

Middlefield Banc Corp.

Middlefield

Thomas G. Caldwell president, CEO

14

Cortland Savings and Banking Co. 194 W. Main St., Cortland 44410 (330) 637-8040/www.cortland-banks.com

$438.4

$425.1

3.1%

11

152

Cortland Bancorp Cortland

James M. Gasior president, CEO

15

Andover Bank 19 Public Square, Andover 44003 (440) 293-7605/www.andoverbankohio.com

$279.3

$278.2

0.4%

8

86

Andover Bancorp Inc. Andover

Martin R. Cole chairman, CEO

16

Portage Community Bank 1311 E. Main St., Ravenna 44266 (330) 296-8090/www.pcbbank.com

$238.2

$230.7

3.2%

2

57

Portage Bancshares Inc. Ravenna

Richard J. Coe CEO

17

Farmers Savings Bank 111 W. Main St., Spencer 44275 (330) 648-2441/www.fsb-spencer.com

$211.3

$220.6

-4.2%

2

30

NA

Thomas W. Lee president, CEO

18

Premier Bank and Trust 6141 Whipple Ave. NW, North Canton 44720 (330) 478-1000/www.mypremierbankandtrust.com

$209.1

$172.7

21.1%

3

68

Excel Bancorp LLC St. Clairsville

Rick L. Hull president, CEO

19

Peoples Bank NA (2) 24400 Chagrin Blvd., Suite 100, Beachwood 44122 (216) 910-0550/www.peoplesbancorp.com

$203.1

$107.7

88.6%

5

831

Peoples Bancorp Inc. Marietta

Charles W. Sulerzyski president, CEO

20

Liberty Bank NA 25201 Chagrin Blvd, Suite 120, Beachwood 44122 (216) 359-5500/www.libertybankna.com

$181.3

$178.5

1.6%

3

38

NA

William A. Valerian chairman, president, CEO

21

Consumers National Bank 614 E. Lincoln Way, Minerva 44657 (330) 868-7701/www.consumersbank.com

$176.0

$166.3

5.8%

7

124

Consumers Bancorp Inc. Minerva

Ralph J. Lober II president, CEO

22

Independence Bank 4401 Rockside Road, Independence 44131 (216) 447-1444

$147.8

$145.3

1.8%

1

23

Independence Banccorp Independence

Christopher Mack president

23

Sutton Bank 3 S. Main St., Attica 44807 (419) 426-3641/www.suttonbank.com

$143.0

$133.5

7.1%

4

86

Sutton Bancshares Inc. Attica

Eric A. Gillett vice chairman, CEO

24

Buckeye Community Bank 105 Sheffield Center, Lorain 44055 (440) 233-8800/www.buckeyebank.com

$135.0

$133.3

1.3%

1

29

Buckeye Bancshares Inc. Lorain

Bruce E. Stevens president, CEO

25

Lake National Bank 7402 Center St., Mentor 44060 (440) 205-8100/www.lakenationalbank.com

$132.6

$133.8

-0.9%

2

30

NA

Andrew L. Meinhold president, CEO

26

Commercial & Savings Bank 91 N. Clay St., Millersburg 44654 (330) 674-9015/www.csb1.com

$118.3

$117.8

0.5%

6

163

CSB Bancorp Inc. Millersburg

Eddie Steiner chairman, president, CEO

RESEARCHED BY DEBORAH W. HILLYER Source: Federal Deposit Insurance Corp., www.fdic.gov, Summary of Deposits reports. Northeast Ohio deposits include deposits in Ashland, Ashtabula, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Stark, Summit, Trumbull and Wayne counties. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues.

(1) Farmers National Banc Corp. acquired First National Bank of Orrville in 2015. (2) Peoples Bancorp Inc. completed its acquisition of North Akron Savings Bank on Oct. 24, 2014.

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