Celebrating 40 years of ACG Cleveland

CELEBRATING 40 YEARS OF ACG CLEVELAND

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Oh, the joy of watching, embracing and participating in the growth and development of ACG Cleveland for 40 years!

Starting as a chapter with the required 50 “interested individuals” in 1981 ACG Cleveland grew slowly for the first 10 years and now is one of 7 large chapters (defined as over 400 members) and has become the 5th largest chapter in the world.

As I often remind the board, the pecking order in the large chapters within ACG is –New York – Chicago – Philadelphia – Dallas – CLEVELAND – Boston – Atlanta – think about this – absorb that order and appreciate the market size of our competitors within that group of large chapters.

In 1989 I remember a board meeting when the treasurer was presenting the budget and he advised that if we could get to 132, we would break even. Well – reach 132 WE DID and continued to grow to where we stand at this writing at 560.

How did we get there – we could site milestones along the way but you can see those in the timeline in this supplement – the overriding factors of the chapter’s success are not quite as capable of being identified on a continuum.

The success of ACG Cleveland has many elements but two stand out and are directly tied to the people – the members – the committees – the boards.

1. The chapter has long been focused on a commitment to governance practices that transcend any one president or any one board and a commitment of succession to perpetuate a strategic focus and continuity;

2. Quality programs/unique locations/a WOW factor that takes us BEYOND NETWORKING and to events in such places as Flight Options Operation Center, Cleveland Botanical Garden, Mather Steamship, Van Sweringen Suite and the Culinary Vegetable Institute to name a few.

Let’s raise a glass to our leaders of the past 40 years and a plan to continue to be the “gold standard” chapter for the next 40!

M. Joan McCarthy, Chapter Executive, 1987-2022 ACG Cleveland

How a humble Midwestern town cultivated an environment of excellence and innovation

By Vince Guerrieri, Crain’s Content Studio-Cleveland

As the 20th century dawned, Cleveland was the Silicon Valley of its day. The city’s population, swelling with an influx of immigrants from Southern and Eastern Europe, found no shortage of industrial jobs. Although it was no longer the largest oil refiner in America, Cleveland was still home to John D. Rockefeller’s Standard Oil. Mills and factories dotted the banks of the Cuyahoga River throughout the Flats. New Hulett ore unloaders – invented and built locally – pulled raw materials for steelmaking from the bellies of Great Lakes freighters. The city had even become a hub for the nascent auto industry, and it was said that Cleveland had more patent applications than any other city in America.

Part and parcel with that industrial growth was the rise of financial services. In 1903, A.C. Ernst and his brother started the accounting firm that would become Ernst & Young. In 1916, former Cleveland Mayor (and future Secretary

of War to Woodrow Wilson) Newton Baker founded a law firm with Joseph Hostetler. Today, Baker Hostetler is one of the biggest firms in the country.

The corporate community in Cleveland has changed markedly, but the financial infrastructure remains strong – and probably the largest reason that Cleveland continues to punch above its weight in the mergers & acquisitions (M&A) market.

Crossroads of innovation

One key strength of the Cleveland M&A environment is the wealth of talent the region is able to boast. Stewart Kohl, co-CEO of Riverside Company, a private equity firm with headquarters on Public Square as well as in New York, attributes that amassing of talent to the cluster theory, that like-minded businesses gravitated to the area because of its corporate environment – and people interested in those businesses started to gravitate there as well.

HISTORY on

How would you describe the Cleveland M&A market?

“It exists, but it’s not as vibrant as in other cities –probably due to the fact that buyouts aren’t as big and corporations aren’t as numerous.”

— Bob Pavey, partner emeritus, Morgenthaler Ventures

“It’s more active than you would expect a city of our size to be. We do deals all over the country and beyond. I think it’s part of our legacy of having this really strong business community.”

— Russ Warren, managing partner, EdgePoint Capital

“Kind of a powerhouse from an M&A standpoint. It’s a very congenial community. We compete, but in a friendly way.”

— Stewart Kohl, co-CEO, The Riverside Company

“It remains very busy, and there remains a large source of capital available to consummate transactions. The last 18 months was as busy as I’ve seen in my career.”

— Tom Welsh, co-chair, Corporate and Finance Group, Calfee

HISTORY

From Page 4

“Cleveland was a manufacturing powerhouse,” Kohl says. “It was such a wealthy and healthy past, and because you had all those successful businesses, you had law firms and accounting firms and banks.”

Nearby cities like Pittsburgh and Detroit soon became one-industry towns – steel in Pittsburgh and automobile manufacturing in Detroit. But the diversity of corporations in Cleveland led to a vibrant economy – and a vibrant financial services industry. Over time, the companies consolidated, and as they matured, they flourished and became big enough to be desirable, but small enough to be sold. This in turn made these companies fodder for mergers and acquisitions.

“Our large companies were just big enough to be acquired by the largest companies,” says Russ Warren, managing partner for EdgePoint and a historian of Cleveland’s business community.

Even today, says Tom Welsh, co-chair of the corporate and finance group of the law firm Calfee, Halter and Griswold, there are not only private equity firms that facilitate M&A deals, but corporations like The J. M.

“We’ve always had a lot of public companies and strategic buyers,” he says. “There are plenty of sophisticated transactional parties doing sophisticated deals and using sophisticated advisers.”

Continuing to offer solutions

The deep well of experienced financial service companies has become a boon for even smaller family businesses that might be cashing out after several generations of success. Warren said when he started in private equity when it was still in its early days in the 1970s, owners who wanted to sell their companies had two options: Finance the deal themselves and wait years for full repayment, or sell the company to a competitor in the market, which would likely consume it in whole or in part, causing it to lose its own identity – and possibly shed its staff.

Bob Pavey, partner emeritus at Morgenthaler Ventures, said that in 1978, capital gains taxes were significantly lowered as well, removing a disincentive to mergers and acquisitions. As a result, buyouts blossomed in the 1980s, which is also when M&A split into two facets: venture capital for growing companies, and buyouts.

In an era when population loss and brain drain remains a concern in Ohio in general, and Northeast Ohio in particular, Kohl sees the M&A industry in Cleveland remaining vibrant – in large part because of the outcomes, but also because of the area’s work ethic.

He adds that the Cleveland area continues to outshine comparable cities, and even some larger ones.

“If you’re scoring it relative to its regional peer cities, Cleveland has a larger, more mature, more developed M&A market,” Kohl says. “You could argue that we have a healthier M&A market than larger cities, say Denver and Atlanta.”

And the future continues to look bright, Kohl says. Advances in virtual meetings and communication – spurred along by the COVID-19 pandemic – have made geography matter less than before, and he says that plays to some of Cleveland’s strengths, like a higher quality of life and a lower cost of living.

“Cleveland punches above its weight in a lot of ways, like its art museum and its symphony,” Kohl says. “This area was important in the development of America, and I’m hopeful that Cleveland will play a growing and enhanced role in the next evolution too.”

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Russ

1994-95

Welcoming

Ralph M. Della Ratta to our Firm

Celebrating

The next generation: Unraveling barriers in the M&A field

What is the biggest challenge to diversity in the M&A industry?

“We are approaching young people too late in their career journey to help shift them toward finance and private equity.”

— Corrie Menary, partner, Kirtland Capital Partners

“You kind of have to make decisions early on in your career to get on the right path and get in the door. And if all of that doesn’t happen in the right order, it can be tough to crack the industry.”

— Katie Noggle, managing director, business development, Align Capital Partners

“I think the recruitment process is flawed. Jobs aren’t advertised. I don’t think people are intentionally trying to exclude people, but when you don’t cast a wide net, that’s what happens.”

— Charles Harris, partner, ScaleCo

“Probably the lack of a candidate pipeline. In the Black community, you don’t grow up with that aspiration. There’s no dinner table conversation about M&A.”

— Brett Jones, CEO, Woodhill Plating

“Finding diverse candidates. I’ve had people tell me, ‘I will hire any diverse candidate you can find, but it’s hard to find diverse candidates.’”

— Rudy Bentlage, Northeast Ohio Executive, JPMorgan Chase

By Vince Guerrieri, Crain’s Content Studio-Cleveland

CharlesHarris’ path to his current job started with a chance encounter at a friend’s barbecue.

Harris, a banker, struck up a conversation with Brendan Anderson, founding partner of ScaleCo. The two had worked together on a deal previously, and within a matter of months, Anderson was looking to expand his team. In 2001, Harris was brought on board as a partner.

“This wasn’t a job that was being advertised on Monster.com,” he says. “It’s not an avenue available to everyone.”

The world of finance can be an insular one, with a well-worn path that starts in high school – and because of that, it can look homogeneous, practiced in large part by white men. According to a 2020 Deloitte study, the number of women in the investment industry is increasing steadily – up to 23 percent –but Black employees still comprise a small percentage, 4 percent.

“More diversity is needed not just in investment funds but in fund leadership,” says Brett Jones, CEO of Woodhill Plating. “You want diverse talent, but you also want diverse management.”

More women are entering M&A than ever before, but each step of the way – even before they get their first internship in college – can weed out a lot of potentially deserving candidates.

“There’s a body of experience of running a business that I think women would be very good at, but it’s an untapped resource,” says Corrie Menary, a partner at Kirtland Capital Partners. “We need people not just entering the industry, but advancing. We need people at the table who look different, think different and have different life experiences.”

It starts even before college. Many people go into banking because a parent or close family friend is in the field. “A lot of people in the industry had a parent or family friend or neighbor in

FUTURE

From Page 11

this space, and that’s usually what got them excited and helped them navigate channels to get potential internships or that first job,” says Katie Noggle, managing director, business development, Align Capital Partners.

“You kind of have to make decisions early on in your career to get on the right path and get in the door. And if all of that doesn’t happen in the right order, it can be tough to crack the industry.”

To that end, Menary says, a lot of companies are starting to offer grants to schools for investment clubs, offering students a chance early on to experience the world of finance. Jones started an organization called the Finance Farm League, initially helping place diverse candidates in college internships. Ultimately, he says, the goal is to increase exposure to the finance field in junior high school and developing it in high school with classes and work engagement through high school.

That right path continues in college, Noggle notes. She went to Ohio University with the intention of becoming a lawyer,

but thought a pre-law major was a little shortsighted, so she majored in business, ending up with an internship at KeyBank that propelled her into the finance world. She was able to get on the path early – and she knows it.

“What if you were, say, a chemistry major, and you want to get your MBA?” she says. “You can be 30 and brand new in the industry and your peers could be further along in their understanding.”

It’s also important, Menary says, to have mentors along the way to not just hire diverse candidates, but keep them. “We need to find ways to retain young people in the industry and help them through the family years where it might be easier to get off the train,” she says.

As is the case in many industries, getting a job and advancement in M&A is a matter of networking. That’s one of the missions of ACG, and a special subgroup has been created, Women in Transactions. Among Women in Transactions’ activities is a series of golf events. The game can be a crucial one in dealmaking – but also one that many women may not have been exposed to at an early age.

“Golf can be intimidating,” Noggle says.

“With this, women can ask questions of a pro in a safe environment.”

Also, many companies are widening their search criteria to draw on a bigger pool. There are two main components to finance jobs, says Rudy Bentlage, Northeast Ohio executive for JPMorgan Chase: An analytical component and a more peopleoriented component. “We might find people with analytical skill – say, someone in an FP&A role – and think maybe we can convert them into a banker.”

Harris is broadening his search criteria as well, but he says all the hires have something in common: They’re hungry, humble and passionate. “Hungry and passionate can’t be taught. And there are a lot of people out there who have that, but might not have a traditional background. We think those people are worth a chance.”

He said that diversity can be a fraught term – leading people to think of affirmative action and quotas – but Jones notes that there are positive financial results.

“It’s the right thing to do socially and morally, but it’s also proven that diverse funds outperform the average,” he says.

“It’s hearts, but it’s also minds.”

Congratulations ACG Cleveland!

As Vorys celebrates the 40th anniversary of our Cleveland office, we are proud to support and congratulate ACG Cleveland on its 40 years as the preeminent business organization in Northeast Ohio.

President Tricia Balser CIBC

Past President Cheryl Strom The Riverside Company

President Elect Jay Moroscak Aon

Governance Charles Aquino Citizens Capital Markets

Treasurer Mark Heinrich Plante Moran

Executive Vice PresidentBranding Pillar Matthew Roberts

Executive Vice PresidentAnnual Events Pillar Jonathan Ives SCG Partners

Executive Vice PresidentInnovation Pillar Beth Haas Cyprium Partners

Vorys, Sater, Seymour and Pease LLP 200 Public Square, Suite 1400, Cleveland, OH 44114

Executive Vice PresidentProgramming Pillar Thomas Libeg Grant Thornton LLP

Board

Directors

Executive Vice PresidentMembership Pillar Bryan Fialkowski JPMorgan Chase

Board Members Martin McCormick FNB Mezzanine

Matthew Kolman Deloitte

Joseph Hatina Jones Day

Mindy Marsden Bober, Markey, Fedorovich and Company

J.R. Doolos KeyBanc Capital Markets

Michael Ferkovic Sunvera Group

Thorne Matteson PricewaterhouseCoopers

Katie Noggle Align Capital Partners

Robert Ross Benesch, Friedlander, Coplan & Aronoff LLP

Sarita Gavhane Edgewater Capital Partners

Jim Rice Ernst & Young LLP

Nicholas House Vorys, Sater, Seymour and Pease LLP

Ryan McGovern Star Mountain Capital

Corrie Menary Kirtland Capital Partners

Kathryn Kelly Deloitte

John Allotta BakerHostetler

David Fechter Action Management Services

Larissa Rozycki Harris Williams

Thomas Welsh Calfee, Halter & Griswold LLP

Margaret Jordan KIKO

Board Observers Robert Chef ns CIBC Mike Cottrill NgageContent