Crain's Cleveland Business

SUSTAINABILITY Avon-based Bendix Commercial Vehicle Systems LLC has made big steps in reducing energy consumption and waste-to-landfill in recent years. PAGE 3

DEI: Private equity has a long way to go in grappling with diversity problems. PAGE 10

CRAINSCLEVELAND.COM I MARCH 21, 2022

BOOST TO RENTALS?

Legislators seek to ban limits on short-term rentals, as industry grows

BY MICHELLE JARBOE

A bill pending in the Ohio General Assembly takes aim at government-imposed restrictions on short-term rentals, a fast-growing segment of the lodging economy.

Introduced in February, House Bill 563 would prohibit communities from banning paid stays of 30 or fewer days at houses, apartments or condominiums. The legislation also would bar local officials from capping the number of short-term rental properties in an area or limiting the duration or frequency of hosting.

Supporters say they’re championing private property rights and seeking to broaden the landscape of lodging options in the state. But detractors see the legislation as another attempt to chip away at home rule, the authority granted to municipalities under Ohio’s constitution.

A handful of states, including Arizona, Florida and Indiana, have approved similar laws. Comparable legislation was introduced last year in Michigan. The Ohio proposal comes as local governments are grappling with how to regulate a tough-to-track industry that spans everyone Heather Bise operates a five-bedroom Airbnb on Cleveland’s West Side. She does not object to permits or regulations for short-term rentals, but she wrote a letter to an Ohio House committee in support of legislation that would prohibit local governments from banning or limiting the industry. | MICHELLE JARBOE/CRAIN’S CLEVELAND BUSINESS

Novagard’s Sarah Nash is challenged to a dual

Society Brands plans to outgrow $200M in capital

BY DAN SHINGLER

Takes on second CEO gig at Bath & Body Works

BY SCOTT SUTTELL

Agility.

It’s a quality Sarah E. Nash considers key to the success of employees at Novagard Solutions, a Cleveland-based manufacturer of silicone sealants and coatings, and foam products, where she’s the majority owner and the CEO. And the ability to think and understand quickly and creatively is a freshly important quality for Nash

herself, as the former investment banker, who has spent the past few years helping put Novagard into a new growth gear, is taking on a second CEO role, albeit on an interim basis. Effective May 12, Nash will be interim CEO of Columbus-based Bath & Body Works Inc. (the former L Brands Inc.), when Andrew Meslow steps down from that job due to health reasons. When that transition See NASH on Page 16

NEWSPAPER

VOL. 43, NO. 11 l COPYRIGHT 2022 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED

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See RENTALS on Page 17

Sarah Nash is the CEO of Novagard and the interim CEO of Bath & Body Works. | CONTRIBUTED

THE

LAND SCAPE

Michael Sirpilla is 35 and doesn’t have a degree — but forget that.

It didn’t stop him from launching a company in 2020, Canton-based Society Brands, that already has raised more than $200 million to finance its own acquisitions.

To be fair, Sirpilla comes from a family of local businesspeople who’ve been successful on a smaller scale, and he previously spent seven years as CEO of American Legacy Insurance Group in Canton.

But still, $200 million? Around

here, that’s the kind of money you see being invested in big, iconic industrial companies, and such deals make headlines.

In today’s modern and dynamic economy, though, sometimes a great idea and the drive to turn a vision into reality is more important than anything else. Sirpilla, CEO of Society Brands, has both.

“They’re big thinkers,” said Eric Kasper, CEO of Tradefull in Green and himself a 37-year-old entrepreneur focused on online retailing.

See SOCIETY BRANDS on Page 16

A CRAIN’S CLEVELAND PODCAST

3/18/2022 2:14:04 PM

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MANUFACTURING

Bendix keeps looking for ways to reduce environmental impact The new solar array at Bendix’s Huntington, Indiana, campus will help the company decrease its North American carbon footprint by about 3%.

| BENDIX COMMERCIAL VEHICLE SYSTEMS PHOTOS

BY RACHEL ABBEY MCCAFFERTY

For so long, companies wanted to make their mark on the world.

But as sustainability takes more of a forefront, companies like Bendix Commercial Vehicle Systems LLC are trying to make that impact a little less literal.

Avon-based Bendix makes braking, safety and air management products for commercial vehicles. It is part of Munich, Germany-based Knorr-Bremse.

Sustainability measures are good for the environment, but they’re also good for business, helping companies become more efficient and save money, said Maria Gutierrez, director of corporate responsibility and sustainability at Bendix.

Sustainability has long been a priority for the company. In the past, Bendix’s goals were centered on reducing energy consumption, using volume-adjusted energy intensity as a measure to allow for growth.

But the UN’s focus on carbon neutrality made the company think bigger. With carbon neutrality, a company is “decoupling growth from environmental impact,” Gutierrez said. It requires a new way of thinking about sustainability.

“Businesses have a big role to play here, so we need to take that responsibility,” Gutierrez said.

Bendix already was on that path, but it was time to take the “next step,” Gutierrez said. In 2020, the company committed to achieving carbon neutrality in 2021 and to cutting its greenhouse gas emissions in half by 2030.

In 2021, Bendix achieved that first goal with the help of carbon offsets, further reduced its energy consumption, kept almost all of its waste out of landfills and launched its first solar array. And it moved into a new, more energy-efficient headquarters in Avon in November, which it submitted to be LEED-certified, Gutierrez said. The building makes use of natu-

At Bendix’s headquarters in Avon, centralized waste collection and water stations help the company reduce waste.

ral light, featuring skylights, and it uses energy-efficient lighting.

Bendix is using three main approaches in its sustainability efforts.

Energy efficiency is still an important component, Gutierrez said. The goal is to use as little as possible, but obviously, its usage is a necessity.

That brings the company to its second approach: the internal creation of renewable energy.

Gutierrez said this isn’t for everyone. Energy efficiency efforts will have a relatively short-term return on investment. Installing solar arrays?

That’s an expensive, long-term investment.

“But it’s going to pay back,” she said. “Ultimately, you’re going to see the savings year over year forever.”

And where the company can’t create its own energy, it’s looking into buying green energy, Gutierrez said.

A news release noted that the company’s first solar array, made of 2,612 solar panels, supplies enough power for about 30% of the energy needs of the main manufacturing facility at the Huntington, Indiana, campus, where it’s located. And it lowers the

company’s total North American carbon footprint by about 3%.

This year, Bendix plans to install two more solar arrays, these at its Acuña, Mexico, manufacturing campus. And Gutierrez said the company is continuing to look for other locations where using solar power would make sense.

David Rountree, assistant plant manager for Bendix Acuña, said in a written statement that the company’s sustainability efforts can create challenges, such as the need to dedicate resources to monitoring new equipment. But the benefits not only are reduced energy use and cost savings, but also a “more comfortable work environment” for employees due to energy and temperature control improvements.

“When we’re making changes in pursuit of sustainability, it’s a major undertaking but one that is essential for our operations,” Rountree said in the statement. “These updates are completed while we keep up with our normal production demands, so organization and planning are critical.

We have to allocate time to develop

and define projects, get quotes and review suppliers, and coordinate installation of equipment. And even once everything is in place, we have to plan for ongoing time maintaining the equipment and making sure everyone knows the new procedures.

To be clear: We’re not on our own doing these things — there’s constant collaboration and support at all levels, and our teams here and in Avon work very closely together to achieve Bendix’s corporate goals.”

Gutierrez said Bendix has teams at each plant that assess possible sustainability-related projects and decide what makes sense to tackle that year. Common areas for improvement include lighting, compressed air and HVAC systems.

There’s a lot of “low-hanging fruit” at the start, she said, with quick returns on investment.

“You start having those wins, and with the savings of those projects, you can self-fund yourself for the next project,” she said. “Once you demonstrate that value to the business, they see that it makes sense.”

And the budget for sustainability

projects at Bendix has continued to grow, making these larger approaches possible.

Bendix has experience with setting — and the achieving — lofty sustainability goals. About 10 years ago, the company said it wanted to send zero waste to landfills, Gutierrez said.

The company started with its industrial waste and looking for ways to recycle different materials. Then it started to get more granular, conducting what Gutierrez called “dumpster dives,” where individuals empty trash cans to examine what’s actually still being thrown out to find more opportunities for savings.

And it worked to eliminate waste streams, such as plastic water bottles in its workplaces.

In 2021, Bendix kept 99.9% of its waste out of landfills, according to a news release. Waste products are being recycled, reused or being turned into energy. Gutierrez said the latter approach would have been too expensive before the company reduced its outgoing waste, but it became an option as the program matured.

Now, the company is focusing on reducing even the waste being recycled. Gutierrez said the focus is on finding ways to reuse materials, exploring ideas like returnable packaging.

And the company is working to make a difference beyond its plant walls. Ultimately, becoming more sustainable is about creating a culture of sustainability among employees.

Bendix’s employee-led “Green Teams” work to implement projects like litter pick-up campaigns, encouraging a culture of sustainability at and outside of work.

“Being sustainable is not what you do at work, but it’s also what you do at home,” Gutierrez said.

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

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Cleveland Water Alliance wants to bring innovation, investment to Lake Erie

BY KIM PALMER

At a research conference in Cleveland, members of the water sector industry pressed scientists and researchers to embrace the fast pace of technology innovation.

“It is a really interesting time for technology,” said Ed Verhamme, past president of the International Association of Great Lakes Research, last week to a group attending his Smart Lake Erie Watershed Initiative presentation in Cleveland. “Tech is finally catching up to some of the phenomena that is happening on Lake Erie,” he added, noting the use of more accessible monitoring and testing technology.

The 2022 State of Lake Erie Conference attendees, including those with water technology firms out of Israel and Europe, gathered in Cleveland for the annual conference highlighting research on Lake Erie and its watershed.

The two-day event covered issues including fish migration, harmful algal blooms, agricultural runoff and the increasing (and changing) role of private industry in the water sector.

Verhamme, also is a project engineer and scientist at LimnoTech, a water-related services firm that is one of the private companies working with the Cleveland Water Alliance to set up test beds on Lake Erie for companies to use for product research.

The goal of these test beds is to catapult the use of new technology, including sensors and high-definition webcams, to collect data that will help improve processes around water monitoring and water treatment for utilities and water-dependent companies.

“There is a mish-mash of technology out there,” Verhamme said at his presentation. “But I want scientists not to assume the limits to what is possible. If they describe the problem, then we can work on the parameters and the cost (of the solution).”

That technology, Verhamme said, includes smart buoys outfitted with sensors that can monitor everything from wind and wave height to oxygen levels, temperature and microbiome concentrations in order to provide timely (and in some case, real-time) data used for weather tracking and water-quality purposes.

The Cleveland test beds result from the work of the Cleveland Water Alliance (CWA), one of the growing number of private, nonprofit groups formed to handle water systems dealing with issues such as crumbling water infrastructure, the effects of climate change or a seemingly never-ending list of harmful pollutants.

Since CWA’s formation in 2014, the group helped set up the on-water test beds, a network of smart buoys, outfitted with sensors, in-

cluding the ones around Cleveland’s four water treatment plant intake valves provides information alerting staff if low oxygen or harmful algae are detected and need to be treated.

“Mitigating risk is really important to water treatment,” Verhamme said.

Lake Erie is a unique environment for the test beds and the growing momentum to address pollution and climate change-induced threats to the nation’s water resources using technology.

“Companies that want to enter the U.S. market see value here,” said Bryan Stubbs, CWA’s executive director.

The proof is in the Cleveland conference guest list which includes IOSight, an Israeli company the specializes in improving operations in waters and energy facilities management, and In-Situ, headquartered in Europe, which uses instrumentation and software for real-time water monitoring, analysis and quality solutions.

Stubbs said Cleveland has one of the largest water utilities in the country and delivers up to 300 million gallons of treated water, for more than 1.45 million people, on a daily basis.

Lake Erie, the most southern and shallowest of the Great Lakes, experiences hypoxia — pockets of low temperature and low-oxygen water — and hazardous algal blooms that wreak havoc on the water treatment, the tourism industry and residents living on the shore.

In the past 30 years, Cleveland

part of that effort. So is the creation of a $5 million seed fund that CWA will launch this spring.

Stubbs said one of the largest barriers that water tech companies face — securing a viable test location — is mitigated here because the Cleveland test beds take some of the risk out of the expensive research and development process.

Technology tested on Lake Erie allow firms such as Bioceanor, a French company specializing in water quality systems, to move research and development out of the lab and into a real and harsher environment, said Frederic Leroudier, the company’s vice president of development in North American.

Lake Erie is a “canary in a coal mine” he said, noting that the smaller size and warmer climate on the lake create more intense conditions for his company to conduct tests.

Leroudier said the water sector is a latecomer to employing technology like artificial intelligence and the Internet of Things, which also means there is a lot of opportunity to scale whatever processes or products come from the Lake Erie test beds.

“The market is global, and the work could change a lot of things,” Leroudier said.

Even without a global market, the federal government’s recent focus on water sustainability provides new inroads for water infrastructure development.

“You have the Build Back Better funding which opens up a whole new market,” said Tyler Hinz, In-Situ regional sales manager out of

“THE MARKET IS GROWING AND MORE STATES ARE STARTING TO LOOK AT WHAT’S ACTUALLY BEING USED WATER WISE, AND WHAT’S ACTUALLY BEING DONE IN THE INDUSTRY. EVERYTHING CONNECTS WHEN IT COMES TO WATER. EVEN BUILDING A BRIDGE MEANS THE WATER UNDER THE BRIDGE HAS TO BE MANAGED.” — Tyler Hinz, In-Situ regional sales manager

alone has spent $1.7 billion to modernize the treatment and distribution of drinking water, and more than $1 billion more in upgrades have been scheduled for the period of 2020 to 2024.

Stressors to the drinking water market means it is ripe for technological and institutional innovation, and Stubbs said the on-water testing sites are the key to bringing vital water technology — and corresponding investment — to Cleveland.

Stubbs said the goal of CWA is to help encourage the development of new products and services in the hopes of growing existing businesses, fostering startups and bringing outside companies to the region.

Outreach campaigns, like the work at the Lake Erie conference, is

Rochester, New York. “There is a huge part of that bill that is about water quality.”

Even with the dedicated water infrastructure funding coming out of Washington, D.C., groups such as CWA are playing a major role by helping to align the normally siloed scientific part of the water sector with the industry that is pushing to drive innovation.

“The market is growing, and more states are starting to look at what’s actually being used water wise, and what’s actually being done in the industry,” Hinz said. “Everything connects when it comes to water. Even building a bridge means the water under the bridge has to be managed.”

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

CORRECTION A quote attributed to administrative partner Kevin Murphy that appeared in a March 14 sponsored Milestones story should have stated: “When I started at Walter | Haverfield, we had 55 lawyers. Now we have nearly 100.” The story was produced by Crain’s Content Studio-Cleveland, the marketing storytelling arm of Crain’s Cleveland Business. The Crain’s Cleveland Business newsroom is not involved in creating Crain’s Content Studio content.

4 | CRAIN’S CLEVELAND BUSINESS | MARCH 21, 2022

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SPONSORED CONTENT

THOUGHT LEADER FORUM

Labor and employment law Monitoring a dynamic legal landscape From the Federal Arbitration Act amendment to COVID-19 policy updates and the work-from-home movement, workplace laws are quickly evolving.

Changing rules should prompt employers to update their employee handbooks and ensure their policies align with new state and federal laws. Here is a look at some major labor and employment law updates:

FEDERAL ARBITRATION ACT AMENDMENT The newly signed “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” amends the Federal Arbitration Act, paving the way for victims of sexual assault or harassment to bring their claim to court and not have to arbitrate their legal case. Individuals also may choose to bring their suit individually or through a class-action lawsuit.

OHIO’S MINIMUM WAGE INCREASE As of Jan. 1, the state’s minimum wage rose by 50 cents an hour, from $8.80 to $9.30, applicable to employees of businesses that earn more than $342,000 a year in gross income. Wages increased from $4.40 to $4.65 for workers who receive tips.

REMOTE-WORK CLAIMS RISE A Gallup poll of 9,000 American workers conducted in May and June 2021 revealed that 54% of employees who work remotely at least some of the time say they would like to split their work time between the home and office. For many industries, the hybrid work arrangement is here to stay. As companies bring more employees back to the office, HR professionals should be prepared to address hybrid workplace requests. Litigation associated with workplace return is on the rise, particularly situations relating to remote work, time off and disability discrimination and retaliation, according to the Society for Human Resource Management.

OSHA UPDATES COVID-19 VACCINATION STANDARD Effective Jan. 26, the U.S. Department of Labor’s Occupational Safety and Health Administration withdrew its vaccination and testing emergency temporary standard that was issued in November 2021. The agency said this standard aimed to protect unvaccinated workers at mid-size employers from workplace coronavirus exposure by strongly encouraging vaccination. The move coincided with the U.S. Supreme Court’s recent stoppage of the federal government’s vaccine-or-test rule for businesses with 100-plus employees. OSHA said it is focused on finalizing a permanent COVID-19 health care standard.

REMAINING VIGILANT Laws and workplace policies surrounding COVID-19 will continue to influence the employment and labor law landscape throughout 2022, as will issues associated with the Russia-Ukraine conflict’s impact on the global economy. The Supreme Court will also hear several cases that affect employers, including matters focused on retirement plan fees and the latitude of agencies that enforce employment laws.

‘Ending Forced Arbitration of Sexual Assault and Sexual Harassment’ and its impact on employers What you should know about the new law and what it might mean for your business

P

resident Biden recently signed significant legislation titled “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” (“the Act”) which prohibits forced arbitration for sexual assault and sexual harassment claims on March 3, 2022. The new legislation amends the Federal Arbitration Act (FAA) and requires courts, not arbitrators, to decide whether a claim constitutes sexual assault and/or sexual harassment.

The new law received extensive bipartisan support. On Feb. 7, 2022, the Act was passed in the House by a 335-97 vote and just three days later, was passed in the Senate by voice vote. The Act is applicable to predispute arbitration agreements mandating arbitration of future claims and joint-action/ class action waivers for sexual assault and sexual harassment disputes. Under the Act, a “sexual assault dispute” is defined as a dispute involving a nonconsensual act or sexual contact, including when the victim lacks capacity to consent. A “sexual harassment dispute” is defined as a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal or State law. Under the Act, no mandatory arbitration agreement or joint-action/class action waiver relating to sexual assault and/or sexual harassment claims is valid or enforceable absent consent from the complainant making such allegations and/or the named representative of the class action.

Now, America’s approximately 60 million workers who are subject to arbitration clauses may go to court rather than mandatory arbitration.

The Act does not apply retroactively and is only applicable to a dispute or claim arising after the Act’s enactment date. Even if employers have an existing arbitration agreement which predates the enactment of the new law, it would not be enforceable against claims arising after the Act’s enactment date. Therefore, employers will need to review their mandatory arbitration agreements and class action waivers and include carve outs for any provisions regarding sexual assault and/or sexual harassment claims.

JENNIFER WHITT Partner Walter | Haverfield jwhitt@walterhav.com 216-928-2921 Jennifer Whitt is a partner at Walter | Haverfield. Her practice focuses on workers’ compensation, litigation and occupational safety and health, defending large and small state-funded and selfinsured employers.

As for the future landscape of sexual assault and harassment claims, the Act will most likely lead to an increase in sexual assault and harassment filings in court. Employers will need to budget for a potential increase in litigation fees and costs. For cases in which other claims are alleged along with sexual assault and harassment claims, such matters may potentially be filed and/or defended on two fronts — in arbitration and in court. The Act also provides a public forum for plaintiffs who have filed sexual harassment and assault claims to “have their day in court.” This public forum will replace the prior standard of confidentiality in arbitration proceedings. Consequently, there is now a threat of public exposure regarding these types of claims for employers. This threat may lead to either an increase in settlements and/or settlements of higher value. Employers should follow best practices and ensure that they have policies and procedures in place to prevent and remedy any issues related to sexual harassment in the workplace, including anti-harassment training, effective reporting and investigation procedures and appropriate corrective measures.

SOURCES: Gallup, National Law Review, Society for Human Resource Management, U.S. Department of Labor Occupational Safety and Health Administration, U.S. House Committee on the Judiciary Compiled by Kathy Ames Carr, Crain’s Content Studio-Cleveland

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

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FOOD AND DINING

Saucy Brew Works pulls out of Independence expansion project

BY JEREMY NOBILE

To the disappointment of local officials, Saucy Brew Works has pulled out of a large expansion project in Independence that was expected to serve as the craft brewery’s new corporate headquarters.

Instead, Saucy CEO Brent Zimmerman said his company will be working on expanding operations at its flagship Ohio City facility that opened in 2017.

“We were super excited about that location. We spent a lot of time and effort on what we thought was going to be a gorgeous brewpub and manufacturing facility in an amazing location,” Zimmerman said. “But life changes pretty quickly all the time, and a new opportunity came up. We are just as excited about reducing costs and having an amazing asset to sell and help grow the company.”

Details about Saucy’s Independence project first came out around the late summer of 2019.

Plans called for the construction of an approximately 26,000-square-foot facility featuring a restaurant, taproom, production brewery, event space, large outdoor area and corporate offices.

Saucy purchased for $2.1 million a 3.2-acre site in the city — located off I-77 on Rockside Boulevard near the

I-480 exchange and a Topgolf facility that opened in 2019 — for the project.

However, a number of delays kept construction from commencing.

A groundbreaking once expected to take place around late 2019 or early 2020 continued to be pushed back. In early 2021, Zimmerman said he was hopeful the site would start to be developed later that summer and that the space could potentially open between fall 2022 and spring 2023.

Zimmerman chalked up the setbacks in part to the pandemic, which impacted the construction industry at large.

Regardless, the Independence project, estimated to cost between $15 million and $20 million, never got off the ground.

According to planning commission meeting minutes from spring 2021, Zimmerman said this was due in large part to Saucy’s onetime construction partner, Independence Construction, falling off the project. Zimmerman said he would not speculate as to why or what happened there. But Saucy had been looking for another construction partner since 2019.

Jessica Hyser, economic development director for Independence, said that while Saucy did receive approval for its project in 2019, if a given project

is not started within six months of receiving approval, materials for the project must be resubmitted.

Resubmitting project materials was brought up at a March 2021 planning commission meeting where Independence officials asked Saucy to go back before the architecture review board to secure requisite approvals and permits once again. A reason this was brought up is because Saucy was showing plans at the time that included a drive-thru not previously included in the original specs that could be used for pickup of at least coffee and food items — think of a Starbucks or Dunkin’ drive-thru that opens as early as 7 a.m. — and possibly even packaged beer.

But that was all last spring. Since then, Zimmerman said Saucy was able to buy out the TITLE Boxing Club that was occupying a space at the company’s Ohio City building on Detroit Avenue.

This is the new opportunity that he said popped up.

Now, instead of building a new production facility in Independence, Saucy is looking to grow into the recently vacated space in its current building.

“I thought TITLE would be there 10 years-plus. So that was amazing. It just fell in our lap,” Zimmerman said. “That

Saucy Brew Works’ flagship brewhouse and restaurant in Ohio City. | CONTRIBUTED

got us to switch gears and save a lot of money to accomplish similar things without building a building with crazy prices on every commodity you can imagine.”

The Independence site owned by Saucy is now up for sale. It’s being listed by CRESCO Real Estate for a sale price of $3.2 million. The property was previously listed at $2.5 million when it was acquired by Saucy for $2.1 million.

“We are disappointed that the project isn’t moving forward here in Independence, but we will work with Mr. Zimmerman and his brokerage firm to identify a potential user and support development of this property,” Hyser said. “We’d like to find a user to complement the needs of both our busi-

ness community and residents.”

Zimmerman said he expects to apply proceeds from that property sale to the expansion of operations in Ohio City.

He said equipment costs for building a second production facility in Independence were pushing toward $6 million alone, but expanding brewery capacity in Ohio City may cost more like $2 million.

The Ohio City brewhouse produces approximately 15,000 barrels of beer annually. Zimmerman envisions an expansion there that would tentatively increase output to about 35,000 barrels.

Increasing beer production is important for Saucy as it continues to expand its physical and distribution footprints.

Besides its Ohio City brewery and taproom, Saucy also has locations in the Pinecrest development in Orange Village (which marked the debut of Saucy Coffee), Columbus and Detroit.

Meanwhile, Saucy is looking to break ground this spring for a taproom in Charlotte, North Carolina, that features an adjacent, seven-room Airbnb.

Zimmerman said the company is also working on finalizing details for a potential location in Nashville — in a location that was once a firehouse — and a second location in Columbus.

“We are beyond excited about the locations on the radar for us now where we’re looking to expand,” Zimmerman said.

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

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EDUCATION

Strengthening pathways between private, community colleges important One way to reduce equity gaps in higher education, according to the authors of a new report from higher ed consulting firm Ithaka S+R , is to boost bachelor’s degree attainment rates for community college transfer students.

The authors call it an “underutilized but essential” pathway, though. Statewide initiatives aimed at strengthening the transfer routes between those twoyear public colleges and their four-year nonprofit private counterparts, they said, is one option to help get this done at scale.

Ohio’s already doing some work on this front. That includes last summer’s announcement where 14 of the state’s private colleges announced plans to work together with 10 community colleges to streamline the transfer process.

It comes as the pandemic amplified enrollment struggles many colleges across the state were already facing.

Julia Karon, an analyst at Ithaka S+R and lead author of “Playbook for Transfer Pathways to the Liberal Arts: How to Design and Implement Statewide Pathways from Community Colleges to Independent Colleges,” spoke with Crain’s Cleveland Business about the just-released recommendations.

This interview has been edited for brevity and clarity.

— Amy Morona ` Let’s start with a big picture question: Why is developing better statewide pathways important?

The state of Ohio has great transfer pathways already from public community colleges to public fouryears in the state, so expanding those pathways to private institutions is really just providing students with more options to complete their bachelor’s degrees. That benefits everyone.

More college graduates leads to more educated employees, which improves the economy in the state, so it’s really a win-win for everybody. ` Faculty from both independent and community colleges, as well as some community college leadership, responded to a survey you

Dale Lenzer

sent out. What were some of those takeaways?

Especially at the community college level, we got a lot of responses noting that leadership and faculty really want what’s best for their students. They understand that expanding pathways to independent colleges gives their students more options that can set them up for success.

There were also some challenges noted. The main one being just that doing this intensive transfer work takes time, it takes resources, so faculty want to be sure that their time is being compensated, that they’re really being involved in the process in a meaningful way.

The Ohio Federation of Independent Colleges has done a really great job

Senior SBA Officer 216.416.2535 dlenzer @fcbanking.com

Several local private colleges, including Baldwin Wallace University as seen here in this file photo, are already part of an initiative working to streamline the transfer process for community college students.| BALDWIN WALLACE UNIVERSITY

incorporating the voices of faculty.

They’re doing peer working groups with faculty at community colleges and independent colleges, really making sure that faculty feel that their voice is heard.

It is so important to involve faculty in the transfer process. They’re often the ones deciding which credits can go towards a certain degree. ` You also conducted interviews, too. The playbook includes a quote from a staff member at an Ohio community college who said, “I’ve appreciated the flexibility and involvement that my private partners have brought...to our students. I think some of the publics I work with could learn from our private partners.” Did you get a sense

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of what they meant by that?

This staff member was referring specifically to when it comes to communicating options to students, and especially accepting credit, private institutions have really done a great job being flexible when it comes to how many credits students can transfer in and how long it takes them to finish that degree. ` In addition to incorporating faculty’s voices, what else are leaders here in Ohio doing well?

We talk about in the playbook, when you’re choosing the goals for your initiative, you really want to engage not only your member institutions, but also community colleges, the public sector, legislators. There are so many

stakeholders involved.

OFIC (the Ohio Foundation of Independent Colleges) has done a great job not only reaching out to the member institutions, but also surveying community colleges and holding focus groups with independent college and community college staff to determine which major transfers pathways they wanted to pursue, what the goals of their initiative should be.

They’ve also done a great job reaching out to ODHE (the Ohio Department of Higher Education), which has been a helpful thought partner throughout the initiative. And they know that they can rely on the resources that already exist so they don’t have to reinvent the wheel. ` Conversely, of course, what could Ohio do better on this front?

That’s honestly something we’re going to have to figure out. Ohio has contracted with the Council of Independent Colleges to evaluate their initiative. And so that evaluation, and our evaluation in later years, will bring up how the initiatives have gone, where are areas for improvement. This playbook is meant to highlight the practices that states are using thus far, but we definitely have more to learn in terms of how effective these practices have been.

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

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MARCH 21, 2022 | CRAIN’S CLEVELAND BUSINESS | 7

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PERSONAL VIEW

DEI in infrastructure can upend racial inequities

RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS

BY JON KRAMER

EDITORIAL

Progress, but ...

P

rogress is welcome even in small amounts, and we’ll apply that philosophy to some numbers from Catalyst, a global nonprofit that works with companies to accelerate women into leadership.

Our print issue this week features a special section focused on diversity, equity and inclusion, a topic we take seriously and, we’re happy to say, generally is treated with more urgency in Corporate America today than in years past. Later this year, in October, we will publish a section called Notable DEI Executives and will host a roundtable event centered on best practices in corporate diversity.

The Catalyst data focus on a small but important marker of diversity in executive leadership: the number of women CEOs of Fortune 500 companies.

That’s rarefied air in leadership circles, and it’s not necessarily indicative of change more broadly in the C-suite, but Catalyst notes there are now 41 women CEOs of Fortune 500 companies, nearly double the 21 of 2016. One of those CEOs is from a Northeast Ohio company: Tricia Griffith, who has been president and CEO of Mayfield Village-based insurance giant Progressive Corp., and a member of its board of directors, since July 2016. Griffith has been with Progressive since 1988, when she started as a claims representative.

A nearly 100% increase in six years is, indeed, pretty impressive and is illustrative in at least some places of an increased willingness to consider all options in picking a leader.

But that increase is off a small base, and 41 of 500 is still just a little more than 8% — hardly a figure worth bragging about.

These kind of numbers aren’t just symbolic. There’s plenty of research showing that diversity in leadership positions — with respect to female CEOs and minority executives, too — benefits corporate performance. A lack of representation, whether it’s at huge companies that are part of the Fortune 500 or at the much smaller businesses, means that many women and minorities still are not getting a fair chance to prove themselves capable leaders and innovators.

We noted that Progressive’s Griffith is one of the female CEOs in the Fortune 500. Among CEOs of public companies based in Northeast Ohio, that’s still a lonely club. Very lonely.

Crain’s latest list of the 64 public companies in this region

shows that just two have female CEOs — Progressive, with Griffith, and Canton-based Concrete Leveling Systems Inc., led by Suzanne I. Barth.

Ohio as a whole fares no better. Our list of the state’s 50 largest public companies shows — wait for it — one female CEO: Griffith, again.

This isn’t meant to disparage the accomplished people who have been chosen to lead these companies. It’s just a reminder about the importance of thinking deeply about these decisions.

Diversity of leadership is critical because it’s visible and sends a message to all workers that there are paths for anyone to advice, if they’re talented and work hard.

Stop doing this I

t’s an election year, and we probably shouldn’t be surprised that Gov. Mike DeWine last week signed into law a bill that removes training, background check and permitting requirements to carry a concealed weapon in Ohio.

When the law takes effect in 90 days, all Ohioans aged 21 and older who are lawfully allowed to possess a weapon will be able to carry it with them, concealed. Prior law “required them to undergo eight hours of training, a background check, and an application through their local sheriff,” Ohio Capital Journal noted. Ohio is the 23nd state in the county with a permitless carry law.

We’re not anti-gun, and we don’t even address this kind of issue, typically. But the requirement to seek a permit always has struck us a reasonable one that achieves a balance between constitutional rights, officer safety and public safety. More worrisomely, this is not a good sign of the direction of the governor and Republican-dominated state Legislature. The last thing Ohio needs is more trips down the road of hard-core legislation on guns, abortion, critical race theory. (What we could use: election maps that pass muster with the state supreme court.)

Ohio has enough trouble keeping and attracting young talent without adding more of this kind of legislation to the mix. Focus on making Ohio a state with a competitive tax structure that is appealing to companies seeking a talented, educated workforce.

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

Over the past century, the United States (and other countries around the world) have designed and built some infrastructure projects that have harmed disadvantaged and impoverished populations.

President Joe Biden announced a $1.2 trillion plan to rebuild, repair and reimagine infrastructure in the U.S. over the next decade. The Reconnecting Kramer is Communities program will “remove or president of repurpose infrastructure barriers,” allo- OHM Advisors, cating at least $1 billion to help recon- which has offices nect cities and neighborhoods segregat- in Cleveland ed or divided by built projects. and Akron.

Government infrastructure funding historically was intended to make the economy work more efficiently. But I think we can all agree that some previous federal infrastructure investment excluded certain communities, resulting in historical policy decisions and systemic disinvestment, cutting neighborhoods off from downtowns and accelerating suburbanization trends. This has certainly been true in big cities in the Midwest — including Cleveland and Detroit.

New federal funding is our chance to right those wrongs.

While infrastructure alone cannot fix systemic racism, focused development that prioritizes putting all people first, genuinely listening to and understanding the needs of the community, will go a long way toward addressing and amending past inequities.

OHM Advisors, with offices throughout the revered Rust Belt, has observed these missed opportunities firsthand. We have learned a lot over the decades, and now have systems and partnerships in place to connect with residents, stakeholders, businesses and community leaders to bring the issue of equity to the center of our collective focus.

Which is precisely what we strive to do in Cleveland, as highlighted by our team’s involvement in the Vision for the Valley. The effort to reimagine “Cleveland’s other waterfront” symbolizes the vision for One Cleveland, linking east to west at the point where both sides of the city come together.

United by the goal to build One Cleveland, with a healthier, more equitable, and more sustainable future, the project team sought to support economic development and scrap long-held racial biases around connectivity, mobility and equal access.

We listened, really listened, to the community when candid discussions revealed that we weren’t as focused on diversity, equity and inclusion as we thought we were — and should have been. The project team purposefully dug deeper to elevate voices, broaden our reach, and engage the community more broadly, which proved instrumental by the Vision’s adoption by the city of Cleveland Planning Commission.

While inspiring to assert that the bipartisan infrastructure deal will help advance equality around the built environment, it will take a concerted effort at all levels to deliver real impact. And it will require all parties to contribute to the full inclusion and participation of residents and stakeholders so that everyone can benefit from innovative policy solutions.

Our infrastructure has been underfunded for a long time.

Truly righting past wrongs requires incorporating diverse perspectives and more equity-based thinking, taking positive steps, and ensuring we address challenges through a lens of equality — and, yes, additional funding.

This is just the beginning. It is an exciting time for our nation to ensure that future investment doesn’t benefit one group of people at the expense of another with this historic funding.

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

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

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OPINION

We are better TOGETHER

LETTER TO THE EDITOR

Who is failing schools?

A March 7 Personal View opinion piece in Crain’s (“A return to ‘normal’ public schools is not enough”) resurrected popular misconceptions regarding public education. A quick summary of the points made in that op-ed and some refutation follow.

The author states that public education is not successful in one-third of Cuyahoga County’s districts due to the following factors: 1. Students are not passing the Ohio proficiency tests.

The statistics indicate that this is superficially accurate. Statistics also indicate that the proficiency scores correlate with average family income in the district.

In addition, parents in wealthier districts have more disposable income to spend on tutors and early childhood education.

Proficiency tests are updated so frequently that districts do not have adequate funds or time to fully re-educate their staff as to the latest version of the test. Also, the state criteria/definition of passing/proficient changes with each revision of the test. In a real sense we are measuring a moving target.

2. School boards need to have increased parental pressure placed upon them to improve educational results; parents and students are the customers, the “primary clients.”

Having worked as an educator in public and private districts, and having served a term on a school board, there is no lack of parental presence at school board meetings. In addition, parents have traditionally been active within the school on strategic planning committees, school levy/ bond drives, PTO/PTA membership and as volunteers.

These parents exert “good” pressure on districts.

3. School districts need to be “focused on student mastery of skills and core knowledge, not their social or political opinions or group identity.”

The student is not merely a cognitive widget parents

send to school to have their child’s brain tightened a little to the left or a little to the right using core subject material.

Educators, psychologists and parents have long ago learned that poverty, a student’s social/emotional needs, parental/teacher expectations, the social developmental demands of elementary students and the maturational demands of middle and high school students are crucial formative factors in learning.

When not addressed in school, student learning is not optimized. Parents or educators will never talk or discipline a teenager out of his/her “group identity”.

4. State legislators need to give parents legislative leverage “to give parents more power against the powerful educational interest groups.”

Assuming teacher unions are out to maximize paychecks and minimize the education of Ohio’s students is a false flag. Professionals in business and technology deserve and earn high salaries. Educators are still attempting to convince legislators that they are professionals and should be compensated accordingly.

While Ohio school districts have taken an educational hit with COVID in the near term and despite the challenges placed on education by misconceptions from some quarters, Ohio students are best served by addressing their immediate needs through rational state testing, continued “good” pressure from parents, a fully funded curriculum addressing all subjects (core and elective), and counseling programs remediating student social/emotional needs.

Educators need to be recognized as professionals and compensated as such.

Defining parents and students as clients/customers presupposes school districts are widget-makers.

The formation of students as future citizens should not be left to a business marketing model.

Sheldon Firem Chardon

www.pleasantvalleycorp.com

w w w. n a i p v c . c o m

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TECH LOOKS TO DEI It’s key for technology companies to implement DEI to drive innovation.

DIVERSITY, EQUITY AND INCLUSION

GETTY IMAGES/ISTOCK PHOTO

PAGE 12

Private equity grapples with its

DIVERSITY PROBLEM

BY JEREMY NOBILE

The private equity sector has generally ignored diversity, equity and inclusion since its first investment firms popped up between the 1940s and ’50s — something that may seem pretty ironic for an industry with equity in its name.

Of course, equity in this field and equity in a broader societal sense don’t refer to exactly the same things.

But there’s no question the PE industry has a diversity problem.

Asset managers and their investors are beginning to appreciate the importance of diversity in this industry, either because it’s the right thing to do or because of the mounting evidence of the positive

results that tend to follow teams and companies that are ethnically and gender diverse.

“Limited Partners are increasingly focused on the diversity of the managers they back, and I would expect this trend to continue,” said Liz Burke, an assistant vice president with global private equity firm The Riverside Co. But there remains a lengthy road ahead before this industry might be considered equitable in terms of its own demographics and the ways its record piles of dry powder are deployed.

“At the end of the day, PE guys care about making money and generating returns. As long as they are doing that and continuing to raise bigger and bigger funds, they will

do what they do without changing,” said Marques Martin, an Ohiobased co-founder of Fvlcrum Funds, a rare private equity shop focused on investments in minority-owned companies.

That firm has raised $109 million so far for its inaugural fund, according to public filings.

“Really, the only way PE firms will change is when limited partners tell them to change,” Martin said. “Until that happens en masse, I don’t think you see all PE firms embrace this.”

To be sure, while matters of DEI are coming up more often in the PE sector, it is not something PE firms and their investors are universally pushing for, at least not yet.

The Ernst & Young 2020 Global Private Equity Report determined that 74% of PE firms with fewer than $2.5 billion had not set targets for diversity and had no plans to do so, while 63% reported the same with respect to gender diversity.

But diversity is something firms say they are increasingly hearing about. The question is whether this is lip service or something that leads to action.

“We do get those questions about diversity more frequently, both in the context of recruiting and more generally,” said Beth Haas, a partner with Cyprium Partners, a private equity firm that makes non-control investments.

“But our industry has a long way to go,” she said. “A first step is trying

to get collective teams to look a bit more like the general population, and I think that goes a really long way.”

Pushing for diverse decision makers Belonging to the thin ranks of women in PE, Haas said she’s faced sexism by men who have been surprised by or dismissive of her presence or what she might have to contribute during meetings. She’s grown accustomed to being the token female in board rooms and conventions and jokes that she’s won a number of lady-drive golfing contests because she was the only woman on the links during a corporate event.

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EI PE firms are seemingly more deliberate about hiring and advancing women in the business, and they’re making more strides here than on the front of ethnic diversity.

Evolution Capital Partners is promoting chief revenue officer Susan Williamson, who joined the company in 2019, to managing partner. Evolution founder Jeffrey Kadlic said this is not to check a so-called box for diversity goals, but because she is the best person for the job.

Nonetheless, he said he recognizes the value of having diversity of thought in decision-making roles for the business. It’s a philosophy that is being promoted at the firm’s portfolio companies as well.

“I would say our industry has evolved from the ’80s and ’90s to today where you are doing everything you can to get the edge, and our industry is finally arriving at the point where diversity of communication and thought is really that next area where we can create outsized returns,” Kadlic said.

A 2019 report by Preqin found that just 17.9% of worldwide private equity employees were female — the lowest representation of any asset class — while only 9.9% of senior roles and 5.2% of firm board seats were held by women.

In terms of ethnic diversity, data is a bit harder to come by.

But research by the Knight Foundation in 2019 found that less than 4% of U.S. private equity firms had minority ownership. The same study reported that firms owned by women and minorities controlled just 1.3% of assets in a $69 trillion U.S. asset management industry.

“I think LPs are starting to put pressure on PE general partners to add diversity, and the aggressive ones are saying, ‘We are not going to invest unless you have diverse decision makers, not just diverse pictures on your website,’” said Anne Richie, managing director for The Mezzanine Fund in Cleveland, a new, builder capital debt fund targeting woman- and minority-owned businesses, which are vastly underrepresented within the capital deployed by investment firms.

An analysis of Crunchbase data found that Black female startup founders were receiving just 0.34% of venture capital spent in the U.S. at midyear 2021 — a trend that came to light despite the level of venture funding for startups led by Black women pacing at a five-year high.

While VC and PE are two different animals, this is one indicator of the dearth of capital that flows to a segment of diverse business owners.

Having more women and diverse individuals making the decisions at investment firms, Richie said, will translate to more capital flowing to corners of the business world where it has been historically absent.

gional schools and historically black colleges and universities and match them with job opportunities.

But a big challenge, said Cyprium founder John Sinnenber, is that firms like his are competing against all of the several thousand other PE funds out there, including the Blackstone and Carlye groups of the world.

Firms are also generally evolving in how they think about who might fit in the PE ecosystem.

This means looking at candidates from less traditional career paths besides the common route many take to the PE business through the investment banking sector, said Maureen Leitch, director of global talent management for Riverside.

She said Riverside, the largest PE firm with roots in Cleveland, is making efforts to connect with diverse candidates earlier in their careers in finance school and looking beyond finance disciplines more regularly.

In many cases, there’s a learning curve to tackle.

“We have often found that diverse candidates are not even familiar with what private equity is,” Leitch said.

“So part of this is education, building up the Riverside brand and nurturing those connections. PE has been this very private, elite sector, and we are trying to help break that cycle.”

So why does diversity in the PE business matter?

Many firms seem to acknowledge

this is just the right thing to do, especially as the country continues to reckon with its history of racial and gender inequality.

But there’s also a clear business case to be made. Various studies show that diverse businesses don’t just make better decisions, they make better investments.

And in the PE world, diverse teams are more likely to invest in diverse companies. That’s the sort of trend that can help support the generation of wealth minorities in particular have been sidelined from — something that has inspired funds like Mezzanine and Fvlcrum that want to channel capital to woman- and minority-owned businesses.

Pointing to studies that show America is on track to be minority white by 2045, Marques Martin argues that ignoring diverse companies and the broadening racial wealth gap could be economically perilous.

“I think these factors have mobilized folks to say that we have got to figure out a way to start getting capital and opportunities in the hands of people who are ultimately going to be the majority of our country, because if we don’t,” he said, “the risks that poses to our country are too significant and dire to think about.”

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

A learning curve to tackle In terms of building diverse teams, part of the challenge is that the demand for people outpaces supply, Haas said.

There’s a bit of a chicken-and-egg dilemma here. One reason the pool of diverse candidates in private equity is so shallow may be because the industry has been so homogeneous for so long.

Haas said Cyprium has worked with a new startup known as the Finance Farm League that helps connect undergrads of color from reMARCH 21, 2022 | CRAIN’S CLEVELAND BUSINESS | 11

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FOCUS | DIVERSITY, EQUITY AND INCLUSION

Tech companies seek to embrace inclusivity in era of fierce competition

BY DOUGLAS J. GUTH

Although technology is not the only field facing ongoing obstacles around diversity, equity and inclusion, the innovation industry is not exactly bursting with disparate perspectives. According to a 2021 report from software firm Lever, about 24% of workers surveyed said that their employers have done nothing to improve DEI. What’s more, approximately 29% of software and technology companies in the Lever report made diversity a top priority in 2021.

Gloomy figures aside, there are actionable steps tech executives can take to improve inclusivity across departments. Considering diversity is a vital innovation driver, it’s key for technology companies to implement specific DEI goals, said industry officials and observers interviewed by Crain’s.

Diversity is treated as a core value at Hyland Software. The Westlake technology firm aims to cultivate different skill sets through a company-wide commitment to belonging, noted director of corporate social responsibility Lisa Jackman.

“When you’re valuing different ideas, perspectives and experiences, that’s what can unlock creativity, which in tech is particularly essential,” said Jackman. “If we’re not innovating, we’re going to be obsolete.”

What this means in practice is not only a call to social responsibility, but a dedication to real action, Jackman added. This intentionality includes employee resource groups — internally named ERGs — that connect workers and build community around DEI issues.

For instance, a “Hyland Pride Alliance” ERG provides LGBTQ staffers with a supportive forum to discuss sensitive issues. Additional ERGs deliver resources and opportunities to women, veterans and individuals with mental health challenges.

Jackman pointed to ERG participation as an overwhelming positive in Hyland’s DEI efforts. The company has grown group membership by over 72% since 2019, with 734 employees currently participating in at least one ERG. “With a distributed workforce, it’s been wonderful to see our ERGs provide a meaningful way for people to engage, even when we’re not all together,” Jackman said.

Bridging the digital divide Cleveland software creator OnShift has a slightly different take on fostering corporate diversity, even if its strategy derives from similar principles of meeting employees where they live. The company’s committee for Diversity, Inclusion and Belonging, or DIBs, focuses on education and recruiting, at the same time encouraging open conversations around potentially divisive topics.

“We want to make this work accepted and celebrated,” said Kristin Weber, vice president of people and culture at OnShift. “Belonging means having a safe place to share your experiences. That’s where these programs make a difference.”

Anti-racism protests that swept the U.S. in 2020 sparked companies including OnShift to crystalize their approach to workplace equity, Weber said. Eliminating disparities for the un-

Jackman

Bilimoria

derserved — whether by gender, race, ethnicity, family income or geography — requires developing those communities’ foundational knowledge.

Computer science fields are infamously plagued by stark underrepresentation. Per a report from the Code. org nonprofit, students from marginalized racial and ethnic groups — along with high percentages of economically disadvantaged learners — are less likely to have access to computer science courses than their peers. Issues of diversity naturally extend to university programs and, eventually, the software workplace itself, the report stated.

In Ohio, only 232 of 3,540 advanced computer science exams were taken by Black high school students, with 166 Hispanic students taking the same exam, per Code.org data. In response, OnShift is reaching younger populations through external initiatives like Code Path, where company engineers voluntarily educate minority college students in nocost coding courses.

“The market does not support a diverse workforce, so we wanted to get involved at the high school and college level,” said Weber. “Folks who are underrepresented in these classes can now see a future in a tech career.”

Hyland is doing its part to bridge the digital divide, noted corporate responsibility director Jackman. The content services provider currently partners with computer science nonprofit TECH CORPS on technology training for elementary school learners on up.

Among these efforts is STEM programming at Cleveland State University’s Fenn Academy and professional computer science training for students attending St. Martin de Porres High School in Cleveland.

Jackman said, “We’ve developed our own technical outreach programs to try and fill that gap. If underrepresented communities at the earliest of ages are lacking access to education, how will they pursue their field of study and advance their career?”

An opportunity to shine Recent headlines underline the distance the tech industry has to travel regarding equitable employee treatment, said Diana Bilimoria, professor of organizational behavior at Case Western Reserve University.

In December, video game publisher Riot Games settled a $100 million class-action suit that alleged gender-based discrimination and sexual harassment. Another suit against game maker Activision Blizzard accused the company of perpetuating a “frat boy” culture where women were victims of harassment, unfair pay and retaliation.

Today’s corporate environment puts a greater emphasis on racial and gender equity, as well as disability issues and LGBTQ workplace inclusion. As such a broad spectrum can be intimidating for enterprises just

beginning their DEI journeys, leveraging data to uncover bias in hiring and recruitment is a strong starting point, Bilimoria said.

Employee experience surveys and regular check-ins are additional means of tracking DEI goals. CIOs can be champions in this area as well, harnessing artificial intelligence for immersive training around hiring and interviewing.

“Participants can make choices and engage in decisions that play out scenarios in real time,” said Bilimoria. “For example, in a hiring selection meeting, what can we say or not say (to applicants)? All of these things can be simulated.”

Once on staff, diverse populations can be offered more stretch assignments and developmental opportunities. Meanwhile, department heads might require allyship or bias mitigation training to help tease out problems affecting company culture.

Ultimately, diversity unlocks innovation and is a critical component of global success, said Jackman of Hyland. Senior executives recognize that a distinct set of backgrounds and perspectives is crucial to innovation, particularly in an increasingly fierce global economy.

“That’s the crux of it — if you’re not creating an environment within your workplace where employees feel they belong, how do you expect them to deliver the best value in product development or customer service?” Jackman said. “To me, it’s the secret sauce to ensuring your workforce is showing up every day and giving 1,000%.”

Contact Douglas J. Guth: clbfreelancer@crain.com

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The vast majority of companies in the U.S. aren’t disclosing whether they’re analyzing the gender pay gap among their employees, and even fewer are publicly sharing what that gap is.

That’s according to a new study from the nonprofit Just Capital, which found that less than a quarter of 954 major U.S. companies disclosed conducting the analysis. Of those that do say they’re looking at the numbers, almost half don’t release any information about their actual performance on issues of gender pay equity, the group found.

Only 75 companies in the research reported the exact pay ratios between women and men.

The study was released last Tuesday, March 15, which was Equal Pay Day in the U.S. and marks how far into the year a woman must work to earn what her male counterpart did in the previous calendar year — about two and a half months.

Progress on ending the gender pay gap, which has persisted for decades, has stalled during the pandemic. After years of incremental progress, the gap has stayed unchanged at 82 cents per dollar over the past two years, according to Payscale’s 2022 State of the Gender Pay Gap report, also released on Tuesday.

The 82-cent gap hasn’t budged since coming in at 81 cents in 2019, according to the Payscale findings, which are basically in line with data released by the Bureau of Labor Statistics.

The shortfall is wider for women of color, and particularly for Native and Hispanic women, who last year earned 71 cents and 78 cents compared with white men, respectively, the Payscale study showed. Black women and those who were Hawaiian or Pacific Islander earned 79 cents compared with white men.

The Just Capital study found that 68 of the 75 companies that provided information on pay disparities said they had reached pay equity for workers, or were within 5 cents of doing so.

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“These figures tell us that companies continue to release information about their gender pay equity performance only when they are doing well or have achieved their parity goals,” Kim Ira and Aleksandra Radeva, the study’s authors, wrote.

In an OpenComp survey of 500 start-up executives, 19% of respondents said their inability to access data is their biggest barrier in closing the pay gaps at their companies.

And while a majority of chief executive officers said that pay equity was important to them, 61% of team members said they didn’t have the resources to rectify the problem, the survey showed.

Thanh Nguyen, the CEO and co-founder of OpenComp, said prioritizing pay transparency is beneficial for both employees and employers looking to retain good workers.

“When companies are moving so quickly — as high-growth companies do — it is surprising to me why compensation strategy is not a priority,” he said. “With access to the right data, start-ups can build equity into their compensation frameworks from the beginning.”

Some states and cities are moving to make more data available.

A new law in New York City will soon mandate that companies disclose a minimum and maximum expected pay range in their job listings, the first major metropolitan city in the U.S. to enact such legislation. Colorado, Nevada, Connecticut, California, Washington and Maryland have laws with some form of salary-range disclosure required; Rhode Island will join them in January 2023.

Similar laws are under consideration in Massachusetts and South Carolina. In New York state, a similar labor law was proposed last year.

In a recent interview, New York state Sen. Jessica Ramos told Bloomberg News that a company’s wariness of pay transparency could serve as a “red flag.”

“This is one of those laws where, if you’re doing the right thing, then you have nothing to worry about,” Ramos said.

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REAL ESTATE

CSU may buy Edge as investment action climbs in student housing sector

BY STAN BULLARD

The Edge on Euclid, the 11-story structure at 1750 Euclid Ave. in Cleveland, looks poised to change hands to Cleveland State University. It’s one of three transactions in the region perking up the nascent apartment sector.

A certificate that signals a buyer’s planned purchase of a residential or commercial property, filed Feb. 18 with the city of Cleveland’s building department, reports that the potential Edge buyer’s address is 2121 Euclid Ave. AC 327. That is the mailing address of CSU’s general counsel at its administration building.

Edge is among three dedicated student-housing developments that have helped CSU develop a residential offering seen as helping to transform it beyond its roots as a commuter college. The building opened in 2017 with 564 bedrooms, which share joint kitchens and living rooms in a total of 237 suites.

Since 2019, the complex has been owned by an affiliate of Goldenrod Capital Services, an Omaha, Nebraska, wealth management firm that has developed or bought a portfolio valued at $4 billion, according to its website.

A sale price was not disclosed when Goldenrod, through 1750 Euclid LLC, acquired the property from its original developers, a joint venture by Korman, a St. Louis real estate developer, and Clayco, a design-build construction company with headquarters offices in St. Louis and Chicago.

The county assigns a market value of $27 million to the property.

Buying Edge would give CSU a

The student housing building at East 18th Street and Euclid Avenue may be purchased by Cleveland State University from its current owner, a private equity firm. | COSTAR

campus reaching west into Playhouse Square, where the university has expanded film and theater offerings in properties leased or shared with Playhouse Square Foundation, which operates the restored vaudeville theaters in the district. Edge also is across the street from the Maxine Goodman Levin College of Urban Affairs, which borders the theater district on the north side of Euclid.

Enhancing and expanding student housing at CSU is part of university president Harlan Sands’ growth plan for the school, referred to as “CSU 2.0.” Buying an existing property adds to the university’s stock of housing with the quick movement of a pen, versus the years it takes to obtain site control and funds to add student housing. The university has also hired Sasaki, the Boston-based master planning and architecture firm, to

create a new master plan.

CSU does not comment on the potential sale or purchase of real property, according to Alison N. Bibb-Carson, the university’s executive director of strategic communications. Recent board of trustees meetings, including Thursday, March 17, do not reflect efforts to buy a property, but such acquisitions may be discussed in secret session under the Ohio Sunshine Law governing state

bodies.

Purpose-built student housing has developed as a new sector of real estate since the 1990s. One of the big attractions is that it was considered recession-proof compared with other apartment and property sectors.

However, it’s not pandemic proof.

Student housing took a hit as colleges shut down or instituted virtual learning programs to combat the spread of COVID-19. That is coming to an end as the nation seems to be emerging from the pandemic’s shadow.

Other purpose-built housing for college students has had a checkered experience in Northeast Ohio.

Latitude at Kent, a five-story building at 1450 E. Summit St., was acquired for $31 million in late December by Singapore-based real estate investment trust Ascott Residence Trust as part of a purchase of a portfolio of eight properties across the United States for $213 million.

Ascott said at the time it announced the deal that Latitude was 98% leased in 2021 and consists of 384 bedrooms in 126 units.

Meantime, The Depot, a 624-bed, 192-unit student housing project at 80 E. Exchange St. that serves the University of Akron, is listed for auction by Ten-X Capital and Colliers International, with a starting bid on April 11 of $7 million.

The three-story building, owned

by Rialto Capital Management, a Miami firm that buys distressed properties and handles special servicing needs of lenders for troubled properties, was constructed in 2014 and has about 90% occupancy, according to auction information.

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

Fogg readies next building for Summit business park

BY STAN BULLARD

Spring has sprung, and Ray Fogg Corporate Properties is readying plans to build another structure, its sixth, at the Seasons Business Park in Stow.

Ray Fogg, president of the Brooklyn Heights building contractor and real estate development firm, said in a phone interview that leasing prospects for the park’s fifth building , finished last year, are strong, so the company is pushing to construct its next building on a speculative basis.

The proposed 254,474-square-foot building will go up on Gray Lane facing State Route 8 at the southwest corner of the state road’s interchange at Seasons Road. The developer received approval for its site plan for the 15acre parcel at the Stow Planning Commission’s Feb. 8 meeting. The structure will be the second to go up on the west side of Route 8 following its initial phase, with four buildings on the opposite side of the interchange. The park is a joint venture by the Brennan family, which owns the land, and Fogg, which is doing the developing and building.

Just 54,000 square feet is left in the park’s fifth building, Fogg said, and there is interest in that remainder, so the company is readying the next structure.

“Most people will tell you it’s the market of a generation,” Fogg said.

“Others will say it’s the market of a lifetime. The forecast is for strong de-

mand to continue for some time. The retooling of the economy with e-commerce and how we do logistics is feeding it. Even the latest worldwide news is pushing greater need to reshore materials, goods and manufacturing here.”

So there is plenty of incentive to continue building, even though the pandemic is making the process more difficult with rising material costs and supply problems.

“There are challenges with every project,” Fogg said, “and supply issues are another challenge to meet.”

To cope with supply problems, he noted his company ordered precast concrete for the next building almost a year ago. In the past, it used to order the precast a few months ahead. He noted that rising building costs are a concern, but may pale compared with the impact of rising interest rates from the record lows of the last two years over the lifetime of a project.

Experts expect Fogg will find substantial demand for the additional space.

David Stecker, a vice president at JLL Inc.’s Cleveland office, said in a phone interview, “From our viewpoint, it’s good to have more inventory on the way. There is lots of spec construction and build-to-suit construction, but not as much space is on the market as we have demand (for).

There are also tenants in existing buildings who will look for places to expand.”

JLL estimated vacancy in the south-

east suburbs, which include Stow, at 4.9% at the end of 2021 in Summit County. Throughout Northeast Ohio, there is 4.5% vacancy, a decline from last year, even though the region absorbed 5.4 million square feet of industrial space in 2021, a record. About 2.5 million square feet of such newbreed warehouses was finished last year and another 4.2 million square feet of such space was under construction. The industrial market in the region now consists of almost 367 million square feet, JLL reported.

George Pofok, a principal at the Cushman & Wakefield Cresco real estate brokerage in Independence, said even with all the industrial building activity, “It’s not near enough. For tenants in the market, 2022 will be challenging because of the lack of available property.”

Stecker said Fogg’s buildings at Seasons are adaptable, so they can fit tenants who need as much as 250,000 square feet or as little as 50,000 square feet.

The downside of all the action, at least for tenants, is that rents are climbing in the industrial warehouse market. The average asking rent hit $4.99 per square foot as of the end of 2021, JLL said, an increase of 63 cents from the prior year.

The Fogg and Brennan joint venture started developing Seasons Business Park in 2015.

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

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NASH

From Page 1

was announced on Feb. 23, Nash, who had been chair of the company’s board, was immediately elevated to executive chair.

The two companies Nash runs might not seem to have much in common, as one occupies a 19th-century brick warehouse on a manufacturing-dense stretch of Hamilton Avenue east of downtown Cleveland, and the other is a consumer-facing business that makes its products in a facility called Beauty Park in Columbus. But technology innovation and productive relationships with corporate partners drive the performance of both businesses, Nash said in an interview last week at her Novagard office. Both, she said, also have “dynamic environments” that have put them on strong growth trajectories.

And both for now are led by Nash, who spent nearly 30 years in investment banking at JPMorgan Chase & Co. — a role that gave her insight and hands-on experience in working with companies in virtually every type of industry and is reflected still today in her work on the boards of Blackbaud Inc. (a software company focused on the nonprofit industry), HBD Industries Inc. (a maker of engineered products), Irving Oil Co., New York-Presbyterian Hospital and the Smithsonian Institution.

“I’m very curious, very competitive,” Nash said of her management style. “And I like to win.”

Shoppers inside a Bath & Body Works store at the Westfield Garden State Plaza mall in Paramus, New Jersey. | GABBY JONES/BLOOMBERG

On the grow

Novagard, which was founded in 1977, has been in growth mode since Nash took over as CEO and majority owner in 2018. (The previous owner: her ex-husband, who remains a minority shareholder.)

Nash said the company has been investing in research and development to expand its products and evolve Novagard from a regional manufacturer of industrial-grade silicones to one positioned as an electronics-grade silicones manufacturer with three divisions: Electronics & Electric Vehicles, Building Systems and Industrial. The agility Nash values has helped the company prepare for a world dominated by “the electrification of everything,” she said. One example: The Electronics & Electric Vehicles division worked to transform the electronics manufacturing process with a silicone coating that cures in just three to five seconds.

She said strengthening and expanding partnerships with other companies is critical to innovation.

SOCIETY BRANDS

From Page 1

Tradefull, which works nationally with online retailers to grow their business and improve their fulfillment, already has more than half a million square feet of warehouse and distribution space at its headquarters south of Akron and in Arizona. Some of that space will be used to help Society Brands portfolio companies, he predicts.

“Their funding round was a very good seed round for a new aggregator (of Amazon sellers),” said Kasper, who said he’s familiar with Society Brand’s acquisition strategy and predicts it will work.

Sirpilla’s confidence-inspiring

Tubes of sealant moving down a line at Novagard. | CONTRIBUTED

One of those companies is Quaker Window and Door, a Missouri-based manufacturer of residential and commercial window and door products. CEO Kevin Blansett said Nash has “created a vision and culture that resonates with companies like Quaker that are looking for strategic partners and not just suppliers.”

Blansett offered two examples of what he considered Novagard having “really taken the time to understand Quaker’s needs and then responded with innovative solutions.”

The first, he said, was the development by Novagard of a two-part silicone “based on our requests that allowed for a faster curing time. This

innovation enabled us to increase line capacity, while maintaining the high quality bonding we required and represents a great example of the solutions-based support strategy Novagard brings to our partnership.” Additionally, Blansett said, Quaker collaborated with Novagard “to be able to offer a custom color program that enabled us to offer silicone to our dealers that matched the window and door colors ordered, ensuring a quality silicone solution, easy installation and consistent look and performance once installed.”

The agility Nash values helped the company during the Texas ice storm

dream started in 2020, when he heard that buying up Amazon’s third-party sellers was a hot trend driving the movement of billions of dollars to new businesses, and he started reading up on it.

“My wife said, ‘Your phone light is on, can you take this somewhere else?’ ” he recalled. “I ended up in a closet in our bedroom.”

When he came out the next morning, he had a plan and more enthusiasm than he took into that closet.

If you shop with Amazon, there’s a good chance you’ve done business with some of the companies Sirpilla is hunting. Look to the right of the page, under the “buy now” button, and you’ll see something like “ships from: Amazon” even though the seller is Sirpilla listed as a company other than Amazon. Those are FBAs. They sell their own products and often are small operators that use Amazon and its vast logistics and distribution system to fulfill their orders.

But those FBAs can grow faster with a little help and additional resources, many believe, and rolling them up into larger companies that can help them manage things such

Fulfilled by Amazon Sirpilla and Society are what’s known as “FBA aggregators”; FBA stands for “fulfilled by Amazon.” As Sirpilla learned quickly, buying up such companies is attractive to investors.

of 2021, which led to massive disruptions for Novagard’s resin suppliers, all of which were in that state.

She said Novagard leadership, left with little inventory at the time, worked quickly to find global resin suppliers where the product was “as good or better” than existing suppliers, and production experienced no significant disruption.

“When a problem arises, I’m a run-to-the-fire type of woman,” she said.

Novagard, as an essential business, stayed open even in the earliest days of the pandemic, and while the summer of 2020 was a challenge, Nash said, the company has continued to grow.

Sales rose in 2020 from 2019 — not something a lot of companies can say — and they were up last year by about 35%, Nash said. The company is investing about $30 million in various growth initiatives, including important upgrades in the Hamilton Avenue operation, and the workforce has grown by more than one-third, to about 160.

Make it two

Nash’s leadership skills now get the new test of running Bath & Body Works.

She was named board chair of L Brands, the then-owner of Victoria’s Secret and Bath & Body Works, in March 2020, replacing legendary retail mogul Leslie H. Wexner. L Brands split itself last year into two firms, with Bath & Body Works and Victoria’s Secret now operating as separate as sourcing, making and branding their products has become a huge business.

Last October, Fast Company reported that there had already been $9 billion invested in FBA aggregators. TechCrunch reported that same month that Thrasio, the biggest of the FBA buyers so far, had raised $3.4 billion in debt and equity alone.

And that was all before several other recent investments had been announced, not the least of which was the $204 million infusion into Society Brands, from the bicoastal investment firm i80, announced March 9. A typically quiet investment firm that reportedly traces

public companies.

Bath & Body Works, CNBC noted, “has been among the biggest pandemic winners thanks to demand for its sanitizers, scented candles and air fresheners from people spending more time at home due to the rise of remote working.” Net sales from continuing operations for the fiscal year ended Jan. 29, 2022, increased 22% to $7.88 billion from $6.43 billion for the year ended Jan. 30, 2021. Earnings per share from continuing operations were $3.94 for the latest fiscal year, compared with $3.07 for the prior year.

Nash said she will divide her week between the two companies based on when circumstances require her in-person presence. Like everyone else in business these days, she’ll also spend a lot of time on Zoom.

She said Bath & Body Works has “a phenomenal leadership team” that is helping to make the transition from Meslow smooth and will enable her to devote time to what she says is her “most important job” — finding the next permanent CEO of Bath & Body Works.

Michael Goldberg, a venture capitalist and entrepreneur who is an associate professor of design and innovation at the Weatherhead School of Management at Case Western Reserve University, as well as the inaugural executive director of the university’s Veale Institute for Entrepreneurship, said it’s “a bit remarkable” to possess the ability to be CEO of two companies simultaneously. Celebrity CEOs who have done it include Jack Dorsey (of Twitter and Square) and Elon Musk (of Tesla and SpaceX), though in those cases, both companies were public.

Goldberg said technology makes it easier now than in the past to run multiple ventures, but the skills needed to be a good CEO — identifying talent, delegating duties, finding the time to meet productively with customers, investors and suppliers — are somewhat old-school. “It comes down to being a person who’s highly focused and organized,” he said.

Nash has no trepidations about the challenge.

“It’ll be a lot of work, but I’m prepared for it,” she said. Nash said she sees this as a particularly good time to be running innovation-focused businesses in Ohio, where she expects the big investment by Intel in the Columbus area to lead to growth for many companies — possibly including Novagard.

“I love the idea of invention and the era we’re entering,” she said.

Scott Suttell: ssuttell@crain.com, (216) 771-5227, @ssuttell some of its money to the wealth of Silicon Valley, i80 confirmed its investment in Society Brands but would say little more.

Sirpilla estimates there’s now been as much as $13 billion invested in FBA rollup firms such as his.

But Sirpilla, folks like Kasper who partner with him and, apparently, i80 think Society Brands has a formula that separates it from its peers.

Smaller slice of a bigger pie Society Brands does two things its competitors do not, Sirpilla said: It seeks acquisitions where the founder of the target company wants to stay on to continue to grow their brand under Society’s corporate umbrella, and it gives those sellers equity in So-

16 | CRAIN’S CLEVELAND BUSINESS | MARCH 21, 2022

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3/18/2022 2:57:55 PM

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RENTALS

from homeowners offering up a spare bedroom to investors with portfolios of vacation rentals.

Airbnb Inc., a publicly traded company that operates a popular online booking platform, has been mobilizing its hosts to support the change in state law.

“Lawmakers need to know that hosts like you are partners in the economic growth of the state, and that any new legislation needs to protect the property rights of Ohio residents, as well as provide a powerful economic boost for local communities through healthy tourism,” the company wrote in a November email blast titled “help protect short-term rentals in Ohio.”

In early March, dozens of hosts submitted proponent testimony to a House committee.

“I have turned my shared home into a little business and I cherish it,” Heather Bise, an Airbnb host in Cleveland, wrote in one such letter. “I live with my guests. I cook for them. I do their laundry. I am an ambassador for my neighborhood. I need your support of HB 563 in order to continue serving others via my home.”

An Airbnb spokesman referred questions about the legislation to Rep. Ron Ferguson, a Republican whose district spans rural Jefferson, Monroe and Belmont counties. Ferguson said he joined the discussion about short-term rentals in January, signing on as a lead sponsor with fellow Republican Rep. Sarah Fowler Arthur, of Ashtabula County.

An aide said Fowler Arthur was unavailable for an interview.

During a panel discussion in early March, though, she said that more than 12,500 Ohioans are serving as hosts.

“The impetus of this bill is to make sure that those individuals continue to have the freedom to open up their home, invite in tourism, invite in the industry and the growth in our neighborhoods that it brings,” Fowler Arthur told the audience at the event, hosted by the Ohio Chamber of Commerce in Columbus.

The chamber is behind the legislation, squaring off against opponents including the Ohio Association of Convention and Visitors Bureaus, whose members rely on local lodging taxes.

The rise of home-sharing, and the global reach of platforms including Airbnb and Vrbo, has prompted a flurry of local regulations across Ohio. Bay Village banned short-term rentals in 2019,

tors Association, whose members primarily focus on residential properties.

Acton and other promoters of House Bill 563 assert that short-term rentals are akin to traditional rental homes — and should be treated the same way by municipalities.

Opponents scoff at that notion.

“There’s no difference between an Airbnb and a hotel,” said Mark Barbour, the law director for Bay Village, a suburb dominated by single-family homes.

It’s unclear how the legislation will impact existing local bans or restrictions.

“Anything that’s in place, our bill’s not retroactive,” Ferguson insisted.

“It’s not going to affect anything at all.”

But the wording forbids local governments from both adopting and enforcing limits on short-term rental activity, aside from health and safety regulations that also apply to longterm rental properties. “I think there’s some ambiguity there,” said Kent Scarrett, executive director of the Ohio Municipal League.

Scarrett views the bill as yet another salvo in an escalating power struggle. “We’ve had great challenges Heather Bise operates a five-bedroom Airbnb on Cleveland’s West Side. | MICHELLE JARBOE/CRAIN’S CLEVELAND BUSINESS PHOTOS communicating to the General Asafter police broke up a large party at sembly the need for respect and ada lakefront estate. Mayfield im- herence to local control,” he said. posed a permit requirement in 2018 “This is a powerful lobby that is proand limited bookings to 30 days a moting this bill.” year at any property.

Hosts like Bise are watching the Peninsula, nestled in the Cuyahoga battle from afar.

Valley National Park, capped the She doesn’t object to the prospect number of short-term rental proper- of special permits or licenses for ties allowed in the village and im- short-term rentals. But she hopes to posed a 3% tax on reservations of up keep building up a business that has become her pri“I HAVE TURNED MY SHARED HOME INTO mary source of income. When AirbA LITTLE BUSINESS AND I CHERISH IT.” nb urged hosts to — Heather Bise, an Airbnb host in Cleveland, speak up, she was in a letter to state legislators happy to respond.

Bise, who rents a to 29 nights. rambling house on Cleveland’s West Cleveland Airbnb host Heather Bise pages through a guestbook in one of the five And Cleveland, which moved to Side, runs a five-bedroom Airbnb rooms she rents to short-term guests. Each room has a theme, such as music or poetry. define and regulate short-term rent- with her landlord’s blessing. The als in the run-up to the 2016 Republi- house goes for $478 a night and can can National Convention downtown, accommodate 10 guests. At 50, she’s laid out different rules for owner-oc- expanding on her hosting role by ofcupants and off-site investors. fering real estate concierge services, Last year, two Cleveland City curating spaces for landlords, Council members proposed a series house-flippers and other clients. of changes, including annual licensGovernments might be fumbling ing for hosts. The legislation, which to get their arms around short-term has been languishing, also would re- rentals. For Bise, though, the disrupquire full-time operators in largely tive industry has been nothing but a residential areas to have their prop- boon. erties reclassified as “lodging hous“It’s kind of like I’ve built everyes.” thing around this business, and it That patchwork of regulations started with Airbnb,” she said. “I’m makes it difficult for homeowners to never going to be a multimillionaire, supplement their income and chills but I’m supporting myself.” investments in real estate, argues Dan Acton, director of government Michelle Jarboe: michelle.jarboe@ Airbnb host Heather Bise keeps a stack of postcards and pocket-sized notebooks for affairs for the Ohio Real Estate Inves- crain.com, (216) 771-5437, @mjarboe guests on the first floor of her rental home on Cleveland’s West Side.

ciety Brands so they have some skin in the game and the potential for a larger return than simply selling for cash would bring.

That’s going to dilute the equity that Sirpilla and his other shareholders own, but he doesn’t care. A smaller slice of a much larger pie is what he’s after.

“I’m not concerned about it because it’s accretive dilution,” Sirpilla said. “From a percentage standpoint, our shareholders will get diluted ... but each shareholder’s equity is still going to be worth more and more.”

The approach was what convinced i80 to invest, he said, and it’s helping him and his team to convince FBAs to sell to Society Brands.

“We saw that a typical e-commerce entrepreneur is not someone who’s looking to retire anytime soon and sit

on a beach,” Sirpilla said. “We wanted to create a win-win solution for these entrepreneurs who can stay on with Society Brands.”

It’s more than getting the seller to say yes, though. Society Brands has to be convinced each transaction is worthwhile, too, and it weighs each target company in terms of its market penetration on Amazon and the seller’s reputation on the site. It helps that, like eBay, Amazon provides ratings for each of its sellers.

“It’s not just about selling on Amazon. It’s about being on long enough to get thousands of reviews and having four- or five-star ratings,” Sirpilla said, though he points out that’s only part of a thorough due-diligence process.

Now he’s focused on closing some deals.

From Page 1

‘I’m kind of all or nothing’ Society Brands has spoken with more than 300 FBAs, he said, and it’s working with about 10 it thinks it likely will acquire soon. Like others in his industry, he can be tight-lipped and has yet to divulge any purchases to date.

But he’s well-armed, and he knows it.

“That $200 million gives us a lot of ammunition to make acquisitions,” Sirpilla said.

He’ll draw down the money from i80 as he finds and completes transactions, then likely seek additional financing.

“After we put the entire $200 million to work, we will have acquired (companies with) $40 million to $50 million in EBITDA (earnings before

interest, taxes, depreciation and amortization). That will probably take 18, maybe 24 months,” he said.

“That just gets us started and then we’ll raise more capital.”

The pond is a big one. Sirpilla estimates there are more than 2 million FBAs already, and more are being formed all the time. The $13 billion he thinks his industry has at its disposal likely will buy about 1,000 of those companies, he estimates.

For Society Brands to get and manage its share of the rest, Sirpilla said, it also has to grow. The company now has 23 employees, including Sirpilla, to handle the deal flow and then the growth of its acquisitions.

“Just in our Canton office, conservatively, we will get to a 50-employee count pretty quickly,” he said.

He expects the company will grow not just in Canton but around the country, where future acquisitions are based.

“I’m not a one foot in, one foot out kind of person. I’m kind of all or nothing,” Sirpilla said.

None of this comes as a surprise to Kasper, who said Society Brands for now is a relatively small client for Tradefull, but one he expects to become much larger. He said Society Brands’ large seed-round of investment already makes it stand out in its industry.

“One day, Society Brands will probably be worth $10 billion,” Kasper predicts. “They’ll be worth several billion, I’m confident of that.”

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

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PEOPLE ON THE MOVE

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To place your listing, visit www.crainscleveland.com/people-on-the-move or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com BANKING

LAW

LAW

Fifth Third Bank

Brouse McDowell LPA

Thrasher Dinsmore and Dolan

Fifth Third Bank has named John Hairston III as Vice President, Treasury Management Area Sales Manager.

He is responsible for leading the treasury management sales team and driving the Bank’s growth within Northern Ohio. John has more than 27 years of banking experience in various leadership roles. He received a bachelor’s degree in finance from The University of Akron and a master’s degree in business administration from Weatherhead School of Management at Case Western Reserve University.

Brouse McDowell is proud to welcome new partner George P. Millich, Jr. to our Trusts & Estates Practice Group. His practice focuses on estate planning, probate, tax law and business succession planning. He also has experience providing counsel to fiduciaries on estate and trust administration, including interpreting language in wills and trusts, providing counsel to non-profit entities on obtaining original charitable status qualification, and other issues specific to tax-exempt organizations.

Thrasher, Dinsmore & Dolan is pleased to announce that Jaredd Flynn has been elected as Managing Partner of the firm, as well as Chair of the firm’s Executive Committee. Jaredd handles a range of legal matters for businesses and individuals with particular experience in contract, intellectual property, sports and entertainment, employment, real estate, and zoning matters.

Jaredd has been a principal of the firm since 2010.

LAW

Thrasher Dinsmore and Dolan LAW FINANCIAL SERVICES

Ancora We are happy to announce that Matt Scullen, CFA has been promoted to a Vice President and Portfolio Manager for the firm’s Micro Cap strategy team and Family Wealth client portfolios.

Matt previously served as an equity analyst on the same strategy team and joined Ancora in 2012. Matt holds the Chartered Financial Analyst® designation and has served in a number of different roles with the CFA Society Cleveland. He earned a Bachelor of Arts degree in Economics from The Ohio State University.

Roetzel & Andress Roetzel & Andress welcomes shareholder Peter LoPalo to its Medical Defense Group in Cleveland.

LoPalo focuses his practice on the defense of medical malpractice lawsuits. He represents medical care providers and medical facilities, including physicians and surgeons, nurses, clinics and hospitals. LoPalo also has extensive experience in transportation litigation and liability defense. LoPalo earned his J.D. from Hofstra University and his B.A. from Quinnipiac College.

Thrasher, Dinsmore & Dolan is pleased to announce that Bridey Matheney and Tim Collins have been elected to the Executive Committee Matheney of the firm.

Bridey advises clients on a wide variety of civil issues, municipal and public law, employment law, administrative law, zoning, real estate, and corporate law.

Tim has been actively engaged in litigation practice for more than 30 years and enjoys blending his legal skills Collins with business issues to achieve solutions for clients, or for courts requiring a receiver or a liquidating trustee.

S H A R E Y O U R C O M PA N Y ’ S J O U R N E Y FINANCIAL SERVICES

The Riverside Company The Riverside Company, a global private investor focused on the smaller end of the middle market, is pleased to announce the promotion of Jason Fulton to Partner at the Riverside Capital Appreciation Fund (RCAF). Fulton, who has worked for Riverside in the U.S. and Australia, was previously a Principal at RCAF. Fulton has been an integral part of the leadership team on the firm’s recent investments in: Abracon, Clinical Education Alliance, HMI Glass, iCEV, and Red Nucleus.

Feature your latest milestones, launches, partnerships, awards and more in Crain’s

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THE WEEK THINKING BIG: Real estate developer Chad Kertesz revealed a proposal to remake the former DoubleTree Hotel in Beachwood as a $125 million mixed-use project with residential, retail and office uses. The plan, which MyPlace Group of Cleveland has placed on the agenda for Beachwood City Council’s next meeting, on Monday, March 21, calls for demolishing the old hotel’s current lobby, restaurant and banquet space. That would create a site for two new structures, one a four-story building with apartments above retail space. The other would be a three-story building with two floors of offices above retail space. The hotel’s existing two seven-story wings and a four-story wing would be converted to apartments.

All told, the defunct hotel site would yield 332 apartments. The plan calls for about 36,000 square feet of selling space and about 27,000 square feet of office space.

THE SEARCH HAS BEGUN: Lubrizol Corp. is back in the market for a CEO. The Wickliffe-based specialty chemicals company has named Mary Rhinehart as president and CEO on an interim basis. Rhinehart also chairs Lubrizol’s board. She succeeds Chris Brown, who became CEO in August 2021 to, as Lubrizol put it in a statement, “help the company with important work around safety and operational excellence.” At the time of Brown’s appointment, Lubrizol did not give a reason that he replaced then-CEO Eric Schnur. However, the company was contending with the fallout from two chemical plant fires: the first in September 2019, in Rouen, France, and another on June 14, 2021, at the Lubrizol-owned Chemtool plant in Rockton, Illinois. A Lubrizol spokesman on Monday, March 14, confirmed that Brown is no longer with the company in any capacity. Lubrizol, which is owned by holding company Berkshire Hathaway, said Rhinehart will lead the search and selection process for a new CEO. NOTHING VENTURED ...: JumpStart Inc., the economic development nonprofit, raised $70 million to invest in new businesses, doubling the amount it has under management.

To emphasize its commitment to nurturing entrepreneurs, the organization created a division, JumpStart Ventures, with its own dedicated staff and website, to find investment opportunities, primarily in Northeast Ohio. Ray Leach, JumpStart’s CEO, describes the organization’s plan as “an evolution of JumpStart’s capital strategy.” Leach sees the venture capital effort as one way to help Northeast Ohio catch up to the rest of the state in investments into young businesses. Leach pointed to statistics showing that while $480 million in venture capital was invested in Greater Cleveland in 2021, that number pales with the amount invested in the Cincinnati area, about $1 billion, and the Columbus area, about $5.4 billion.

LET THE BIDDING BEGIN: A pair of Beachwood office buildings will be auctioned off next month, after a year in a lender’s hands. The Commerce Park 4 and 5 buildings popped up last week on the Ten-X auction website, where they will be offered for sale in late April. The bidding will start at $2 million, with an unpublished reserve — a higher minimum price that the seller is willing to accept. An affiliate of Flor-

ida-based Rialto Capital took possession of the property in early 2021 to resolve a messy foreclosure lawsuit.

That litigation stemmed from a $15 million mortgage that was bundled with other commercial real estate debt and used to back bonds sold to investors. Rialto, a special servicer that deals with troubled debt and distressed assets, opted last year to sit on the buildings and to pursue new leases in a quest to boost the property’s value. But the company recently changed tacks. The ebbs and flows of the pandemic hampered marketing efforts and made it tough to land new office deals, said Cyndie O’Bryon, a first vice president at the Colliers International brokerage in Cleveland.

ON TARGET: TransDigm Group Inc. is growing through an approximately $360 million acquisition. The Cleveland-based aircraft component maker entered into a definitive agreement to acquire DART Aerospace of Montreal, Quebec. DART, a portfolio company of Greenbriar Equity Group L.P. and First Aviation Services Inc., is a provider of helicopter mission equipment products. The company primarily serves civilian aircraft. DART is expected to generate about $100 million in pro forma revenues for calendar year 2022.

About 95% of its revenues are from proprietary products. Eighty percent are from the aftermarket.

END OF THE LINE: Akron’s Energy Harbor announced it will exit the fossil-fueled power-generation business by the end of 2023, which will entail either shutting down or selling its W.H. Sammis Power Station in Stratton, along the Ohio River in Jefferson County. The company, created in 2020 via the bankruptcy of FirstEnergy Corp.’s former power-generation subsidiary, FirstEnergy Solutions, owns the Davis-Besse and Perry nuclear power plants. The coal and nuclear plants had all been the intended beneficiaries of Ohio’s scandal-ridden House Bill 6. The 2019 law would have provided them with more than $1 billion in subsidies paid by Ohio ratepayers. But that law was passed with more than $60 million in bribes paid to public officials, led by former Ohio House Speaker Larry Householder, federal prosecutors have alleged. Subsidies for the nuclear plants were taken away by state lawmakers in early 2021 but were left in place for the fossil-fuel plants.

CAMPAIGN STRATEGY: The Rock & Roll Hall of Fame said it added Kaye Ridolfi as vice president of development, where she “will play a pivotal role in leading the museum’s next phase of philanthropic growth.” Since 2011, Ridolfi has been senior vice president of advancement for the Cleveland Foundation, where she led fundraising activities, charitable gift planning, donor relations and donor communications. Before the Cleveland Foundation, she spent two decades as a fundraiser in the academic sector, at Case Western Reserve University, Ohio State University and Ohio Wesleyan University. Ridolfi takes on a role at the Rock Hall that was last filled by Dionne Broadus, who now is the national vice president of social impact and mission advancement for the American Heart Association. The Rock Hall is engaged in a capital campaign for a $100 million expansion project. A spokeswoman said the campaign to date has raised $93 million.

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