Crain's Cleveland Business

VOL. 38, NO. 26

JUNE 26 - JULY 2, 2017

Source Lunch

Akron Hudson business park suddenly is booming.

Page 28

REAL ESTATE

Benesch ups stay at Public Square

What a difference a year makes Cavs’ payroll: By the numbers In three seasons as the general manager, David Griffin presided over a team that twice had the league’s largest payroll.

Season

Salaries

2014-15 $82 million

sbullard@crain.com @CrainRltywriter

SEE BENESCH, PAGE 27

Largest conference centers in NEO Page 26

SPORTS BUSINESS

By STAN BULLARD

When the proposed 45-story nuCLEus tower begins rising skyward remains unknown, but move-in day for major tenant Benesch, Friedlander Coplan & Aronoff has been pushed back to 2021 or even 2022.

The major downtown Cleveland law firm recently renewed its lease with its current landlord at 200 Public Square until July 2022, although it secured the ability to leave the building as much as a year earlier, July 2021, according to a lease recorded in Cuyahoga County land records.

John Banks, chief operating officer/chief financial officer of Benesch, said, “We remain fully committed to the (nuCLEus) project. However there’s been some delay for it.”

Banks said the early out in 2021 reflects that continued support.

“We think that’s in line with what it will take to produce the building,” Banks said.

The firm’s prior lease expires in 2019.

Benesch will occupy at least half the 200,000 square feet of office space that real estate developer Stark Enterprises of Cleveland has included in plans for the skyscraper, which also includes apartments, condominiums, first-floor retail space and massive parking garages.

Ezra Stark, chief operating officer of the family-owned real estate development company, said, “It’s a non-story” when asked about Benesch renewing its lease at the former BP Tower.

“They’re just creating a buffer for themselves,” Stark said. “For us, nothing has changed. We’re shovel-ready (at nuCLEus) when we get our public financing approved.”

The List

CLEVELAND BUSINESS

David Krueger, Cannabis Arbitration Panel co-founder Page 31

Luxury tax

Total

$7 million

$89 million

2015-16 $107 million $54 million

$161 million

2016-17 $127 million $25 million

$152 million*

*-Projected; Sources: Spotrac, ESPN, Crain’s research

It could get more costly The 2017-18 Cavs have $125.2 million in guarantees for eight players. Six are slated to make more than $10 million: LeBron James: $33.29M Kevin Love: $22.64M Kyrie Irving: $18.87M

Tristan Thompson: $16.4M J.R. Smith: $13.76M Iman Shumpert: $10.34M

A $140 million payroll this season could cost the Cavs another $70 million in luxury taxes.

Cavs head coach Tyronn Lue and former general manager David Griffin talk to the media last September. (Ken Blaze for Crain’s)

David Griffin’s departure results in rare backlash aimed at Cavs owner Dan Gilbert

By KEVIN KLEPS kkleps@crain.com @KevinKleps

The Cleveland Cavaliers are entering the final season of LeBron James’ contract with front-office drama normally reserved for the NBA’s most down-trodden organizations.

General manager David Griffin — the runner-up as the 2015 NBA Executive of the Year — was shown the

door on Monday, June 19, 11 days before his contract was set to expire.

Trent Redden, the Cavs’ well-regarded senior vice president of basketball operations, also left the organization as it reportedly was deep in trade talks involving the likes of Paul George and Jimmy Butler.

The exits were “truly a mutual decision,” a team source told Crain’s, but the moves resulted in rare fan backlash aimed at Cavs owner Dan Gilbert.

Nationally, the reactions were just as

harsh, as an ESPN story said Gilbert’s management style “vacillated between overbearing and absent.”

The departures of Griffin and Redden occurred a week after the Cavs were eliminated by the Golden State Warriors in Game 5 of the NBA Finals — and, ironically, on the anniversary of the organization’s first championship. Four months earlier, Cleveland. com reported that two vice chairmen with close ties to Gilbert — Jeff Cohen and Nathan Forbes, who have

small stakes in the franchise — had lost influence with the owner.

Cohen is no longer involved with the organization, but Forbes, who resurfaced at Quicken Loans Arena during the postseason, is still engaged with the franchise, a Cavs source told Crain’s.

Does such drama — while concerning or, depending on your point of view, entertaining — affect an organization’s bottom line?

SEE CAVS, PAGE 27

DEVELOPMENT

Food manufacturing is inviting field here

By JAY MILLER jmiller@crain.com @millerjh

When Dallas-based Daisy Brand LLC broke ground on its $116 million sour cream production operation in Wayne County in 2014, its first operation east of the Mississippi River, company president Vince Taylor said Wooster was chosen because of its access to a supply of

Entire contents © 2017 by Crain Communications Inc.

cream — Ohio has 2,560 dairy farms — abundant clean water and its strategic location, with about half the U.S. population living within reach of a refrigerated truck based in Northern Ohio.

A second investment of $45 million will add cottage cheese to Daisy’s Ohio product line and take employment up to 170 by 2020.

That Daisy and 38 other food-related companies have chosen to locate or expand in Northeast Ohio in the last five

years has helped boost employment in the region’s food and beverage manufacturing sector to nearly 22,000 in the last decade, a 21% increase. Team Northeast Ohio, the regional business attraction and development nonprofit, suggests that number will grow another 14%, to about 25,000 employees, in the next decade.

Team NEO reported on this growth of food and beverage manufacturing in its quarterly economic review of the

18 counties in Northeast Ohio. The report also noted that, despite the growth in food manufacturing, the manufacturing sector lost about 5,000 jobs from May 2016 to May 2017.

Total employment, however, has grown, up 11,800 in the last 12 months to 1.9 million for the 18-county region that stretches from Erie County on the west to Ashtabula County on the east, including a southern tier of counties SEE TEAM NEO, PAGE 27

Prep and parochial schools << A

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CONTENT

SPONSORED BY

NEWS AND TRENDS FROM NORTHEAST OHIO’S TECHNOLOGY SECTOR

TECH MATTERS CYBERSECURITY a top priority among companies, organizations

C

yberattacks occur all the time, in all kinds of ways, all over the world — from the WannaCry ransomware attack that spread across nonupdated networks and systems across the globe to a seemingly innocuous email from a company’s IT department disguised as a phishing scam.

Cyberattacks are becoming more sophisticated, leaving business leaders to wonder how to proactively manage new threats and keep their people, data and assets secure.

Phishing and spear phishing are some of the main vectors of cyberattacks. In phishing schemes, the perpetrator sends a fraudulent email requesting the recipient provide personal information. Some of the most coveted data are credit card numbers, higher education student information and patient medical records.

“That information presents some of the highest rewards for hackers,” said Robert Eckman, chief information security officer for MCPc, a Cleveland-based consultancy and technology integrator.

Spear phishing targets a specific individual, and the email address comes from someone he or she knows, such as a boss.

“My CFO got an email from my address asking for a wire transfer,” said Gabriel Torok, CEO of Mayfield Village-based PreEmptive Solutions, a provider of application security tools. Fortunately, Torok’s CFO was able to see through the ploy because Torok is the only person in that firm authorized to send wire transfers.

“Small- to mid-size firms in particular should only have one person designated to make wire transfers, and they should communicate that clearly to employees,” he said.

Hackers can scan an employee’s social

CALENDAR OF

EVENTS

networks to determine who their connections are and target attacks accordingly, said Torok, who also is chairman of the board of advisers for OHTec, a regional tech-focused economic development group.

Small- and medium-sized businesses are as vulnerable to attacks as their larger organizational counterparts.

“An attacker can spend weeks banging their head on the door to get into the Fortune 50 network, or they can attack one of their small company suppliers, gain a foothold in that network and attack the larger organization through the channels in place,” said Michael Woolard, an IT security architect at OEC. “You

COSTLY CONSEQUENCES According to NetDiligence’s 2016 Cyber Claims Study, which analyzes data reported from insurers on losses sustained from data breaches and other cyberevents, 77% of the claims were unintentional and were attributable to employees. The majority of companies that submitted claims for the study reported revenues of less than $2 billion.

Among the report’s other key findings: n

A breach with few records can be costly, with one firm reporting a cost of between $1.5 million and $2 million with only one breached record.

n

The average breach cost was $665,000.

n

The highest average payout in the financial services sector was $1.3 million, while the average payout in the health care sector was $726,000.

may not be attacked for your information, but you may be attacked for your relationships with larger organizations.”

To minimize risk and exposure, industry experts recommend a continual assessment of all connected systems. Local IT experts say companies and industries should have in place well-funded and compliant security programs. Make sure operating systems and software programs are patched, or fixed, to address bugs. Always keep employees informed and aware of emerging threats.

“That’s the takeaway message,” Torok said.

“Minimize risk, patch, educate employees, and always know there are new threats to be aware of.”

More regional cybersecurity collaborations are underway. OHTec dedicated one full day to addressing cyber and privacy risks during its flagship Tech Week in late April.

Meanwhile, the Northeast Ohio CyberConsortium formed in 2015 and is now made up of more than 30 participating organizations, including Fortune 1000 and large mid-market companies, health care systems, academic institutions, law enforcement agencies and civic/government partners.

Consortium members meet twice a month to discuss active threats and to share data in real time so that organizations can better protect themselves, along with monthly best-practice meetings, said Jeff Brancato, the consortium’s director. The consortium also is working to create a larger and stronger talent pool in Northeast Ohio. Those efforts range from coordinating professional certification training to summer cybersecurity threat analysis internship programs.

“Becoming a leader in cybersecurity will help make our organizations and the region more successful,” Brancato said.

Safe Keeping Cybersecurity programs extend beyond traditional networks, servers and software and expand to anywhere that an attacker can identify exposures, says David Kennedy, founder of TrustedSec, a Strongsville-based information security consultancy. “You now see the massive swing to the Internet of Things,” or interconnected devices that include anything from HVAC systems to the lights in the office, he said. “These are all devices that have special components that communicate across the network and the Internet. Many times, they have little to no security and have a number of security exposures.” He offers the following considerations for strengthening a firm’s resiliency.

1

Don’t let your users be used.

Most organizations and employees don’t understand how attacks happen. One compromised machine can be the gateway to a larger-scale breach. Interdepartmental computers that don’t need to “talk” to each other shouldn’t be able to (otherwise known as “network segregation.”)

2

Be safe, so you won’t be sorry.

Work with threat intelligence experts — either externally or internally — who understand tactics, targets and procedures, and can help build better defensive strategies.

3

Protect data in the cloud.

Don’t assume the cloud infrastructure is secure. It’s the company’s responsibility — not the cloud provider’s — to keep its information stored in the cloud safe. Have a good risk management strategy in place to protect that data.

4

Reinforce the perimeter.

Websites tend to be most susceptible to attacks. Minimize perimeter ports and protocols. Ensure the code you produce either through third parties or an internal development team passes rigorous security controls. Identifying flaws can save a costly breach for any organization.

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JULY 12

JULY 20

Entrepreneurial Readiness Training: Noon to 1:15 p.m., Women’s Business Center Cleveland/Akron, 2800 Euclid Ave., Cleveland. Individuals who are interested in starting their own business will learn about what it takes to move their idea or concept forward. Info: wbcohio.org/events/ cleveland-and-northern-ohio/772/

How To Start Your Business: 10 a.m. to noon, 1350 Euclid Ave., Cleveland. This workshop provides an overview of Cleveland SCORE and its mentoring programs.

Discussions will cover startup considerations and basics; business and financial plans; and business development and assistance resources. Info: sba.gov/offices/district/ oh/cleveland/?colorboxEventID=1559052

Small Business Innovation Research Road Tour: 7:30 a.m. to 4:30 p.m., Ohio Aerospace Institute, 22800 Cedar Point Road, Brook Park. Federal and state program managers with access to $2.5 billion in early stage funding will be at this event. Those involved with advanced technology are invited to attend.

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TO READ PREVIOUS TECH MATTERS STORIES, GO TO crainscleveland.com/techmatters.

A PRODUCT OF

CRAIN CONTENT STUDIO C l eve l a n d

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PA G E 3

APM buys Barrington Place in Westlake

By STAN BULLARD sbullard@crain.com @CrainRltywriter

Barrington Place, a 164-unit apartment complex in Westlake, has a new owner — an affiliate of APM Management of Pepper Pike — after changing hands in a multimillion-dollar transaction.

Cuyahoga County land records do not disclose a sale price for the property that transferred June 9. However, a $14 million mortgage from First Commonwealth Bank of Indiana, Pa., was recorded at the same time, which indicates a big run-up in price as newer apartments have become prized commodities.

The county values the multibuilding complex at $9.2 million for property tax purposes.

The last recorded sale price was to an even earlier owner, Barrington Garden Associates, an affiliate of Norfolk, Va.,-based Harbor Group International, which continues to own

Barrington Place, which sold recently, helped set the tone for a raft of new, upscale apartment properties constructed in the late 1980s and early 1990s in Northeast Ohio. (Stan Bullard)

the 200 Public Square skyscraper downtown. The Harbor Group affiliate paid $7.7 million for the same

property in 2009.

APM is a low-profile but huge multifamily manager based in

Northeast Ohio. It has a portfolio of more than 6,000 suites in Ohio, Michigan, Pennsylvania and South Carolina. APM’s CEO, Paul Kiebler, signed the mortgage for Barrington’s new proprietor, Barrington Owner LLC, according to county land records.

The seller was Barrington Real Estate LLC, led by Solon-based real estate investor Reuven Dessler, a co-founder of Solon-based closeout retailer Mazel Co. The property was previously managed by J-Dek Limited, a Solon nursing home and apartment company that is a partner in real estate developer Stark Enterprises nuCLEus project in downtown Cleveland near Quicken Loans Arena.

The 28600 Detroit Road apartment complex was built in the 1980s, when several high-amenity apartment complexes were built in Westlake, Strongsville and North Royalton, ending a long drought in new apartment construction in the region for a short time. That period ushered high-

er rents and greater amenities into the region, but it has been eclipsed by the current apartment-building market.

Barrington includes a freestanding fitness center and other upscale amenities.

Ralph McGreevy, vice president of the Northeast Ohio Apartment Association, said APM is a member of the trade group that has “bought and sold a good number of communities over the years, and has good operational people. I have never met Paul Kiebler, but I have admiration for several of his key people who are active in the association.”

McGreevy noted that Westlake remains a competitive apartment market with multiple properties and ownership groups vying for upscale tenants.

Three calls and an email to APM and Kiebler were not returned by 1 p.m. on Friday, June 23.

Calls to Dessler and Peter Goldman, J-Dek chief operating officer, also were not returned.

Financial firm debuts women-focused division

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

Cleveland’s Fairport Asset Management has launched a new division focusing specifically on women in a move that should not only fill a void in the market of financial planning, but further the development of niche services that may chart the future for the industry.

Fairport’s Luma Wealth Advisors will be led by firm managing partner

Heather Ettinger, who has long advocated for women in the business, both in terms of advancing their careers in the profession and targeting services for female Ettinger clients.

In explaining why such a women-focused enterprise is needed, Ettinger recalled a letter a financial planner mailed to clients that carried

a noticeably condescending tone.

The letter, advertising a financial wellness seminar, was outwardly addressed to a household, but spoke directly to the husband. Near the end, it encouraged him to bring his wife, emphasizing the seminar would be basic and in simple language “she” could understand.

It’s something that still makes Ettinger’s blood boil.

“If I read this, my husband wouldn’t hear the end of it for the next 20 minutes,” she said. “They send this stuff out with the attitude

that they have to dumb things down for her. I don’t think that’s how women want to be treated.”

The less-than-subtle sexism of that letter underscores an issue many experts see persisting in the world of financial planning: the notion that managing money is something women can’t, or don’t want to, understand.

Not surprisingly, behavior like that is a main reason why women are distrustful of their financial advisers, or otherwise feel like they aren’t meeting their needs. Numerous

studies confirm this. According to a more recent one, a March 2016 survey of U.S. women sponsored by Philadelphia robo-adviser WorthFM, 76% of women did not believe that Wall Street really cares about consumers.

“This is our way of saying that this is a segment with some unique needs that need to be differentiated in the marketplace,” Ettinger said. “It’s really codifying what we’ve already been doing. And we think what we have is very, very unique.”

SEE FAIRPORT, PAGE 4

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Tiny Glenwillow in midst of large industrial boom

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CLEVELAND

Glenwillow Village may have less than 1,000 residents and measure 3 square miles in size, but itâ&#x20AC;&#x2122;s poised for an outsized role as Northeast Ohio industrial construction surges anew.

Glenwillow Mayor Mark Cegelka proudly points to three new industrial buildings rising or proposed for the village, the most at any time in half a decade.

A total of $26 million in construction and another $18.6 million in investments in equipment and furnishings will go in under three projects that have received property tax abatement packages or are pending, according to Peggy Spraggins, economic development director for Glenwillow.

The trio includes the following: Mantua Manufacturing Co., a bed frame maker that recently added a website for its projects called bedframes.com, plans to construct a nearly $20 million, 110,000-squarefoot building on Diamond Parkway.

The proposed building would house under a single roof the companyâ&#x20AC;&#x2122;s headquarters on Krick Road and its Walton Hills factory and warehouse.

Another $20 million is also scheduled to go in on Diamond Parkway for a 130,000-square-foot headquarters and manufacturing building for GED Integrated Solutions that started construction on June 9. The company, which manufactures equipment for suppliers of window and door frames, will relocate from a slightly smaller location in Twinsburg.

Site preparation is underway for the third building program set for

TAMPA

Indeed, Fairport, under Ettingerâ&#x20AC;&#x2122;s leadership has been focusing on women for a long time. When she and co-managing partner Kenneth Coleman took the reins of the business in 2010, they began tackling services through niche groups, which furthered those efforts.

Some of their defined practice groups include those for executives and family-owned businesses.

But the inception of Luma â&#x20AC;&#x201D; the name references the shining of light on financial planning for women â&#x20AC;&#x201D; marks the formal branding of those services for the female demographic.

The division will focus on five specific segments for women, such as those widowed or divorced or those supporting their family as the primary breadwinner.

There donâ&#x20AC;&#x2122;t seem to be many financial planners taking a similar women-focused approach in the market, let alone rolling one out with national reach as intended for Fairportâ&#x20AC;&#x2122;s Luma.

Some of the largest players, like Morgan Stanley and Goldman Sachs, donâ&#x20AC;&#x2122;t have womenâ&#x20AC;&#x2122;s financial planning divisions at all. Ellevest markets its services toward women, but thatâ&#x20AC;&#x2122;s a robo-adviser rather than a traditional financial planner.

A 2011 report for the Family Wealth Advisors Council that Ettinger co-authored found that female workers marked precisely half of all employees in the country, while 40% of

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Glenwillow, a $14 million expansion

by Interdesign Inc. that will add 200,000 square feet to the Solon-based housewares makerâ&#x20AC;&#x2122;s warehouse at 30320 Emerald Valley Parkway. The project doubles the size of the property that InterDesign had constructed in 2007.

All this action follows a drought that accompanied the Great Recession and the following six years it has taken for industrial vacancy to fall, and the need for expansion reached the point that manufacturers and wholesalers are willing to pay current construction costs.

Roots of the current expansion phase were set years ago as Geis Cos. and Weston developed Diamond Business Park in Glenwillow and Indianapolis-based Duke Realty Corp. constructed Emerald Valley Business Park. When Duke left Northeast Ohio, it sold its remaining vacant Glenwillow land in 2007 to affiliates of Premier Development Co. Bill Weaver, GEDâ&#x20AC;&#x2122;s president and CEO, said the company began thinking about moving about two years ago, as it was looking toward growth. The new building will allocate more space to manufacturing than offices, he said.

Business conditions also were right.

American families had mothers as their primary breadwinners.

So thereâ&#x20AC;&#x2122;s clearly a need. The historically male-dominated industry has just been slow to give women what they want.

And as Luma hits the market, others are already lauding its approach.

Charles Schwab, which is a custodian to Fairport, an independent RIA, is one of those. â&#x20AC;&#x153;Focusing on women makes a lot of business sense, and we applaud Fairport for being at the forefront with Luma Wealth,â&#x20AC;? said Jessica Heffron, Schwab adviser services vice president. â&#x20AC;&#x153;Fairportâ&#x20AC;&#x2122;s long history of helping women build financial literacy and wealth demonstrates that they have the DNA to make them credible in this space. We see many statistics that underscore how women will control a greater amount of wealth in the near future, either through their own earning power or as a result of a transition of wealth.â&#x20AC;? â&#x20AC;&#x153;Unfortunately,â&#x20AC;? she added, â&#x20AC;&#x153;there still remains a lot of unconscious bias and a legacy of stereotypes when it comes to women and investing.â&#x20AC;?

The letter Ettinger read is evidence of that. â&#x20AC;&#x153;When I see things like that letter, it drives me crazy because women are more financially literate than the industry is giving them credit for,â&#x20AC;? Ettinger said.

Fairport has $1.5 billion in assets under management, according to company filings. It has 27 employees with seven male and female advisers each.

â&#x20AC;&#x153;Our manufacturing is busting at the seams right now,â&#x20AC;? Weaver said in an interview with Crainâ&#x20AC;&#x2122;s Cleveland Business.

All told, the companies will take to Glenwillow a total of 230 jobs new to the community and bring a total additional payroll of about $13.5 million to the village.

However, that comes at the cost of Twinsburg, which GED will leave, and Walton Hills, the current home of Mantua.

Cegelka said in each case where a company seeks incentives to move, it does so after options to remain in its existing city cannot accommodate its growth needs or time schedule.

Jonathan Berns, a real estate developer participating in GED Cashew, a venture formed to build and own GEDâ&#x20AC;&#x2122;s new facility, said the company also entertained new sites in Twinsburg and Solon before settling on Glenwillow.

Berns said the move is a textbook case for how regional considerations are growing between cities, even as they compete for projects with incentives. â&#x20AC;&#x153;It is necessary to recognize that the municipalities that were presented this opportunity, specifically the cities of Solon and Twinsburg, while not selected to be the home of GED, did not act in a mean-spirited or hostile manner to prevent GED from relocating to Glenwillow,â&#x20AC;? Berns wrote in an email to the communities that he forwarded to Crainâ&#x20AC;&#x2122;s. â&#x20AC;&#x153;This was a case of all parties working for a common good of Northeast Ohio and recognizing that retaining businesses in our region is more important than localized competitive bravado.â&#x20AC;?

Reporter Rachel Abbey McCafferty contributed to this story.

The niche approach is apparently resonating in the marketplace. While executives declined to disclose annual revenues, Coleman said 75% of the firmâ&#x20AC;&#x2122;s growth in the last three years has been in the primary niche areas for family business owners, executive and women. Revenues have grown 50% since 2010 when that approach was promoted by Coleman and Ettinger.

So the business case is obvious.

And the need is apparent.

But beyond that, those numbers, if extrapolated across the financial planning landscape, indicate the future of the financial planning business likely is in the niche focus and delivery of services. â&#x20AC;&#x153;I really think that is the future,â&#x20AC;? Ettinger said, adding that she expects Luma to grow at least 10% in its first year.

While the firm is rolling out its womenâ&#x20AC;&#x2122;s-focused division, part of the benefit in branding that in its own group is implicitly conveying to men that theyâ&#x20AC;&#x2122;re not being pushed aside. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re not treating women like second-class citizens,â&#x20AC;? Ettinger said. â&#x20AC;&#x153;And weâ&#x20AC;&#x2122;re not going to do that with men, either.â&#x20AC;?

Correction J A story in the June 19 edition of Crainâ&#x20AC;&#x2122;s inaccurately described an arbitration case involving Signet Jewelers that is set to go to trial in March 2018. That case will only address claims of gender discrimination.

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More than two decades after Dr. Lee Ponsky founded Medwish International in his parentsâ&#x20AC;&#x2122; garage, the nonprofit that donates discarded medical supplies to humanitarian efforts in developing countries has grown dramatically and now has its very own building for the first time.

For nearly 15 years, the Cleveland Clinic has donated space to Medwish for its offices, inventory and operations. But as that location came under new ownership, it was time to find a new space. â&#x20AC;&#x153;We want to make sure that we have the ability to direct our future and control our own space,â&#x20AC;? said Ponsky, now president of the Medwish board of directors. â&#x20AC;&#x153;And we needed to grow and be in a neighborhood that our staff and our volunteers feel safe and excited to be in.â&#x20AC;?

So this month, Medwish began the migration to a building it purchased at the corner of East 31st Street and Payne Avenue. Itâ&#x20AC;&#x2122;s about the same size as its current space, but it offers more loading docks that could help move donations faster, said Carolina Masri, Medwish executive director.

She also hopes the location will help attract more volunteers, which the organization relies on heavily to sort and pack product donated from 116 hospitals and health care providers in Northeast Ohio. Plus, the facility is near hospitals for easy donation delivery.

There are â&#x20AC;&#x153;so many things we can do just from here, helping people that ultimately we might not have the opportunity to meet in person, but really changing lives all over the

world, so thatâ&#x20AC;&#x2122;s huge,â&#x20AC;? Masri said.

More than 3,000 volunteers support Medwish, which last year donated more than 304,000 pounds of medical supplies and equipment to 41 developing countries.

To move the thousands of supplies Medwish collects to a new facility, the organization enlisted the help of a nonprofit thatâ&#x20AC;&#x2122;s new to Cleveland: Team Rubicon, a national nonprofit that connects the skills and experiences of military veterans with first responders to form emergency response teams.

Harvey Graham-Green has been charged with establishing a Cleveland chapter, which in the past six months has grown to a few dozen members.

When not training or working with first responders, the organization works to pair veterans with short, high-impact work. So far, Team Rubicon has helped organize a team to move a large chunk of inventory, and has plans to assist with a couple more projects In return, Medwish is working to be able to host Team Rubicon USAâ&#x20AC;&#x2122;s Mobile Training Center, which travels around the country training team members and will allow Graham-Green to get roughly 30 members trained He said Medwishâ&#x20AC;&#x2122;s willingness to donate space speaks to the collaboration and generosity of Northeast Ohioâ&#x20AC;&#x2122;s nonprofit community. â&#x20AC;&#x153;Even being able to pick up a phone and ask if anyoneâ&#x20AC;&#x2122;s got a facility for 30 people that I can use, and people even entertaining that fact is very amazing,â&#x20AC;? Graham-Green said.

The donations to Medwish are supplies and equipment providers can no longer use, but are still in safe, working condition and meet World Health Organization standards. For instance, a hospital may switch vendors, or a manufacturer may look to

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replace inventory because theyâ&#x20AC;&#x2122;ve updated their logo.

Or, especially given the high level hospitals in the region, providers are upgrading to the latest, greatest model of equipment, and consumers often expect that, Pinsky said. If the products arenâ&#x20AC;&#x2122;t broken or expired, Medwish can help connect them to recipients that have been vetted to ensure theyâ&#x20AC;&#x2122;re matching doctors with the right equipment and that organizations arenâ&#x20AC;&#x2122;t reselling the donations, Masri said.

In addition to shipments, Medwish allows doctors who are traveling on medical missions to shop for supplies and equipment they may need abroad.

In the past decade, Medwish has recovered more than 4.5 million pounds of medical surplus and delivered it to people in need worldwide. Though itâ&#x20AC;&#x2122;s difficult to account for how many people are helped, Medwish estimates more than 1 million people have benefited from their efforts.

But sometimes it can be difficult to show that connection to people locally. Ponsky said heâ&#x20AC;&#x2122;d like to see the organization do a better job telling the stories of the patients and families with real needs.

At the end of the summer, Medwish is hosting its annual Band Aid Bash in its new headquarters to celebrate the facility and raise awareness for the work.

Down the road, Masri hopes to engage people through a speaker series in the new facility, with topics such as cultural diversity, protecting the environment and saving lives. â&#x20AC;&#x153;And ultimately, they are still helping save the environment because instead of just throwing it away theyâ&#x20AC;&#x2122;re finding ways to help others all over the world,â&#x20AC;? Masri said. â&#x20AC;&#x153;If Cleveland cannot do that, as a mecca of medicine, who then?â&#x20AC;?

CRAIN’S CLEVELAND BUSINESS

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PA G E 7

NEO has played critical role in success of Boston-based medical device maker

By DAN SHINGLER dshingler@crain.com @DanShingler

When Boston-based medical device company Myomo rang the bell of the New York Stock Exchange on June 16, it was doing more than heralding the company’s first-of-its-kind, $5 million initial public offering of stock.

It was also a sort of ringing endorsement of Northeast Ohio’s efforts to advance its own medical-manufacturing economy.

Myomo CEO Paul Gudonis said the Northeast Ohio region has been important to his company’s success to date, because it’s where Myomo has found partners for its research, facilities for its testing — and even a highly specialized manufacturer to make its high-tech medical devices.

“It’s a result of the medical device ecosystem you have there,” Gudonis said in a recent interview. “When you think of medical device clusters around the U.S., you think of Minneapolis, of course, but then you think of Cleveland.”

He added, “It’s a real strength of the area.”

Myomo was born out of sensor technology from the Massachusetts Institute of Technology. It produces a sort of motorized exoskeleton that helps stroke victims regain the use of their arms and hands. The non-invasive device reads a signal that is in the user’s existing nerve — one too weak after a stroke to move — which Myomo’s sensors can still detect. It then uses those signals to control motors that move the device, and along with it the user’s own arm, hand or even fingers.

“I can’t say enough good things

Myomo CEO Paul Gudonis, joined by employees and company backers, rings the bell at the New York Stock exchange following the company’s IPO on June 16. (Courtney Crow/NYSE)

about it. It’s a godsend for me with my arm,” said Vince Quercioli of Willoughby, who suffered a stroke four years ago and for more than six months now has been helping Myomo test and refine the product.

Quercioli said the device has helped him to regain independence after not being able to use his left arm until he started using the device.

Now, he looks forward to visits to Geauga Rehabilitation Engineering in Chardon, where he recently demonstrated his latest “new arm” — his fourth, with the latest controls and the ability to help him grip things.

So far, Myomo has sold about 600 of the devices, Gudonis said — all made, one at a time, by GRE at its small plant in Chardon that employs 16 people.

“Each patient has a customized brace. The fit is critical,” said Vince

Baroni, GRE’s director of clinical services, who’s been with the company since it was making much more simple orthotics at its founding in 1999 by orthotics engineer Jonathan Naft.

Today the company still makes other orthotics, but about a fourth of its business is now with Myomo, Baroni said, and the company sees producing Myomo’s future devices as a

major source of future growth.

In addition to GRE, Myomo has also worked on research with the Louis Stokes Cleveland VA Medical Center and Case Western Reserve University, worked with patients at the Cleveland Clinic and University Hospitals, and even with Akron investment banker Bill Manby, a senior vice president with New York-based TriPoint Global Equities, the lead underwriter on Myomo’s IPO. One of the company’s presentations to investors was held at the headquarters of BioEnterprise in Cleveland.

Myomo’s IPO was also the first in the U.S. to be done under the Securities and Exchange Commission’s new so-called A+ regulations, which have been described as a sort of equity-crowdfunding whereby small investors can purchase stock in an IPO, even if they only buy a single share.

The rule allows companies to work with investors who in the past would not be considered “accredited” by federal regulators and therefore could not participate in IPOs. “This should help to bring back the small-cap IPO. People are saying this could be really important,” Danby said of Myomo’s stock offering.

Manby said there were some Northeast Ohio investors involved in the IPO, but that he’s precluded from saying how many or how much they put up.

Gudonis said he was pleased with what he termed a successful IPO — the company hit its minimum of $5 million, and raised another $2.9 million in a private transaction with accredited investors.

The company plans to continue to manufacture its devices in Chardon, with sensors and some other parts made in Massachusetts, because it has faith in Naft and GRE's ability to fabricate medical devices, he said.

It will use proceeds from the offering to further refine is products.

“We’re going to continue our product development, to make products with more functionality and lighter weight in the future,” Gudonis said.

But, what he said is more important about the offering than probably anything else is how it demonstrates Northeast Ohio’s continuing transition, and success at moving from an old-tech manufacturing company to a high-tech economy. Manby said he’s also working to start a new venture capital fund to focus on investing in other local companies that are also part of that trend.

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PA G E 8

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CRAIN’S CLEVELAND BUSINESS

Opinion At the Table

Returning for another helping

Editorial

Culture counts At first glance, Fairlawn-based Signet Jewelers and the Council for Economic Opportunities in Greater Cleveland (CEOGC) have virtually nothing in common.

One is a big retailer with about 3,000 brick-and-mortar U.S. stores that is focused on contending with the economic crosscurrents of changing consumer behavior in the digital era. The other is a 53-year-old nonprofit that runs Head Start programs and provides other services to low-income families in Cuyahoga County.

Of late, though, they share this: internal turmoil and management tensions that make their already challenging business missions that much more difficult. Both offer cautionary lessons for companies and nonprofits here and elsewhere.

Signet has about 3,500 employees in Northeast Ohio, mostly in the Akron area, so its struggles produce economic anxieties in a lot of households and the region generally.

Its many problems were documented in a June 19 story by Crain’s Akron Business reporter Dan Shingler. Among them: some customers’ claims in May 2016 that the company’s Kay Jewelers stores swapped out diamonds on jewelry brought in for repair or cleaning, and, in February, a Washington Post story that said “hundreds of former employees” claimed the company’s CEO and other leaders “presided over a corporate culture that fostered rampant sexual harassment and discrimination.”

Signet has consistently denied the sexual harassment claims.

(It’s still involved, though, in an arbitration case that addresses claims of gender discrimination.) Last month, it settled a complaint by the U.S. Equal Employment Opportunity Commission over the pay and treatment of female employees. Signet also set up a special committee of its board to “focus on respect in the workplace,” and in April it brought in a former federal judge to conduct a “thorough review of the company’s policies and practices regarding equal opportunity and workplace expectations.”

Only belatedly, perhaps, is Signet coming to a key realization: culture matters. (Just ask the folks who work at Uber.) Signet in the first quarter reported a steep drop in earnings, as same-

store sales fell about 12%. That’s not primarily because of the discrimination allegations; business is hard for all traditional retailers these days. But it’s harder when there are, at the very least, perceptions by some of your employees that the workplace doesn’t offer a level playing field in which their talents can be deployed, and the attention of executives and board members is drawn to fixing cultural problems that shouldn’t have existed in the first place.

Over the long run, no company can thrive if its employees don’t believe their hard work can be rewarded.

At CEOGC, the tensions have come from a sour relationship between some board members and the nonprofit’s CEO, Jacklyn Chisholm. The board chair in February announced Chisholm had been fired in October 2016, though there were questions about the validity of the vote and process to take that action.

Chisholm remained in the job and still runs CEOGC today.

The CEOGC board has, essentially, split into two factions, with two lawsuits now dogging the organization — a wrongful termination suit by Chisholm alleging she was fired in retaliation for investigating financial irregularities and failure of board leaders to comply with the organization’s bylaws, and one by Chisholm-supporting board members seeking a judgment to void the dismissal and other actions by the anti-Chisholm faction.

In a June 12 story about the turmoil, one attorney specializing in nonprofit law told Crain’s that the case “shows the value of good documentation, having well-organized minutes, regularly updating your code of regulations and following your code of regulations.” Another expert noted that it underscores problems that can happen at nonprofits if board members “go with the flow” and fail to speak up about issues that trouble them.

The CEOGC’s complicated issues are in the hands of an arbitrator. However it shakes out, the organization must quickly resolve its toxic board/management culture (an entirely new board wouldn’t hurt) so the people who rely on CEOGC’s work are not harmed.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

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Timothy Magaw (tmagaw@crain.com)

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216-522-1383

As I was saying, leaving your job isn’t the same as retiring, right?

Maybe I should back up a bit. A few weeks ago, when I stepped down as restaurants and dining editor for The Plain Dealer, in my farewell column, I wrote that I wasn’t quite ready to shelve the keyboard and toss out my pen.

What I didn’t expect was to climb back into the saddle so quickly.

Here I am, all the same, a new contributor to Crain’s Cleveland Business. As a freelance writer, I’ll be adding my voice to these pages, and I’m aware that I’ll be addressing a big segment of Northeast Ohio’s most dynamic leaders.

When the editors at Crain’s first proposed regular coverage, I hesitated simply because I’ve never thought of myself as a “business Joe writer,” even though I’ve been covering food Crea and dining since 1975. (Yikes.)

Yet all along, I have been covering the endless business of eating. Restaurant openings and closings. The price of a “healthy” diet. Weather-induced crop price hikes, and the cyclical effect of beef prices. Food safety and inspections. The changing retail landscape. The economic impact of eateries on neighborhoods and whole communities.

Along with all that, I speak as a native Clevelander.

When I was a kid back in the 1950s, when Cleveland stood tall as one of the nation’s biggest cities, fine dining restaurants were a rarity here, chiefly an enclave of the well-heeled. Pizzerias, spaghetti joints, steakhouses, delis and chop suey palaces mostly served the area’s blue-collar crowd. As for the most moneyed citizens? They ate at the club or saved any “serious” dining for trips to culinary capitals.

What a difference a few decades make. Urban and suburban neighborhoods harbor a growing number of well-regarded, and occasionally acclaimed, eateries. Today, not only do local media honor the region’s finest, the national media have heaped on their affirmation.

Not long ago, Time magazine named Cleveland the seventh-best food city in America. Now the city routinely turns up on similar rankings: Thrillist, Forbes, Los Angeles Times, Eater, Travel + Leisure ...

Meanwhile, Clevelanders have scored at least four James Beard Awards, the nation’s foremost culinary honors. Iron Chef and TV co-host Michael Symon (Lola, Mabel’s BBQ, B Spot), author Michael Ruhlman, Jonathon Sawyer (Greenhouse Tavern and Trentina) and Sokolowski’s University Inn are honorees. Other area restaurateurs have been nominees.

At this point, if I have to persuade you that Northeast Ohio has emerged as one of the nation’s foremost food scenes, I’m afraid my breath will be wasted.

Still, it comes as a shock to NEO natives like me who never envisioned their hometown as a dining destination or foresaw the economic boost that brings.

The rise of Ohio City, the Warehouse District, East Fourth Street, Tremont, Gordon Square and other neighborhoods can be directly linked with startup businesses — many of them restaurants, artisan food purveyors, bakers and brewers — that found in our once-beleaguered districts an affordable opportunity to take a shot.

Sure, any keen-eyed observer will point out the failures and recognize the high-risk gamble that restaurateurs face. Yet a great many of those urban pioneers continue to survive, and thrive, in parts of our city once dismissed by many as wastelands.

Count me among those former skeptics. When I returned to Cleveland in 1998, I was floored when I learned that Tremont was even a thing.

SEE CREA, PAGE 9

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CRAIN’S CLEVELAND BUSINESS

CREA

CONTINUED FROM PAGE 8

I grew up working in restaurants and writing for my school newspapers. After graduating college in Vermont, I came home and worked in a couple more restaurants while freelancing for the old Plain Dealer Sunday Magazine.

Frankly, I didn’t see much future here. Abandoning my hometown, I spent many years working for newspapers in Florida and Southern California. During those years, I served roughly 18 years on several Beard Awards committees, eventually retiring as the foundation’s Awards Board chairman.

Along the way I earned a few honors — best of all, being blessed with the most wonderful woman I could ever hope to call my wife, and the best kid I could ever hope for.

And a hilarious, loving family and more than my share of good friends (most of whom tolerate me admirably).

Since 1998, I covered the restaurant, dining and food scene here in town for The Plain Dealer and its affiliate website. It was a job that I sincerely loved — until cancer snuck up on me and knocked me on my ass.

A year’s medical leave for a dizzying panoply of treatments gave me pause to rethink my life’s course and ease back a bit.

But I still have a lot to say about the restaurant business. Ever since I was a kid and throughout 35 years in the newsroom, I’ve loved what many of us will forever call “the hospitality industry.”

So, let me tell you what I hope you can expect of me.

I’ve always aimed to speak honestly about any restaurant’s successes and failures. I respect the workers, owners and artisans that make a place good, but I respect the customers more. Agree with me or not, my aim is to be evenhanded.

Though I’m always interested in new places opening and old (often, not so old) places closing, please don’t look to me to chronicle every transaction. Others in town do that quite well, and they have my sincere appreciation for their diligence and hustle.

Frankly, I’m done chasing that ambulance.

I’m far more interested in how restaurants work, and how we diners can better enjoy them. What drives and inspires chefs? How does great, or lousy, service happen?

Tastes and trends, sure. Nutrition, occasionally. The cultural role and impact food plays in our homes, neighborhoods, lives and the world, absolutely.

You’ll find some news here, some topical explorations, profiles of Northeast Ohioans who contribute to this region’s food landscape and an occasional essay.

On some level or another, food matters to each one of us. Whether you “eat to live” or live to be the very first through the doors of the next hot new place, eating plays a central role in living.

And maybe in living a more enjoyable, adventurous life.

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PA G E 9

Personal View

Transforming city streets creates another path to growth

By BOB BIGGAR

Downtown Cleveland’s continued growth depends on attracting people and jobs. We’re working toward this goal with a number of strategies, but there is another method to attract people and jobs that we have largely ignored. It is relatively inexpensive, can be implemented quickly, and has an immediate impact.

I’m talking about the design of our city streets. Young talent is moving to walkable, dynamic cities that do not require driving as the primary means of transportation. Companies like GE, Marriott, Kraft and Motorola are following this talent back into the cities.

Experts are encouraging cities to capitalize on these desires to attract more residents.

Paul Graham, leader of the top tech incubator Y-Combinator, recently spoke on attracting young people to Pittsburgh. In his lecture, he highlighted millennials’ evolving preferences, stating that, “… those 25- to 29-year-olds do not like driving. They prefer walking, or bicycling, or taking public transport. Why not make Pittsburgh the most bicycle and pedestrian friendly city in the country? … If you do, it’s very unlikely you’ll regret it. The city will seem like a paradise to the young people you want to attract. … And what’s the downside? Can you imagine a headline ‘City ruined by becoming too bicycle-friendly?’ It just doesn’t happen.”

Developing our downtown to seem like “a paradise” to young people seems like a good way to increase demand for downtown housing.

Another expert, Janette Sadik-Khan, the former commissioner of the New York City Department of Transportation under Michael Bloomberg, said, “Better streets for walking, biking and buses are some of the fastest, yet also some of the least costly, transformation strategies. In my six years as commissioner, we invested $6 billion just to keep our network in a state of good repair. All of the plazas and bike lanes we built cost less than 1% of that, though they generated 99% of the headlines.”

Cleveland’s leaders love big projects like the Convention Center and Public Square. These certainly make our city a better place, but we often ignore the small changes that can become “transformational strategies” and generate headlines.

Our city is moving slowly in the right direction. Most recently, University Hospitals has generously sponsored a bikeshare program and City Hall has said that bike lanes are a priority. The Euclid Avenue HealthLine is a great example of what success can look like as new apartments and retail are opening along this east-towest stretch of downtown. The developers of East 4th Street have transformed a dark alley into one of the most iconic sections of the city.

Yet most of our city’s landscape remains geared toward cars, not people. None of our few bike lanes are protected from traffic, and they often end abruptly into hectic areas.

Our zoning code requires variances for the type of dense, urban housing young people want to live in. We are spending $330 million of money from the state of Ohio on two miles of new highway to save a few people a few minutes. Yet we have to ask the federal government for only $8 million to build transformative trails that would connect our neighborhoods to the Cuyahoga River, Lake Erie and the Towpath Trail.

Let’s focus our efforts on building the right kind of infrastructure for the future that will help Cleveland grow in the ways we want it to: more foot traffic and more connected communities.

Some paint, planters and chairs will be worth their weight in gold.

We have an opportunity today to be one of the most attractive cities in the country for young people. Let’s move quickly to reallocate some dollars and capture this value before other cities beat us to it. As Paul Graham said, we are unlikely to regret it.

Biggar is an initiative development manager at KeyBank who lives downtown.

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Focus PREP AND PAROCHIAL SCHOOLS

When letter grades get an F National effort to retool transcripts has local roots

By TIMOTHY MAGAW tmagaw@crain.com @timmagaw

Hawken’s head of school D. Scott Looney hates letter grades so much that he’s building a national movement to get rid of them.

Looney, whose school boasts campuses in Lyndhurst and Gates Mills, has put together a coalition of more than 100 of the nation’s most-powerful private schools pushing for a dramatic redesign of the standard college transcript that has been in use for well over a century. This, too, is much more than a meeting of the minds, but rather a well-financed, well-connected and deeply passionate group of educators who believe they have what it takes to unwind a century’s worth of educational pedagogy.

Dramatic? Yes, but that’s entirely the point.

“When I finally shuffle out of the educational business into retirement or death, I want to know I tried to fix the system because it’s broken,” Looney said. “It’s hurting kids, and it’s unhealthy.”

SEE GRADES, PAGE 12

Illustration for Crain’s by Daniel Zakroczemski

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PA G E 11

PA G E 12

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CRAIN’S CLEVELAND BUSINESS

Speech Therapy at Home! tŝƚŚ ũƵƐƚ Ă ŚŝŐŚ ƐƉĞĞĚ ŝŶƚĞƌŶĞƚ ĐŽŶŶĞĐƟŽŶ ĂŶĚ Ă ǁĞď camera, your child can receive specialized services ĨƌŽŵ Ă ĐĞƌƟĮĞĚ ƐƉĞĞĐŚ ůĂŶŐƵĂŐĞ ƉĂƚŚŽůŽŐŝƐƚ ĨƌŽŵ ƚŚĞ Cleveland Hearing & Speech Center - in the comfort, ƉƌŝǀĂĐLJ ĂŶĚ ĐŽŶǀĞŶŝĞŶĐĞ ŽĨ LJŽƵƌ ŽǁŶ ŚŽŵĞ Address issues such as:

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PREP AND PAROCHIAL SCHOOLS

GRADES

CONTINUED FROM PAGE 11

The so-called Mastery Transcript Consortium is a group that wants to rebuild how high schools record their students abilities and achievements and, in turn, upend how colleges and universities evaluate their applicants.

No longer would admissions reps, for instance, scour transcripts for A’s and B’s, but rather something that gives them a much more holistic view of the student. The effort recently got the backing of a $2 million grant from the Edward E. Ford Foundation, which supports private secondary schools, and participating schools have pledged to match that grant.

How this transcript of the future might look is still in the works, but the idea is to develop one that signifies the complete “mastery” of a specific skill. Rather than be organized around a specific academic department, the mastery transcript model is organized around performance areas — like leadership, communication, ethical decision-making, etc.

The performance areas and credit standards would be tailored to the individual crediting school, but the idea is to create a consistent format across schools. Adding more heft to the transcript would be an electronic component that will allow college admission officers to see actual evidence of a student’s work.

Locally, aside from Hawken, Shaker Heights-based Laurel School and Sagamore Hills-based Lawrence School are part of the diverse coalition that includes all types of independent schools — from co-educational day institutions to boarding schools and the like. Longer term, the hope — though, of course, challenging given the legal and regulatory tangles — is that the public school community would come on board.

“It’s been a long time coming in this country for significant education reform,” said Ann V. Klotz, Laurel’s head of school. “We want to be on the ground floor with something that has the potential to make real lasting change for our kids.”

One man’s vision For the last several years, Hawken in particular has taken strides to reinvent the academic experience for its students, Looney said. The school has re-imagined its facilities, altered the schedule and even retooled its administrative organization. That said, the age-old way of grading and crediting students remained a problem and wasn’t reflective of the types of students the school produced, Looney said. Making A’s, B’s and C’s increasingly irrelevant, he added, is the growing problem with grade inflation.

“The scale has been compressed to

“Ninety-nine percent of all high schools have the same transcript — content labeled, single-credit courses. The 1% that don’t, they even tend to show content-labeled courses on the transcript. So, we decided to be the little engine that could and create our own.”

— D. Scott Looney, Hawken’s head of school

two points: A and not A,” Looney said.

So, Looney made it his mission to find a model that fit. The school hired Hanover Research, an Arlington, Va.based market research firm, to find an alternative transcript Hawken could replicate.

“Ninety-nine percent of all high schools have the same transcript — content labeled, single-credit courses,” he said. “The 1% that don’t, they even tend to show content-labeled courses on the transcript. So, we decided to be the little engine that could and create our own.”

Looney shared a prototype with some of his friends — namely, deans of admission at prestigious colleges — at a social event. Their response?

Great idea, but “we’re going to hate it,” Looney said, largely because it would require a complete re-training of their admission staffs for one school’s transcript. He countered by asking what would they say if he brought 25 or 50 of the nation’s top private schools to the table.

“They told me that would be completely different,” Looney said. “I told them I’d be back.”

So, about a year ago, Looney invited 30 school leaders from all over the country to Hawken to explore the idea.

Afterward, 28 signed on to consortium.

Today, 134 independent schools are dues-paying members of the group, which even has an interim executive director leading the day-to-day — Patricia Russell, who had served as the dean of studies at the influential Phillips Academy in Andover, Mass.

At current, the consortium is in talks with several tech companies about building the back-end system for this transcript — software that could ultimately cost $4 million to $8 million to produce, Looney said.

“A year ago, I wouldn’t have been shocked if those 30 schools said, ‘Good for you, but that’s crazy,” Looney said. “When they all said let’s try to pull this off, that lead me to believe this might be the time to do this.”

The laboratory As for the ever-important reception of the college community, it’s still a bit early to see which way it’s leaning. The Washington, D.C.-based American Association of Collegiate Registrars and Admissions Officers has not formulated any official position on the proposal, according to an email from the organization’s executive director Mike Reilly.

Reilly did say, however, that “if it were the only documentation presented by a student it could cause difficulties at institutions that are required to look at courses and grades to determine admissions eligibility.”

He said his organization plans to meet with the consortium, though nothing has been scheduled yet.

Participating schools aren’t naive about this venture — as it could take years for this type of model to even take hold at the individual school level. Initially, the decision to move forward with this type of transcript will be left up to the student or the individual families. The hope is to figure out what works and what doesn’t.

In addition to selling the broader higher education community on the concept, there will also have to be a lot selling to the students’ parents that this is a proper way forward because it is such radically different way of evaluating students.

“We will have to reassure them that their children will not suffer in the process,” said Lou Salza, the head of school at Lawrence School, which serves K-12 students with dyslexia, ADHD, and other language-based learning differences.

Salza added, “The public purpose of private education is to be the vanguard — laboratory schools — for what really floats the boat,” he said.

“Across the country, independent schools have been innovators.”

Below is an early draft of the consortium’s new transcript.

(Contributed diagram)

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Northeast Ohio’s transcript trailblazers While the Mastery Transcript Consortium is made up entirely of independent schools, there’s great diversity in the types of private schools included.

“Our goal is not to make this an effort inclusive of independent schools,” said D. Scott Looney, the initiative’s founder and head of school at Hawken.

“We’re nine times over represented in selective colleges. We’re pretty credible because of our high standards.” Here are the three institutions involved.

Kevin G. Reeves

Downie Photography

Contributed photo

Hawken School

Laurel School

Lawrence School

12465 County Line Road, Chesterland

1 Lyman Circle, Shaker Heights

10036 Olde Eight Road, Sagamore Hills

www.hawken.edu

www.laurelschool.org

www.lawrenceschool.org

Head of school: D. Scott Looney

Head of school: Ann V. Klotz

Head of school: Lou Salza

Details: Hawken, founded in 1915, is a co-educational, private day school with multiple campuses serving pre-school aged children through 12th grade. Hawken’s upper school last year finalized a two-year, $26.5 million renovation dubbed Stirn Hall. It was the largest capital project in the history of Hawken. It encompasses 106,000 square feet of building space and includes a science wing, a fabrication lab, a writing center, a cafe and a learning commons. Hawken’s head of school, D. Scott Looney, has taken the lead on the Mastery Transcript Consortium.

Details: Laurel, founded in 1896, is an all-girls, K-12 school that also has a co-educational pre-primary program. In addition to its campus in Shaker Heights, the school has its 140-acre Butler campus in Russell Township. In 2007, the school founded its Center for Research on Girls, which has influenced the school’s curriculum. According to the school’s website, Laurel’s curriculum reflects “research on the power of growth mindset, the importance of educating girls about stereotype threat, and proven approaches for engaging and retaining girls in STEM fields.”

Details: Lawrence, founded originally as a summer school in 1969, serves K-12 students with dyslexia, ADHD and other language-based learning differences. It has two campuses — its lower school is based in Broadview Heights while its upper school is situated on 47 acres in Sagamore Hills. The 62,000-square-foot upper school campus opened in 2007 and features a gymnasium, two science laboratory suites, an arts suite, theater, a weight room, library and classrooms areas. Lou Salza, the head of school, recently announced he would retire in June 2018.

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Learning to Lead – Preparing to Serve

PREP AND PAROCHIAL SCHOOLS

Hershey Montessori puts independence at the heart of learning

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Hershey Montessori School’s Huntsburg campus is anything but typical.

For one, the 97-acre campus in Geauga County is home to a working farm with chickens, horses and a garden. There are no end-of-course exams. Students can live on campus, but even those who commute help cook for one another and care for the livestock, in addition to learning more traditional subjects like math or foreign languages.

“We’re looking for thoughtful, engaged, caring, informed, whole people,” said Laurie Ewert-Krocker, upper school program director. “And we’re just trying to create the environment and the kind of activity — learning activity — that’s going to continue to support that kind of human development.”

Hershey Montessori has been in existence for nearly 40 years, and it continues to grow and evolve. It has two campuses, with the Concord campus serving students from infancy through age 12 and the Huntsburg campus now serving ages 12 through 18.

Its newest piece, the upper school program, which serves students ages 15-18, has been growing for the last two years and will be fully implemented through 12th grade this fall.

School officials believe Hershey Montessori is the first school to fully realize the vision of Maria Montessori — the Italian educator who died in 1952 known for developing the philosophy — for educating children from birth through age 18.

At the heart of the Montessori philosophy is an emphasis on independence and self-directed activity, according to Alyssa Schwartz, interim executive director of Association Montessori International/USA. Schools are expected to meet regulations and standards, she said, but children are more likely to enjoy school and learning if they have the chance to research what interests them.

Much of Maria Montessori’s work focused on the young child, said middle school program director Judy Venaleck.

And although Maria Montessori researched adolescent education, she passed away before she was able to implement her philosophy at that level.

However, families at Hershey Montessori yearned to extend their children’s education beyond the elementary level.

Ideally, that included them learning on a farm campus where they could care for animals, grow their own food and cook for themselves and others.

Reflecting on Maria Montessori’s vision for adolescent education, Venaleck said adolescents need to be prepared to step away from their family unit, and that kind of responsibility helps them on that path.

Though it’s not necessary for adolescent Montessori programs to have a farm, the ability to have a “microcosm” of society and the responsibilities that go along with that is important, said Ewert-Krocker.

In many ways, the Huntsburg campus has become a model for adoles-

cent Montessori education across the globe.

Each summer, for the last several years, 60 educators visit the campus through the NAMTA/AMI Montessori Orientation to Adolescent Studies Program. The North American Montessori Teachers’ Association is an affiliate of the Association Montessori Internationale.

The roughly five-week program gives participants a basic foundation in the research, as well as the opportunity to take part in hands-on projects like students would.

Growth at all levels While the upper school might have been the school’s most ambitious expansion, Hershey Montessori also has seen growth in some of its offerings for younger ages.

Head of School Paula Leigh-Doyle said the school is expanding its evening, late afternoon and summer parent-infant programs to meet increased demand. And starting next year, Hershey Montessori will offer one group for ages 6 to 9 and two for ages 6 to 12.

Leigh-Doyle said the 6 to 12-yearold configuration will be new to the school in the fall, as it used to offer two groups for ages 6 to 9 and two for 9- to 12-year-olds. The school is changing the configuration as the elementary program grows, LeighDoyle said, though it may return to the old configuration in the future.

Hershey is recognized by the AMI/ USA for ages 0 through around age 6, but not for its 6-12 programs. In an email, Leigh-Doyle said the organization does not currently have a system that allows for students who need to leave the classroom for some specialized learning support, which Hershey offers. AMI/USA does not offer a recognition program for adolescent programs.

The middle school program for what is essentially the 7th, 8th and 9th grade levels currently has about 50 students, about half who live on campus and half who commute, Venaleck said. The upper school program had about 20 students, only four of whom chose to board on campus, Ewert-Krocker said.

Teachers at the school are referred to as “guides” or “adults,” and students are given a lot of independence and responsibility. Students have choices regarding when they study certain concepts or how deeply they dive into them, but the teachers are there to make sure they learn everything they need to in terms of academic standards.

There is a structured schedule the students follow, with a math and foreign language class in the morning and a humanities or occupation project they choose, based on their interests, most afternoons.

“So our students, they don’t have a traditional science class,” Venaleck said. “We call them occupations. So an example of an occupation may be organic gardening, or a bee occupation, or a bovine or swine occupation.”

Students in the bovine occupation would then learn scientific concepts and get real-world experience, learning about anatomy but also calling a

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PREP AND PAROCHIAL SCHOOLS vet to visit campus to learn how to inseminate their cow, Venaleck said.

The projects the students are taking on aren’t “tokenistic,” she said.

It’s “meaningful work” that’s necessary to the farm. And these roles can change based on the farm’s needs.

The upper school takes these science and humanities projects to the next level and its students study the “issues of our time,” Ewert-Krocker said. Those included climate change, immigration and gun violence. For one, students researched whether climate change is affecting Northeast Ohio — work that included lessons in chemistry and economics. They even traveled to Denver to do the same kind of work there, and ultimately gave a presentation at Kent State University’s Geauga campus.

“These are highly interesting, en-

CLEVELAND BUSINESS 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 www.crainscleveland.com @CrainsCleveland Publisher/editor Elizabeth McIntyre Managing editor Scott Suttell Sections editor Tim Magaw Creative director David Kordalski Web editor Damon Sims Associate editor/Akron Sue Walton Assistant editor Kevin Kleps Senior reporter Stan Bullard Real estate/ construction Reporters Jay Miller, Government Dan Shingler Energy/steel/auto Rachel McCafferty Manufacturing/ energy Jeremy Nobile, Finance Lydia Coutré, Health care Data editor Chuck Soder Cartoonist Rich Williams

“They see the relevance. They feel the relevance as they work with experts in the community.

They never feel like they’re wasting their time.”

—Laurie Ewert-Krocker, upper school program director

gaging endeavors for the students,” Ewert-Krocker said. “They see the relevance. They feel the relevance as they work with experts in the community. They never feel like they’re wasting their time.”

The school doesn’t give its upper school students end-of-course exams, Ewert-Krocker said, but it does have to present the state of Ohio with a detailed curriculum document that showed how students would be

meeting all of the academic requirements. And to meet diploma requirements, the school will follow ACT or SAT benchmarks.

The benefits of Montessori education are really the “soft skills” employers are seeking, Leigh-Doyle said, including critical thinking, entrepreneurship, creativity and teamwork.

The school calls them “essential skills,” she added, saying it had recently begun developing ways to track them.

ONE OF A KIND PARTNERS. WORLD CLASS PROGRAMS.

The 97-acre farm at the school’s Huntsburg campus gives students the opportunity to learn by caring for crops and animals. (Contributed photo)

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PREP AND PAROCHIAL SCHOOLS

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Beaumont embraces lofty IB designation The Catholic school is the only all-girls school in the area to launch the program

By TIMOTHY MAGAW tmagaw@crain.com @timmagaw

Beaumont School has been officially authorized as an International Baccalaureate World School by officials with the IB organization in Geneva, Switzerland — a move that makes it the only all-girls school and the second Catholic school in the Cleveland area to earn this distinction.

So, why is this program — which at Beaumont will be offered for the first time this fall — a big deal?

Simply put, IB is a rigorous academic curriculum that can be implemented across all grades. It’s offered to a school’s brightest students and embraces in-depth research and writing projects.

When a school launches an IB program, it’s an expensive endeavor and often requires the complete retooling of its operations.

Before the IB program could go live, Beaumont brought in a dean of academics and IB coordinator, Nick Beyer, to facilitate that transition.

Beyer recently took on the role of interim principal for the 2017-18 school year, succeeding Mary Whelan, who announced she would not return.

“The journey to reach IB World School status is neither brief nor easy,” Beyer said in a recent news re-

lease. “For the past three years, our faculty and administration have worked tirelessly to write course curriculums and have collaborated regularly with each Beyer other and educators around the globe. This program, as with all that Beaumont offers, puts our students at the center, giving them opportunities for success in high school and beyond.”

Across the country, the IB movement continues to gain steam. Between 2012 and 2017, the number of IB programs offered worldwide has grown by 39.3%, according to the nonprofit IB organization.

Other IB schools in the area include St. Edward High School in Lakewood, Shaker Heights High School, Firestone High School in Akron and The Montessori High School in University Circle.

The IB program, of course, isn’t without its critics.

For one, some have criticized the cost of training teachers in the philosophy. Moreover, some have bristled at its multicultural themes. Some suggest the Advanced Placement program — which, like IB, is recognized with course credits by many of the nation’s elite colleges — is a far better option.

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Former journalist finds calling at Beaumont “You start to really think about, ‘OK, when I’m healthy, what is it that I’m really meant to do?’ And for me, doing something with women and education and empowerment was always going to be part of that equation.”

By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

As a journalist writing about an allgirls school, Wendy Hoke began to realize how much she would have thrived in such an environment.

“I had a great high school education, but I was a wallflower; I was an introvert,” said Hoke, the new president of the Beaumont School, an allgirls Catholic high school in Cleveland Heights. “What more could I have done if I had had the confidence level in high school? That’s what I see in these girls is this opportunity to develop their confidence, to become these accomplished young women earlier in their lives.”

After years working as a freelance journalist, Hoke became vice president of marketing and communications at St. Vincent Charity Medical Center, where she worked for eight and a half years. In the past couple of years, Hoke has spent a lot of time thinking about her next chapter. Her youngest son just graduated high school, and later this year, she’ll turn 50. But largely driving her reflection was a diagnosis she received in 2015: Stage 3 breast cancer.

She finished her treatments last October, but the hours spent sitting in chemotherapy treatments gave her a lot of time to think, and sharpen her perspective.

“You start to really think about, ‘OK, when I’m healthy, what is it that I’m really meant to do?’” Hoke said.

“And for me, doing something with women and education and empowerment was always going to be part of that equation.”

She’s informally mentored young women and professionals for years, but leading Beaumont, she said, would be an opportunity to influence girls on a broader scale. And education has always been an undercurrent in her life. The self-described life-long learner said her parents always stressed the importance of education for opportunity, and she was always excited to learn about new things, which was part of what drew

— Wendy Hoke, president of Beaumont School

her to journalism in the first place.

And now, as she embarks on her new role, she’ll learn about the school, its faculty and students and the opportunities going forward.

Hoke, who replaces Sister Gretchen Rodenfels after she stepped down at the end of the school year, will be the first woman to lead Beaumont who is not a nun.

Hoke’s leadership skills, commitment to service and experience in a mission-driven organization made her a great fit, said Sister Susan Durkin, president of the Ursuline Sisters of Cleveland, which sponsors Beaumont.

Some may be concerned about having a lay-person lead the school, she said, “but the Ursuline sisters are so excited about Beaumont School, and we are so confident that Wendy is going to be able to lead this school and do a phenomenal job and carry on our legacy and our mission.”

Durkin said she hopes to see Hoke continue to bring strong catholicity and continue the tradition of Ursuline education in preparing women for life, leadership and service.

She’ll be able to expand on things that have gone before her, including a two-year-old $9.5 million expansion and renovation that focused on space for STEM curriculum (science, technology, engineering, math).

“I’m sure she’ll bring her own stamp to it, too,” Durkin said.

Hoke’s excited to oversee the launch of the school’s international baccalaureate program, making

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Beaumont the first all-girls school to have such a program, she said. After getting to know the school, Hoke said her focus will be on increasing engagement, expanding enrollment and growing the endowment.

“My role is to tell the story at Beaumont of academic excellence (and) faith tradition to students and parents and donors and alums and the community at large,” she said.

Shannon Jerse, general counsel at St. Vincent Charity Medical Center, is sad to see Hoke leave the hospital, but thrilled for Beaumont, where her

Congratulations to the HB Class of 2017, now off to make their marks at some of the finest colleges and universities in the world:

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Emory University (2)

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youngest daughter will be a senior in the fall.

“She’s a professional woman, she’s raised three boys and she also has this external communication, marketing background,” Jerse said. “So she’s going to take Beaumont, I think, to a different level and shout it from the mountains.”

Hoke will make a great role model for young girls, especially in how she balances her career and family, Jerse said.

“She’ll be the person that can tell girls, ‘You can do it. You can balance this and keep your priorities in or-

der,’” she said.

Joan Ross, former senior vice president and chief operating officer at St. Vincent, also spent several years working with Hoke before accepting a job earlier this year at St. Mary Medical Center in Langhorne, Pa. Ross is not surprised to see Hoke move to a new level in her work.

Hoke has “amazing passion” for whatever she’s doing, Ross said.

“I think she’s going to really be able to get things accomplished for them,” Ross said.

Hoke said she’s looking forward to getting to know the girls and is really excited by their energy and enthusiasm.

If they learn one piece of advice from her leadership, she hopes that it is to not be afraid to speak up, to lead and to be positive.

“The Ursuline sisters of Cleveland have this deep faith tradition, and it’s rooted in academic excellence and the belief that women are agents of change — not can be; they are agents of change,” Hoke said, “and that the formation of young women as strong, dynamic, well-educated individuals can lead them to live lives of leadership and service.”

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Northwestern University Princeton University

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PA G E 18

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CRAIN’S CLEVELAND BUSINESS

PREP AND PAROCHIAL SCHOOLS

New meaning for fo

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Private and parochial school cafeterias typically have more flexibility — in terms of both available funds and regulatory oversight — than their public-school counterparts. As such, many of those private institutions locally are taking their culinary experiences to the next level.

Sure, some still offer simple wrapped sandwiches, but farm-totable, handcrafted entrees are becoming quite common. As such, many schools have engaged outside caterers to add some flair to their menus and even cultivated their own school gardens as a food source. In many cases, sustainability has also taken center stage.

Take St. Ignatius High School in Cleveland’s diverse Ohio City neighborhood where the source of the food is a lesson in of itself for the students. Several of the 23 items on the school’s salad bar are grown by students when the season is right. That includes tomatoes and lettuce from the school’s Hydroponics and Ploughmen clubs. Other items are sourced locally when possible.

“We have 40-plus local vendors that we use,” said Dave Turska, the school’s campus dining director. “We try to keep our purchases based in Cleveland. Sustainability is a key piece for us.”

St. Ignatius started easing into this approach about a decade ago when its Rade Dining Hall was remodeled into a station setting. Two years ago, Turska made the decision to no longer be a part of the federal program requirements and thus, funding. The school gained flexibility and created its own subsidies for students.

“One of our biggest goals is to provide a college-type experience for our young men,” Turska said. Realistically, he adds, “We’re trying to provide choice. We have healthy options, but I know I can’t get my own kids to just purchase healthy things. So, we try to provide balanced choices of what they should eat and want to eat.”

To achieve that the dining hall has seven different stations including a salad bar, comfort food, pizza, hot grill, roller grill, action station (like a food truck) and convenience case.

Menus at most of these vary by day.

Sustainability and locally sourced foods are also prevalent at the Montessori High School at University Circle. The school’s garden had historically been used to supplement the lunch program, but now it’s being more thoughtfully designed to create a true farm-to-table inspired program — something that dovetails with the school’s larger goal of promoting sustainability from its urban campus. Because the school is small — 90 students in grades nine through 12 — students and faculty all eat a prepared meal at the same time.

“Students learn from working in the garden,” said Caitlyn Tierney Caldwell, the school’s marketing and development coordinator. “They’re becoming more strategic in their planting and more deliberate with communication with the kitchen.”

Walsh Jesuit High School in Cuyahoga Falls, meanwhile, evolved its culinary offerings in the most recent school year by transitioning from a large vendor of prepared and

Above: Montessori High School students work in a garden for a service project.

frozen foods to a local caterer, A Taste of Excellence based out of Strongsville. The relationship with the caterer isn’t new, as it had been servicing the school’s special functions and fundraisers, but the two now have a 10-year contract to operate the cafeteria. Part of the charge includes

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PA G E 19

Learn, Lead and Serve

or food for thought

Over 77% of the Class of 2017 was offered college scholarships.

These merit awards totaled over $19.8 million.

Our graduates were accepted to colleges, including:

Pictured is the Montessori High School at University Circle’s garden.

Below: A rain gauge is pictured at the school’s on-campus garden.

(Contributed photos)

helping Walsh Jesuit reinvent its kitchen and dining space.

This year, the school’s cafeteria space will quadruple and be remodeled to include five stations — exhibition kitchen, grill, salad bar, ice cream and beverages. The exhibition station will serve a different feature

every day, from stir fry to build-yourown submarine sandwich to comfort food.

“We wanted to give students a quality program that was as excellent as our spirituality and academics,” Walsh Jesuit president Karl Ertle said.

“It’s part of an overall wellness initiative.”

Ben Erjavec from A Taste of Excellence catering is working as a contractor to set up and manage the food service.

“Our whole focus is giving the kids a healthy, fresh approach. Not everything is healthy, but we have those options available,” he said. Many are sourced from local, sustainable, even organic, growers.

The cafeteria is open from 7 a.m. to 1:30 p.m. For afternoons, evenings, weekends and summer — when the cafeteria is closed, but students are engaged in extracurricular activities — the caterer stocks vending machines. One machine offers healthy snacks like baked chips, gluten-free and organic options while another supplies junk food. A refrigerated machine sells sandwiches, yogurt, hummus cups and more.

Lake Catholic High School in Mentor has been using the basic diocesan food program outlined. In 2017-18, the school hopes to do something different.

“After looking at other schools we want to streamline,” said Robert Kumazec, Lake Catholic’s principal.

“We have a lot of catering needs. We want a vendor who can come into the school and take over everything. That includes the cafeteria, meetings and special events.”

Changes will include using produce grown by the environment and sustainability science class.

“A new vendor will give us more options,” Kumazec said. “The quality of food will be fresher and more diverse.”

For now, the cafeteria is only open for lunch and the Cougar Café in the school’s atrium supplements it with from 7:30 a.m. to 4 p.m. “We work with different companies to sell their products in the café — Chick-fil-A, FroYo Twist, Hungry Howie’s and more.”

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PREP AND PAROCHIAL SCHOOLS

Local schools promote community service Hathaway Brown

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

Whether it’s an official requirement for graduation or simply part of a school’s fabric, community service is a common experience for high school students.

And it’s certainly not just about building up a resume or filling out a college application. Community service helps students gain leadership skills, live with compassion and learn more about the world around them, educators say.

At Hathaway Brown in Shaker Heights, the school’s motto is focused on learning “not for school, but for life.”

Community service isn’t a requirement, but it’s built into that focus on “life-learning,” said Stephanie Hiedemann, director of the Center for Civic Engagement.

“Life happens outside of a school,” Hiedemann said, not just inside of it.

It’s also important to help students see the challenges people face and to foster empathy, said Lisabeth Robinson, a member of the history faculty at Western Reserve Academy in Hudson.

Here’s a look at a few of the more unusual service projects local high school students have taken on over the last few years.

One of the ways students at Hathaway Brown can get involved is through a student-run foundation called Girls Reaching Others Worldwide, or GROW. Hathaway Brown in Shaker Heights serves young women in grades kindergarten through 12 and offers a co-ed early childhood education program.

Hiedemann said the foundation runs much like its larger counterparts in the community, just with a smaller budget.

GROW puts out calls for proposals and evaluates applications to see how they fit into their mission. The middle school GROW program has been around for about 15 years, and the upper school version began about five years ago.

The middle school program’s mission focuses on education-related causes, like raising money for school uniforms for children in homeless shelters, Hiedemann said. The upper school focuses on social and economic empowerment causes, like college access programs.

The students raise the majority of the money in the funds through fundraisers like bake sales or calls to families for donations in lieu of holiday gifts for teachers, Hiedemann said. But the middle school is able to give away significantly more money — about $10,000 a year — compared to the $2,000 to $4,000 a year the upper school can give away, because the middle school has a small endowment from an alumna, as well as some outside funding.

So this past year, some of the upper school members decided to seek additional funding for its GROW program. Hiedemann said the students wrote grant applications, one of which has made it to the final round.

The students are still waiting to see if they receive the funding.

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Congratulations to the Laurel School Class of 2017.

Saint Ignatius High School The Jesuits are associated with taking the gifts God gave you and using them for the “betterment of the world around you,” said Tom Healey, a teacher in the theology department at Saint Ignatius High School for young men in Cleveland.

And that association runs strongly through the school, where sophomores are required to take part in a service program.

But the sophomore service program is just the beginning, and students at the school log thousands of service hours each year, Healey said. The service programs help students become leaders at the school and once they leave its grounds, Healey said. Opportunities include more somber activities, like serving as pall-bearers to those in need or taking part in the homeless ministry program, but it also has room for fun.

To that end, Saint Ignatius has been taking part in the Kick-It kickball fundraiser for research on pediatric cancer about eight years. The program was started locally just about a decade ago, and Saint Ignatius was asked to take part shortly after the death of Healey’s son, an Ignatius graduate, to cancer.

While students can’t heal someone’s cancer, it’s a tangible way for them to raise money to help, said Healey, who is also the co-moderator of Kick-It for Kevin at the school. The program at Ignatius started with just the annual kickball game, but students soon wanted to take it to another level. Healey said they began finding ways to raise more money, like asking local restaurants for portions of their proceeds on specific days.

This year, the students raised more than $20,000 for Kick-It, about double what they usually raise, Healey said.

Western Reserve Academy For the past five or six years, co-educational high school Western Reserve Academy in Hudson has been taking students on a service trip to the Pine Ridge Reservation in South Dakota to learn about service and about the lives of the Oglala Lakota who live there.

Robinson said about 10 to 12 students visit the reservation in June of each year to work with the Re-Member organization. Students help build bunk beds and outhouses for the residents of the reservation, as many live in crowded trailers without working plumbing. They also help install outhouses and skirting around the trailers to hold in heat, Robinson said. After the day’s physical labor is done, students have the chance to learn about the Oglala Lakota’s culture.

Service isn’t a requirement at Western Reserve Academy, but it is part of its culture, Robinson said. The school wants students to feel an obligation to make the world a better place. Helping students realize that service is a “twoway street,” and that you learn from the people you serve, she said.

“You walk away with something, too,” Robinson said.

St. Edward High School

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One of the ways students at all-boys St. Edward High School in Lakewood give back is through the school’s documentary program. Nicholas Kuhar, chairperson of the film department, said a few years ago, some St. Edward students went to Haiti for a service project and decided to make a short film while they were there. At the time, it happened organically as the students, who were interested in film, realized there were stories to be told, Kuhar said. When they returned, they entered the film to the White House Film Festival and received an honorable mention. The school realized there was an opportunity to formalize that idea, Kuhar said.

The documentary program has a built-in service component, where the subjects of the documentaries are organizations outside of the school that can use the films to help their causes, Kuhar said. Since formalizing the program, the students filmed “Razzle Dazzle,” a documentary about the Beck Center for the Arts’ musical revue of the same name. The cast is mostly made up of people with special needs, Kuhar said. The students got the documentary accepted into the Cleveland International Film Festival, but the Beck Center was also able to screen it at its fundraising gala. Students have also filmed a documentary about Syrian refugees in Northeast Ohio.

Saint Joseph Academy Service is a big part of the educational experience at all-girls school Saint Joseph Academy in Cleveland.

Students are required to complete 20 hours of community service each year, said communications manager Mackenzie Schuler.

One of the special projects students took part in this year was an event for the St. Baldrick’s Foundation fundraiser at St. Mark School. Typically, the fundraiser features posters with photos of children who have dealt with the disease. But this past year, the group wanted to offer special portraits of the children as a surprise to the families and reached out to Saint Joseph Academy for help, said art teacher Tammy Sparks.

Students worked on portraits of eight children, some done digitally and some drawn, using biographies to incorporate elements of their personalities or interests.

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Q&A: Joe Vogel

Director, Center for Global Citizenship, Hathaway Brown Joe Vogel had always dreamed of teaching abroad. So, after completing his training at Ohio State University, he figured heâ&#x20AC;&#x2122;d bide his time stateside because most countries wouldnâ&#x20AC;&#x2122;t issue a work visa to anyone with less than two years experience. As such, he eventually landed at Hathaway Brown, an all-girls prep school in Shaker Heights. â&#x20AC;&#x153;I never would have imagined a position like this in terms of global education would have existed,â&#x20AC;? Vogel said. â&#x20AC;&#x153;If you would have told me when I was 30 this is what I would have been doing, I would have said that was crazy.â&#x20AC;?

Today, Vogel, while based in Northeast Ohio, views the global stage as his classroom. As director of Hathaway Brownâ&#x20AC;&#x2122;s Global Citizenship center, Vogel oversees international student travel and exchanges, as well as a course of study designed to allow the students to understand other cultures and the most pressing issues facing the planet. This interview has been edited for length and clarity. â&#x20AC;&#x201D;Timothy Magaw Where did this wanderlust come from?

This desire to explore and understand other cultures struck me when I was quite young. My dad had traveled some, so we had things around the house that would remind me of places I was unfamiliar with.

As I look back, those things resonated with me. I also remember getting up really early to watch National Geographic while everyone was sleeping. It was incredible to see things I was unfamiliar with, and people living lives that were very different â&#x20AC;&#x201D; similar in some ways â&#x20AC;&#x201D; but very different than my own. The first time I traveled abroad was to Germany when I was in high school. It was when the Berlin Wall opened up.

That sealed it forever.

Before teaching, you had quite an extensive career in government working with Maureen Oâ&#x20AC;&#x2122;Connor, who is now chief justice of the Ohio Supreme Court. Why make that switch?

When I was in college, I spent summers interning at the Summit County Probate Court and became friends with Maureen Oâ&#x20AC;&#x2122;Connor, who, at the time, was a young magistrate.

We both liked to travel, eat at ethnic restaurants and explore other cultures. I ended up working for her when she was the Summit County prosecutor and moved to Columbus to work for her when she was elected lieutenant governor. She had always been supportive of this passion of mine, and while I enjoyed working for her, I saw this fellowship at Ohio State focused on social studies in global education. For me, that was a perfect fit. I loved government and teaching about it, but I had this passion for anthropology, history and the exploration of other cultures.

Teaching was a way of combining what I love to do personally with what I would love doing professionally.

You mentioned having been to about 60 countries, but youâ&#x20AC;&#x2122;re particularly interested in countries in transition or emerging from conflict. Why is that?

Whether theyâ&#x20AC;&#x2122;re coming out of political upheaval or in the midst economic development, I find them to be fascinating. What these countries or people are faced with is

how modernity and preservation can come in conflict or even complement each other. Thatâ&#x20AC;&#x2122;s always been interesting to me.

What has been one of the most eye-opening experiences youâ&#x20AC;&#x2122;ve had abroad?

I think about specific times when Iâ&#x20AC;&#x2122;ve realized how much we have in common with some people even if we donâ&#x20AC;&#x2122;t speak the same language.

One of my fondest memories was when I was taking a long distance bus ride in Laos, and the bus had some mechanical issues in a very isolated area. I was sitting in the back of the bus, and there was an older gentleman in front of me who clearly had been through conflict of Vietnam and bombing of Laos by American forces. We were just two passengers on this bus â&#x20AC;&#x201D; one, theoretically, who had few financial means because he was taking the bus, me, a visitor, who had a lot of financial means. When it broke down, we pulled into a truck stop, and we shared a meal together. He refused to allow me to pay. I was his guest.

We sat there, ate and at the end we shared a pack of Wrigley spearmint gum. Then we went on our way. I give that as an example because I want our students to have experiences that shape how they view themselves and view themselves in the world. Sometimes it can be a large sweeping thing they remember, but sometimes it might be just one or two minutes when they connect with somebody in a country they may never see again.

Why is imparting this global view on students such a passion of yours?

Itâ&#x20AC;&#x2122;s a critically important part of being educated. Itâ&#x20AC;&#x2122;s not a nice add-on, but it is a fundamental part of what it means to have an incredibly rich education in 2017. The skills and understanding girls learn when they travel abroad or when they participate in HBâ&#x20AC;&#x2122;s Global Scholars program are skills that will shape them to be successful. I donâ&#x20AC;&#x2122;t mean that in terms of just financial enrichment, but successful in myriad ways â&#x20AC;&#x201D; the richness of being engaged and understanding human beings or being able to navigate complex issues once they graduate.

What goes into this Global Scholars program?

Itâ&#x20AC;&#x2122;s a four-year course of study at HB. Itâ&#x20AC;&#x2122;s a designation on our transcript.

There are certain requirements students have to meet. One is they have to take three years of Global Scholars courses. Other requirements would be one purposeful international experience, four years of upper school world language, passing a comprehensive geography exam and then also during senior year researching, writing and defending a thesis paper which is between 20 and 35 pages in length.

How do these students change over those four years?

There are tangible things I want them to take away â&#x20AC;&#x201D; particular knowledge about certain countries, cultures and people â&#x20AC;&#x201D; and I think they are gaining those things. They have an understanding of politics and issues dealing global health and gender inequality, for example. But weâ&#x20AC;&#x2122;ve been successful in being able to shape how they view themselves as human beings. Being in the program has influenced the colleges theyâ&#x20AC;&#x2122;re attending, majors theyâ&#x20AC;&#x2122;re looking at and now the professional careers theyâ&#x20AC;&#x2122;ve chosen.

Youâ&#x20AC;&#x2122;re also executive director of the Global Benchmark Group, which has 215 member schools across the globe. Whatâ&#x20AC;&#x2122;s that involve?

Right now, with our member schools, weâ&#x20AC;&#x2122;re identifying an assessment tool that uses data to measure the effectiveness of global ed programs in the United States and abroad.

That would allow to assess and establish a baseline of global competency for freshman and be able to assess them during their senior year to evaluate that growth.

This tool would be able to show us what we are doing well but also show us areas of weakness.

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What have your students taught you?

Thereâ&#x20AC;&#x2122;s not a day or week that goes by when there isnâ&#x20AC;&#x2122;t something they say that makes me step back because it might be perspective thatâ&#x20AC;&#x2122;s never crossed my mind. As a teacher in the classroom, youâ&#x20AC;&#x2122;re constantly learning â&#x20AC;&#x201D; and you should be. You should constantly be evaluating the art of teaching. Iâ&#x20AC;&#x2122;m interested in many things, but there are certainly areas and topics theyâ&#x20AC;&#x2122;re passionate about that historically I havenâ&#x20AC;&#x2122;t been as passionate about.

Last year, HB students were on every continent besides Antarctica. As an educator, whatâ&#x20AC;&#x2122;s it like traveling with students?

Professionally, itâ&#x20AC;&#x2122;s the most enriching thing I do here. Other faculty members would say the same thing. You see your students in a different light. The playing field becomes equal. Yes, youâ&#x20AC;&#x2122;re a teacher and leading them, but youâ&#x20AC;&#x2122;re travelers together â&#x20AC;&#x201D; exploring a place that maybe youâ&#x20AC;&#x2122;ve both never been to. We donâ&#x20AC;&#x2122;t offer pity tours. Iâ&#x20AC;&#x2122;m not taking students abroad to feel sorry for people because their lives are financially, for example, better off. I want them to understand that, but I want them to walk away with a full picture of that country.

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Co-Founder and Managing Partner Evolution Capital Partners LLC

Michael F. Marhofer is Co-Chair of the Corporate & Securities Practice Group and a member of the executive committee of Benesch. Benesch is a business law firm with offices in Cleveland and throughout the Midwest. Michael’s practice focuses on mergers, acquisitions, joint ventures and divestitures for a wide range of companies and industries. His experience with private equity funds helps him assist clients in capital formation matters, including venture and mezzanine capital financings. Clients also rely on him to provide day-to-day counseling on a full range of corporate and private equity topics. He regularly negotiates and drafts all types of commercial contractual arrangements. Michael serves and has served on the board of directors and as corporate secretary for many privately held companies. He is also an advisory board member for Evolution Capital Partners. Michael is a member of the Cleveland Development Board for Miami University and also has served on the Advancement Council for The University of Akron College of Business Administration for many years.

Jeffrey Kadlic spent the first part of his professional career working in the financial services industry with banks, insurance companies and private equity funds before co-founding Evolution Capital Partners LLC in 2005. It was during this time when he recognized that small growing companies were often overlooked, not because of their lack of potential, but simply due to their size. The solution was co-founding a firm based on demonstrated best practices. Today, Evolution has received recognition for its successful contributions to small businesses, having multiple companies, including Evolution, recognized as Inc. 500|5000 businesses.

Moreover, in 2013, Jeffrey was named as an Ernst & Young Entrepreneur of the Year finalist.

THOMAS N. LITTMAN

Thomas N. Littman joined Kirtland Capital Partners in 1995 and now serves as the firm’s Managing Partner. Kirtland is a relationship-oriented private equity firm that makes majority and minority investments in established, profitable and growing lower middle-market companies. Kirtland has been making those types of investments for 40 years. Tom is involved in all aspects of Kirtland’s business, including fundraising, deal sourcing, acquiring and divesting portfolio companies, and portfolio management. Prior to joining Kirtland, Tom was a corporate attorney with Jones Day.

Managing Partner Kirtland Capital Partners

ANDREW PETRYK

Managing Director and Principal, and Head of Diversified Industrials Brown Gibbons Lang & Co., a member of Global M&A Partners

As Head of the Diversified Industrials Practice at Brown Gibbons Lang, Andrew Petryk has completed transactions throughout the Americas and Europe for family-owned, publicly traded, and private equity-controlled businesses serving a broad range of industrial end markets. He has significant experience working with companies that design and manufacture highly engineered, value-added products, including engineered materials, such as industrial lubricants and specialty coatings; plastics and packaging; residential and commercial building products; capital goods, such as specialty vehicles and machines tools; and industrial technology, including test and measurement, automation and controls. Andrew’s investment banking and corporate finance career spans more than 30 years. He joined BGL in 1996, and has focused on mergers and acquisitions, capital raising and restructurings for middle-market companies. Andrew has held previous positions at KeyBank in the Structured Finance and Loan Restructuring Group and in a family office focused on direct control investment in private companies. He began his career in the Small Business Audit and Consulting Practice at Ernst & Young. He earned a bachelor’s degree from Miami University and an MBA from Weatherhead School of Management at Case Western Reserve University. Andrew is a member and former Cleveland chapter president of Association for Corporate Growth (ACG) and is a CPA.

SPONSORED CONTENT

ROUNDTABLE

DISCUSSION

Q&A

WE’RE

‘‘

GROWING

All transactions have momentum, and it is critical for sellers to keep that momentum in order to get an agreement timely signed at the price a seller expects to receive. All parties should see a clear and understood path to closing to reach the finish line. It is very important to hold a buyer to a tight, but reasonable, timeline throughout the process.”

— MICHAEL F. MARHOFER, Partner and Co-Chair of the Corporate & Securities Practice, Benesch

What are some of the key trends in the current M&A market?

ANDREW PETRYK: Today’s “perfect storm” conditions dictate a seller’s market. Purchase price multiples have remained elevated for a sustained period because of pent-up demand, cheap financing and surplus capital.

There are not enough quality deals in the market for the amount of capital available. Strategic buyers are sitting on cash stockpiles and struggling to achieve above-GDP growth. Private equity firms have billions in dry powder to deploy and need to put the money to work.

Lenders are also aggressively competing for financing opportunities, which has translated into attractive valuations and deal terms for sellers. We are seeing high valuations across our sector practices, with inflation of 1x to 2x EBITDA or more for high-quality companies.

Processes have become more competitive. We are driving multiple buyers deep into the due diligence process without exclusivity or expense reimbursement, which allows us to more effectively manage closing risk. This ensures that buyers remain aggressive and retain negotiating leverage for the seller through closing.

Time to close varies based on the transaction strategy. A focused process consisting of two to four buyers could close in as little as two to three months, while a broader, global process could take six months or more. Buyers are looking for ways to differentiate their bids and trying to preempt sale processes. Due diligence is still rigorous, with accounting and thirdparty market studies commonplace.

Regulated lenders are exhibiting heightened scrutiny because of increased regulatory oversight.

How does a business prepare for a sale to achieve the expected outcome?

JEFFREY KADLIC: Start the process of preparing your business for sale sooner rather than later — preferably at least a couple of years in

June 26, 2017 S2

advance. Owners should seek outside opinions as to what the strengths, weaknesses, opportunities and threats are to the business. Be objective to gain insight into how potential buyers will assess value.

Make sure you have good data and financial statements that will support the story you are trying to tell prospective buyers. Develop a five-year growth plan that outsiders can easily digest. All key executive positions should be filled with talented and forward-thinking professionals who, importantly, tell the same story you do about the prospects for the business. You don’t want to sell a business that is too reliant on the founder or one or two individuals.

Consider the team you will rely on to facilitate the sales process, including an attorney who specializes in mergers and acquisitions, an accountant who can possibly do some pre-sale quality of earnings analysis and a net proceeds analysis that discloses what the seller would receive post-taxes and transaction expenses. Make sure that you have an easily transferable business, including documented processes and procedures, a technology and/or product development roadmap and protected intellectual property. All shareholders need to be aligned with the sales process and potential outcome.

Address any potential legal problems that could cause lingering concerns.

What are some of the key issues for strategic buyers when seeking acquisitions?

ANDREW PETRYK: Given nominal global growth rates across many industries, strategic buyers are seeking ways to achieve growth in excess of GDP. In fact, public company investors are demanding it. This dynamic places significant strain on management teams and corporate boards of directors.

Therefore, companies are pursuing acquisitions to accelerate their growth.

For strategic buyers, simply buying revenues is not enough. Acquisitions must also fit with a company’s CONTINUED ON NEXT PAGE

FOR IT

Building at the top to keep our clients ahead With the addition of six attorneys, including our new Co-Chair, Michael F. Marhofer, our Corporate & Securities Practice Group is raising the bar even higher on our clients’ behalf. Mike’s substantial experience with complex corporate transactions and deals of all sizes and types adds strength and breadth to our already deep bench.

As Benesch’s largest transactional practice, we pride ourselves on being our clients’ primary business and legal advisors and counselors.

Whether that means handling public company/securities matters; helping with an M&A, joint venture, divestiture, capital raise or financing; reviewing and negotiating complex contracts; counseling on commercial finance and banking matters; or assisting in managing day-to-day legal needs, we’re serious about being our clients’ firstcall resource and trusted advisor for all corporate and transactional business needs.

If you are interested in joining our growing, dynamic team, please contact Laura Dutt, Director of Recruiting, ldutt@beneschlaw.com.

www.beneschlaw.com

Benesch_CorpSec_6x6_C.indd 1

6/14/17 10:33 AM

Unlock the True Potential

of Your Small Business with

Evolutionary Capital

We provide more than just a proven funding strategy – we offer a well-established process that delivers the kinds of results you’ve been searching for.

www.evolutioncp.com

SM

ROUNDTABLE

S3 June 26, 2017

CONTINUED FROM PREVIOUS PAGE

long-term growth strategy. The need to expand servable markets, often globally; gain access to new customers; acquire new technologies and production capabilities; and realize operational synergies frequently drive M&A activity. A well–devised integration plan must be flawlessly executed for the acquisition to be considered a success.

What are private equity buyers looking at when making an investment, other than purchase price?

JEFFREY KADLIC: First is the quality and professionalism of the management team. In most investments, the outcome relies quite a bit on the management teams’ ability to react to changes to the original plan. Understanding how to accurately interpret what is going on in the market, what adjustments need to be made and then executing on those changes in a rapid yet thoughtful way is a very important skill. Second, I want to assess the predictability of the business. What kind of visibility would I have in a business? How much time would I have to marshal necessary resources, train new employees or react to challenges and

DISCUSSION

‘‘

Make sure you have good data and financial statements that will support the story you are trying to tell prospective buyers. Develop a five-year growth plan that outsiders can easily digest.”

— JEFFREY KADLIC, Co-Founder and Managing Partner, Evolution Capital Partners LLC

turn them into opportunities? The more time you have, the higher the likelihood you will make the right decisions and come out on top.

Finally, the ability to understand and believe its growth opportunity. As an equity owner, I will make more money for my investors and ultimately will have an easier time selling the business if it has grown during my partnership with management. Investing in an industry growing double digits makes the story all the more believable because a business does not need to take market share from competitors to grow. In growth industries, businesses have the latitude to make some mistakes, maintain pricing discipline and invest in new ideas without impairing the business as easily as if an industry was flat or declining.

ANDREW PETRYK: Acquisitive growth is central to private equity’s investment thesis, so fragmented industries are a draw. Platforms with the ability to grow through acquisition

are in high demand.

We use a valuation scorecard in evaluating businesses, which helps us rank companies and assess the level of anticipated buyer interest.

Private equity sponsors use a similar “checklist,” and the “A” companies that can “check all of the boxes” command higher valuations.

Strong financial performance is paramount, which means a business must be able to demonstrate sustainable growth and margins and high cash flow. Sponsors are looking for visibility and predictability to revenues and a stable and manageable cost structure. Businesses that demonstrate less cyclicality are attracting higher multiples in today’s market. The management team must possess deep bench strength and a proven track record across business cycles. Sponsors will typically require roll-over equity to solidify management’s buy-in to the growth story. Sponsors also need to see a logical exit strategy to a liquidity event.

As we celebrate our 40th anniversary, we are grateful for the relationships we have built with our investors, lenders, service providers, and management teams.

Our motto – Relationships Matter – has served us well for 40 years and will continue to be our hallmark for years to come.

To mark this milestone, we are making a donation to the Greater Cleveland Food Bank to support a critically important organization in our community.

Celebrating 40 Years of Successful Partnerships

How do you choose the right private equity partner when the purchase price is the same?

JEFFREY KADLIC: Let’s assume existing shareholders and management will continue in some capacity with the private equity fund. While purchase price matters, existing shareholders and management are continuing on with the business because they want that “second bite of the apple.” So think about which private equity partner is best suited and has the capacity to maximize value of the business. Start with their investment track record. Does one private equity partner have more expertise and focus in your industry than others?

Do reference checks with existing portfolio company management and understand how the private equity fund reacts in both good and bad times. With resources like LinkedIn, you can do a lot of research outside of the standard reference lists offered today. You also need to understand the reporting expectations of your new partner, and its usefulness and impact on you and your management team’s daily routine.

Determine your private equity partners’ incentives and where your investment fits. Being earlier in the investment cycle is more desirable because you conceivably have more time to execute your strategy. Does your private equity partner have the financial capacity to execute your strategy and support in acquisitions if that is part of your strategy? It also comes down to personal chemistry and whether the person you would work with for many years is someone who complements your skill sets and whom you respect personally and professionally.

What advisers should be on your deal team,

‘‘

SPONSORED CONTENT

and what are important characteristics for each?

MICHAEL MARHOFER: Your deal team should consist of an investment banker, an attorney and an accountant. All members of your deal team must be team players, experienced in transactions and have very good communication skills. An investment banker plays a critical role as part of your deal team in finding qualified buyers to acquire your business, maximizing its value and facilitating the transaction. Unless you know your buyer and you are comfortable with the price that is being offered, you should have a thirdparty intermediary on your side.

It is important that an investment banker has experience in the industry in which the business operates. Such experience facilitates discussions with strategic buyers that can help maximize value. Your legal counsel must have transactional experience.

Your family lawyer, litigator or labor attorney will not be enough to handle the sale of your business. There are complexities and nuances that only experienced deal lawyers can assist you through. Your accountant should be very knowledgeable about your business so that accurate and complete financial statements can be provided and explained, and your after tax-proceeds from the sale can be determined.

THOMAS LITTMAN: Build strong relationships. These relationships will help you bridge difficult times during the deal process and avoid the deal getting off track or dying.

Establishing these relationships takes time and effort. While we all like the ease and convenience of communicating via email and text, nothing compares to in-person meetings and social gatherings to build a strong relationship. Invest the necessary time early on in a deal to build personal relationships with the key constituencies — the owners, key managers and deal advisers. It is important to understand who the key decision makers are and get to know and understand them. You should likewise require your advisers to forge good working relationships with their counterparts.

Given nominal global growth rates across many industries, strategic buyers are seeking ways to achieve growth in excess of GDP. In fact, public company investors are demanding it. Companies are pursuing acquisitions to accelerate their growth.”

— ANDREW PETRYK, Managing Director and Principal, Brown Gibbons Lang & Co., a member of Global M&A Partners

SPONSORED CONTENT

How can a company be sure to maximize the value of its purchase price?

ANDREW PETRYK: There is no substitute for running a high-quality sale process that includes a broad universe of global buyers. A prospective seller needs to hire an experienced investment banking team, led by senior bankers that remain actively involved throughout the transaction process. The team needs to have industry expertise and global relationships. No two companies are identical, so the banking team needs to customize the process and be creative and thoughtful.

Timing the market is essential.

Market conditions should warrant a favorable exit window, one with ample buyers and capital availability.

Company performance should be trending positively, supported by quality of earnings and quantifiable growth opportunities. Cyclicality and timing in the business cycle will also impact value.

What are some ways in which a company can minimize disruption to its business during the M&A process?

THOMAS LITTMAN: The sale of a business is a milestone event in a company’s history. Everyone wants to be a part of it. Creating an effective, but small deal team is vital to minimizing disruption to your business. It is important to limit intensive involvement to as small a group of managers as possible. This strategy allows the remainder of the senior management team to stay focused on effectively running the business. It is paramount that your business continues to perform well during the sale process.

You should communicate regular updates to the rest of your team so they feel included in the process, but are not burdened by significant interruptions to their day-to-day activities. You also need to develop a thoughtful communication plan for when to disclose a sale process to your broader employee base, customers, suppliers and other constituencies.

Some companies prefer to limit knowledge of the process to just the key managers who are working on the deal. Other companies believe the best course of action is to communicate to all employees that a sale process has

ROUNDTABLE

‘‘

DISCUSSION

The sale of a business is a milestone event in a company’s history.

Everyone wants to be a part of it. Creating an effective, but small deal team is vital to minimizing disruption to your business.”

— THOMAS N. LITTMAN, Managing Partner, Kirtland Capital Partners

begun. What is most important is to have a communication plan so you are prepared and know what, when and to whom you plan to communicate.

Finally, if your business is seasonal, you should consider timing the sale process to avoid the busiest time of year for your company.

What are the key strategies for a buyer to successfully complete a transaction?

MICHAEL MARHOFER: Just as a seller needs to prepare the business for sale, a buyer equally needs to be prepared to acquire a business. In competitive auction processes, a seller will expect a buyer to move quickly to a signing of a definitive agreement. In order to do this, a buyer will need to have a deal team in place, including legal counsel and other third-party service providers that will perform due diligence on the target business, including legal, accounting, insurance, environmental, tax and typically a market study.

A buyer must be able to demonstrate that it has adequate capital available to complete the transaction through debt and equity commitment letters. Thus, having established relationships with financing sources that can move fast when necessary can help win the deal. In many cases, the highest price is not always enough to win a competitive sale process. A buyer will need to be a good fit for the business.

Most sellers will want the business to be well taken care of by the next owner. A buyer’s intentions and synergies with the business and management teams can play critical roles in securing a transaction.

What are some common pitfalls that a seller should avoid?

at the price a seller expects to receive. All parties should see a clear and understood path to closing to reach the finish line.

It is very important to hold a buyer to a tight, but reasonable, timeline throughout the process. Sellers also should get the business ready to sell prior to engaging in a sale process. It is important to “clean up” the business prior to marketing it for sale and to conduct sell-side due diligence. The sell-side deal team needs to be fully aware of all potential issues involving the business so they can be proactive in discussing and resolving any such issues with the buyer.

Sellers also should have reasonable expectations going into a sale process.

Not only should sellers be educated with respect to the price range that the business is likely to sell for, but the time commitment of the management team, the information that will be requested about the business and the amount of time it will likely take to get to a closing.

These are all matters that should be thoroughly discussed and understood before engaging in a sale process.

THOMAS LITTMAN: Speed is your friend in a sale process, so sellers should adopt an aggressive timeline and stick to it, even it means sacrificing evenings and weekends in the short-term. Buyers will expect you to live up to your projections, so be very thoughtful about the numbers you share about your company’s performance over the next six to 12 months.

Sellers need to make sure their management teams continue to effectively manage the business during the sale process. Noise and loose ends within a business can detract from a process.

Take the time before you go to market to confirm that the business has all necessary permits, proper documentation with the customers, suppliers and employees, and addressed environmental, pension and other similar potential liabilities. You want to be able to tell your story without being distracted by these types of issues.

Sellers should not fall in love with or unduly focus on one buyer in the process.

June 26, 2017 S4

The buyer might not get there in the end, so you should be open-minded and responsive to all potential buyers. Finally, consider carefully who your advisers will be for a sale process. For example, the attorney who prepared your will may be your most trusted adviser, but may not be the best choice to represent you in the sale of your business.

What role does resilience play in completing a transaction?

THOMAS LITTMAN: Resilience is critical to successfully completing a transaction. Parties can become very emotional during a transaction and say and do things that create stress and anxiety. Buyers and sellers need to rely on their advisers to help them stay the course during difficult periods of a transaction. Rely on frequent communications to minimize misunderstandings. Deals never go in a straight line and always try the patience of all involved in a deal.

Deal participants need to reject the urge to say “forget it — the deal is dead” and remind themselves of the key elements that formed the basis for the deal. Don’t let small, petty items or comments derail your deal. Deals get done by people who forge ahead and overcome the bumps in the road.

Chicago • Cleveland • Irvine • Philadelphia • San Antonio • www.bglco.com

Spanning the Globe.

Creative.

Resourceful.

Networked.

MICHAEL MARHOFER: All transactions have momentum, and it is critical for sellers to keep that momentum in order to get an agreement timely signed

Mergers & Acquisitions • Capital Raising • Financial Restructurings • Valuations & Fairness Opinions • Research

Advertising director: Nicole Mastrangelo, nmastrangelo@crain.com Managing editor, custom and special projects: Amy Ann Stoessel, astoessel@crain.com Project editor: Kathy Ames Carr Graphic designer: Staci Buck For more information about custom publishing opportunities, please contact Nicole Mastrangelo.

To learn more, contact: Andrew Petryk, 216-244-3304, apetryk@bglco.com

Transactions involving securities are completed through Brown, Gibbons, Lang & Company Securities, Inc., an affiliate of Brown, Gibbons, Lang & Company LLC and member FINRA.

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CRAIN’S CLEVELAND BUSINESS

THE LIST

Conference Centers Ranked by Meeting Space THIS YEAR NAME (1)

MEETING SPACE (SQUARE FEET)

LARGEST ROOM # OF MAX MEETING CAPACITY ROOMS AMENITIES/SERVICES

SALES CONTACT

CATERING CONTACT

1

International Exposition Center (I-X Center) One I-X Center Drive, Cleveland 44135 (216) 265-2673/www.ixcenter.com

1,200,000

32,000

27

Over 1 million square feet of flexible space including a grand ballroom and 26 meeting rooms

Travis Poppell tpoppell@ixcenter.com

NA

2

Huntington Convention Center of Cleveland 1 St. Clair Ave. NE, Cleveland 44114 (216) 928-1600/clevelandconventions.com

350,000

15,000

35

225,000-square-foot exhibit hall, 32,200-square-foot grand ballroom; attached to Global Center and Hilton Cleveland Downtown

Judy Kent jkent@clevelandconventions.com

Chris Bupp cbupp@levyrestaurants.com

3

Corporate College East 4400 Richmond Road, Warrensville Heights 44128 (216) 987-2938/www.corporatecollege.com

107,000

350

29

Conference, training and meeting rooms with flexible seating arrangements, free Wi-Fi, video conferencing and teleconferencing capability, AV services

Joan O'Connor joan.o'connor@tri-c.edu

Amber Muslusky amber.muslusky@tri-c.edu

Conference & Dining Services at LCCC 1005 N. Abbe Road, Elyria 44035 (440) 366-4100/spitzerconferencecenter.com

100,841

350

50

Free Wi-Fi, free parking, on-site catering, video conferencing, video recording, ARS Software, data projectors with VGA and HDMI capabilities, smart rooms, document cameras

Marcus Wagner mwagner@lorainccc.edu

Chase Wilcox cwilcox@lorainccc.edu

5

Renaissance Cleveland Hotel 24 Public Square, Cleveland 44113 (216) 696-5600/renaissancecleveland.com

64,000

2,950

33

Executive boardrooms, AV services, business center, high-speed internet, event service professionals, 22,000-square-foot grand ballroom

Frank McGee frank.mcgee@renaissancehotels.com

NA

6

Arden Shisler Conference Center 1625 Wilson Road, Campus of OSU/OARDC, Wooster 44691 (330) 263-5500/www.shislercenter.com

60,000

500

14

Ergonomic furniture, communications technology, dedicated conference planners, complete catering services, 1,000-seat auditorium, free parking

Hannah Roscoe roscoe.20@osu.edu

Hannah Roscoe roscoe.20@osu.edu

7

John S. Knight Center 77 E. Mill St., Akron 44308 (330) 374-8900/www.johnsknightcenter.org

58,000

5,000 (2)

18

In-house culinary department, AV and communication services, expansive dock area, parking deck via skywalk, adjacent parking decks/surface lots

Dirk Breiding dbreiding@visitakron-summit.org

Ron Dorsey

8

Sawmill Creek Resort & Conference Center 400 Sawmill Creek Drive, Huron 44839 (800) 729-6455/www.sawmillcreekresort.com

50,000

2,000

25

Business center, exhibitor services, 18-hole golf course, AV/IT service

Cathy Razzante crazzante@sawmillcreekresort.com

Lisa Wood lwood@sawmillcreekresort.com

9

Hilton Cleveland Downtown 100 Lakeside Ave. E., Cleveland 44114 (216) 413-5000/hiltonclevelanddowntown.com

46,000

2,000

18

New LEED certified building connected to the Huntington Convention Center and Global Center; restaurant, 32nd-floor bar, lakefront views

Jillian Corbets jillian.corbets@hilton.com

Randy Shain Randy.Shain@hilton.com

10

House of Blues 308 Euclid Ave., Cleveland 44114 (216) 274-3353/houseofblues.com/cleveland

45,000

1,200

10

Catering, dining, entertainment, corporate gifts

Julie Woyma juliewoyma@livenation.com

Julie Woyma juliewoyma@livenation.com

11

Wolstein Center 2000 Prospect Ave., Cleveland 44115 (216) 687-9292/www.wolsteincenter.com

43,676

2,000

10

Conference center and arena space that transforms into a grand ballroom space, AV services, in-house catering and parking

Michelle Schilling m.l.schilling@csuohio.edu

Kevin Cannon k.m.cannon@csuohio.edu

12

Cleveland Campuses of Indiana Wesleyan University 4100 Rockside Road, Independence 44131 (216) 525-6160/indwes.edu

40,000

120

25

Classroom and meeting spaces with technology stations and Wi-Fi, beverage service catering available, outside catering allowed

Vaso Suhodolsky vaso.suhodolsky@indwes.edu

NA

13

Landerhaven 6111 Landerhaven Drive, Mayfield Heights 44124 (440) 449-0700/www.landerhaven.com

37,000

1,200

7

Full-service catering facility, indoor and outdoor spaces, decor and floral division, Wi-Fi, AV, high-speed internet, complimentary valet parking, adjacent hotel

Charles Klass cklass@executivecaterers.com

Sam Umina sumina@executivecaterers.com

InterContinental Hotel & Conference Center 9801 Carnegie Ave., Cleveland 44106 (216) 707-4100/intercontinentalcleveland.com

35,000

1,000

13

Table 45 for lunch and dinner, Northcoast Cafe for breakfast and lunch, 24-hour in-room dining, business center, fitness center, 500-seat amphitheater, grand ballroom seating 720

Scott Gerlach scott.gerlach@ihg.com

Terri Kufel terri.kufel@ihg.com

14

Kent State University Ñ University Events & Conference Services P.O. Box 5190, Kent 44242 (330) 672-3161/www.kent.edu

35,000

5,000

32

AV services, food service, summer housing, Internet, recreation center, gymnasium, fashion museum

Susan OÕKarma Ann Day ucb@kent.edu

NA

14

NEW Center 4211 State Route 44, Rootstown 44272 (330) 325-6850/newcenterevents.com

35,000

700

13

Modern design, executive chef/catering staff, in-house event planner, AV services, easy access from Interstate 76, free parking

Amanda Senn amanda@newcenterevents.com

Dawn Hull dhull2@neomed.edu

17

LaCentre Conference & Banquet Facility 25777 Detroit Road, Westlake 44145 (440) 250-2000/www.lacentre.com

26,000

800

9

Professional catering and event planning; multi-media services with lighting and production operated by inhouse technology company

Anne Rusnak arusnak@lacentre.com

NA

18

The Conference Center, Kent State University at Stark 6000 Frank Ave. NW, North Canton 44720 (330) 244-3300/kent.edu/stark/cucc

24,200

600

14

Various technological resources and professional services; environment suitable for corporate meetings, training, videoconferencing, trade shows, conferences

Janet Capocci jcapocci@kent.edu

NA

19

Bertram Inn and Conference Center 600 N. Aurora Road, Aurora 44202 (330) 995-0200/www.thebertraminn.com

24,000

600

32

Free wireless in guest rooms and public spaces, AV services, free parking

Victoria Hudson

Alex Shaffer ashaffer@thebertraminn.com

19

Quicken Loans Arena 1 Center Court, Cleveland 44115 (216) 420-2000/www.theqarena.com

24,000

20,000

8

AV services, internet access, video conferencing, inhouse food and beverage service

Hallie Yavitch

Shari Lindenbaum slindenbaum@cavs.com

21

Sheraton Suites Akron/Cuyahoga Falls 1989 Front St., Cuyahoga Falls 44221 (330) 929-3000/www.sheratonakron.com

23,000

500

14

Recently completed $5 million renovation, all suite hotel, outdoor dining on the Cuyahoga River, river view meeting rooms, full-service catering, outdoor events

Stacey Sobel-Marder

Stacey Sobel-Marder ssobel@sheratonakron.com

22

Corporate College West 25425 Center Ridge Road, Westlake 44145 (216) 987-2938/www.corporatecollege.com

22,900

40

4

Variety of training and meeting rooms in a professional suburban setting, free Wi-Fi, video conferencing, DVD, CD, VHS, Java City Coffee Shop and concierge staff

Joan O'Connor joan.o'connor@tri-c.edu

Amber Muslusky amber.muslusky@tri-c.edu

23

Hard Rock Rocksino Northfield Park 10777 Northfield Road, Northfield 44067 (330) 908-7625/www.hrrnp.com

22,007

2,300

5

A gaming, dining and entertainment venue offering 22,007 square feet of meeting space.

Rick Wittkopp

Michelle Baker michelle.baker@hrrnp.com

24

Quail Hollow Resort 11080 Concord-Hambden Road, Concord 44077 (440) 497-1100/www.quailhollowresort.com

20,000

500

19

AV services, high-speed internet, 24-hour business center, full catering service, full-time meeting manager, outdoor tent/500 guests

Annie Osolin osolina@quailhollowresrt.com

Julie Drury druryj@quailhollowresort.com

25

The Ritz-Carlton Cleveland 1515 W. 3rd St., Cleveland 44113 (216) 623-1300/www.ritzcarlton.com

19,000

400

12

Newly transformed meeting rooms, AV services, customized menus, team building activities, fitness center

London Williams-Young london.williams@ritzcarlton.com

Emily Ebersbacher-Gallo emily.ebersbacher@ritzcarlton.com

26

Holiday Inn Cleveland South/Independence 6001 Rockside Road, Independence 44131 (216) 524-8050/www.hiindependence.com

18,000

1,000

18

Wireless Internet, full-service restaurant, business center, AV services, airport shuttle, ATM, fitness center, swimming pool, sauna

Maureen Labyk mlabyk@hirockside.com

Laura Surace lsurace@hirockside.com

27

700 Beta Banquet & Conference Center 700 Beta Drive , Mayfield Village 44143 (440) 646-1777/www.700beta.com

17,000

800

9

Complimentary high-speed internet, 128 guest rooms, adjacent to the Hilton Garden Inn Cleveland East

Katie Grace

Aria Buford

4

14

RESEARCHED BY CHUCK SODER: CSODER@CRAIN.COM

Want the full version of this list Ñ and every other Crain's list? Become a Data Member: CrainsCleveland.com/data

The digital version of this list includes 37 facilities and names of additional executives. Information is provided by the companies. Information is supplied by the companies. Crain's does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all feedback and will include omitted information or clarifications in coming issues.

(1) Playhouse Square declined to be included in this list; an expanded theater schedule has limited the organization's ability to host additional events for the near future. (2) Theater style

CRAIN’S CLEVELAND BUSINESS

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List: Image CAVS boost helps conference centers csoder@crain.com @ChuckSoder

Maybe it’s not just a bunch of hype.

Northeast Ohio’s image has improved to the point where it’s helping many of our local conference centers win business.

How do we know? We asked them while compiling our Conference Centers list.

Here’s the exact question we asked: “People tell us that Northeast Ohio is gaining a reputation as a good place to host events, citing new hotels and amenities in downtown Cleveland and big events like the Republican National Convention.

Based on what you’ve heard from clients, has the region’s image improved to the point where it has actually helped this facility win business?”

Twelve of the 22 people who responded to that question said “yes.”

Six said “maybe — I’m not sure” and four said “no.”

Five of the “yes” respondents said the image boost has had a significant impact on their business, while seven described it as a modest impact.

Caveat: The full digital list includes 37 facilities — 15 of which did not answer the question.

I thought about that caveat when I saw the results for a different question: Did this facility experience an increase or decrease in event-related revenue in 2016 vs. 2015?

Fifteen of the 22 respondents (almost the exact same group that answered the other question) said sales increased by at least 2%. Five of them said it went up by 7% to 12%, and six said it jumped by more than 12%.

Only five facilities said their revenue dropped by more than 2%. But maybe some facilities didn’t want to tell us they had a bad year (even though we promised anonymity).

Back to the 15 facilities that did experience an increase. Fourteen of them identified the biggest factor behind the increase. The most common responses? Four of them chose “Northeast Ohio becoming known as an event destination.”

Three picked “Landed one or two large events.” Two said “Improving economy.”

TEAM NEO CONTINUED FROM PAGE 1

that includes west to east Richland, Ashland, Wayne, Tuscarawas and Columbiana.

The manufacturing loss was more than offset by growth in the service sector, which added 13,000 workers to a 1.3 million worker service sector.

With most manufacturing sectors of the economy are shedding jobs while still boosting production, the food sector job growth has Team NEO thinking about paying more attention to attracting dairy and other food businesses to the region, making it more of what economists call a driver industry.

A few years ago, Team NEO and other regional economic strategists identified five specific industry sectors — auto manufacturing, chemicals, health care, metals manufactur-

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PA G E 2 7

Cavs were in basketball purgatory.”

The Cavs have sold out all 151 regular-season and playoff contests since James returned in 2014. During his last three seasons in Miami, the Cavs’ average attendance ranged from a low of 15,926 to a high of 17,329, which is still 3,233 below capacity at The Q. The team’s average rating on Fox Sports Ohio during James’ four years with the Miami Heat was 3.45. The norms for the three seasons since are 7.94, 9.31 (a franchise record) and 7.38, respectively. The Cavs had the league's second-best TV ratings in each of the three years.

“If LeBron leaves, I think you’ll see something similar to the 2011 season as far as what will happen from a fan perspective,” said Eric Smallwood, managing partner of Apex Marketing Group, a sports sponsorship and analytics firm in St. Clair, Mich. “He’s the key to growing the team and (fans) spending dollars.”

The Cavs still have plenty of time to

convince James to stay, and the world’s best player can earn considerably more money (at least $200 million over five years) by re-signing with the team in 2018.

James’ presence, while obviously welcomed, had Griffin and the Cavs most often in win-now-or-else mode.

The result is something for which many fans have praised Gilbert — his willingness to spend record amounts of money on the roster.

Since the 2014-15 season, the Cavs have invested more than $400 million on player salaries and luxury taxes. The total for the last two seasons is in the $313 million range, including respective luxury-tax bills of $54 million and $25 million.

The 2017-18 Cavs, barring any major tweaks, have more than $125 million in guarantees for just eight players — putting Gilbert on pace to shell out $200 million or more, once the more-punitive 2017-18 luxury taxes are factored in.

In January, Forbes estimated that the Cavs lost more than $40 million during their championship season, which a team source later told Crain’s was a “conservative” figure. The Cavs would also lose money in 2016-17 — though not as much, the source said. (The flip side of that is the franchise’s value, according to Forbes, has soared to $1.2 billion, which is $825 million above the price Gilbert paid for the team.)

Such a willingness to do what it takes to field a winner gave Gilbert considerable clout with the team’s fans. That power, however, has faced its sternest tests the last few months, with a much-debated arena renovation plan, followed by a front-office shakeup.

“It feels unusual. It doesn’t feel right, and a lot of people are questioning why that is,” Withers, Dix & Eaton’s CEO, said of Griffin’s exit. “What’s clear is we don’t have all the answers.”

For at least the next year, Northeast Ohio does have James, whose presence ensures a star-studded roster and a slate full of national-TV games.

“He’s the centerpiece to everything,” Withers said.

The nuCLEus tower has secured big tenants. (Contributed rendering)

He declined to elaborate. Stark also declined to indicate proposed construction or delivery dates for the nuCLEus skyscraper, which won its first city approvals in 2015.

Stark, which has partnered on the high-rise with J-Dek Investments of Solon, has kept momentum for the project going publicly by announcing four tenants for the retail space in February.

Those tenants include Cleveland Live!, a multiple concept entertainment venue by Cordish Cos.; a Starbucks Reserve Cafe and what it dubbed the first Ohio location for Shake Shack, the New York Citybased burger chain.

However, Shake Shack announced Wednesday, June 21, that a location at the Pinecrest mixed-use project in Orange Village will be its first offering in Ohio with an opening set for 2018.

Construction at Pinecrest, which includes office, hotel, apartment and retail space, is well underway near the

Harvard Road and I-271 interchange.

Krystin Clark, a spokeswoman for Shake Shack, said in an email she does not have a current opening date for the chain at nuCLEus. With an avant-garde design bringing to mind piled-up blocks, nuCLEus is proposed for a site that a J-Dek affiliate owns consisting largely of parking lots between East Fourth and East Sixth streets, Prospect Avenue and Huron Road. The site is north of Quicken Loans Arena.

Stark Enterprises is among many real estate clients at Benesch.

ing, and professional services — to focus their attention on, believing they would be the key building blocks, the drivers, of the Northeast Ohio economy of the future.

Now, said Jacob Duritsky, Team NEO’s vice president for strategy and research, food manufacturing may be moving up the ladder into that group.

“There aren’t many manufacturing sectors projected to add net new employment in the future, nor manufacturing sectors that have seen growth since 2007, the beginning of the recession,” he said. “This is one of those sectors.”

Added Bill Koehler, Team NEO’s CEO: “If you think about where do we find the growth, how do we make our economy better, stronger, more viable, diversification matters. And people (in the food industry) are not just investing here once. They are committing here.”

Koehler was referring to continuing investments being made in the region by companies such as J.M. Smucker Co. and Nestle. Both of those companies recently have made significant investments in Northeast Ohio.

Smucker has invested $31 million — and 400 jobs — in a soon-to-becompleted pet foods research and development facility in Orrville. At the same time, Nestle USA has been steadily adding buildings and employees to its 60-acre Solon campus over the last several years, including a $50 million development center that opened in 2015.

According to the Ohio Department of Development, food and beverage producers added nearly $10.4 billion to the state’s gross domestic product in 2014, up from $9.2 billion in 2008.

Joseph Needham, director of the food and agribusiness sector for JobsOhio, the state’s economic development nonprofit, said Ohio has sever-

al natural advantages for food manufacturers.

“We’re the farthest-east major production center if you need feedstocks for your dairy or if you need wheat for your flour mill, but then add in that we have abundant fresh water,” he said. “Food manufacturing is very water-intensive.”

Needham, a former business development executive with The Andersons, a diversified agribusiness firm based in Toledo with operations in 20 states, said low-cost natural gas and the region’s pool of available talent also are advantages.

“Every company we talk to says, ‘Labor is a major issue. We can’t find workers,’ ” he said. “I’ve built plants in Kansas, Nebraska and Iowa, and you can’t find people. There aren’t people.”

Needham also said European food companies are looking west.

“We see a lot of European (food)

companies want to establish their first plant in the United States,” he said. “We can compete for that.”

Needham, who surveyed the longevity of food plants in Ohio, said another factor making food makers attractive is that they tend to stay put.

“When you invest money in a place that has a good labor force and good water and good energy, the plant gets old and you just keep rehabbing it.

You don’t want to move it,” he said.

Team NEO’s quarterly review also noted that the vacancy rate in industrial properties is down to 4.6%, the lowest in the nine years the organization has tracked vacancy.

Team NEO also has tracked natural gas wells since 2012 and reports there are 1,022 wells in production statewide. However, new well permits have dropped below 100, half the number of permits drawn when permitting peaked in the fourth quarter of 2014.

CONTINUED FROM PAGE 1

By CHUCK SODER

J U N E 2 6 - J U LY 2 , 2 017

The obvious answer is no, since fans, as long as a team is successful, largely don’t care about the general manager, industry analysts told Crain’s. The more complicated response, though, is if Griffin’s exit eventually impacts James’ future, the repercussions could be significant.

“I think, ultimately, the vast majority of fans care only about game-day outcomes, and they care about the stars,” said Chas Withers, the CEO of Dix & Eaton, a Cleveland integrated communications firm. “All of this behind-the-scenes stuff is largely meaningless to them.”

In many respects, Griffin’s departure is business as usual for the Cavs, who have yet to award a GM with a second contract since Gilbert purchased the team in 2005. The perception in the NBA is that the Cavs’ owner doesn’t value the GM role as highly as others in the league do, though Griffin wasn’t a typical basketball executive.

When the Cavs trailed the Golden State Warriors 3-1 in the 2016 Finals, the GM sent an organization-wide email that predicted the team was going to be the first in league history to rally from such a deficit. Griffin’s inspirational messages to all members of the organization helped to make him a beloved figure, sources said, and his departure upset many.

Fans, however, can be very forgiving — especially if a controversial decision winds up resulting in transactions that are viewed to have helped the team.

“Cavs fans will soon forget David Griffin if his replacement is able to bring some new players to town,” said Jim Kahler, the executive director of the Center for Sports Administration at Ohio University and a former Cavaliers senior vice president of sales and marketing. “My thought is that LeBron will continue to push Dan Gilbert to surround him with the best possible players so he can take another shot at Golden State.”

Vice chairman Jeff Cohen, left, is no longer involved with Dan Gilbert’s Cavs, but Nathan Forbes, right, still has a role. (Ken Blaze for Crain’s)

The one who matters most And really, it’s James’ presence that is easily the most critical, since it impacts every aspect of the organization — from annual Finals trips, to sold-out arenas, monstrous television ratings and seven-figure sponsorship deals.

On the night the Cavs confirmed Griffin’s exit, James tweeted, “If no one appreciated you Griff I did,” which only served as fuel for those who believe the superstar will leave the Cavs next summer.

James can opt out of his contract following the 2017-18 season, and rumors that he has his sights set on the Los Angeles Lakers heated up before the Cavs even played their first home game of the 2017 Finals.

“I think it’s really the only thing that matters,” Dix & Eaton’s Withers said of James. “What did we witness when he was here before? The Cavs had success, and attendance and people followed. When he left, the

BENESCH CONTINUED FROM PAGE 1

PA G E 2 8

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J U N E 2 6 - J U LY 2 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

AKRON

Hudson finally sees takers for business park

By BETH THOMAS HERTZ clbfreelancer@crain.com

After years of stagnant development, Hudson Crossing Business Park, along state Route 303 near state Route 8, is in the middle of a building boom, with four new construction projects underway and one more under consideration.

The new projects — two of which are spec buildings — will join two buildings that have been at the Premier Development Partners site for several years and will bring an estimated 427 new jobs with a payroll of $27 million to the city of Hudson.

“There is no exact science as to why you have four projects in a park in a 12-month span compared to not having any projects there over a four-year span,” Premier senior partner Spencer Pisczak said. “It just happened the way it happened in terms of the activity coming in the same period.”

Pisczak and Ross Farro, a restaurateur and former office building developer, in 2006 purchased the 130acre Hudson site as part of deal in which they bought 300 acres in four Northeast Ohio suburbs from Indianapolis-based Duke Realty Corp.

Since then, things moved slowly until relatively recently.

In 2012, the a 62,500-square-foot facility at the back of the park that houses the WBC Group (formerly Meyer Distributing) went up, and Sky Zone, a 26,000-square-foot trampoline park that faces Chittenden Road, was built in 2014.

The four buildings under construction are: J HC 125, a 125,000-square-foot spec building that has been fully leased. Universal Screen Arts, an internet retailer and mail-order catalog company already based in Hudson, will be a tenant. Premier declined to identify the second tenant.

J HC 21, a 21,000-square-foot spec building that faces Route 303. About 7,500 square feet have been leased to Goldfish Swim School, which offers indoor swim lessons in a kid-friendly

This aerial shot shows the already-occupied WBC Group building and the under-construction 125,000-squarefoot spec building at Hudson Crossing Business Park. (Contributed photo)

environment. The company has locations across the country. About 13,500 square feet remain available in this building. Pisczak said additional tenants will most likely also have a kid focus, such as a daycare center.

J ForTec Medical, a 70,000-squarefoot build-to-own facility that will be the national surgical equipment supplier’s corporate headquarters. Owned

by Hudson residents Drew and Nancy Forhan, ForTec’s new space will be nearly double that of its current location in Streetsboro, Pisczak said.

J Assurance Health, a 13,000-squarefoot build-to-own facility that will provide short-term residential psychiatric treatment for seniors.

A fifth building is under consideration. Pisczak said it would be another spec building but declined to give further details.

Pisczak said Premier is pleased with the quality of companies that are locating in Hudson Crossing and the job growth they represent after the fairly

dormant period in the park’s history.

He said the recession was partly to blame for the delay, attributing the current growth at least in part to pentup demand. With four parcels remaining, there is room for up to seven more buildings in the park, he added.

“We always felt that this corridor long term would be extremely prosperous and be a great spot for corporate entities that want to expand, as well as some retail and office users, and it’s starting to get the momentum that we thought it would get about five years ago,” he said.

The park location near Route 8, I-271 and the Ohio Turnpike is a strong asset, Pisczak said.

“Route 8 is very manageable traffic-wise with six lanes handling about 55,000 vehicles a day,” he said. “We can easily draw from 10 to 15 miles away because of these roads.”

Premier has other interests in the area, including having built the Arhaus headquarters and distribution

center on Hines Hill Road in Boston Heights a few years ago.

Premier senior partner Kevin Callahan said the city of Hudson’s highspeed Velocity Broadband fiber-optic network is another asset boosting park development.

“It’s a great addition to have hightech connectivity,” he said.

About 200 businesses are using the city-owned network right now, said Hudson Chief economic officer Jim Stifler. He said it is one of only about three dozen community-owned networks in the country.

“Hudson has a higher tax rate than some communities, but Velocity helps us attract innovative and hightech businesses that want fiber-optic capabilities,” he said.

Stifler agreed, too, with Pisczak about the draw of good highway access, an upswing in the economy and tight industrial vacancy rates in the area as being catalysts for the spurt of growth.

He also said the city granted signif-

icant 15-year tax abatements to help get the park going, including 100% for WBC in 2011 (which requires annual payment to Hudson City Schools), and for the HC-125 and ForTec buildings more recently. The H-21 and the Assurance Health buildings received 50% abatements. “(The abatements) have totally paid off,” he said. “However, we don’t expect that future abatements will need to be as big as things are growing well now. The need to provide incentives in the future will be determined in a case-by-case basis.”

Stifler has seen lots of nibbles from developers interested in Hudson lately, which he agrees is boosted by the easy highway access. However, buildable land is scarce in the area, he said.

The 136-acre Seasons Greene eco-friendly industrial park is one area that is getting interest, and he thinks that park, located on Seasons Road, will pick up as Hudson Crossing starts to max out. Another area attracting interest is what Stifler calls his “diamond in the rough,” 170 acres between the turnpike and Hines Hill Road at Route 8 that previously housed a youth development center.

The city bought the land about eight years ago, he said.

“I get a lot of interest about that land, but I want it to go to the right party — a large entity with a good payroll” that will help support Hudson well into the future, he explained.

Phase II of Hudson’s First and Main project is also about to kick off, with plans to unveil details to the public later this summer, Stifler said. The project is being developed by Testa Builders of Cuyahoga Falls.

Work is currently being done downtown to add trees, improve lighting, upgrade sidewalks and resurface the road. For Phase II, the city will be relocating its nearby salt dome, Hudson Public Power, city storage areas, the school district’s bus garage and more to create an area that blends about 150,000 square feet of commercial space with about 150 empty-nester homes that will be a mix that includes lofts, condos and townhouses.

Canton’s innovation district gets major backing

By DAN SHINGLER dshingler@crain.com @DanShingler

Canton isn’t just getting an innovation district. It’s also getting an incubator to help hatch new businesses inside it — and a healthy dose of private investment in infrastructure.

That’s the promise — with a caveat — of Kyle Quillen, co-founder and chief technology officer of Canton-based Agile Networks, a company that specializes in working with hybrid fiber-optic networks and broadband networks generally.

“We are planning to invest seven figures in it,” Quillen said of the district, noting that his company will work to get the district the 100GB of internet speed it needs, while also opening an incubator in its own space.

“It will be a private incubator, funded by Agile,” Quillen said.

It’s all thanks to state legislation passed last year, after it was introduced by Rep. Kirk Schuring, a Jackson Township Republican with Canton in his district. That law enables cities in Ohio to set up redevelopment

districts and innovation districts — and to earmark property taxes raised within them for their continued development. Schuring said the legislation was inspired Quillen by a 2014 Brookings Institution report that showed how such districts can be a success.

“That report talked about how downtowns are being revitalized and young people are being drawn to downtowns — and that a big part of that resurgence was often an innovation district,” Schuring said.

Canton now has the first in the state. It set up a redevelopment district that covers about a dozen blocks in center of the city and in May announced that it has set up an overlapping innovation district.

“Our office just happens to be in the middle of the district,” Quillen said, from Agile’s headquarters at 213 Market Ave. N. That’s partly why Quillen said he’s willing to invest his company’s own

money, not just in the incubator but in the district’s broadband infrastructure. He wants the area around his own company to grow, improve and help him attract the talent he needs. More often than not, his company is looking to hire young, tech-savvy professionals, who also are the type of residents civic leaders and local economic developers would like to see Canton attract.

As for the caveat, Quillen wants a say in how the Innovation District is managed, which probably will mean a seat at the table, if not at the head of the yetto-be-named board that will manage it.

That might not be a big ask, though, as Quillen and Agile already have the support of local leaders, including the Canton Regional Chamber Commerce and Schuring, who said he’s working with both Agile and state officials to get 100GB internet service in the district.

Chamber president Dennis Saunier said Quillen is likely a good choice to help lead the district and an example of what he hopes the district will produce.

“Kyle is one of the people we want to attract more of. His involvement and his willingness to lead the pro-

cess of the incubator gives us a tremendous opportunity — with someone who knows what it takes to make to survive and thrive in this world,” Saunier said.

Agile is a young company itself, formed in 2010 with just three people. But today it employs about 35 and is poised for more growth, Quillen said. It was a bit bigger — close to 50 people a couple of years ago — but that was largely because it was working on some big projects for the state of Ohio which have since been completed, as planned, Quillen said.

Still fairly young (32) himself, Quillen said he now plans to share what he’s learned, along with his office’s amenities, with other entrepreneurs.

Agile’s offices are not big — just 6,000 square feet in total — but the company has more than enough space to host several other companies and hopes to open its incubator and have its first tenants in place by sometime this fall. It doesn’t need a lot of space because the IT and other tech startups it hopes to bring in will often only consist of a few people.

“Or even one person,” Quillen said.

Quillen said he wants to see the dis-

trict continue to develop new apartments, other urban housing options, restaurants, entertainment venues — and all of the pubs, coffee shops and other attractions he says help companies like his rely on to draw urban-oriented, young employees.

To at least some degree, the district will fund its own success.

Schuring’s law enables the city to earmark 70% of the increased property taxes on a building that’s improved in the district to be reinvested in the district itself. It’s hoped that more investments will be made in existing buildings, if backers realize that a good portion of their taxes will be used to improve the part of the city right outside their door.

Chamber vice president of economic development Mike Gill said the district’s improvements, including adding high-speed internet, will serve two purposes.

“It’s almost two markets that will be developing. The incubator market with people working on IT applications, but there are also businesses that need high-speed connectivity that are already established and will benefit,” Gill said.

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J U N E 2 6 - J U LY 2 , 2 017

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PA G E 31

David Krueger

Co-founder, Cannabis Arbitration Panel When not serving clients at Cleveland law firm Benesch as a litigator, David Krueger is working alongside his business partner, Mike Scottsdale, to develop what may be the first arbitration company in the United States focused entirely on the relatively young legal marijuana industry. ¶ The business, which effectively began earlier this year, is in its infancy, not unlike the industry here. ¶ But as the cannabis industry matures in Ohio and across the country, CAP’s founders believe they’ll be able to fill a need in the sector to help resolve business issues bound to arise over time, like the inevitable disputes between marijuana cultivators and vendors. The differences between federal and state laws on marijuana, though, combined with the nuance in policies between states themselves, creates just as much opportunity as challenge for this budding arbitration firm. — Jeremy Nobile

Five things What’s one of your favorite hobbies?

Homebrewing. Been doing it seven years now.

Any favorite styles?

My favorite to brew and drink is an English-Style Pale Ale ESB (extra special bitter).

What’s something people may not know about you?

I’m getting my pilot’s license. Cessna 152 and 172 is what I fly right now.

Favorite TV series?

Game of Thrones

If you could take any job, regardless of pay, what would you be doing?

I’d be a bush pilot in Alaska.

Give me the elevator pitch: What is the cannabis arbitration panel?

We’re an alternative dispute resolution company that focuses on private resolutions for companies operating under state-approved cannabis programs.

So what does that really mean?

What exactly does CAP do?

We’re looking to work with those attorneys because depending on what state you’re in, they’ll be the local experts. So we’re building a network of lawyers to resolve these disputes as they come up. If a dispute were in Ohio, we potentially could be the arbitrators, but that’s not the approach we want to take.

The strength in what we want to do is in making connections with lawyers who have specialized knowledge. We’re not looking to compete with other attorneys in this space, but work with them.

Why would someone use CAP or any arbitration panel for that matter?

Enforceability, because the arbitration would be built into a contract; knowledge of arbitrators and mediators; and privacy because arbitration isn’t made public. I think we’re up to 10 attorneys so far in Ohio, Colorado and Florida. But that’s just networking through our different contacts.

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Ohio in particular won’t even have a medical marijuana program in effect until next September, though, so there’s nothing to really arbitrate here just yet. Why do this now?

As regulated as the industry is, all the pieces are just kind of falling into place. So what happens in two, three, four years down the line when business disputes happen? It’s just going to occur naturally as the industry matures. That’s why we need to build our network now.

These disputes are already happening in other states with a marijuana business scene. What’s a common issue that arises?

Say a cultivator contracts with a vendor. The vendor stiffs the cultivator, and the cultivator says, “You owe me $300,000 based on the terms of the contract.” The defendant says, “You’re right, under terms of the contract, I did agree to pay you X amount.” But they’ll tell a judge they can’t enforce the contract because it conflicts with federal law. Unfortunately, in a few of those cases, the

courts agreed. They’ll say this looks like a valid contract, but I can’t enforce it. And the cultivator is out of luck.

Wow, that seems like a pretty shady way of doing business.

It really is. And I think that while a lot of courts are starting to get on board now, people in the industry should have an interest in arbitration. If you have someone you work with who says no, I’d rather go to court than put in a contract that they’ll arbitrate a dispute, that should be a red flag in this industry. You don’t want to be left holding the bag with some goods you can’t turn around and sell.

And arbitration is needed now because courts aren’t really touching these disputes due to the mismatch in state and federal laws?

Right. The judges will look at a contract, tell you that you have a good argument, but they can’t award any money because marijuana is still illegal under federal law, even though they’re operating legally in their state. And the laws themselves aren’t even entirely clear yet. Take Ohio, for example, which didn’t approve medical marijuana until fall 2016. Well, the new regulations still technically aren’t written yet. But people are entering or writing contracts right now with manufacturers, suppliers — they’re trying to set up their networks even though the laws aren’t entirely there.

Down the line, even if courts have a more favorable view of marijuana, these aren’t things the courts will be very familiar with outside of the criminal context. That’s why we’re trying to get ahead of this.

You and Mike are both litigators by day, right? What inspired you to do this?

After the Ohio Supreme Court modified rules to say lawyers could advise clients on medical marijuana within XYZ parameters, our firm, like others in the state, started doing that. One day, one of our contract lawyers came to us, said he was working with this client, a marijuana company. He said there were concerns about going to court if there’s a dispute, and asked if we knew any arbitration companies specializing in cannabis. With Mike and I being in the litigation practice, we’re no stranger to arbitration. So we started looking around but didn’t find anything. None of the major arbitration companies have practices in that area or subgroups in that.

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