Crain's Detroit Business: Oct. 13, 2014 by Crain's Detroit Business

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www.crainsdetroit.com Vol. 30, No. 41

OCTOBER 13 – 19, 2014

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Final signoff for WADL? Adell looks to sell at FCC auction, expects $170M

$25M gift boosts WSU’s tech transfer focus How the future stacks up for HP’s Pontiac presence Do we do housekeeping? That’s the question at DMC CRAIN’S MICHIGAN BUSINESS

Based on estimates provided by the FCC, which Adell shared with Crain’s, he expects to get $170 million for WADL’s portion of the local UHF airwaves. “It might be time, at $170 million, to take the chips off the table on WADL,” Adell said. “I don’t think it’s going to go for less.” The FCC will take 15 percent of the auction sale price as a broker fee, and Adell expects WADL’s spectrum to sell for closer to $180 million or $190 million. The station, which he and his now-deceased father launched in 1989, would go off the air three months af-

BY BILL SHEA CRAIN’S DETROIT BUSINESS

Kevin Adell has met an offer he cannot refuse. Well, not quite an offer, but the expectation of an offer. Adell, who owns WADL TV-38 in Clinton Township, said he will participate in the Federal Communication Commission’s auction next year in which TV stations will sell their shares of the coveted UHF over-the-air broadcast spectrum to mobile wireless providers that need more airwaves bandwidth to satisfy customer demand.

See WADL, Page 31

COURTESY OF WADL

As the name on the water tower suggests, Kevin Adell, in addition to owning WADL, also owns the site of the former Novi Expo Center.

A heart for software How philanthropy in Grand Rapids is reshaping, Page 17

This Just In Moody’s: Water board deal positive for bondholders The unanimous approval of the deal to form a Great Lakes Water Authority that will lease and manage assets of the Detroit Water and Sewerage Department is a likely “credit positive” for holders of more than $5 billion in DWSD bond debt, Moody’s Investors Service Inc. reported Friday. The new report does not change current bond ratings but states that the authority will be positive for current bondholders — if the agreement sufficiently isolates the systems from Detroit bankruptcy risk. Local officials have said the new authority will likely refinance more than $5.2 billion of legacy DWSD bond debt and lease the city-owned water and sewer assets for $50 million per year for 40 years. “The systems will, however, remain exposed to Detroit’s credit weakness as the city will likely become its largest wholesale customer,” the report adds. — Chad Halcom

Led by its upbeat CEO, Menlo spreads joy of technology BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

ich Sheridan was fed up with lousy software and bad corporate management when he co-founded Ann Arborbased Menlo Innovations LLC in 2001 with the mission statement: “To end human suffering in the world as it relates to technology.” Along the way, CEO Sheridan has become perhaps the most prominent face of IT in Ann Arbor. He’s a community activist who has served on a range of boards. He’s a frequent event speaker noted for his upbeat messages. One of Menlo’s co-founders, James Goebel, describes Sheridan as “pretty tirelessly optimistic. If you put him in a room full of manure, he will dig through it until he finds the pony.” Sheridan, 57, is an evangelist for common-sense solutions, an executive who disdains worker bees in favor of empowered employees who come up with their own solutions to coding problems, and a consummate salesman and marketer. Menlo’s innovation, clients attest, involves dissecting software products all the way through be-

What’s your business worth? ... Really?

LEISA THOMPSON

From left: Menlo Innovations co-founders Rich Sheridan, James Goebel and Robert Simms, who calls Sheridan “a one-man marketing juggernaut that allows (Menlo) to thrive without a sales or marketing team.”

fore development, including sending nonprogrammer types who are called high-tech anthropologists into the field to really understand how end users do their job. But beyond understanding what end users really need, or having a See Menlo, Page 32

THE MENLO LOWDOWN Menlo’s climb began in the basement, Page 32 Remember tech’s paperless promise? Not here, Page 33 Video: Take a tour of Menlo’s office, crainsdetroit.com/video

Figuring business valuations involves more than crunching some numbers to come up with a price tag. Here’s what you need to consider and why, Page 11

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MICHIGAN BRIEFS More expansion brewing in GR, this time from Holland beer biz So is anyone in West Michigan a teetotaler? Following on the announcement of an expansion by Grand Rapids-based Founders Brewing Co., Holland-based New Holland Brewing Co. said it plans to open a $10 million brewery in what used to be called the Furniture City but nowadays is … well ... beer. Lots of beer. New Holland will locate parts of its brewing and distilling programs in Grand Rapids, bringing about 150 jobs to the city. The project is scheduled to finish in January 2016.

Zeeland council revokes tax break for Consumers Energy plant The Zeeland City Council unanimously voted to revoke a tax break for Jackson-based Consumers Energy Co., The Holland Sentinel reported. No city official could recall ever revoking a tax abatement. Council members made the move in light of a dispute with the utility over the value of its power-generating plant. The move must be approved by the Michigan Tax Commission before taking effect.

If you seek a pleasant peninsula full of zombies, look over here Jim Burns of Grand Rapids, who every year erects a haunted house,

Kent County’s largest employer to offer same-sex benefits Grand Rapids-based Spectrum Health will begin providing insurance benefits to same-sex partners next year, MLive.com reported. The policy takes effect in January. Spectrum is the largest employer in Kent County, with 22,400 workers. The policy covers all the hospitals in the health system, said Roger Jansen, a senior vice president and Spectrum’s chief human resource officer. Spectrum will offer benefits to legally married gay couples and same-sex couples who can demonstrate they are in a committed relationship. Offering these benefits is important for employee thought this year he would “put something out there a little bit different to catch your eye.” We fear that is just what happened. His marketing campaign, affixed to a billboard: “PureMichiganFear.” The problem wasn’t that he forgot to put spaces between “Pure,” “Michigan” and “Fear” — although, frankly, at least one editor here rolled his eyes. The problem is that the state considers this a form of trademark infringement because it sort of incorporates the moniker of the state’s Pure Michigan tourism campaign. The state said Burns can keep the billboard, but a website using “PureMichiganFear” now redirects to another website, The Grand Rapids Press reported. Pure Michigan spokeswoman Michelle Grinnell notes that “we

recruitment and retention, Jansen said. “A lot of other large systems already have had these types of benefits.” “We think it’s the right thing to do to take care of our communities,” he said. “We recognize diverse familial and home situations, and we want to make sure we take care of all the people we serve and that we employ.” Employees have expressed “zero negative reaction” to the new policy, Jansen said. The response has been “very positive. We have received a number of thank-you letters.”

are not out there being the logo police.” Although that would be an intriguing costume.

MICH-CELLANEOUS 䡲 The gross domestic product of Monroe County rose 7.46 percent last year, the highest among the 15 metropolitan statistical areas in Michigan, according to data from the U.S. Bureau of Economic Analysis. It also ranked 22nd among 381 metropolitan statistical areas in the U.S. Michigan’s GDP grew 2 percent. 䡲 Saginaw Township-based Morley Cos. Inc. plans to hire 200 people to meet demand from a global automotive manufacturer, national health care company and Fortune 100 insurance provider, MLive.com reported. Morley employs more than 1,750. Its products include

meetings and incentives, business process outsourcing, market research, exhibits, displays and performance improvement programs. 䡲 Aerospace supplier Alcoa Power and Propulsion, a business unit of New York City-based Alcoa Inc., has moved its headquarters from Cleveland to Whitehall north of Muskegon, the Grand Rapids Business Journal reported. The 2,150 workers now in Whitehall make cast components for commercial passenger jet engines and Western military aircraft jet engines.

䡲 A story on Page 25 of this issue should say that a capital campaign

by Wayne State University has raised $382.2 million to date. An incorrect number was used.

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䡲 Michigan’s first incubator devoted to fashion design, The Runway, opened in a rehabbed former department store in downtown Lansing, the Lansing State Journal reported. It’s a project of the Lansing Economic Development Corp. 䡲 Following through on plans reported by Crain’s Michigan Business in June, Grand Rapids-based Electronic Cigarettes International Group Ltd. plans to sell the public up to $150 million in stock. 䡲 Eric Buehler, Josh Hulst and Ryan Graffy of Grand Rapids won the $10,000 “Code Michigan” grand prize, culminating a three-day event for civic-minded software developers and designers, The Associated Press reported. The three won for their “SnowFi” app, which shows where snow plows are and what roads have been cleared. The men said they took part in the contest for fun. (Well, obviously.)

Muskegon gon n

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Gift boosts WSU’s tech transfer Urban Science founder pledges $25M, other help BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

The announcement last week of a $25 million gift to create an institute to create startup companies in Wayne State University’s College of Engineering was the latest in a series of moves since M. Roy Wilson became president last summer with a promise to make technology

commercialization a priority. The donation comes from James Anderson, founder of Detroitbased Urban Science Applications Inc., and his wife, Patricia. The James and Patricia Anderson Engineering Ventures Institute is intended to encourage faculty and students to think of commercial applications for new technologies and provide

WSU’S CAPITAL KICKOFF Wayne State unveils a $750 million fundraising campaign, Pivotal Moments: Our Campaign for Wayne State University, Page 25 mentors to teach best practices in research innovation, technology transfer and commercialization. “Jim Anderson is one of the most admired entrepreneurs in Detroit,” Wilson said in a press release. “By establishing the Anderson Institute, he and Patti are empowering our engineering and

computer science faculty and students to follow in his footsteps and turn their ideas into businesses.” Anderson got his undergraduate degree in civil engineering from WSU in 1966 and his master’s degree in 1970. He was an instructor in the College of Engineering in 1967 as he began developing models and computer mapping techniques that led him to form Urban Science, a global automotive retail consulting firm with more than 850 employees in 19 offices around the world. “Investing in engineering and

Inside

Panasonic’s plans to make voice more reconizable, Page 7

See WSU, Page 29

Company index

HP split may impact Pontiac unit’s future

These companies have significant mention in this week’s Crain’s Detroit Business: Adell Broadcasting . . . . . . . . . . . . . . . . . . . . . . . . 31 Autoliv . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Automation Alley . . . . . . . . . . . . . . . . . . . . . . . . . 30 Belfor Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Chrysler Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Clark Hill . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 13 Compuware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Con-way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Daifuku Webb Holding . . . . . . . . . . . . . . . . . . . . . 22 Detroit Medical Center . . . . . . . . . . . . . . . . . . . . . . 3 D:hive Detroit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Ties to auto industry may aid local office BY DUSTIN WALSH CRAIN’S DETROIT BUSINESS

How do things stack up for Hewlett-Packard Co. in Pontiac? Experts say the local office could benefit from growth in services, particularly cloud computing. These boxes of printer cartridges represent a sector of HP with a less rosy outlook.

An uncertain future faces Hewlett-Packard Co. in Pontiac as its multinational parent company prepares to split into two separate public entities by October 2015. HP announced the split on Oct. 6 as part of CEO Meg Whitman’s three-year turnaround strategy for the Palo Alto, Calif.-based tech firm. The result will be HP Inc., which will continue to manufacture PCs and printers, and its cloud-computing, programming and software firm, Hewlett-Packard Enterprise. Whitman, a member of the Crain’s 1996 class of 40 under 40 when she was president and CEO of then-Southfield-based Florists’ Transworld Delivery Inc., will become president and CEO of HewlettPackard Enterprise. Dion Weisler,

HP IN PONTIAC

Domino’s Pizza . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Number of employees: Sources estimate 500 to more than 2,000. Still hiring? Hewlett-Packard posted 32 job openings in Pontiac on Oct. 6, the day it announced its split into two public companies. Office space: HP leases 638,000 square feet at 535 South Blvd., according to CoStar Group Inc.

FranNet of Michigan . . . . . . . . . . . . . . . . . . . . . . . 15

Extreme Tool & Engineering . . . . . . . . . . . . . . . . . 21

executive vice president of HP’s printing business, will become president and CEO of HP Inc. The firm’s stock jumped more than 4.7 percent following the announcement, but experts offer no certain path toward prosperity for either company or its large enterprise services division in Pontiac. Sources speculate the number of employees at the Pontiac operation is anywhere from 500 to more than 2,000. HP declined to comment on this story or even provide basic information regarding its presence in Pontiac, but it leases 638,000 square feet of office space at 535 South Blvd., according to

Frey Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . 18 General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Grand Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Grand Rapids Community Foundation . . . . . . . . . . 19 Grand Valley State University . . . . . . . . . . . . . . . . 17 Hewlett-Packard . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Huron Capital Partners . . . . . . . . . . . . . . . . . . . . . 11 Inteva Products . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Jaffe Raitt Heuer & Weiss . . . . . . . . . . . . . . . . 11, 13 JK Machining . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Kelly Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Lear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Lochbridge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Lockhart’s BBQ . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Menlo Innovations . . . . . . . . . . . . . . . . . . . 1, 32, 33 Michigan Society of Association Executives . . . . . . . 4 Mr. Handyman International . . . . . . . . . . . . . . . . . 15 NSF International . . . . . . . . . . . . . . . . . . . . . . . . . 22 O’Keefe & Associates Consulting . . . . . . . . . . 11, 13 Panasonic Automotive Systems Co. of America . . . . 7 Powerlink Facilities Management Services . . . . . . 34 The Rapid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 RGIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Rock Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Small Business Association of Michigan . . . . . . . . . 4 SMART . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 TI Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 University of Michigan . . . . . . . . . . . . . . . . . . . . . 30 Urban Science Applications . . . . . . . . . . . . . . . . . . 3 Van Andel Foundation . . . . . . . . . . . . . . . . . . . . . . 19

See HP, Page 30

WADL TV-38 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Wayne State University . . . . . . . . . . . . . . . . . . . 3, 25

BLOOMBERG

Wege Foundation . . . . . . . . . . . . . . . . . . . . . . . . . 18 The Word Network . . . . . . . . . . . . . . . . . . . . . . . . 31 Yardbird Smoked Meats . . . . . . . . . . . . . . . . . . . . 10

DMC weighs outside housekeeping; 565 jobs on the line BY JAY GREENE CRAIN’S DETROIT BUSINESS

The review Detroit Medical Center is undergoing to outsource its 565-employee housekeeping workforce is part of a trend by hospital systems in Southeast Michigan and elsewhere. Over the past several years, Henry Ford Health System, St. John Providence Health System and Barbara Ann Karmanos Cancer Institute have outsourced either all or part of

their housekeeping services. As part of a larger review by parent company Tenet Healthcare Corp., a for-profit hospital chain based in Dallas, DMC is studying the financial, customer service and quality implications of hiring a third-party company to manage housekeeping, said Conrad Mallett Jr., DMC’s chief administrative officer. As part of the process, DMC filed a Worker Adjustment and Retrain-

ing Notification Act notice Sept. 30 with the state of Michigan. DMC said the possible transfer of its housekeeping workforce could result in the layMallett Jr. off of 565 employees at its eight hospitals. In early September, some DMC

union housekeeping employees staged a protest in front of the downtown Detroit hospitals over the possibility they may be laid off and rehired by a private contractor at lower hourly rates. A decision on whether to outsource DMC’s housekeepers and which company might be selected is expected to be made before Dec. 1, Mallett said. See DMC, Page 34

Ziebart International . . . . . . . . . . . . . . . . . . . . . . 22

Department index BANKRUPTCIES . . . . . . . . . . . . . . . . . . 5 BUSINESS DIARY . . . . . . . . . . . . . . . . 26 CALENDAR . . . . . . . . . . . . . . . . . . . . 28 CAPITOL BRIEFINGS. . . . . . . . . . . . . . . 4 CLASSIFIED ADS . . . . . . . . . . . . . . . . 29 KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8 MARY KRAMER . . . . . . . . . . . . . . . . . 17 OPINION . . . . . . . . . . . . . . . . . . . . . . . 8 OTHER VOICES . . . . . . . . . . . . . . . . . . 9 PEOPLE . . . . . . . . . . . . . . . . . . . . . . 27 RUMBLINGS . . . . . . . . . . . . . . . . . . . 35 STAGE TWO STRATEGIES . . . . . . . . . . 15

THIS WEEK @ WWW.CRAINSDETROIT.COM

The “power couple” redefined A husband makes outages personal to help his ailing wife, and DTE responds. Jay Greene tells the story in his blog, crainsdetroit.com/blogs. COURTESY OF HAROLD WEISBERG

WEEK ON THE WEB . . . . . . . . . . . . . . 35

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As election nears, big names stump for state candidates to do is teach the practiElection Day is less cal practice of lobbying than a month away, to those who do it on our bringing with it the seaside of the equation,” son for big-name nationFowler said. al surrogates to paraWhile he said the goal is chute in for rallies and to try to help society memfundraisers to drum up bers understand the rules enthusiasm and money of lobbying, it also will as the campaigns enter cover things that are legal the final weeks. but not a good ethical In the past week or so, practice to take part in, Republicans have been such as giving a lawmakvisited by New Jersey Chris Gautz er a campaign check durGov. Chris Christie, who was in Detroit campaigning ing a meeting on a policy position. “You should never talk about for Gov. Rick Snyder. Then former presidential candidate Mitt money and issues in the same conRomney was in Livonia with a versation,” Fowler said. Some of the sessions include plethora of Republican candidates from around Michigan, in- learning new regulations about pocluding former Republican Secre- litical action committees, camtary of State Terri Lynn Land, paign finance reporting and lobbywho is seeking the open U.S. Sen- ing laws, how to staff a government ate seat against Democratic U.S. affairs team — and the tax consequences behind setting up a politiRep. Gary Peters. Snyder and Lt. Gov. Brian Cal- cal organization under Section 527 ley were conspicuously missing of the federal tax code. Fowler said they also will talk from that event. Both had previous engagements, though political observers believe it had more to do with keeping the governor from having to deal with attacks from Democrats by posing with such a high-profile figure who did not support the auto rescue, rather than their ability to clear their schedules. Land then had an event with another failed Republican presidential candidate, former Pennsylvania Sen. Rick Santorum, along with Indiana Gov. Mike Pence in Troy. Today, former Republican Florida Gov. Jeb Bush will be doing several campaign stops around the state, including one in Troy with Snyder. On the Democratic side, first lady Michelle Obama was in Detroit on Friday campaigning for Peters and former U.S. Rep. Mark Schauer, who is challenging Snyder. Former secretary of state and presumed 2016 presidential candidate Hillary Clinton will be in Michigan on Thursday to campaign for Peters and Schauer. There have also been reports that President Barack Obama plans to make an appearance in the state in the coming weeks. Be prepared for more stumping, with Michigan an important state for both parties.

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Lobbyist ethics The Michigan Society of Association Executives is putting together a four-part academy, beginning next month, that seeks to help its members learn best practices and how to lobby lawmakers in an ethical manner. The Government Affairs Academy sessions are intended for CEOs of associations, their lobbyists, staff members and volunteer board members. Rob Fowler, president and CEO of the Small Business Association of Michigan and chair of the society’s subcommittee tasked with putting on the academy, said this is the first time the organization has done something like this. “We felt as though what we need

about reporting requirements when giving gifts or buying meals for lawmakers as well as the rules surrounding endorsements of candidates. “There are Fowler things you can and can’t say and do depending on what fund the money comes from,” Fowler said. “There is jeopardy in not knowing what you’re doing in this business.” The academy will take place with half-day sessions beginning Nov. 7 and continuing Dec. 12, Jan. 9 and Feb. 3. The cost to attend all four sessions is $390 for society members and $490 for nonmembers. Details are at msae.org. Chris Gautz: (517) 403-4403, cgautz@crain.com. Twitter: @chrisgautz

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Lochbridge to move out of Compuware HQ BY KIRK PINHO CRAIN’S DETROIT BUSINESS

Lochbridge, Compuware Corp.’s former professional services division, is moving out of its space in the 1.1 millionsquare-foot Compuware headquarters building at One Campus Martius and moving into nearly about 49,000 square feet at the nearby 150 W. Jefferson building. Lochbridge, which was sold to Hermosa Beach, Calif.based Marlin COSTAR Equity Partners Lochbridge, in January, Compuware Corp.’s will move 250 former professional employees services division, is into the moving into the 493,000-square150 W. Jefferson foot building building. owned by Johns Creek, Ga.-based Piedmont Office Realty Trust Inc. at the end of this month, according to Matt Mowat, director of marketing at Lochbridge. The 150 W. Jefferson building, formerly known as the Madden Building, is 88.1 percent leased, according to CoStar Group Inc., a Washington, D.C.-based real estate information service. The building was constructed in 1989. Piedmont bought 150 W. Jefferson for $93.75 million in 2003, according to CoStar. Lochbridge will become the third-largest tenant in the building behind only Miller Canfield Paddock and Stone PLC (116,000 square feet) and Butzel Long PC (69,000 square feet), according to CoStar. The Southfield office of Mohr Partners Inc. represented Lochbridge, while the Farmington Hills office of Houston-based Transwestern represented Piedmont. San Francisco-based private equity firm Thoma Bravo LLC is poised to buy Detroit-based Compuware in a $2.5 billion deal announced last month. Kirk Pinho: (313)446-0412; kpinho@crain.com. Twitter: @kirkpinhoCDB

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BANKRUPTCIES The following business filed for protection in U.S. Bankruptcy Court in Detroit Oct. 4-10. Under Chapter 11, a company files for reorganization. BFC Management Co., 19235 W. Eight Mile Road, Detroit. Chapter 11. Assets and liabilities not available. — Chad Halcom

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Growing D:hive to split into two new organizations BY AMY HAIMERL CRAIN’S DETROIT BUSINESS

D:hive Detroit was there to be everybody’s friend. A welcome center, a job connector, a home-finder, a small-business developer, a tour guide, all encompassing, all things to all people, all Detroit, all right now. The plan was to connect newcomers and longtime residents to the budding startup and cultural communities in downtown and across the city. But after three years of funding from the Hudson Webber Foundation in partnership with the Downtown

Detroit Partnership, D:hive is splitting into two organizations: Detroit Experience Factory and the Build Institute. Hudson Webber funded D:hive as a three-year experiment so it could assess its work and then decide whether the city still needed a one-stop welcome shop. “It’s really terrific and evidence of its success that the three-year trial has expanded into something more permanent,” said Eric Larson, CEO of the Downtown Detroit Partnership. “You can feel that shift from when something is greater than the sum of its parts to when the parts

are greater,” said Jeff Aronoff, D:hive executive director. “We’re at a point where it’s more effort to keep them together.” One unexpected success was the Build business-planning classes, which D:hive started offering almost as a side note. Initially, the nonprofit was more focused on the tours and welcome center aspect of its mission, but demand for classes grew from one course in January 2012 to four classes quarterly. By January 2015, the Build Institute will have turned out 400 graduates, some of whom have become the bold-faced names of De-

troit’s growing small-business community. Lisa Ludwinski was one of the earliest Build graduates, using the program to develop Sister Pie, which won the $50,000 Hatch Detroit grand prize this fall. Kirsten Ussery co-founded Detroit Vegan Soul with partner Erika Boyd as a caterer; it’s now a full-service restaurant in West Village. “D:hive helped me by providing the peer support and hands-on exercises necessary for me to first determine whether our business idea was viable, and secondly, to put together a business plan,” Ussery

said. “Before taking the Build class, I really didn’t understand the financial pieces of a business plan, such as break-even point.” The eight-week courses have become so successful that there is often a 100-person waiting list. By placing Build Institute under its own banner with funding from the New Economy Initiative, director April Boyle intends to expand the number of classes and bring them directly into city neighborhoods. “I see us as a full incubator in the next 12 to 24 months,” Boyle said. “We’ve just started to scratch the surface.” Boyle is still looking for space — somewhere in the greater Midtown or Corktown areas — and finalizing the investment from NEI and other sources. She anticipates having three full-time employees plus contractors who teach classes. D:hive is a $500,000-a-year program, and Aronoff expects that Build Institute and Detroit Experience Factory will need $250,000 each to run effectively and successfully. The new Detroit Experience Factory brings Jeanette Pierce full circle. When D:hive was founded, it enveloped her existing nonprofit, Inside Detroit, to handle tours and connections, which she grew from 8,000 people on tours in 2012 to nearly 15,000 this year. “The Experience Factory will continue to offer connections to jobs and residential, plus more tours,” Pierce said. “It will continue to be the soft landing spot. Nothing is going away.” That includes a storefront welcome center. Pierce, however, is not certain whether it will remain at the D:hive location on Woodward Avenue. She is seeking a space downtown because DXF will continue to be a program of the Downtown Detroit Partnership.

Directors launch new businesses D:hive is also spawning two new businesses. Its design director, Andrew Kopietz, is starting his own graphic design and branding firm, Good Done Daily. A Build Institute grad, he already has several clients, including Wayne State University Press, Eastern Market Corp. and the recent Dlectricity. “I’m taking a lot of the positive momentum I got here and moving it into my own practice,” Kopietz said. “It’s going to focus on working with nonprofits and family and community foundations, maybe things that are city-centric.” Meanwhile, Aronoff, who left his position at Miller, Canfield, Paddock & Stone law firm to become the executive director of D:hive, is starting his own firm that will help local entrepreneurs raise money from local investors. Gov. Rick Snyder signed legislation last year that allows individuals to invest in businesses through crowdfunding. Unlike with Kickstarter campaigns, where patrons are essentially donating to the person, equity crowdfunding comes with legal terms and debt to be paid off. All four D:hive principals will continue to work together to support Detroit, they said. Amy Haimerl: (313) 446-0416, ahaimerl@crain.com. Twitter: @haimerlad

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Panasonic to use preferences, questions to simplify voice tech How can automakers help motorists who struggle with voice recognition, the technology that generates more customer dissatisfaction than any other in-vehicle gadgetry? Tom Gebhardt, president of Panasonic Automotive Systems Co. of America, based in Farmington Hills, believes he has a solution: an infotainment system that learns users’ preferences, then asks them what they want. He says Panasonic, a leading infotainment supplier, will introduce its “smart” voice technology in Tom Gebhardt, January at the Panasonic International Automotive CES (ConSystems Co. sumer Elecof America tronics Show) in Las Vegas. Gebhardt, 54, spelled out his vision for infotainment during a Sept. 9 interview with Automotive News’ David Sedgwick.

Q&A

Does Panasonic Automotive expect revenue to rise about 10 percent this year, as it did in 2013? Globally, it will be a little bit less than that. For North America, it would be a little bit more. What generates the most growth for Panasonic in the United States? Our infotainment business is our best business. That’s the thing that has powered us over the last five years, and that continues to be the real core. What infotainment product has generated growth? Panasonic has been an “imaging” company for some time, with cameras and camcorders. We’ve got a good understanding of images and displays. So when automakers put more cameras in the vehicle, that’s a real positive for us. And the displays in a vehicle are a positive, too. Is the head unit, the control box in a vehicle’s instrument panel, still your primary infotainment revenue generator? Yeah, that’s a solid core product, and we build around it. The Cadillac Cue infotainment display is a Panasonic unit. Are capacitive touch screens, those controlled by the touch of a finger, the wave of the future? Some touch functions are highly effective. In fact, you get so accustomed to a tablet’s touch functions that you almost need to have some of that functionality in the car. Will automakers finally give up knob controls? People still like to have the combination of a touch screen with

control knobs. They can’t give up the knobs. And it does get distracting if you try to adjust audio volume and some other functions on a touch screen. So the answer is some kind of hybrid display. Does voice recognition work well enough to satisfy most motorists? Our data shows that 50 percent of the people love it, and 50 percent hate it. It’s very bipolar. Either you use it three times and hate it and you won’t try it again, or you get used to it and you really like it. Will that love-it-or-hate-it split continue? As the technology continues to improve, we believe more people will start to gravitate to it. But you’ve got a big learning curve with some people who had early generations (of voice technology) and became dissatisfied. They’ve got to get over that hump, and that will take some time. How would Panasonic make voice recognition acceptable for motorists who don’t like it? We think we have to ease them into it because they aren’t going to jump back into it. We have to take it to another level where it’s not so complicated, so that the motorist is in his comfort zone and doesn’t have to ferret through a menu of 30,000 selections. We need to make it easier, with a smaller number of selections.

whole point “isThe to simplify the

”

Can Panasonic create a simple yesor-no sequence of commands? Right. Imagine that your infotainment system understands your habits. When you pull out of the driveway and go in a certain direction, it could say, “Dave, are you going to work?” And you could say, “Yes.” So now the computer knows it’s Monday, and I usually listen to NPR. And it asks me if I want to listen to the news? Yes. And it could ask me if I want local news or national news? Yes, that simplifies it. You have a conversation that the computer understands. The whole point is to simplify the things that motorists don’t like, so that they will use

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them. That’s the answer to voice technology. Simplify it.

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To make that work, you need an infotainment system that can learn your habits. We’ll demonstrate that capability at the next CES show (in January). Pandora’s streaming radio app has the ability to learn users’ likes and dislikes. Did Panasonic study Pandora? I don’t know that it was Pandora specifically. Facebook has learning algorithms. Google is the master of learning behavior. There are all sorts of tech companies that use this incredibly well. Does Panasonic have the software and hardware that can make this work? When you use the cloud, the possibilities are pretty infinite.

A Logical

How would Panasonic pare down the list of commands so the motorist has a higher chance of success? Imagine if you had your own preferences already set up — Dave’s morning, Dave’s afternoon, Dave’s weekend. So if it’s Saturday, the computer knows that I always listen to “Wait Wait … Don’t Tell Me!” on NPR? Right. That’s the way we believe it will ultimately work. The computer says: “It’s Saturday morning, Dave. Do you want to listen to this?” You could make a simple response — yes or no — and you’d be more likely to connect.

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OPINION

Bring facts to light before vote on jail n September, a one-man grand jury indicted three current and former Wayne County officials for their part in the county’s stalled jail project. The indictments accuse the three of misleading county commissioners about the project costs, whose estimated expenses have soared nearly $100 million over projections. But nobody said the investigation was over. And key documents tied to the investigation — such as a 2013 report by the county’s auditor general — have not been made public. Yet county commissioners will meet Thursday to discuss — and possibly vote on — options for the unfinished jail. No vote should occur without making key facts public. The suspicion lingers that decisions were made to enrich insiders — not produce an efficient and effective public project. The public deserves information before the county moves forward.

$25M gift a catalyst for WSU With nearly 30,000 students, a medical school and a research budget approaching $300 million, Wayne State University is one of Detroit’s largest economic engines. But it could be even bigger. Last week, WSU kicked off a $750 million capital campaign. A lead gift is $25 million from alum James Anderson, founder of Detroit-based Urban Science, and his wife, Patricia. They want to help engineering talent at WSU commercialize more technology. (See story, Page 3.) The Andersons’ gift is the College of Engineering’s largest, and it can help WSU realize its potential for being a catalyst for new ideas, new companies and new jobs in Detroit.

Detroit can learn from GR giving Speaking of giving back, some of Grand Rapids’ longtime wealthy families are moving into a third generation of philanthropy. (See story, Page 17.) Many are watching with interest to see what the new generation’s approach will be, but it’s clear that a culture of collaboration has been instrumental in making Grand Rapids’ philanthropic and community efforts effective. Surprisingly, this wasn’t by plan. It came about in the late 1960s when no single donor had enough money to bring a mammoth Alexander Calder sculpture to town. Detroit’s foundations have been collaborating on joint projects; maybe the next step is for the area’s major individual and family philanthropists to find ways to work together on a project — and publicize the results to encourage an even larger giving culture.

TALK ON THE WEB From www.crainsdetroit.com Re: Wayne County nixes moving jail to Mound Road; Rock Ventures cautions Unbelievable. Does the city really want the big greeting into town to be a jail? Hasn’t Dan Gilbert invested enough time, energy and money to almost singlehandedly revitalize Detroit? Why don’t they just turn the site over to Rock so they can develop an alluring gateway to the city? Just because you make one bad decision, do you have to continue to make more? John md Instead of selling prime real estate to a private developer and collecting taxes on it, they want to convert it to another tax-exempt property and build a jail in the middle of downtown. Brilliant. Ken Baranski This project has no business being in a busy downtown area like this where we need retail, business and

Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity. people-friendly destinations. This place belongs at the old Mound Road facility. 248739

Re: Owner of home health agencies pleads guilty to $22M in Medicare fraud People with disabilities who require home health services and support fight for every dime to be able to hire qualified direct-care staff. The staff are way overworked and way underpaid, and we have people ripping off those who really need the support. This guy and his cohorts should spend the rest of their lives homeless and hungry — paying back every penny they stole. Elmer Cerano

Re: Texas developers buy New Center buildings, plan loft-style residences Wondering if the downtown area will ever be attractive to residents with school-age children. Better schools and crime prevention must still be addressed if the area will ever thrive again. We can’t rely on just shopping and sports arenas. Defense Community Building lofts and large-scale development is the sure way to go, and then fill in the gaps with smaller development. Detroit has the potential to be a city that also can be comprised of villages that are selfcontained, as far as some retail and general services go. Villages will make the city more appealing to both the middle class as well as the wealthy, because smart people don’t commute very far. Justin Thompson See Talk, Page 9

KEITH CRAIN: They can’t see the forest for the trees Last week, a committee of the Wayne County Commission voted to eliminate from consideration a plan to house the Wayne County Jail in a former state prison on Mound Road. That opens the door for the very misguided idea of restarting the financial debacle on Gratiot Avenue that has already cost taxpayers $157 million and is far from finished. This entire jail project is a fiasco. The project is overrun with bad ideas and worse judgment. The sooner it’s halted and the unfin-

ished jail removed, the better off the city, the county and the about-tobe-elected Wayne County executive will be. No one is standing up to take the blame for the initial idea, but having that eyesore sitting there for months should be enough to make everyone realize that it simply needs to be somewhere else. Some have suggested simply expanding the current jail. Or moving to Mound. Or

finding a completely new site. But it is clear that regardless of who ends up with the current Gratiot site, whether it’s nearby Greektown Casino-Hotel or some other entity, building an ugly new jail in the middle of a prime real estate area just doesn’t make sense. The full Wayne County Commission is supposed to vote on this issue on Thursday. One can only

hope that saner heads prevail. Commissioners should realize they made a great big mistake in the first place, and they need to do whatever it takes to rectify that mistake. And shouldn’t the new county executive who takes office in January get to have a vote? Warren Evans, a former sheriff and now presumptive winner of the Nov. 4 election for county executive, says the jail planned on the site is too small. Does his opinion count? The county has already sold $200 million in bonds to finance the

original construction, and it looks like it will have to issue an additional $400 million to make the Gratiot project work. This is one of the biggest messes that the county has had in memory. (Biggest, at least, as far as the public knows about.) It certainly helped to torpedo the political career of Bob Ficano, the current county executive. Let’s hope that the commission uses a modicum of common sense and does what’s right for the residents of Wayne County as well as the residents of Michigan.

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OTHER VOICES: CBO creates barrier to new investment velopment project. where they can expand and invest. force the commitments that busi- ment projects follow the principles The Detroit Economic A CBO is bad public pol- We want and need those invest- nesses ought to make. we all agree on. Growth Corp. firmly beicy. It openly shirks the ments in Detroit. However, to seEvery brownfield plan, for exInstead of trying to build lieves economic growth responsibility of elected cure our long-term potential, we ample, already requires a hearing stronger, higher barriers to busicannot be sustainable leaders and governmen- must firmly demonstrate that we and recommendation from a com- ness, we should focus on enforcing without economic particital/quasi-governmental en- want new investment and will munity advisory committee. Zon- and monitoring the tools we alpation by everyone. tities to manage, repre- work in a spirit of partnership to ing reviews ensure that nearby ready have. The community beneWe should encourage sent and defend the inter- help businesses be successful and property owners are considered in fits ordinance is not the solution. an economic structure ests of the community. assist them in partnering with the redevelopments. Executive orders We should be opening gates and ofand culture that supports Instead, the ordinance community. A CBO discourages mandate targets for hiring Detroit fering a welcoming environment. business owners who inquietly passes the fiducia- the very thing we need most by residents, and tax abatements re- Let’s listen to the business owners vest and grow here, emRodrick Miller ry responsibility of elect- constructing a huge barrier that quire that new jobs be created. we depend on and work together to ploy Detroiters, and acWith those kinds of checks and build a better city for all of us. Totively seek and do business with ed leaders to community members businesses must overcome. A sad part of the push for the or- balances — as well as many direct gether we can find a solution that other Detroit companies. Through who are not officially accountable thoughtful targeted programs and to anyone and who may or may not dinance is that it ignores the reviews by City Council commit- will work. Rodrick Miller is president and initiatives, we can respect, appropriately represent the pub- mechanisms we already have in tees or the body as a whole — we place to encourage the kind of in- have the tools to ensure that major CEO of the Detroit Economic strengthen and stabilize neighbor- lic. Businesses have options as to vestments the city wants and to en- investments and major develop- Growth Corp. hoods. At DEGC, we work hard every day recruiting new businesses and promoting the growth of existing businesses — not just for their own sake, but to create jobs and opportunities for Detroiters, increase city revenue, and improve the quality of city services and the quality of life for people who live, work or visit here. The quickest way to undo all we have done to create a positive enviAt a certain level of wealth, a family’s wants and needs invariably change. Philanthropy, and the values it imparts to ronment for new investment and to abruptly stop the economic moyounger generations, takes on greater meaning; the long-term balance between family wealth and family harmony mentum we have built over the past five years is to pass a commubecomes ever more important; and the merits of a trust become clear. Issues relevant to generational wealth are best nity benefits ordinance — in any form, or by any name. served by an advisor with unimpeachable integrity, competence and a steady hand. Consider the Family & Foundation One of the harshest lessons from the city’s fiscal crisis and bankServices Division of Greenleaf Trust. From one generation to the next, we serve families and oversee their best interests ruptcy is that if Detroit wants to control its own destiny, it must in a meaningful, personalized manner remarkable for its reliability and attentiveness. As part of a highly respected, take more responsibility generatprivately held wealth management ﬁrm with over $7 billion in assets, we know family matters—in every ing the revenue it needs to serve its citizens. The only way we can meaning of the phrase. For a discrete consultation, call us. be more self-sufficient is by building a strong tax base of profitable businesses that are generating jobs and investments. A CBO will undermine our economic progress well before our recovery has hit critical mass because it will add onerous burdens of risk, cost and time to every de-

Three generations and counting—on you.

TALK ON THE WEB ■ From Page 8

Re: Detroit, Wayne County bundle properties to fight blight People need to stop rushing to tear down the old buildings of Detroit. Yes, according to this, they said severely blighted. Sad, but OK. But save as much from the great old city as possible. oldbuildingsrule88 I applaud the move by Mayor Mike Duggan and his new team and hope with his new reign of power we will see drastic change. The only thing I wish is instead of creating new task forces or new plans, the city would stick with one and make it work. All it seems we hear about is this or that plan or group in charge of blight; less talk, more action. Connor Corey

Re: Troy transit center to open Oct. 14 A near total waste of taxpayer money. I live very near there. People use cars to cross the street. The lines for rail and buses around here sometimes are two-people deep. Michel Jenson

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October 13, 2014

Oakland County restaurants make meaty investments New investment is coming to Oakland County in the form of space to consume smoked meats. In Royal Oak, Lockhart’s BBQ is finishing up $600,000 in renovations at its restaurant. In addition, plans are in the works for a second location in Lake Orion, at 37 E. Flint St., to open next year, said owner Drew Ciora. The lower level changes in Royal Oak include 90 more seats, two custom bars, a 60- 100-person private room that guests are already booking, a grand staircase and more craft beers. “We are often on a wait of 60 to 90 minutes, and we cannot always accommodate all our guests,” Ciora said. Royal Oak-based Krieger/Klatt Architects Inc. designed the space that is set to open by Oct. 16. The Lockhart’s menu includes brisket, pork and beef ribs, whole chickens, homemade sides and more.

Yardbird Smoked Meats opens in Keego Harbor Farther north, Keego Harbor now has an array of smoked meats and old-fashioned griddle burgers and dogs at Yardbird Smoked Meats, which is officially open at 1978 Cass Lake Road. The 80-seat restaurant offers barbecue comfort food prepared by Chef Jeremy Grandon, who co-owns the restaurant with designer Brad Cousens. With reclaimed lumber, old iron skillets COURTESY OF YARDBIRD and a cus- Brad Cousens (left) tom-branded and Jeremy Grandon vintage bicy- are co-owners of cle that will Yardbird Smoked be used to Meats in Keego make local Harbor. carryout deliveries next summer, the dining room is equally as comfortable as the food. The meat — smoked low and slow in-house using Michigan apple, cherry, maple and oak woods — includes beef, chicken, fish and pork. Diners can get a belly-filling smoked meat platter, which includes brisket, sausage and ribs with either a specialty dry rub or glaze of Yardbird’s Northern Red BBQ sauce, served with two sides and cornbread with apple butter for $17. Cousens and Grandon wanted the restaurant to reflect the local neighborhood and surrounding communities. — Anjana Schroeder

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CHAIN DOES SOME DIY TO AVERT SOS How Mr. Handyman got its house in order to survive the recession, Page 15

growing small businesses REPORTER’S NOTEBOOK Tom Henderson covers banking, finance, technology and biotechnology. Call (313) 4460337 or write thenderson @crain.com.

Tom Henderson

Survey: Small biz feels better about pay hikes A fall survey of small and midsize Michigan business owners by Pittsburgh-based PNC Financial Services Group Inc. shows that they are much more likely to give their employees raises than they were a year ago or even in the spring — and that they are four times as likely to add full-time employees than they were a year ago. One of three business owners plans to increase employees’ compensation during the next six months, up from 25 percent in the spring survey and 15 percent last fall. About 55 percent of those plan hikes of at least 3 percent, up from the national average of 2 percent. The planned rise in pay may be tied to a feeling that finding qualified people has gotten harder. Thirty-nine percent of respondents in the state say they are having a tougher time finding qualified employees than six months ago, which is nearly double from the 20 percent who said they were having trouble last fall. Sixteen percent of state business owners surveyed by PNC plan to add full-time employees this year, up from just 4 percent a year ago. “Wage growth has been a missing piece of the labor market puzzle to date,” said Stuart Hoffman, PNC’s chief economist, in a statement. “With more business owners planning pay raises and higher prices for customers, these findings strongly support our forecast for a faster economic and jobs expansion and also send important signals to Fed policymakers that the economic recovery is speeding up.” Interestingly enough, despite improvements in outlooks regarding wage hikes and hiring, business owners had grown less optimistic about their own companies’ prospects for the next six months. Seventy-six percent say they are optimistic now, compared to 81 percent a year ago and 80 percent in the spring. The Michigan segment of the national survey was conducted of 151 owners from July 24 to Sept. 10, with a 95 percent confidence level that the sampling error is plus or minus 8 percent.

BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS

f you’re the owner of a small business, or even one not so small, and don’t know the value of your business, don’t feel bad. It’s not a figure most business presidents can pull out of their pockets.

Figuring business valuations is more than a numbers game

“Some business owners hear their friends at the country club say they sold their company at eight times EBITDA, so they think, ‘My company must be worth at least as much as that because my company is better,’ ” said Christopher Sheeren, partner at Huron Capital Partners LLC, a Detroit-based private equity firm. Valuations are a necessary part of business acquisitions. Any business with plans to sell itself will want to stay on top of its value, as will businesses with visions of gobbling up competitors. “It’s more common that most small businesses formally don’t know their value. It’s more of an understanding When you need a of their cash flow. They know what valuation, Page 13 they’re taking out of the company Ways to boost a and know what it needs to operate, but they’re not so sure they know the company’s value, Page 13 value,” said Daniel Minkus, an attorSome tips from a ney at Clark Hill PLC’s Birmingham ofvaluation expert, fice who specializes in business coun- Page 14 seling and mergers and acquisitions. For businesses not looking to sell or buy, there are other reasons to become valuation-savvy. (See Page 13.) Many variables beyond the basic numbers go into valuations, not all of them obvious, especially when someone is dangling milLARRY PEPLIN lions of dollars before a company’s eyes. Christopher Sheeren of Huron Capital Partners notes “There are things that surprise (owners) one reason to know the value of your company: “A that drive value that they normally wouldn’t competitor comes knocking and says, ‘We’d like to think about,” said Patrick O’Keefe, CEO of give you X million dollars for your business,’ you’d O’Keefe & Associates Consulting LLC in Bloomlike to be prepared to respond quickly to that.” field Hills. More small-business owners are acquaintstone process. It varies by purpose and from ing themselves with the finer points of valuatransaction to transaction, contingent on the tions, in part because of private equity’s interests of the parties involved. rise to prominence, Sheeren said. But “At the end of the day, it is what both sides misconceptions abound. agree it is. In most cases, it isn’t a perIt’s also not a set-infect answer where a

ADDED VALUE

magic formula is used. Subjective factors go into that,” said Sara Kruse, an attorney at the Southfield office of Jaffe Raitt Heuer & Weiss. Here are answers to five fundamental questions about the ins-and-outs of business valuations, from local professionals steeped in the process:

How are valuations measured? Business valuations commonly are done in multiples of EBITDA — earnings before interest, taxes, depreciation and amortization — an indicator of cash flow. This allows outside parties to estimate how much cash the business will generate in the years ahead (typically five years). There’s also adjusted EBITDA, popular among private equity firms, which removes expenses a future buyer wouldn’t necessarily have to pay. These could be things like expenses for the business owner’s car or country club membership — expenses added to get the greatest tax benefit but that detract from a valuation. “A lot of these expenses wouldn’t exist under different ownership,” Sheeren said. One-time expenses, such as those related to a weather disaster, also are removed in adjusted EBITDA, as are one-time gains, such as the sale of property or equipment. Large capital expenses also should be considered in a valuation, especially if it’s a company with significant annual capital expenditures that consume free cash flow. This could be a trucking company that continually has to repair and replace trucks. Ultimately, the valuation exercise is about developing a strong understanding of the company’s free cash flow — in other words, estimating how much money the business truly generates annually. “Earnings growth is what drives valuations,” Sheeren said. What this also says is that valuation is not just about revenue. “The profitability of the revenue is more important than the amount of the revenue,” O’Keefe said. Nor is it about the hard assets a company owns, things like buildings, chairs and computers. See Value, Page 12

A sense of worth ISTOCK PHOTO

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CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

Second Stage

Value: What price, biz? â&#x2013; From Page 11

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â&#x20AC;&#x153;Those things have market value, but thatâ&#x20AC;&#x2122;s an appraisal more than a valuation. The desks are worth X, computer systems worth Y, the building is worth Z,â&#x20AC;? Minkus said. So, revenue and hard assets are factors, but ones that often take a backseat to other characteristics of the business. It wouldnâ&#x20AC;&#x2122;t make sense to value a technology or health care company on its limited number of few hard assets, whereas with a manufacturing company, hard assets would be a more prominent factor.

Canâ&#x20AC;&#x2122;t I just go with the â&#x20AC;&#x2DC;5 times EBITDAâ&#x20AC;&#x2122; rule of thumb? Not all businesses are worth five times earnings, Minkus said. Some should be based on revenue stream, others on their intellectual property. The results can vary wildly, according to the nature of the business, its market and its industry. This rule of thumb is at best a starting point, and not a very good one at that, Minkus said. â&#x20AC;&#x153;You canâ&#x20AC;&#x2122;t be out there in the business world for any length of time and not hear that number. Itâ&#x20AC;&#x2122;s a great insult to the valuation community and to the concept of valuation,â&#x20AC;? he said.

What other factors go into valuations? A long list of tangible and intangible variables can be factored into a valuation: the companyâ&#x20AC;&#x2122;s intellectual property, supply base, reputation, planned product launches, potential future developments, corporate entity type, uniqueness of product and protections against competition. Not to mention the market and industry. Buyers also will look at the length of time managers have been around, telling evaluators if leaders are engaged with the business and its customers. A businessâ&#x20AC;&#x2122; value will take a hit if itâ&#x20AC;&#x2122;s dependent on one entrepreneur who holds the keys to all the important relationships. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re looking for enterprise value as opposed to one or two peo-

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What about customer lists? The quality of a companyâ&#x20AC;&#x2122;s customer base is whatâ&#x20AC;&#x2122;s important here. Are they new customers? Do the customers keep changing from year to year? Are there long-term contracts in place? How old are these companies? Are they new, or distressed? â&#x20AC;&#x153;Stability and predictabilityâ&#x20AC;? are what buyers look for, Sheeren said. And of course, diversification is as important as ever here. If the business relies on just one or two customers for the bulk of its revenue, that wonâ&#x20AC;&#x2122;t help a valuation. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s not merely as superficial as saying, â&#x20AC;&#x2DC;Do they have a good customer list?â&#x20AC;&#x2122; â&#x20AC;? Minkus said. â&#x20AC;&#x153;If thereâ&#x20AC;&#x2122;s a bunch of clients the company has done work for, for a long time, the risk is lower and the buyer doesnâ&#x20AC;&#x2122;t need the same return on investment. Itâ&#x20AC;&#x2122;s worth paying a higher multiple.â&#x20AC;?

Is it necessary to know a companyâ&#x20AC;&#x2122;s value at all times? Some would argue â&#x20AC;&#x153;yesâ&#x20AC;? â&#x20AC;&#x201D; a strategic buyer could make an offer out of the blue. Itâ&#x20AC;&#x2122;s best not to be caught unawares. â&#x20AC;&#x153;A competitor comes knocking and says weâ&#x20AC;&#x2122;d like to give you X million dollars for your business, youâ&#x20AC;&#x2122;d like to be prepared to respond quickly to that,â&#x20AC;? Sheeren said. Plus, a sudden health issue for an owner could lead to stepping See Next Page

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ple driving all the sales. No one is around forever,â&#x20AC;? Sheeren said. Family-owned businesses are prone to transition issues, as well, Kruse said. Because of all this, a business with less revenue than its competitor can have a higher multiple, and vice versa. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;d rather have $10 million (in revenue) and a margin of 20 percent resulting in $2 million in earnings than a $20 million company with 2 percent margin and only making $400,000 in earnings,â&#x20AC;? Minkus said.

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Second Stage YOU NEED A VALUATION WHEN … Valuations are called for in any situation involving the sale of a company, and quite a few beyond that. The many factors that go into a valuation bear different weights, according to the purpose at hand. There is the “minority discount,” for example. This is when investors taking a minority stake get a discounted valuation (effectively increasing their share) to recognize when they have no ability to manage the company or liquidate its assets. Conversely, a strategic buyer might agree to a higher valuation because it sees certain assets as highly valuable to its own business and knows it can shed costs in the company after the sale by doing things like cutting staff and selling assets. But the fundamentals are the same from situation to situation. Here are more scenarios in which a business owner might seek one: A purchase. Besides evaluating the company it wants to buy, the acquirer should know where its own valuation stands in relation to the target. This is especially important if members of the target company expect to retain a stake in the newly merged company. Estate and gift planning/succession planning. Valuation numbers must be established before transferring ownership stakes to family members or future leaders of the company. Bringing in a partner/offering stock incentives to employees. Both scenarios mean splitting ownership into more pieces, necessitating the establishment of a number value. Preparing for a sale down the road. See

market conditions improving a few years out? Make sure you sell at peak value by staying on top of your company’s value, as well as the sales of comparable companies — valuations often include data on sales of comparable companies. Leverage in loan negotiations. The standard bank loan is a line of credit based on receivables and inventory. Bringing the business’ entire value into the discussion can give a business different options — and better terms — when doing things like taking out a loan to fund operations. “A lot of secondstage companies, especially entrepreneurial companies, haven’t thought a lot about alternatives,” said Daniel Minkus, an attorney at Clark Hill PLC’s Birmingham office. “You have to look at what’s out there, and valuations can be an important part of that.” Litigation. Shareholder, spouse Minkus and estate battles require hard numbers to fight over. Just in case. A company never knows when a strategic buyer might come calling. “The seller always needs to know more about the business than the acquirer,” said Patrick O’Keefe of O’Keefe & Associates Consulting LLC. There could be “an awakening experience” in store for the company, he said, such as realizing its intellectual property carries strategic value. If Hostess had foreseen that buyers would end up with its recipes, it might have made different decisions, O’Keefe said. — Gary Anglebrandt

OTHER WAYS TO INCREASE A COMPANY’S VALUE Much of increasing a company’s value has to do with getting ducks in a row — making sure operations are orderly and professional. An evaluator should be able to look inside a company and see clear plans and finances backing up a diversified, stable enterprise. Any points of uncertainty will decrease value. “The last thing you want is to have the buyer come look at you and be confused as to what the company looks like,” said Sara Kruse, an attorney at the Southfield office of Jaffe Raitt Heuer & Weiss. She represented Ann Arbor-based HandyLab Inc.’s $275 million sale to Becton Dickinson and Co. in 2009, and the $205 million sale of Ann Arbor-based Accuri Cytometers Inc. to the same company in 2011. Here are other ways to Kruse increase a company’s value: 䡲 Grow earnings. 䡲 Pay off debt. 䡲 Invest in management by hiring more experienced professionals. 䡲 Extend contracts with existing customers. “If a contract is up for renewal in a year or so, try getting extensions in place now. Give the acquirer some comfort the business is going to be there,” said Patrick O’Keefe of O’Keefe & Associates Consulting LLC in Bloomfield Hills. 䡲 Shut down operations that drag finances. 䡲 Invest in management O’Keefe systems that produce metrics of business performance. 䡲 Remove failed or languishing ventures and R&D

that’s going nowhere. O’Keefe sees these sorts of things go overlooked all the time. “We see situations where there are plants that have no reason to be in existence, for making a product line that drags down earnings.” 䡲 Diversify the customer base. 䡲 Diversify the supply base. 䡲 Remove all unnecessary expenses. Business values swing on profitability. Dropping expenses immediately increases margins, putting upward pressure on EBITDA multiples, said Daniel Minkus, an attorney at Clark Hill PLC. Dropping a leased equipment expense of $1,000 turns into an extra $6,000 for the seller when the sale is based on a multiple of six times earnings. 䡲 Point out expenses that can be stripped out. A profitable business might be midstream in some risk-bearing experiment that’s sucking up earnings but can’t be halted at that moment. During a valuation, the owner can point this out as something a buyer could carve off later. 䡲 Have a clear succession plan in place. 䡲 Point out staffing expenses that wouldn’t flow to a buyer. Closely held businesses, such as those family-owned, might have friends and family working nonessential jobs, or jobs that could be integrated into one. Similarly, the owner might be drawing a larger salary than a new ownership entity would have to give to a chief executive, or to itself. The owner can pull these things out ahead of, or at least point them out during, a valuation. 䡲 Have financial controls and processes in place. “I’ve been through transactions or looked at deals where we were finding issues with financial reporting and that would cause the buyer to walk away,” Kruse said. 䡲 Have day-to-day systems in place. Evolve from the fun, seat-of-the-pants startup days. 䡲 Consider a different corporate structure. Different corporate structures have different tax implications that could impact a buyer’s decision. “You don’t want to end up with double taxes on a sale. That does happen,” Kruse said. — Gary Anglebrandt

From Previous Page

down or passing on a stake to a family member. Others would say “no” because it’s costly — a valuation is only good for about a year as market conditions change, necessitating continual spending to keep up. “Valuations are only at a point in time. They become pretty stale pretty fast,” said Minkus, who wouldn’t bother having one on file at all times if it were his business. Firms that do valuations, usually accounting firms, will charge at least $5,000 or $10,000, but probably much more. “Anybody worth his salt is going to charge $20,000 to $30,000 for the first year,” O’Keefe said. However, subsequent update valuations will cost around $5,000 and might be worth it, said O’Keefe. Valuations are good for knowing how an owner’s net worth has changed relative to the business, and they provide information on transactions of comparable companies within the past year — critical insight for anyone thinking about a sale. Considering the prep work for value improvements can take a long time, novices of the process would be well-advised to at least begin thinking about it now. A less costly method is to stay in touch with knowledgeable contacts who can speak to market conditions and transactions. “Prudent business people stay in touch with attorneys, accountants, bankers, industry groups to get a continuing sense of the value of their company and companies in their space,” Minkus said.

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Jennifer Baird played a a business attractive. central role in one of the The analogy a lot of peomost lauded successes to ple can relate to is buycome out of Michigan’s ing and selling a house. venture capital and startBuying and selling a up communities, the 2011 company is very much sale of Ann Arbor-based like that. You want to Accuri Cytometers Inc. to spruce it up as much as medical technology giant you can, give it as much Becton Dickinson and Co. curb appeal as you can. for $205 million. But you can’t change As CEO, Baird led Acwhere your house is — curi, a maker of a medical there are going to be limdevice used to analyze its. You’re probably nevJennifer Baird, cells, through many valuaer going to double the tions. She’s also been Accio Energy Inc., size of your house. You Sonetics through the process for might never get your inUltrasound Inc. two other startups she vestment back. leads, Accio Energy Inc. and Sonetics Ultrasound Inc., both based What else do you do to increase in Ann Arbor. the valuation? Prior to her life in the startup Competition. Get multiple peoworld, Baird was a business man- ple bidding either at the investagement consultant, helping busi- ment stage or at the purchase nesses improve operations. stage. That will get you a better For venture-backed startups try- multiple because then you have ing to prove a new technology, val- the opportunity to take the best uations are even more stringent bid. The times when I’ve gotten the than for well-established compa- nicest terms on a round was when nies. Baird shared her thoughts on I had multiple investors doing that the process with Gary Anglebrandt. round with us.

Q&A

How many times have you been through a valuation? Dozens, for sure. Probably less than 100, definitely more than 15 or 20. Every time you do a fundraising round, there’s a valuation involved. Also, there’s a valuation involved when you issue stock options. What were the leading factors in the Accuri valuation? The leading factors totally depend on the stage of development of the company. In the earliest stages, you’re evaluating the potential of a company and eventually when you have financial results, you’re evaluating based on those financial results. When you back it out and think about what’s going on, it’s all about how big is your market, how good is your product, how attractive is your product to customers, and how much profitability are you able to achieve. Those are the basic things that affect valuation. It’s all about what kind of business you can build. What made Accuri so successful was how attractive the product was. There’s a big market of scientists who wanted the product. What’s the No. 1 factor you make sure is well-addressed before heading into a valuation? I try to develop as much momentum as I can. By momentum, I mean positive results of things that drive value. Technology that works, happy customers, fast revenue growth, profitability — all those things drive your valuation higher. Try to reduce risks. There are technology risks and management risks and marketing risks and financial risks. Eliminate questions marks as much as you can. Valuation is just kind of an aggregation of all factors that make

What’s the top one or two leading misconceptions about valuations

from an entrepreneur’s point of view? The biggest misconception I hear from entrepreneurs is they think there’s some absolute truth out there, an absolute number. There isn’t. It’s a negotiated number; that’s why I like the house analogy. There’s no absolute number that says this house is worth this. It’s the same thing for a company. It’s always negotiated. You’re in the middle of negotiations and the guy on the other side of the table may not agree. (Another misconception entrepreneurs have is) they think a valuation determines percentage ownership, which determines who has control. An investor can own 10 percent and have absolute control, based on the contract. The investor appoints all the members of the board or has rights to approve all sorts of things. People make that mistake, especially first-time entrepreneurs. They say, I need X percent, then I’ll have control. They didn’t read the other parts of the contract. A good, sophisticated investor will put fences in the contract.

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Home improvement service chain had to fix its own house BY GARY ANGLEBRANDT SPECIAL TO CRAIN’S DETROIT BUSINESS

Mr. Handyman International LLC is the franchising entity behind the Mr. Handyman home improvement service chain. There are 203 franchises in the system, all independently owned and operated (no corporate outlets) by a total 120 owners. The franchises do home repair and improvement projects on the smaller end of the contracting scale — “things a general contractor wouldn’t A look at touch,” said problem-solving President J.B. by growing Sassano. Most companies of the work is residential, with commercial work taking up about 15 percent of the jobs. Problem: The recession put families’ home improvement projects on the back burner, and plenty of unemployed people were around to do work under the table — not optimal conditions for a handyman franchise. Mr. Handyman went from 212 franchise owners operating 299 total franchises and collecting $66 million in systemwide revenue in 2008 to 121 owners operating 186 franchises and collecting $48 million in revenue in 2012. Core revenue for the Mr. Handyman franchising entity went from $6.7 million in 2008 to $3.1 million in 2012. The system had added more than 100 franchises in three years before the recession hit. For many owners, that wasn’t enough time to build enough momentum to make it through the downturn. “They were very challenging years,” Sassano said. “You’re listening to stories about how they don’t want to become a failure or be

STAGE 2 STRATEGIES

MR. HANDYMAN INTERNATIONAL LLC Location: Ann Arbor Description: Home improvement service franchisor President: J.B. Sassano Founded: 2000 Employees: 13 Revenue: $3.5 million in 2013 (systemwide: $55 million) seen as someone who couldn’t make it happen.” Solution: It was time for Mr. Handyman to look at its own house and make necessary repairs. But before it could do that, there was some housecleaning to be done. By early 2012, Sassano many franchisees already had packed it in. But there were quite a few still hanging on. In April, Sassano saw nearly half of the franchises were in poor health. “It’s a sobering sight to see 62 of your 140 businesses under breakeven,” he said. Sassano’s team identified ones that needed to close down for good and pushed businesses — 39 of them in 2012 — to close. This was done by pointing out the hard realities the numbers were describing and also that owners could get regular jobs making more money than they were with their franchises. “We had to get the base healthier, bite the bullet, take the lumps, and make the system stronger by removing those people,” Sassano said. “Then we sat down with the rest and had open, honest communications about their financial sys-

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tems, which is something they really didn’t (get from corporate leaders) in the past.” Then came the repairs. First, franchisees were allowed to use subcontractors. Previously, homeowners were expected to hire a plumber in addition to Mr. Handyman if a plumber was needed as part of a project. This was annoying to homeowners who would have preferred Mr. Handyman to be the single point of contact. Next, longer projects became part of the offering mix. Franchises already were replacing sinks and toilets. “Why not package it altogether and do remodeling?” Sassano said. Mr. Handyman also began working with national service providers, brokers that match contractors with projects for large national companies like restaurant chains. This added commercial work. The result has been a leaner system that brings in more money per outlet: The number of actual franchises is still low compared to 2008, but systemwide revenue is working its way back to 2008 levels. There were 188 franchises at the end of last year owned by 114 franchisees who collectively brought in $55 million. Mr. Handyman estimates systemwide revenue of $61 million for this year, with core revenue of $4.7 million. Risks and considerations: Allowing subcontractors to work on projects brings some risk. If the subcontractor does shoddy work or doesn’t show up on time, the homeowner will blame the Mr. Handyman franchise as much or more than the subcontractor. “You’re the one who brought them into play,” Sassano said. Larger jobs and commercial work entail more risk because more is invested to complete the work before being paid, and the timeline for getting paid is longer. Franchises have to be at a certain level of size and experience before they are allowed to take on these kinds of projects, but the risk remains. Expert opinion: Cutting back the number of franchises is a tough decision for a franchisor to make, said Mark Cory, franchise placement specialist at Grosse Pointe-based Cory DevelopCory ment Inc., which does business as FranNet of Michigan. But it can sense for the longterm health of the system. Said Cory: “There often comes a time when a franchisor needs to put unit growth on the back burner and focus more on unit profitability, and, in this case, not only devising new ways to funnel more revenue to the franchisees and help them control costs — but also counseling underperforming franchisees on an exit strategy.”

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Capital Strength Six ways to thrive as CFO of a high-growth firm By James Ritchie

FOs of rapidly growing companies are faced with great change as they take on a larger role in guiding organizational strategy and navigating a variety of new risks. But even as the role evolves, the heart of it remains the same: managing finances. Matthew Elliott The difference for CFOs in fastMichigan Market President moving organizations versus more Bank of America Merrill Lynch traditional enterprises lies in the definition of “managing finances.” For firms that are expanding, focus needs to be on ensuring they have enough capital to make things happen. That means CFOs in such companies still have plenty of opportunity to use their time-honored technical skills — but also a multitude of new ones. Here, Matthew Elliott, Michigan market president for Bank of America Merrill Lynch, offers some best practices for CFOs of high-growth firms:

• Watch the markets. Timing is everything when it

• Stay objective. The biggest pitfall is falling in love with

comes to credit. It’s very possible to wait too long to try to develop new liquidity and then find that it’s not there for you. At some point you may realize that you’re going to have to make a move based not only on your needs but also on what the markets look like.

an idea. The CEO says, ‘I want to go there.’ The CFO says, ‘We have the capital; we can get there.’ But after you invest the money and resources, you still have to be ready to go in a different direction if you aren’t getting results. For more on the right sources of capital for your Detroit business, contact matthew.b.elliott@baml.com

• Choose the right growth. The metrics you focus on will depend on whether your firm’s growth is organic, M&A-fueled or innovation-based, and how — and to what extent — it is leveraged. For example, some companies that are using leverage to fund growth might be closely monitoring cash positions. I know companies that are measuring sales based on location daily to make sure their investments are paying off in the time they expect them to pay off.

• Stack up to your peers. Benchmarking can give you a sense of whether your approach to risk is in line with that of other companies. We have tools that let customers compare themselves to averages for liquidity, leverage, working capital, inventory and other factors. Firms can measure their performance against vast amounts of benchmarking data through a Bank of America Merrill Lynch resource called PeerProfiler ®, which includes information aggregated from thousands of firms, along with industry-specific and publicly available data.

With the right connections, companies grow fast. baml.com/growth

• Free up cash. The vagaries of closing deals, fulfilling orders, and getting paid bring challenges when you’re pushing for growth. Having adequate cash or credit on hand lets you overcome the hurdles. When we’re working with teams, we make sure they’ve built in sufficient liquidity — six, 12, 24 months out — to do what they’re trying to do. Credit financing is a convenient and flexible source of capital for firms seeking to build new plants, bring new products to market, or even acquire another company. But it’s by no means the only option for middle-market companies, as equity capital is also a popular choice for firms pursuing growth of all types.

• Scale it back. Making big plans and carrying them out is the fun part of working in a rapidly growing company — but sometimes the CFO has to spoil the fun. If an idea carries too much risk, it’s often up to the CFO to suggest scaling it back, delaying it or dropping it. It’s like a double-edged sword. You can grow like crazy, which creates value, but you can also run out of cash. You have to manage growth carefully or it can be a bad thing.

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PUBLISHER’S NOTEBOOK Contact Mary Kramer at mkramer @crain.com.

CRAIN’S MICHIGAN BUSINESS Mary Kramer

GR vote could signal future of term limits Are Michigan voters ready to amend the term limits they enacted by referendum 22 years ago? Business leaders attending the West Michigan Policy Forum in Grand Rapids last month want to extend or modify those limits. And Senate Majority Leader Randy Richardville also has proposed modifications to the current limits of six years in the House and eight years for state Senate and governor. But do voters still like term limits? Grand Rapids will find out Nov. 4 when voters decide whether to adopt limits of eight years for city commissioners and the mayor. Two women leading the charge collected 10,000 signatures — far more than the 6,700 required. Rina Baker works in a lab at the city’s leading hospital system and has run unsuccessfully for the commission. Campaign treasurer Bonnie Burke has run her own interior design business. The pair’s campaign has a small budget for direct mail and has used mostly Facebook, social media and their website, which features a quote attributed to humorist Mark Twain: “Politicians and diapers must be changed often. And for the same reason.” Business and organized labor — the Grand Rapids Area Chamber of Commerce and Kent-Ionia Labor Council — oppose term limits that would prohibit current Mayor George Heartwell and four commissioners from seeking re-election. The catalyst, in part, was a controversial city income tax increase narrowly adopted by voters for road improvements in 2010 and extended with a vote this year. In both elections, the proposal was placed on a May ballot, and voter turnout was 15 percent or less. Baker and Burke carefully planned their term-limit question to ensure it would fall on a November ballot in a gubernatorial election year, when more voters are expected. At the state level, business groups now say term limits shortchange the public interest. It takes time to learn the state’s $50 billion budget, they say. Case in point: When lawmakers were debating whether to extend coverage of Medicaid, the issue became muddied when lawmakers privately seemed to confuse Medicaid — health care for low-income people — with Medicare, health care for seniors. To that argument, Baker retorted: “They skipped that civics class; you can learn in five minutes what you need to know. In the private sector, you learn on the job all the time.” If Grand Rapids adopts term limits, it just might make modifying limits at the state level a little more difficult.

ASSOCIATED PRESS

The Alexander Calder statue “La Grande Vitesse” — a symbol of Grand Rapids’ philanthropic past — is united with its present, the city’s annual ArtPrize exhibition and competition, albeit temporarily. Foam flower petals attached to the sculpture last year as part of a work called “Fleurs et riviere” were removed, amid objections from the Alexander Calder Foundation.

A new age of giving Grand Rapids philanthropy evolves from a generation whose names dot landscape BY ROD KACKLEY SPECIAL TO CRAIN’S MICHIGAN BUSINESS

he death this past July of Peter M. Wege was the latest passing among the first generation of Grand Rapids philanthropists whose influence traces its origins to the Alexander Calder sculpture that for many outside West Michigan was the symbol most vividly associated with the city. This past week, within walking distance of “La Grande Vitesse,” unfolded a vivid example of the city’s emerging generation of philanthropy: ArtPrize, an art exhibition and competition, now in its sixth year, that brings 400,000 people into downtown Grand Rapids over three weeks. Peter M. Wege — the only son of Peter W., a founder of Grand Rapids-based Steelcase Inc. — was preceded in death in recent years by Jay Van Andel, a cofounder of Ada-based Amway Corp.; his wife, Betty; and Frederik Meijer,

founder of Walker-based Meijer Inc. The man who helped Van Andel build Amway — Rich DeVos — is in his late 80s, as is DeVos’ wife, Helen. All are members of a generation who in the late 1960s saw in Grand Wege Rapids a community that could be improved — then decided they would do something about it. The sons and daughters of DeVos, Van Andel and Meijer led the second generation of donors. And now, they are getting ready to step aside for a third generation who, besides being younger, has access to more money — and there are many more of them than the city has ever seen. Dick DeVos, a member of the second generation of one of the most philanthropic families in Grand Rapids, is confident that the third generation will

change the philanthropic dynamic of the city. He just isn’t sure what that change will be. “It used to be when you only had a few people making decisions, it was a whole lot simpler,” DeVos said. “It is probably going to become more complex.” The approach of the next generation of donors is a mystery to their elders in the philanthropic community — so much so that the Johnson Center for Philanthropy at Grand Valley State University studied them in 2013. Michael Moody, Frey Foundation chairman for family philanthropy at the Johnson Center, said the center’s #NextGenDonors study found that this third generation — the “G3s” — wants to be much more hands-on in their philanthropic investments than their parents were. They want to do more than feel good. They want to make an “impact” — and be able to measure that impact. See Giving, Page 18

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Giving: Generation next ■ From Page 17

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“You are seeing more interest (among the G3 philanthropists) in grassroots or neighborhood-based projects and programs,” said Steve Wilson, president of the Grand Rapids-based Frey Foundation. “The next generation is also very interested in the environment and how it connects on a broad, regional basis.”

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The planning and vetting of projects being done now is different from the process in place 25 years ago, Wilson said. A good example of today’s approach is Grand Rapids Whitewater. The project includes the removal of five dams along the Grand River in downtown Grand Rapids; the restoration of a natural, 18-foot drop in the elevation along a twomile stretch of the river; and the re-creation of a boulder-strewn rapids. Organizers say those changes will make the river more attractive for kayaking, fishing and stand-up paddling along with other water recreation. An Anderson Economic Group study released last month contends that the project could have a positive net economic impact as high as $19.1 million. But this is only the first of several studies. “We needed to demonstrate the viability of this project to our partners, members of the community and funders,” said Chris Muller, a co-founder of Grand Rapids Whitewater. The worst-case scenario for this emerging generation of donors, Moody said, would be to walk into a room and see a thermometer drawn on the wall with a new line added every time someone makes a donation, until the campaign meets its goal. “They don’t want to be a line on the fundraising thermometer,” he said. “They want to be on a task force that is solving a problem.”

‘Culture of collaboration’ It was the third generation’s grandparents who started what Ellen Satterlee, CEO of The Wege Foundation, called the “culture of collaboration” among the city’s philanthropists. Moody said it began with postWorld War II philanthropists such as Peter M. Wege, who in 1967 created his foundation with the first project to clean up the water, air and land in West Michigan through his Center for Environmental Study. Wege; Dick Gillette, president of what then was called Old Kent Bank and what today is part of Fifth Third Bank; and others thought they could do a better job of revitalizing Grand Rapids than the political officials running the city. The first project launched by this first generation — one that also included Amway co-founders DeVos and Van Andel — involved art. They wanted to bring Calder’s “La Grande Vitesse” to Grand Rapids in 1969. No single donor had the money

(The emerging “ generation of donors) don’t want to be a line on the fundraising thermometer. They want to be on a task force that is solving a problem.

”

Michael Moody, Johnson Center for Philanthropy

to purchase this 42-ton, 43-foot-tall statue. And so was born, by necessity, a “culture of collaboration and community engagement that was very strong in the beginning and strong throughout the 26 years I knew him,” Satterlee said of Wege. Arend D. “Don” Lubbers, president emeritus of Grand Valley State University, said Gillette “brought Rich DeVos and Jay Van Andel in when they were starting to make big money, so the structure of getting people together and having citizen leadership participation to develop the community was there.” So was born the model for how things got done in Grand Rapids. One of Wege’s last gifts was the $20 million lead donation for the construction of a new home for the Grand Rapids Art Museum, which opened in 2007. Jay Van Andel and Rich DeVos, partners in business, were also partners in philanthropy. They led the drive to renovate the old Pantlind Hotel downtown. Today, it’s the Amway Grand Plaza Hotel. The DeVos and Van Andel family names are on many buildings, but they don’t stand alone. Meijer family members were the lead donors for the Spectrum Health Meijer Heart Center on the Medical Mile, a one-square-mile section of downtown that has become a center of medical-related development. Frederik Meijer and his wife, Lena, also were the lead donors for the 125-acre Frederik Meijer Gardens & Sculpture Park, which opened in 1995. As noted by the authors of a Metropolitan Policy Report produced by the Brookings Institution: “The substantial private investment in downtown amenities was a de facto major policy. The owners of Amway Corp. and Steelcase, along with the descendants, each poured hundreds of millions of dollars into the city and the region through individual and foundation gifts.”

The second generation More than 20 years after “La Grande Vitesse” was placed on Calder Plaza, the sons and daughters of those Grand Rapids businessmen/philanthropists doubled down on the investment their parents made, forming the Grand Vision committee in 1991 and transSee Next Page

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CRAIN’S MICHIGAN BUSINESS Wilson of the Frey Foundation said the next generation is investing in “softer tissue” and leveraging the infrastructure created by the cooperation of the public, Rick DeVos private, philanthropic sectors that came from the two previous generations.

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An example of that, Wilson said, is ArtPrize. The event — created by Rick DeVos, son of Dick and Helen DeVos — uses the downtown Grand Rapids buildings built by his parents’ and grandparents’ generations of philanthropists as venues for hundreds of works of art. “Now, it’s not been about what Rick DeVos is going to build,” Moody said. “It is about what kind of innovative social enterprise can he get involved in.”

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Just as their grandparents created a new model of philanthropy and their fathers and mothers changed it, the next generation of philanthropists, the G3s, are creating their own model of giving. “A relatively small group of Gen X’ers and millennials are inheriting over $40 trillion in wealth, much of that designated for charitable giving,” according to the #NextGenDonors study. “Many are making their own wealth, too. They will be the major donors in America for decades to come; some already are.” Bringing the next generation on board is a concern for Diana Sieger, president of the Grand Rapids Community Foundation. “What you hope is that the first

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You have to challenge your own set of priorities and your generation’s issues.” Michael and Christina Rosloniec are two of the new generation of donors in Grand Rapids. Both, in their early 40s, are following a tradition of family philanthropy, but not from a position of great wealth. Michael is a family wealth and institutional consulting director at Graystone Consulting in Grand Rapids. Christina was a development officer at Heart of West Michigan United Way before their son was born 14 years ago. Now she helps nonprofits — local Catholic elementary schools, in particular — increase their fundraising and exposure in the community. The Grand Rapids Community Foundation got them into philanthropy with a program designed to attract younger investors who might not be able to give $1 million each but could throw $2,000 into the pot. Michael Rosloniec said he and Christina were part of a group of 40-50 people who created a $100,000 fund for three community grants. They were not looking to fund continued capital improvements or give money to programs that had been in Grand Rapids for decades. The idea was to find charities with good ideas and try something new. The best example, he said, was St. John’s Home in Grand Rapids and programs to help kids with drug and alcohol addiction.

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forming it into Grand Action in 1993. Grand Action led the way on three major projects that, starting in the 1990s, transformed downtown Grand Rapids, all fueled by philanthropic dollars: Van Andel Arena, DeVos Place Convention Center and, most recently, the Grand Rapids Downtown Market. “We concentrated on the central city and big-scale, capital-intensive projects that were game changers,” said David Frey, a Frey co-chairman of Grand Action. “And I think we have been proven pretty successful at that.” Although Grand Action has been a force in the community, Dick DeVos, Rich DeVos’ son and a member of the second generation, stressed that no formal organization or “czar of philanthropy” exists to bring the foundations together. Nor is there an official organizational chart of the Grand Rapids philanthropic infrastructure. Many of the people watching Grand Rapids from the other side of the state find that surprising, he said. “There is a misperception in Southeast Michigan that I call the ‘Wednesday morning coffee perception,’ that in West Michigan everybody sits down and has coffee on Wednesday morning and figures out what they are going to do together, has a round of ‘Kumbaya’ and away we go,” DeVos said. Each of the philanthropic family foundations in Grand Rapids has its own interests and priorities, he said, yet there is also an overarching motivation of simply making a better community. In the Van Andel Institute, founded in 1996, the Van Andel family created an anchor in downtown Grand Rapids for what is now the Medical Mile. Also part of the Medical Mile is the Helen DeVos Children’s Hospital. The institute, which conducts biomedical research and medical education, is an example of the two generations working side by side. Jay and Betty Van Andel wrote the check. Their son, Dave, is the CEO of the institute.

generation has given the gift, if you will, of how to be giving and supportive and to be good community members to their children, grandchildren and great-grandchildren,” Sieger said. Like DeVos, Satterlee thinks Sieger the new generation of philanthropists will change the process of project creation and grant evaluation. That presents a new challenge of how to communicate and explain “impact” for the variety of organizations funded by the Wege Foundation, she said. The Frey Foundation itself is transitioning. Over the next three to five years, patriarch David Frey said, most trustee responsibilities will be transferred to the third generation. David Frey said his family’s 3G will be free to find its own way — within limits. For instance, the foundation’s bylaws and articles of incorporation state that it always will remain headquartered in Grand Rapids. Still, Frey said, the transition to his children’s generation will require changes in attitudes at the foundation as well as Grand Action. “We are building bridges; trying to be inclusive, thoughtful and good listeners,” he said. “The world changes. Society changes.

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GR officials see development as next stop for bus rapid transit BY ROD KACKLEY SPECIAL TO CRAIN’S MICHIGAN BUSINESS

The first exploration of bus rapid transit in the Grand Rapids area is already halfway to its goal of 5,000 riders a day most weekdays. And although nothing is shovel-ready yet, city officials think developers are starting to get interested in investing along the corridor of the new bus line. The service, known as the Silver Line, encompasses 34 bus stations along a 9.6-mile route from the southern suburbs to downtown Grand Rapids and the Medical Mile, a one-square-mile section of downtown that has become a hub for medical-related development. “We are seeing much stronger starts for this line than any previous new route we’ve established — generally, weekday ridership for a new route is in the hundreds, not thousands, like we are seeing on the Silver Line — and continues to build over time,” said Jennifer Kalczuk, external relations manager for The Rapid, the region’s mass transit agency. The average ride from the southern suburbs to the Medical Mile takes about 27 minutes. That’s no faster than driving the route in a car. But Kalczuk said that doesn’t seem to matter to the thousands riding the Silver Line every day.

“Based on what we are hearing, some of the riders we are attracting would otherwise be commuting on U.S. 131 rather than Division (Avenue),” she said. “They are choosing the Silver Line because it is faster, or less expensive, or more convenient, or all three.” Kalczuk said the Silver Line has not cannibalized more than a few hundred riders from Route One, another Rapid bus route that continues to operate alongside the Silver Line but without any of the new route’s technology. Ridership along the Division Avenue corridor, which includes the Silver Line and Route One, was up 44 percent compared to the last week of August and all of September one year ago, based on statistics released by The Rapid. “We are hearing that we have a lot of Grand Rapids Community College students and a lot of people who are working on Medical Mile, especially Spectrum Health employees,” Kalczuk said. So far, evidence that the community college, the Michigan State University College of Human Medicine and Spectrum Health — three of the largest entities along the Silver Line route — are using the new bus service is anecdotal. Melissa Kamara Liggins, manager of corporate public relations for Spectrum Health — which operates Butterworth Hospital, Helen DeVos Chil-

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connected Kalamazoo and Grand Rapids. Grand Rapids officials, along with their colleagues to the south in Kentwood and Wyoming, hope the route will spur the kind of economic development that bus rapid transit lines have seen in other cities, like Cleveland. The Greater Cleveland Regional Transit Authority has estimated that by 2025 there will be 7.9 million square feet of commercial development, 5,400 new or imJON BROUWER proved residential units Officials say the recenlty started Silver Line, the and $1.3 billion in capital inbus rapid transit line in Grand Rapids, is already vestments along the route of halfway to the goal of 5,000 riders a day. its Healthline bus rapid transit route — itself origidren’s Hospital, Meijer Heart Center nally called the Silver Line. and other facilities on the Medical Peter Rogoff, the Federal Transit Mile — said the technology to track Administration administrator, said employees on the Silver Line Grand Rapids could expect to see should be in place next spring. 30,000 jobs generated in the city’s “We do know that approximate- central business district alone, ly 300 employees ride The Rapid thanks to the Silver Line because each month, with 200 of those em- of what is known by developers as ployees riding 10 or more times “transit-oriented development,” or TOD. per month,” Liggins said. “We have had some interest as Connecting the southern suburbs to Grand Rapids is only one purpose far as people trying to understand of the Silver Line. Grand Rapids what this means,” said Suzanne city officials also hope the line will Schulz, director of the Grand Rapids spur a rebirth of Division Avenue, Planning Department. “There have which before U.S. 131 opened was a been rumors of people acquiring thriving commercial corridor that property, but I have not seen any

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specific projects yet.” The next step for the Planning Department is to meet with people who live, work and own property along the Silver Line corridor so city officials can talk with developers about what future land use and development should look like, she said. The city has a TOD ordinance in the zoning code so that areas around Silver Line stations could be rezoned for office or retail, with condo or apartment residential units and little or no parking requirements for the developments — the assumption being that instead of using cars, the people who live, work and shop there would use the bus system. “We want to remove any potential barriers that the development community might think would exist,” Schulz said, “and to streamline the approval process so they don’t have to go through rezoning. If they meet the code, they could come in for permits right away.” One person who has been unimpressed with The Rapid’s first month is Jeff Steinport, a cofounder of the Kent County Taxpayers’ Alliance. The organization campaigned against a millage proposal for the Silver Line’s operation. Steinport calls bus rapid transit “a $40 million waste of money.” “The first weeks of service, they have been offering free rides, and now they are doing a special promotion with ArtPrize,” said Steinport, referring to the popular art competition that concluded Sunday. “I am also concerned whether they are checking to make sure people have purchased tickets or are just riding for free.” Because Silver Line riders don’t have to show the drivers tickets and because drivers don’t accept fare money, riders essentially pay on an honor system. With the Silver Line barely more than a month old, The Rapid already is looking at running another bus rapid transit route. This 13-mile route, dubbed the “Laker Line,” would run from Grand Valley State University’s Pew campus in downtown Grand Rapids to the university’s main campus about 20 miles to the west in Allendale. GVSU faculty and students who have classes on both campuses are now served by The Rapid’s Route 50 bus. The Laker Line, named after the nickname of the school’s athletic teams, would replace it. Lisa Haynes, Grand Valley’s assistant vice president for Pew campus operations and regional centers, said 2.9 million students, faculty and staff rode Route 50 in the 2013-14 academic year. The Rapid’s Kalczuk said the advisory committee that has been studying the Laker Line proposal will review a draft of the study recommendations in November. If no significant changes are made, that group would recommend that it go to The Rapid board in December for approval. “Once the study is complete, we start the process of applying for federal funds, which will be the determining factor in how quickly anything happens,” Kalczuk said. “We are projecting five years until implementation — if everything goes right.”

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Tooling firm thinks being in U.P. gives it upper hand BY JIM JOHNSON CRAIN NEWS SERVICE

COURTESY OF JK MACHINING INC.

The roof above employees at JK Machining in Kalamazoo carried its burden of snow last winter until, in February, the weight and gravity prevailed. But with help from the region’s tooling coalition, the company never missed a delivery.

Remember winter? Kalamazoo mold maker’s tale of snow woe BY KERRI JANSEN CRAIN NEWS SERVICE

On a Tuesday afternoon in February, a crack appeared in the ceiling of JK Machining Inc. in Kalamazoo. “It was about 4 o’clock in the afternoon,” recalled Henry Kalkman, JK Machining president. “Heard a loud noise, walked out in the manufacturing facility and saw my guys looking at a big crack in the ceiling, running the length of the building.” As staff began to leave the building, a second crack appeared and spread toward the office area. Then, under the weight of an unusually heavy snowfall, the roof collapsed, crushing equipment and covering 5,000 square feet of manufacturing space in debris. “That roof was carrying a snow load all winter long,” Kalkman said. “A lot of times snow comes and goes, and I guess after having snow on it for four, five months, it finally decided it was time to give up.” All staff members made it out of the building without harm. After the collapse, JK Machining prioritized saving its inprogress work. The company makes injection molds for automotive, medical and furniture end markets. “We had a crane on site by 8 o’clock that night, and the next morning we started lifting pieces of the roof and the rafters away so that we could get at all of our customers’ molds,” he said. “And by the end of the day, we had all of our customers’ molds out of our facility and into other local shops that helped us finish them.” JK Machining is a member of the Southwestern Michigan Tooling Coalition. The alliance helped make

it possible to deliver all molds on time. “Never missed a date, never missed a delivery,” Kalkman said. “It was survival mode; you don’t deliver late.” Kalkman said he received offers of help from all over the state as the company salvaged what it could and set up shop in a temporary facility about 20 minutes away. “We were able to save our manual machines,” he said. “Anything that was computer-driven, CNC, high-accuracy” had to be replaced. “We got all new high-speed mills, new EDMs, new wire machine, new CNC milling machines. Everything else was pretty much crushed.” JK Machining, which employs 16, is rebuilding at the same location, with construction expected to be completed within the next month and a half. The original 5,000-square-foot manufacturing space will be replaced, plus an additional 3,500-square-foot expansion. Insurance covered replacement machines and the 5,000-square-foot construction; Kalkman is covering the cost of the additional space. Kalkman said he had not been planning an expansion, but the new construction made it a practical choice. “Everything’s out of the way; now’s a perfect time to add on,” he said. The next challenge will be tearing down the company’s temporary shop and relocating it to the new building. But with the fresh start comes new opportunities. “I’ve got all new machines. It’s going to change our capabilities. We’re going to be doing high-speed five-axis machining now,” Kalkman said. “We have updated machines, basically. Things have

changed in 15 to 20 years.” Kalkman expects to be operational in the new space by the end of this year. From Plastics News

Extreme Tool & Engineering Inc. is in a remote corner in the western Upper Peninsula and has an average employee age of 28. Those two details might be considered disadvantages to some mold makers. But for Mike Zacharias, they are a couple of key reasons his Wakefieldbased company is successful. “I’m not saying there’s Zacharias anything wrong with being an old guy like me. But I do believe in the power of youth and reinvesting in training. The bottom line is we’re preparing for the next 40 years, not the last 40,” he said at the recent 2014 Plastics Caps & Closures conference in the Chicago suburb of Rosemont, Ill. Being in such a remote location, with its economic challenges, means the 80 or so jobs at Extreme Tool are some of the best in the area, Zacharias said. And that helps keep employee turnover low — about 5 percent annually. That, he said, compares with 10 percent to 20 percent that a company like his would see elsewhere. Zacharias often hunted and

fished with his father in the U.P. He vowed to move there and find a way to make a living. He did just that, taking a significant pay cut to become a mold maker apprentice at nearby Ironwood Plastics. By 1998, Zacharias and some fellow employees at Extreme Tool bought out the company after its parent company decided to divest operations. Six employees then have grown to about 80, and Zacharias is now the sole owner. And they, like the owner, appreciate having a job that allows them to live in that part of the country. Workers commute anywhere from two to 40 miles. Zacharias, at one point, did have concerns about attracting enough talent to keep his shop successful. But not anymore. Extreme Tool either hires directly from high school or college and trains its employees. “We’ve been able to promote our brand and our company locally at a level where we are able to attract young talent,” he said. “We’re very aggressive about training. “I’m not going to be foolish enough to say we’ve got it all figured out, but it does seem like we’ve got things heading in a direction where we can get the capable, qualified people that are able to and ready to be trained to be productive employees for our company.” From Plastics News

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Canada

WHERE MICHIGAN DOES BUSINESS Autoliv Inc. Based: Auburn Hills and Southfield (Autoliv Electronics) Operations: Facilities in Tilbury, Collingwood and Markham, Ontario Employees: 1,200 Top executives: Dan Garceau, president, Autoliv North America; Steve Rode, president, Autoliv Electronics Products: One-piece woven inflatable curtain airbag, textile manufacturing, automotive seatbelt webbing, restraint central module, satellite sensors, radar Clients: General Motors, Ford, Chrysler-Fiat, Nissan, Honda, Toyota, Kia/Hyundai, Daimler, Tesla, Mazda

anada had a 2013 GDP of $1.825 trillion — and is the United States’ closest trading partner. About 75 percent of Canada’s merchandise exports end up in the U.S., according to the CIA World Factbook. Some of Canada’s most significant industries include chemicals, minerals, wood/paper products, food products, transportation equipment, petroleum and natural gas. Canada also is the largest energy supplier to the U.S., one reason the country’s petroleum sector is seeing rapid growth. Oil sands in Alberta have raised the number of proven oil reserves in Canada, which now ranks third in the world for proven oil reserves. Canada also supplies energy through gas, uranium and electric power. Major export partners of Canada include the U.S. (74.5 percent), China (4.3 percent) and the United Kingdom (4.1 percent). Major exports include motor vehicle and parts, aircraft, telecommunication equipment, chemicals, crude petroleum and natural gas. The Canadian government plans to balance the national budget by 2015, making cuts in the number of federal government jobs, military spending and funding for the CBC broadcasting network.

Crain’s World Watch Monthly report showcases Michigan companies that are leaders in global markets and those that are expanding. Each World Watch features a different country. If you know of a Michigan company that exports, manufactures abroad or has facilities abroad, email Jennette Smith, managing editor, at jhsmith@crain.com.

COMING UP 䡲 November: Brazil/Venezuela 䡲 December: China/Taiwan

Kelly Services Inc. Based: Troy Operations: Headquarters in Toronto; 23 offices across Canada Employees: 175 permanent staff and more than 6,800 temporary employees Services: Outsourcing and consulting services as well as staffing on a temporary, temporary-to-hire and direct-hire basis Top executive: Kristin Supancich, vice president and general manager, Canadian operations

Lear Corp. Based: Southfield Operations: Manufacturing in Ajax and Kitchener, Ontario Employees: 1,100 Products: Seats and seat components Top executive: Ray Scott, president of seating operations Clients: General Motors, Chrysler

Domino’s Pizza Inc.

CANADA Edmonton Montreal, Boucherville

Among Belfor’s Canadian plants is one in London.

Moncton

Belfor Holdings Inc. Based: Birmingham Operations: 34 full-service restoration facilities across Canada with office, production and warehouse spaces Employees: 1,240 Products: Full range of fire, smoke and water restoration services. Top executive: William Cook, president More information: Belfor Canada restored properties following the catastrophic flooding in Alberta in June 2013.

Based: Ann Arbor Operations: Headquarters in Leamington, Ontario; more than 300 stores Employees: 700 Top executive: Michael Schlater, president, Domino’s Pizza of Canada More information: Canada was the first international market for Domino’s. Michael Schlater opened a store in Winnipeg in 1983.

Collingwood

ONTARIOBrampton

Markham Bramalea Whitby Georgetown Toronto Guelph Mitchell Stratford Burlington Cambridge London Windsor

Woodstock

Glencoe Tilbury

East Kingsville

president and CEO of Chrysler Canada Inc.

General Motors Co. Based: Detroit Operations: Headquarters, engineering center and assembly plant in Oshawa, Ontario; assembly plants in Ingersoll and St. Catharines, Ontario Employees: 9,000 Products: Chevrolet Equinox, GMC Terrain, engines and six-speed transmissions, Chevrolet Impala and Camaro, Buick Regal and Cadillac XTS Top executive: Kevin Williams, president and managing director of GM Canada

Con-way Inc.

Chrysler has an aluminum casting facility in Etobicoke, Ontario.

Chrysler Group LLC Based: Auburn Hills Operations: Headquarters, assembly plant and R&D center in Windsor; aluminum casting plant in Etobicoke, Ontario; assembly and satellite stamping plants in Brampton, Ontario; 440 dealers as well as sales offices and parts distribution centers in Canada Employees: 10,245 Products: Chrysler, Jeep, Dodge, Ram, Fiat and Mopar vehicles and products including the Ram Cargo Van (Windsor), and the Chrysler 300, Dodge Charger and Dodge Challenger (Brampton) Top executive: Reid Bigland, chairman,

Based: Ann Arbor Operations: Con-way Freight, St. Stephen, New Brunswick; Pigeon River, Sarnia, Windsor and Niagara Falls, Ontario; Pacific Highway, British Columbia; Emerson, Manitoba; Coutts, Alberta. Menlo Logistics operates from Mississauga, Ontario. Employees: 306 at Con-way Freight; 192 at Menlo Logistics Services: Con-way Freight transports lessthan-truckload cargo between Canada and the U.S. Menlo offers multi-client warehouses in Canada and dedicated logistics facilities. Top executive: Carl Fowler, vice president of sales and solutions for North America, Menlo Worldwide Logistics

NSF International Based: Ann Arbor Operations: Offices and laboratories in Montreal; and in Ontario in Guelph, Burlington and Aurora Employees: 253 Services: Standards development, auditing, testing, certification and training to a range of industries. Top executives: Serban Teodoresco, global strategic consulting managing director; Petra Schennach, training and education global managing director, NSF International global food division

RGIS Based: Auburn Hills Operations: Head office in Mississauga, Ontario, with district offices across Canada Employees: 3,500 Products/services: Physical inventory, fixed/capital asset inventory, merchandising, space optimization, macro space software, store surveys and related services Top executive: Jean Daniel Bouchard, senior vice president of RGIS Canada and Global Specialty Services Clients: Shoppers Drug Mart Corp., Reitmans Canada Ltd., Walmart Canada Corp., Canadian Tire Corp. Ltd., 7-Eleven

TI Automotive Ltd.

Inteva’s manufacturing and assembly facility, Inteva Oshawa Operations, opened in Whitby, Ontario, in 2010.

Daifuku Webb Holding Co.

Inteva Products LLC

Based: Farmington Hills Operations: Plant with manufacturing and office space in Hamilton, Ontario Employees: 200 Products: Conveyors and conveyor parts, and specialized equipment Top executive: Rob Meijer, intra-company operations manager Clients: General Motors, Chrysler, Ford, automotive suppliers

Based: Troy Operations: Tier-one automotive manufacturing and assembly facility, Inteva Oshawa Operations, is in Whitby, Ontario Employees: 140 Products: Produces and assembles automotive cockpits and headliners Top executive: Pat Stewart, vice president and executive director of interior systems Clients: General Motors

Based: Auburn Hills Operations: Fluid-carrying systems plants in Bramalea and Cambridge, Ontario Employees: 148 Products: Brake and fuel lines, fuel assemblies Top executives: Derek McDonald, plant manager; Carson Hodder, plant manager Clients: Hitachi, MEC Products, Ivaco Rolling Mills, Atlas Hydraulics, Transfer Flow Inc., YH America, Toyota and internal

Ziebart International Corp. Based: Troy Operations: 84 franchise locations, with the master licensee located in Laval, Quebec Employees: 114 Services: A line of appearance and protection services Top executive: Thomas Wolfe, president and CEO of Ziebart International Corp. Compiled by Natalie Broda

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October 13, 2014

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CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

CRAIN'S LIST: LARGEST MICHIGAN MANUFACTURERS Ranked by 2013 revenue Company Address Rank Phone; website

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.

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CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

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Rock Ventures to keep fighting to redevelop halted downtown jail site BY CHAD HALCOM AND DUSTIN WALSH CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

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Despite a committee of county commissioners shelving a plan to relocate the Wayne County Jail to Mound Road, developers Rock Ventures LLC will keep fighting for a chance to redevelop the halted jail construction project site on Gratiot Avenue. The committee at an Oct. 9 meeting voted 9-2 to recommend approving a resolution taking off the table a possible alternate jail and criminal justice center at the former Mound Road Correctional Facility. The measure now goes for a formal vote of the full board, possibly by Oct. 16. The resolution offered by Commission Chairman Gary Woronchak scuttles two alternate proposals to relocate the jail nine miles away at Mound Road, and would direct the board to consider only the three remaining options from a presentation it received last month. That could pave the way to resume the half-finished project on Gratiot, a move opposed by Rock Ventures, the development arm of Quicken Loans Inc. founder-Chairman Dan Gilbertâ&#x20AC;&#x2122;s holdings. The commission has reviewed five development alternatives so far, two of which involved moving to Mound Road. Two more involve completing the Gratiot building, and a fifth option is to renovate two existing jail buildings along nearby Clinton Street â&#x20AC;&#x201D; a longshot, officials have told Crainâ&#x20AC;&#x2122;s, because one of the current buildings is almost 90 years old. But all three remaining options would preclude Rockâ&#x20AC;&#x2122;s offer to pay $50 million for the Gratiot site along with the Frank Murphy Hall of Justice, a juvenile detention facility and other county buildings. Gilbert has argued remaining at Gratiot will hinder revitalization of downtownâ&#x20AC;&#x2122;s entertainment district. Commissioners have told Crainâ&#x20AC;&#x2122;s that the two Mound Road options would cost either $468 million or $488 million in new construction, depending on the size of the jail , and Wayne County could need to issue about $400 million of new bonds on top of its current debt load, which includes $200 million of bonds sold in 2010 to fund the Gratiot jail. Commissioner Kevin McNamara said the project has come too far to turn back. Commissioners voted 9-2 to keep going and may make their final decision Oct. 16. â&#x20AC;&#x153;A judicial complex makes sense for a downtown area. You canâ&#x20AC;&#x2122;t walk away from $157 million,â&#x20AC;? McNamara said, referring to the jail construction bond funds already spent on Gratiot. Construction was suspended in June 2013 after a county report that the project would run $91 million over the planned cost. The state has offered a former prison nine miles away in Detroit for a $1 annual lease as an alternative. The commission ruled out that plan with its resolution Oct. 9. The downtown projectâ&#x20AC;&#x2122;s cost overruns prompted a grand-jury investigation that culminated last month in the indictment of three current and former county employ-

ees on charges of neglect of duty. Gilbert has lobbied for the alternate plan. He has offered to buy land around the downtown site for $50 million and lead efforts to redevelop it with a hotel, housing and retail space. He owns 60 buildings in the downtown area, including nearby Greektown Casino-Hotel and parking structure. Gilbertâ&#x20AC;&#x2122;s Rock Ventures, in a statement following Thursdayâ&#x20AC;&#x2122;s vote, said: â&#x20AC;&#x153;Detroit has made some very short-sighted important decisions that have caused negative repercussions and cut off untold opportunity for many decades.â&#x20AC;? The statement referenced the building of the cityâ&#x20AC;&#x2122;s three casinos in three different locations, locating the Renaissance Center on the waterfront and building a one-way people mover. â&#x20AC;&#x153;Critical decisions like the location of the jail cannot be measured solely by numbers on todayâ&#x20AC;&#x2122;s spreadsheets,â&#x20AC;? the statement said. â&#x20AC;&#x153;They must be measured through the prism of what opportunity, vision and ultimate value would be created in an alternative scenario.â&#x20AC;? Converting the state prison and building a new courthouse adjacent to it would cost $260 million more than completing the downtown jail, according to a report Wayne County Executive Robert

Ficano delivered to the commission last month. A memorandum of understanding signed by Wayne County late last year with Rock Ventures, while it was reviewing the development proposal, runs through the end of 2015 â&#x20AC;&#x201D; meaning if it sells the potential development properties to anyone else before then it must reimburse Rock Ventures $500,000 for its costs during a due diligence review. However, Matt Cullen, president and CEO of Rock Ventures, doesnâ&#x20AC;&#x2122;t think the conversation about redeveloping at least the jail site is over. â&#x20AC;&#x153;We really think the discussion is just starting,â&#x20AC;? Cullen said Thursday in an interview with Crainâ&#x20AC;&#x2122;s. â&#x20AC;&#x153;We believe thereâ&#x20AC;&#x2122;s a solution that accommodates everyone. The committee, today, acknowledged the key stakeholders were not at the table.â&#x20AC;? Cullen said Wayne County justice officials are now engaging the process to find the best solution for the site â&#x20AC;&#x201D; whether that includes finishing the jail site at Gratiot, rehabbing the current jail near the site or moving the jail to another location. â&#x20AC;&#x153;That site is compelling enough, as a gateway to Detroit, to make a very compelling investment and do something else with the jail,â&#x20AC;? Cullen said. Bloomberg News contributed to this report.

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CRAIN’S DETROIT BUSINESS

Page 25

WSU starts public part of $750M campaign BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

Wayne State University unveiled its latest fundraising campaign last week, a $750 million initiative called Pivotal Moments: Our Campaign for Wayne State University. The Detroit school plans to complete the campaign in 2018 to coincide with the school’s 150th anniversary. WSU President M. Roy Wilson told Crain’s last week that the goal is to lift the school into the top ranks of public urban research universities in the U.S. “Our vision is to become a preeminent public research university, and to do that, we have a lot of lifting to do,” he said. “This is only the second campaign for the school in close to 150 years. Most universities have had a number of campaigns, so we’re pretty far behind the eight ball. We’ve got to make fund-raising a big part of what we do.” The school began the “silent phase” in the campaign in 2009 and has raised $357.2 million so far, including a commitment of $8.5 million in July for the school’s School of Medicine from Michael and Marian Ilitch. “The philanthropic dollars that you get in a campaign should be aspirational and let you reach for something you typically spend money on. It’s not a replacement for tuition dollars or a loss of state money,” said Wilson. Wilson said money from the campaign will, among other things, fund: 䡲 The $40 million Hilberry Theatre gateway project, which will involve building a new 450-seat theater on Cass Avenue, renovation of the current theater, a former church built in 1916, and the moving of the historic David Mackenzie House on Cass, a Queen Annestyle mansion built in 1895, to another place on campus. 䡲 The funding of endowed chairs to recruit renowned researchers and their teams to the new Integrative Biosciences Center, IBio for short, in the old Dalgleish Cadillac building across from TechTown. Construction on the building is about half done and scheduled for completion next spring. “You need endowed chairs to attract researchers and populate the building,” said Wilson. “The goal on the science side to put to focus on endowments so you can attract good researchers.” 䡲 Endowed scholarships, internships, study abroad and other programs for students. WSU’s first capital campaign was launched in 2005 and concluded Dec. 31, 2008, having raised $484.4 million plus a $407.8 million in-kind PACE (Partners for the Advancement of Collaborative Engineering Education) gift, for a total of $892.2 million. Money from that campaign was used to build the Marvin I. Danto Engineering Development Center, the Richard J. Mazurek Medical Education Commons, the Mort Harris Recreation Center and the Eugene Applebaum College of Pharmacy and Health Sciences. Wilson said that all of the economic activity in Detroit now — including the growing tech hub in downtown Detroit, the M-1 rail line along Woodward, the city’s

impending emergence from bankruptcy and various projects by Mayor Mike Duggan — reinforces the university’s decision to launch a public campaign, now. “In terms of timing, what better time than right now in Detroit? The city is being revitalized and it’s a great time to capitalize on that,” he said. “This is a good time to invest in Wayne State,” said Chacona John-

son, vice president for development and alumni affairs. The school announced the launch of the campaign Wednesday at the university’s Welcome Center. For more information visit go.wayne.edu/giving-campaign. As of June 30, WSU’s endowment totaled $313 million. Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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October 13, 2014

CRAIN’S DETROIT BUSINESS

BUSINESS DIARY ACQUISITIONS & MERGERS

CONTRACTS

EXPANSIONS

Agree Realty Corp., Farmington Hills, closed on the acquisition of four net lease retail properties with an estimated aggregate purchase price of $16.4 million. The acquired properties are a Firestone Auto Care Store in Columbus, Ohio; a 24-Hour Fitness gym in Littleton, Colo.; a Golden Corral restaurant in Rockford, Ill.; and a Giant Gas station in Limerick, Pa. Website: agreerealty.com. Lincoln Electric Holdings Inc., Cleveland, a provider of arc welding products, acquired Easom Automation Systems Inc., Madison Heights, a full-service turnkey provider of automation systems. Angle Advisors-Investment Banking LLC, Birmingham, was Easom’s investment banking adviser in the transaction. Websites: lincolnelectric.com, easomeng.com, angleadvisors.com.

Formcode LLC, Royal Oak, a creative firm, designed and launched new websites for the art gallery Habatat Galleries, Royal Oak; the Roostertail, Detroit; and CSI Utility Sales, Grand Ledge. Websites: habitat.com, roostertail.com, csiutilitysales.com, formcode.com. Graphic Visions Inc., Northville, created a new logo and website with custom animated illustration for Calspyder by Renucci LLC, Flagstaff, Ariz. Website: calspyderii.com. Meritor Inc., Troy, announced it completed the sale of its Mascot operations in Canada and the U.S. to an entity to operate as Mascot Industries LLC. Other Meritor brake and trailer axle remanufacturing operations, as well as its distribution business and aftermarket drivetrain program, are unaffected by the sale. Website: meritor.com.

Garden Ridge Corp., Plano, Texas, has opened an At Home store at 3100 Washtenaw Ave., Ypsilanti. Website: athome.com. Lane Bryant Inc., Columbus, Ohio, has opened a store at Macomb Mall, 32233 Gratiot Ave., Roseville. Website: lanebryant.com.

MOVES Dollhouse Creations LLC moved its Miniature Makers’ Workshop from 32755 Woodward Ave., Royal Oak, to 28120 Woodward Ave., Royal Oak. Telephone: (248) 549-0633. Website: miniaturemakers.com.

NEW PRODUCTS Resort Advantage LLC, Southfield, a provider of FinCEN and IRS compli-

ance solutions for the gaming industry, announced SAR Workflow Accelerator, a suspicious activity reporting process workflow management tool to manage an entire SAR reporting process at a property. Website: resortadvantage.com. ProQuest LLC, Ann Arbor, has created Trench Journals Digital Gallery, a free online gallery composed from works in Trench Journals and Unit Magazines of the First World War, the world’s largest online collection of World War I magazines written and illustrated by service members. ProQuest’s digitization team has scanned more than 1,500 titles; it will be 500,000 digital pages when complete. Website: proquest.com. Secure-24 LLC, Southfield, a provider of cloud-based software services for companies, has introduced the Secure-24 Cloud Advantage for Oracle.

“HOW IS DTE ENERGY DEDICATED TO HELPING BUSINESS?” DTE Energy’s new Business Center is designed to help business customers save time, energy and money. You can call 1.855.DTE.4BIZ to talk to an experienced, Michigan-based consultant trained to serve our business customers. Or go online to dteenergy.com/dte4biz to view and pay your bill, report an outage, or modify service. We think you’ll ﬁnd that our dedication to serving your needs better will make business easier.

Sally Like, Owner Marcile’s Fashions & Bridal

New capabilities enable enterprises running Hyperion, JD Edwards, PeopleSoft and Oracle E-Business Suite to best leverage cloud hosting and thirdparty disaster recovery services. Website: secure-24.com.

NEW SERVICES Ally Financial Inc., Detroit, launched a new free interactive tool on its website to help consumers decide whether buying or leasing might be their best option when shopping for a vehicle. Website: ally.com/auto/personal/explore-financing-options.

STARTUP Mimi’s Bistro, a restaurant, café and bakery, opened at 15318 E. Jefferson Ave., Grosse Pointe Park. Telephone: (313) 922-4085. Website: facebook.com/MimisBistro. STATEMENT REQUIRED BY THE ACT OF AUGUST 24, 1912, AS AMENDED BY THE ACTS OF MARCH 3, 1933, JULY 2, 1946 AND JUNE 11, 1960 (74 STAT. 208) SHOWING THE OWNERSHIP, MANAGEMENT AND CIRCULATION OF: Crain’s Detroit Business, Publication No. 743370, published weekly, no issue the 4th week of December and special issue 3rd week of October at Detroit, Michigan, for September 29, 2014. 7. Complete mailing address of known office of publication: Crain Communications Inc., 1155 Gratiot Avenue, Detroit, Wayne County, MI 48207-2997. 8. Complete mailing address of the headquarters or general business office of the publisher: Crain Communications, Inc., 1155 Gratiot Avenue, Detroit, Wayne County, MI 48207-2997. 9. Full names and complete mailing address of Publisher, Editor, and Managing Editor: Publisher: Mary Kramer, Crain Communications Inc.,1155 Gratiot Avenue, Detroit, MI 48207-2997. Editor: Cindy Goodaker, Crain Communications Inc.,1155 Gratiot Avenue, Detroit, MI 48207-2997. Managing Editor: Jennette Smith, Crain Communications Inc., 1155 Gratiot Avenue, Detroit, MI 48207-2997. 10. Owner (Do not leave blank. If the publication is owned by a corporation, give the name and address of the corporation immediately followed by the names and addresses of all stock holders owning or holding 1 percent or more of the total amount of stock. If not owned by a corporation give the names and addresses of the individual owners. If owned by a partnership or other unincorporated firm, give its name and address as well as those of each individual owner. If the publication is published by a nonprofit organization, give its name and address.) Crain Communications Inc., 1155 Gratiot Avenue Detroit, MI 48207-2997. K.E. Crain, 1155 Gratiot Avenue Detroit, MI 48207-2997. R.E. Crain, 658 Third Avenue New York, NY 10017-4036. 11. Known bondholders, mortgagees, and other security holders owning or holding 1 percent or more of total amount of bonds, mortgages or other securities: None. 15. Average number of copies of each issue of this publication sold or distributed through the mails or otherwise during the 12 months preceding the date shown above was: Total number of copies: 26,652; Paid distribution outside the mails including sales through dealers, carriers, street vendors and counter sales and other paid distribution outside USPS: 128; Mailed outside county paid subscriptions stated on PS Form 3541: 23,511; Paid distribtuion by other classes of mail through the USPS: 0; total paid distribution: 23,639; Free or nominal rate outside-county copies included on PS Form 3541: 1,535; Free or nominal rate distribution outside the mail: 116; Free or nominal rate copies mailed at other clases through the USPS: 0; Total free or nominal rate distribution: 1,651; total distribution: 25,290; Copies not distributed: 1,362; Total: 26,652, Percent Paid: 93.47%. Actual number of single issue published nearest to filing date (Sept. 29, 2014); Total number of copies: 24,021; Paid distribution outside the mails including sales through dealers, carriers, street vendors, counter sales and other paid distribution outside USPS: 39; Mailed outsidecounty paid subscriptions stated on PS Form 3541: 22,756; Paid distribution by other clsses of mail through the USPS: 0; Total paid distribution: 22,795; free or nominal rate outsidecounty copies included on PS Form 3541: 320; Free or nominal rate copies mailed at other classes through the USPS: 0; Free or nominal rate distribution outside the mail: 21; Total free or nominal rate distribution: 341; Total distribution: 23,136; Copies not distributed: 885; Total: 24,021; Percent Paid: 98.53%. 17. I certify that all information on this form is true and correct: Keith E. Crain.

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CONSULTING

Malec

11:29 AM

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CRAIN’S DETROIT BUSINESS

PEOPLE

Koss

10/10/2014

Long Susan Koss to partner, O’Keefe and Associates Consulting LLC, Bloomfield Hills, from managing director. Also, Russell Long to partner, from managing director, and Andrew Malec to partner, from managing

Page 27

IN THE SPOTLIGHT Palace Sports & Entertainment, the umbrella management company for the Detroit Pistons and the Palace of Auburn Hills, has named Greg Campbell as executive vice president and CFO. Campbell, 54, has more than 20 years of experience in sports management. He spent 2008-13 as president of business operations with the National Basketball Association’s Memphis Grizzlies, and four years before that as senior vice president of finance. He also has worked for the NBA’s Los Angeles Clippers, the Toronto Argonauts of the Canadian Football League and the now-defunct Los Angeles Avengers of the Arena Football League. At PS&E, he replaces Bob Feller, who has left the company. Campbell Campbell has a bachelor’s of commerce degree specializing in sports administration from Laurentian University in Sudbury, Ontario.

Precast Can Be Pretty Precast wall panels do not automatically wear a boring gray hue. Architectural precast can be cast in almost any color, form or texture to meet aesthetic and practical requirements. Special sculptured effects can provide visual expressions, such as strength and massiveness or grace and openness.

director.

FINANCE

Figliuolo

GG Brown Laboratories Ann Arbor, MI

Ortbring

Stephen Figliuolo to chief risk officer, Flagstar Bank, Troy, from executive vice president and chief risk officer, Citizens Republic Bancorp Inc., Flint. Janice Ortbring to vice president, marketing manager, Bank of Ann Arbor, Ann Arbor, from co-owner and creative director, Edgar Norman Creative USA, Chelsea. Andrew Kasischke to manager, accounting, audit and assurance group, Doeren Mayhew & Co. PC, Troy, from audit associate.

KERKSTRA PRECAST www.kerkstra.com

HEALTH CARE

Ellis

Brynt Ellis to executive director, St. Joseph Mercy Livingston, Howell, and St. Joseph Mercy Brighton, Brighton, from senior project manager, office of the COO, University of Michigan Health System, Ann Arbor.

LAW

Fransway

Paul Fransway to member and coleader of the franchise and distribution practice group, Dickinson Wright PLLC, Ann Arbor, from shareholder, Butzel Long PC, Ann Arbor.

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NONPROFITS Steve Ebben to president, Forgotten Harvest, Oak Park, from senior vice president and chief administrative officer.

SERVICES Chris Mourad to general counsel, Stefanini Inc., Southfield, from senior contracts manager, Information Services Group, Detroit.

To learn how we can help, contact:

Patrick Skiles, Senior Vice President (734) 542-2790 pskiles@tcfbank.com

TRANSPORTATION Scott Lambka to chief of police, Adrian & Blissfield Rail Road Group, Westland, from director of public safety, Raisin Township.

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October 13, 2014

CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

CALENDAR THURSDAY OCT. 16 Forward Thinking: Business Strategies for Health Care, 8:30 a.m.-noon. Detroit Regional Chamber. Larry Boress, president and CEO of the Midwest Business Group on Health, will share strategies MBGH members are using to improve health care value and will highlight ways to implement a strategy at your own organization.

Detroit Regional Chamber, Detroit. $25 DRC members, $50 nonmembers. Contact: Jonathan So, (313) 596-0340; email: jso@detroitchamber.com; website: detroitchamber.com.

tact: (313) 963-8547; email: info@econ club.org; website: econclub.org.

Setting the Course for Growth: CEO Perspectives on Critical Business Issues. 11:30 a.m.-1:30 p.m. Detroit Economic Club. With John Veihmeyer, chairman and CEO, KPMG LLP. Cobo

Inno-vention 2014: A Medical Main Street Conference. 6:30-8:30 p.m. Oct. 21, 7:30 a.m.-4:30 p.m. Oct. 22. Medical

Center, Detroit. $45 DEC members, $55 guests of members, $75 others. Con-

UPCOMING EVENTS Main Street, Oakland County Advantage. An event showcasing the life science and health care industries in Southeast Michigan and beyond. With keynote speaker Krischa Winright, CIO, Priority Health, and vice president of information technology, Spectrum Health, plus matchmaking sessions and startup pitches. Suburban Collection Showplace. Novi. $149, includes networking reception, conference and luncheon; register at medicalmainstreet.com. Website: advantageoakland.com.

The Price Is Right: Are You Offering a Competitive Wage?. 11:30 a.m.-1 p.m. Oct. 21. Automation Alley. A â&#x20AC;&#x153;lunch â&#x20AC;&#x2122;nâ&#x20AC;&#x2122; teamâ&#x20AC;? with Colby Spencer-Cesaro, research director, Workforce Intelligence Network for Southeast Michigan, as she discusses how small- to medium-sized companies can attract and retain a skilled workforce. Automation Alley Resource Center, Troy. Members, $20 advance, $40 at door; nonmembers, $30 advance, $50 at door. Preregistration deadline is Oct. 17. Contact: (800) 437-5100; email: info@automationalley.com; website: automationalley.com.

Minority Capital Access Forum, 8:30 a.m.-3 p.m. Oct. 22. Michigan Majori-

UNIQUE OPPORTUNITY Turn-key flight department for sale at Oakland County Airport (KPTK) to include: t (VMGTUSFBN (*7 QBTTFOHFS CVTJOFTT KFU XJUI %JSFDU 57 #PUI FOHJOFT IBWF POMZ IPVST TJODF NJEMJGF JOTQFDUJPOT DPNQMJFE XJUI JO +BO 'FC BJSDSBÄ&#x2122; DBO CF TPME TFQBSBUFMZ

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ty Coalition, Asian Pacific American Chamber of Commerce. Bankers, community development finance practitioners and business owners highlight strategies that help funders connect with minority business owners. Federal Reserve Bank of Chicago â&#x20AC;&#x201D; Detroit. Free; registration required. Contact: Sarah Lalone, (248) 430-5855; email: sarah@apacc.net; website: apacc.net.

Taking the Pulse of Healthcare Communications, 5:30-8 p.m. Oct. 23. The Association for Women in Communications Detroit Chapter. A panel discussion with Kara Gavin, lead public relations representative, University of Michigan Health System; Desiree Cooper, director of community and media relations,

Planned Parenthood Mid and South Michigan; Helen Stojic, director of corporate affairs, Blue Cross Blue Shield of Michigan; and Patricia Anstett, health and medical journalist formerly of the Detroit Free Press. University of Michigan Health System, Fairlane Center â&#x20AC;&#x201D; South Building, Dearborn. $25 AWC members, $35 nonmembers, $15 full-time students; add $5 on day of event. Contact: (866) 385-1784; email: info@womcomdetroit.org; website: womcomdetroit.org.

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If you want to ensure listing online and be considered for print publication in Crainâ&#x20AC;&#x2122;s Detroit Business, please use the online calendar listings section of www.crainsdetroit.com. Hereâ&#x20AC;&#x2122;s how to submit your events: From the Crainâ&#x20AC;&#x2122;s home page, click â&#x20AC;&#x153;Detroit Eventsâ&#x20AC;? in the red bar near the top of the page. Then, click â&#x20AC;&#x153;Submit Your Entriesâ&#x20AC;? from the drop-down menu that will appear and youâ&#x20AC;&#x2122;ll be taken to our online submission form. Fill out the form as instructed, and then click the â&#x20AC;&#x153;Submit eventâ&#x20AC;? button at the bottom of the page. Thatâ&#x20AC;&#x2122;s all there is to it. More Calendar items can be found on the Web at www.crainsdetroit.com.

CRAINâ&#x20AC;&#x2122;S HONORS HEALTH CARE HEROES Discover ways to provide health care in an age of reform at the Crainâ&#x20AC;&#x2122;s Detroit Business Health Care Leadership Summit and Health Care Heroes Awards, 7:30 a.m.-1 p.m. Nov. 6 at the Shriners Silver Garden Events Center, Southfield. Keynote speaker is Joe Flower, an author and health care futurist. A panel discussion on health care consolidation will feature Rob Casalou, president and CEO, St. Joseph Mercy Ann Arbor and Livingston hospitals; Gene Michalski, president and CEO, Beaumont Health; Joe Mullany, CEO, Detroit Medical Center; and Nancy Schlichting, president and CEO, Henry Ford Health System. Tickets are $110 for individuals, $100 for guests in groups of at least 10. Preregistration deadline is Oct. 31. If available, walk-in registration will be $130 per person. For more information, call Kacey Anderson, (313) 446-0300, or visit crainsdetroit.com/events. Join the conversation on Twitter with #crainshealthcare. CAPA Leadership Summit, 9 a.m.-2 p.m. Oct. 25. Asian Pacific American Chamber of Commerce. With keynote speaker Joe Grimm, visiting editor in residence, School of Journalism, Michigan State University. GM Vehicle Engineering Center, Warren. $5$10; registration required. Contact: Sarah Lalone, (248) 430-5855; email: sarah@apacc.net; website: apacc.net.

Inforum BoardAccess Workshop: Kickstart Your Board Experience. 1-5:30 p.m. Oct. 27. Inforum Michigan. With Jennifer Dudley, partner, Warner Norcross & Judd; Blaire Miller, entrepreneur and partner, The Hunter Group; Nancy Phillippart, general partner and co-founder, The Belle Michigan Fund; and Mary Brevard, executive director, Inforum BoardAccess, in a conversation on board service opportunities with privately funded companies. Skyline Club, Southfield. $125 Inforum members, $175 nonmembers. Contact: (877) 633-3500; website: inforummichigan.org. 22nd Annual Q2 Awards Breakfast, 7:30 a.m. Oct. 29. Boost Detroit Business. Awards honoring contributions made to quality of life in Oakland County, to Jack and Annette Aronson, owners,

Garden Fresh Gourmet; Christina Scharrer , executive director, Leadership Oakland ; Allan McMorris , presiJack Aronson dent and CEO, Oakland County Credit Union. Hosted by L. Brooks Patterson , Oakland County executive. Marriott at Centerpoint, Pontiac. $165 individual, $1,500 table sponsor. Contact: Kelly Sieva,

(810) 955-1957.

The Future of Global Healthcare From Your Local Pharmacy, 11:30 a.m.-1:30 p.m. Oct. 31. Detroit Economic Club. Gregory Wasson, president and CEO of Walgreen Co., and Nancy Schlichting, CEO, Henry Ford Health System, will discuss the merger of Walgreens and Alliance Boots and global health care trends. Westin Book Cadillac, Detroit. $45 DEC members, $55 guests of members, $75 others. Contact: (313) 963-8547; email: info@econclub.org; website: econclub.org. Maverick Marketing Monday. 11:30 a.m.-1 p.m. Nov. 3. Detroit Regional Chamber. Join Alexandra Gonzalez, Google expert, on how to utilize search engine marketing and how Google can grow business. Emagine Royal Oak, Royal Oak. $20 members, $50 nonmembers; preregistration required. Contact: Maggie Oldenburg, (313) 596-0482; email: moldenburg@ detroitchamber.com; website: detroitchamber.com.

Detroit Economic Club Presents: Mike Jackson. 11:30 a.m.-1:30 p.m. Nov. 6. Detroit Economic Club. With Mike Jackson, chairman and CEO, AutoNation Inc. Dearborn Inn Marriott, Dearborn. $45 DEC members, $55 guests of members, $75 others. Contact: (313) 963-8547; email: info@econclub.org; website: econclub.org.

Business Leaders for Michigan CEO Summit, 8 a.m.-3 p.m. Nov. 13. Business Leaders for Michigan. The third annual event, with keynote speaker Peter Diamandis, chairman and DEO, X Prize Foundation, and author of Abundance â&#x20AC;&#x201D; The Future Is Better Than You Think. Westin Book Cadillac, Detroit. $125. Contact: Jennifer Hayes, (313) 259-5400; email: jenniferh@businessleadersformichi gan.com; website: businessleaders formichigan.com.

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WSU: Donor â&#x20AC;&#x2DC;saw a very committed presidentâ&#x20AC;&#x2122; at Wayne State â&#x2013; From Page 3

computer science education in Detroit will expedite the cityâ&#x20AC;&#x2122;s renewal to its place of prominence in the world,â&#x20AC;? said Anderson in a news release. He also serves as chairman of the College of Engineeringâ&#x20AC;&#x2122;s board of visitors. â&#x20AC;&#x153;The philosophy behind the institute is captured in a statement first made by Abraham Lincoln: â&#x20AC;&#x2DC;The best way to predict the future is to invent it.â&#x20AC;&#x2122; That is what the institute will be all about,â&#x20AC;? he said. In an interview with Crainâ&#x20AC;&#x2122;s Friday, Anderson said jokingly, â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve been getting a lot of congratulations, but theyâ&#x20AC;&#x2122;re expensive congratulations.â&#x20AC;? He said the grant will fund five endowed chairs and several graduate scholarships, and that he expected an office in the college to be open and staffed by the end of the year. He said employees at Urban Science will serve as mentors and coaches. â&#x20AC;&#x153;We started at Urban Science with $1,000 and a $500 map, and weâ&#x20AC;&#x2122;ll be over $200 million (in revenue) next year,â&#x20AC;? he said. â&#x20AC;&#x153;We had to learn it the hard way. Maybe we can make it a little easier for them.â&#x20AC;?

Speeding change Anderson said having Wilson as president was critical to making the donation. â&#x20AC;&#x153;It was extremely important for me,â&#x20AC;? he said. â&#x20AC;&#x153;In him I saw a very committed president who knew what needed to be done and how to get it done. He is aligned with my

MARY JANE MURAWKA

Through their $25 million gift, Patricia and James Anderson are â&#x20AC;&#x153;empowering our engineering and computer science faculty and students to â&#x20AC;Ś turn their ideas into businesses,â&#x20AC;? said M. Roy Wilson, Wayne State Universityâ&#x20AC;&#x2122;s president.

vision 100 percent.â&#x20AC;? While accomplishments by the engineering faculty in the past five years include 160 patent applications, 12 commercialization licenses and four startup companies, the department has largely been overlooked by venture capital investors, who found more fertile soil in Ann Arbor and the University of Michigan. That has recently begun to change, and the institute will speed that change along, said Adrian Fortino, a vice president at Invest Detroit who himself has been look-

REAL ESTATE

ing for technologies in the College of Engineering School to invest in. Fortino discovered one technology ripe for commercialization while meeting with faculty and students last year. After the technology was licensed by the techtransfer office, Invest Detroitâ&#x20AC;&#x2122;s Detroit Innovate Fund invested $250,000 last May in the resulting startup, Detroit Materials Inc., which is developing cast-steel parts for the military, mining and off-road markets. The company also was launched with the help of a $150,000 phase-

one Small Business Innovative Research grant from the National Science Foundation. It is based on patented research by Susil Putatunda, a professor of chemical engineering and materials science. â&#x20AC;&#x153;This is a fantastic opportunity for the school to take advantage of the really deep research they have in the engineering school. Joan is building up her team, and this will give her the resources to speed tech transfer up much faster,â&#x20AC;? he said, referring to Joan Dunbar, the associate vice president for technology commercialization at WSU who heads up the tech transfer office. â&#x20AC;&#x153;I have a lot of friends in the VC community, and theyâ&#x20AC;&#x2122;re beginning to take a look at whatâ&#x20AC;&#x2122;s going on at Wayne State. Theyâ&#x20AC;&#x2122;re beginning to realize thereâ&#x20AC;&#x2122;s a lot there, and this will only help,â&#x20AC;? Fortino said. â&#x20AC;&#x153;This is an enormous opportunity for the technology transfer office,â&#x20AC;? Dunbar said. â&#x20AC;&#x153;It lets us get to the technology at an early stage, where we can do market research and get a team in place to help get the technology to the point where it can be licensed,â&#x20AC;? she said.

High on tech transfer Wilson told Crainâ&#x20AC;&#x2122;s soon after taking over as president that his goal was to turn the school into a premier urban research university, and a key to that was bolstering tech transfer. In May, Kenneth Massey, who had 28 years in biotechnology,

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most recently as managing director of MicroDose Life Sciences LLC of Farmington Hills and its venture capital fund, was named senior director of venture development in the tech-transfer office. And John Shallman, who has more than 24 years in tech commercialization, most recently as director of commercialization at Royal Oak-based Beaumont Health System and before that with the Michigan Economic Development Corp., was named senior director of licensing. In June, Stephen Lanier was named vice president of research at the school. Since 2006, Lanier had been the associate provost for research and professor of cell and molecular pharmacology and experimental therapeutics at the Medical University of South Carolina in Charleston. He was also the chief scientific officer and chief research officer at the school. Before the Medical University post, he was chairman of the department of pharmacology at the Louisiana State University Health Sciences Center in New Orleans and spent eight years at Harvard University. The Andersonsâ&#x20AC;&#x2122; gift is part of the $750 million fundraising campaign the school formally announced last Wednesday. The school began a silent phase of the campaign in 2009, and this makes a total of $382.2 million to date. Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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HP: Company tries to counter slump â&#x2013; From Page 3

Washington, D.C.-based real estate information service CoStar Group. HP continues to fall victim to fewer consumers buying PCs. In 2008, HP was the market leader with an 18.2 percent market share of the 302 million-unit global PC sales. But sales began slumping, driven by consumers investing more in tablets and smartphones. Chinese PC-maker Lenovo Group Ltd. overtook HP last year as the top producer of computers as HPâ&#x20AC;&#x2122;s market share fell to 16.2 percent of a market in which unit sales shrunk by 10.4 percent. Experts say itâ&#x20AC;&#x2122;s the cloud computing market, like the services offered by the HP office in Pontiac, thatâ&#x20AC;&#x2122;s prepped for a boon. By 2017, enterprise cloud computing is projected to reach $235.1 billion, tripling 2011 at $78.2 billion, according to research firm IHS Inc. Peter Wahlstrom, senior technology analyst at Chicago-based equity research firm Morningstar Inc., expects HPâ&#x20AC;&#x2122;s enterprise business to grow in the low- to mid-single digits over that time. That growth should benefit its Pontiac office, if HP can compete, Wahlstrom said. â&#x20AC;&#x153;The cloud market is certainly growing, but looking ahead, I donâ&#x20AC;&#x2122;t know how they grow beyond their competitors,â&#x20AC;? he said. Amazon Web Services, the cloudcomputing arm of online retailer Amazon.com Inc., already has a death grip on the market â&#x20AC;&#x201D; the division generated revenue of $3.4 billion in 2013. The competition continues to grow with Microsoftâ&#x20AC;&#x2122;s Azure business and Googleâ&#x20AC;&#x2122;s cloud business gaining ground.

Other experts say itâ&#x20AC;&#x2122;s too late for HP to be competitive. Erik Gordon, associate director of the University of Michiganâ&#x20AC;&#x2122;s Zell Lurie Institute, called HP a â&#x20AC;&#x153;laggardâ&#x20AC;? in the fast-growing cloud computing space. â&#x20AC;&#x153;You really have trouble finding which business (at HP) is the growth business,â&#x20AC;? Gordon said. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s just no evidence to show that HP is going to get a big share of the market. Like a lot of fastgrowing markets, the competition is fierce, and HP is way behind.â&#x20AC;? David Linthicum, cloud computing analyst at San Francisco tech media company Gigaom Media, also said the competition is too fierce for HP. â&#x20AC;&#x153;The reality is the cloud market is beyond crowded, and the big names will likely outspend HP on R&D and marketing in the next few years. Theyâ&#x20AC;&#x2122;re already ahead of HP today, and the gap will only increase,â&#x20AC;? Linthicum said in an Oct. 7 blog on InfoWorld. â&#x20AC;&#x153;HP will do the best it can do, but Iâ&#x20AC;&#x2122;m not sure it will find much left in the cloud market when all is said and done. Perhaps if HP had split a few years ago, the story could have been different.â&#x20AC;? HP projects revenue for its enterprise division â&#x20AC;&#x201D; which includes its financial services, enterprise services, enterprise group (servers, etc.) and software â&#x20AC;&#x201D; of $58.4 billion this year with a $6 billion operating profit. That projection is done from its 2013 total of $59.2 billion, according to documents filed with the U.S. Securities and Exchange Commission. But HP continues to hire in Pontiac. The firm posted 32 new job openings in Pontiac on Oct. 6, the day it announced its split. Those positions include openings for financial associates, mobile app developers and software developers. The openings exist in contrast to HPâ&#x20AC;&#x2122;s 2012 plan to cut 55,000 employees by 2015. As of the end of the third quarter in 2013, about 36,000 employees had been cut as part of the restructuring program,

according to HPâ&#x20AC;&#x2122;s website. However, it remains unclear whether the new positions in Pontiac represent new growth or are part of staff it needed to rehire from the loss of 3,000 employees to one of its largest local clients. In late 2012, General Motors Co. announced it would hire 3,000 HP employees as part of its effort to bring most of its IT work in-house. At the time, GM had a $3 billion IT budget. In 2010, it awarded a $2 billion contract to HP. GM confirmed last week that it still works with HP as one of several technology providers, but it didnâ&#x20AC;&#x2122;t provide specifics. Similarly, Ford Motor Co. confirmed it works with HP, but could not confirm whether that work occurred out of HPâ&#x20AC;&#x2122;s Pontiac office. Gordon said if HP is able to strengthen its work in the automotive space, growth potential does exist for its enterprise services. â&#x20AC;&#x153;Auto is going to be a huge growth area in computing,â&#x20AC;? Gordon said. â&#x20AC;&#x153;If the Pontiac office has developed the expertise and strong relationships with the auto industry, it could be an office that sees growth because everyone in IT is trying to stake out ground in auto.â&#x20AC;? HPâ&#x20AC;&#x2122;s Pontiac office also performs government contract work, confirmed Alysia Green, director of talent development for Automation Alley. The Troy-based association is working with HP on training workers through a U.S. Department of Labor H-1B Technical Skills Training Grant. HP committed to training 300 new workers and 150 already in-house, Green said. Green also could not confirm how many employees work in Pontiac, saying, â&#x20AC;&#x153;They are mum on everything, even with us.â&#x20AC;? Phil Bertolini, CIO for Oakland County, said HP has contacted the county to assist in its plan for shared services among its communities, but the meeting hasnâ&#x20AC;&#x2122;t yet been scheduled. Dustin Walsh: (313) 446-6042, dwalsh@crain.com. Twitter: @dustinpwalsh

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WADL: Adell looks to sell in 2015 FCC auction, expects $170M ■ From Page 1

ter the auction sale is finalized. “I’m the last of a dying breed. I’m smart enough to know when to get out, to leave on top. That’s when you sell,” he said. “It’s an industry you’re going to get paid to leave. I’ve got someone that’s willing to pay me a lot of money to get out, and pay me at the highest price.” Adell, 47, will continue to own The Word Network, the Southfieldbased religious programming satellite network that is a separate company from WADL.

I’m the last of a “ dying breed. I’m

The auction The FCC in fall 2015 will stage an auction of the 600-MHz spectrum UHF television airwaves for mobile broadband use. Wireless providers need more of the broadcast spectrum because of consumer demand for mobile connectivity, and the powerful overthe-air TV spectrum is the obvious candidate. Hence, the FCC in 2012 got approval from Congress for the auction. “If the U.S. does not address this situation promptly, scarcity of mobile broadband could mean higher prices, poor service quality, an inability for the U.S. to compete internationally, depressed demand and, ultimately, a drag on innovation,” the FCC said in an online explanation of the spectrum auction. Broadcasters will relinquish their airwaves in an incentive auction in return for a portion of what the wireless companies bid for shares of the spectrum. Dallasbased AT&T Inc., for example, has said it will spend up to $9 billion to buy additional spectrum. Others expected to bid on the former television spectrum are New York City-based Verizon Communications Inc.; Overland Park, Kan.-based Sprint Corp.; Bellevue, Wash.-based T-Mobile US Inc.; and smaller, regional carriers. Mobile providers like the powerful TV spectrum because it penetrates walls and obstacles, and reaches into basements and other places current mobile wireless has a harder time reaching. They’re also running out of available space on their current portion of the spectrum. “It’s a big pipe, so it’s valuable spectrum,” Adell said. The Detroit market has nine full-power TV stations, and the FCC pre-auction estimates value their spectrums at $170 million on the high end with a $110 million median estimate. Stations in Los Angeles have the highest spectrum auction estimates at $570 million, followed by New York City at $490 million. By contrast, Chicago stations are expected to max out at $130 million. Factors driving the auction prices will include the market size and how badly the wireless providers want in that area, and how many stations in a market participate in the sale. The FCC is using value estimates created by New York investment firm Greenhill & Co. LLC. Stations belonging to major networks, or their affiliates, are not expected to participate because they generate higher revenues that what the auction would pay. Independents are the most likely

COURTESY OF WADL

smart enough to know when to get out, to leave on top. ... I’ve got someone that’s willing to pay me a lot of money to get out, and pay me at the highest price.

”

Kevin Adell may convert the WADL building into a studio for The Word Network, Adell’s Southfield-based religious programming satellite network that is a separate company from WADL.

participants, and Adell has a potential advantage because of WADL’s proximity to Canada. Border proximity limits how many stations could participate in the auction because of spectrum interference concerns. Canada has not yet moved to open more of the 600-MHz spectrum to wireless companies. “Stations close to the national borders are considered more valuable,” data analysts SNL Kagan wrote in an analysis last week. The FCC estimates the entire auction could generate up to $45 billion, with perhaps $38 billion going to broadcasters. Not everyone in the industry is buying that prediction. “The FCC readily admits these projections are rosy, assuming that the auction clears 126 MHz of UHF spectrum and carriers pay the going rate of $1.50 per megahertz per person in the U.S.,” wrote noted tech blog Gigaom.com. “(FCC Chairman Tom Wheeler) wants to present broadcasters with the best possible outcome in order to convince them to buck up and put their airwaves on the auction block.” The FCC has said the final auction prices could be driven down, and that the Greenhill estimate is merely a starting point. Industry watchers agree. “The ultimate station compensation will depend on the carriers’ appetites and ability to pay the levels suggested in the document and broadcasters’ bottom-line values,” Kagan wrote. There also is legal wrangling over the auction process. In August, the National Association of Broadcasters, the lobbying group for television stations, sued the FCC in federal court, alleging

that the auction process was unfair to broadcasters that opt not to participate in the sale. Congress determined that stations not participating would have their broadcast area protected within the wireless spectrum, but the lawsuit alleges that the FCC unfairly changed its methodology for determining coverage area. The new formula reduces the area and number of viewers, the NAB says. The suit is ongoing. FCC media relations staff deferred questions about the auction to its previously published statements and explanations.

Location, location, location To meet the mobile wireless demand for bandwidth, the FCC chose to make the 600-MHz spectrum available because most Americans don’t rely on over-theair TV broadcasts. “While television viewership is still popular, and over-the-air viewing provides free access to vital information that serves a public interest, 93 percent of households do not rely on over-the-air, instead watching primarily via cable, satellite or online, resulting in a relatively inefficient use of the allocated spectrum,” PricewaterhouseCoopers LLP noted in a May report about the spectrum auction. Some of the spectrum up for auction will remain earmarked for TV broadcasts. Stations with desirable spectrum that don’t participate in the auction could be involuntarily moved to another channel by the FCC, and that could require relocating aerial towers and buying new equipment. The FCC has $1.75 billion earmarked to help broadcasters who

Independent stations such as WADL may look to cash out because Congress is expected to slow the growth of fees that cable and satellite providers pay TV stations for the right to carry their broadcasts, said Benjamin Quayle of Clark Hill plc.

Kevin Adell

don’t sell their spectrum, and end up switching channels. It’s the threat of being forced to move that Adell said also fuels his decision to sell. “If you don’t participate in some way, give up some of the spectrum, you’ll be interfered with,” he said. Independent stations such as WADL may look to cash out because Congress is expected to slow the growth of retransmission fees that cable and satellite providers pay TV stations (under federal regulation) for the right to carry their broadcasts, said Benjamin Quayle, a former Republican Congressman from Arizona and now a senior director of Clark Hill plc’s government and public affairs practice. “Those fees have kept a lot of these broadcasters afloat because there has been a decline in advertising revenue,” he said. “The spectrum is the most valuable asset for many.” The fees, authorized by Congress in 1992, were first paid by cable companies in the mid-2000s, according to USA Today, and are expected to more than double from $2.36 billion in 2012 to $6.05 billion (about 23 percent of total TV station revenue) by 2018, according to SNL Kagan. Quayle said Congress next year is expected to take up a revision to the Communications Act to slow the growth of those fees, which are passed to consumers in cable bills.

WADL The auction next year would bring to an end 26 years of Adell ownership of WADL. Adell’s parents applied for a television license in 1978, and it was awarded 10 years later, he said. He said his father, Franklin Adell, borrowed $3 million to build the station, and it went on the air in May 1989. Franklin Adell, who established himself with a family-owned automotive supplier of door jambs decades before, hired Kevin after his graduation from Arizona State University in 1988 to help him establish WADL. It initially broadcast infomercials and home-shopping programming before adding religious content, along with children’s shows, music videos and classic movies. In 2007, it began airing a mix-

ture of older and newer syndicated shows aimed at an urban AfricanAmerican audience. Two years later, it added classic syndicated shows such as “I Love Lucy” and “The Brady Bunch.” WADL’s current programming includes “Bridezillas,” “King of the Hill,” “Cops,” “Seinfeld,” “Everybody Loves Raymond,” “Law & Order SVU,” “The Andy Griffith Show,” “Star Trek,” infomercials, and a pair of Tyler Perry series. There are four 5-minute news breaks weekly. About 30 to 35 staffers work at WADL, Adell said. According to court records, Adell became majority owner of Adell Broadcasting Corp. in 2012 after paying his sisters $3.25 million to settle two lawsuits and dissolve the trust of his father, who died in 2006. The trust had been 80 percent owner of Adell Broadcasting. The settlement gave him controlling interest in Adell Broadcasting and full ownership of STN.com Inc., a satellite TV uplinking business, and Birmingham Properties, a real estate company that owns the WADL and Word Network office/studio properties. It’s The Word Network’s contractual payments to STN from which Adell derives millions in income, court records show. Adell, a colorful businessman with a history of court battles, also is a real estate developer. He owns the site of the former Novi Expo Center at I-96 and Novi Road — a water tower there has been emblazoned with “ADELL” — and Bingham Farms-based Burton-Katzman Development Co. has planned a $100 million, 500,000square-foot mixed-use project on the site anchored by either two eight-story office buildings or an office building and a hotel.

The Word Network While WADL broadcasts in eight Southeast Michigan counties, The Word Network is on satellite and reaches a potential 3 billion people around the world. Word went live in 2000, aided by pressure on broadcasters from prominent African-American clergy such as the Revs. Jesse Jackson and Al Sharpton, and activists such as Sam Riddle, according to a 2003 Wall Street Journal profile. The 501(c)(3) nonprofit religious network has 200 full- and part-time employees and three prayer call centers, Adell said. The WADL building may be upgraded into a Word Network studio and used after hours as a prayer call center, he said. “Religion isn’t going anywhere,” Adell said. The World Network is a lucrative business: Half-hour airtime blocs sell starting at $3,500 and they sell out around the clock every day of the year, Adell said. The network also does some live programming of its own three days a week, and is adding a fourth. Word is the cash cow, and Adell said he won’t be sentimental if WADL is sold and goes off the air. “It’s a business. It’s not like selling my family home,” he said. Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19

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CRAIN’S DETROIT BUSINESS

From the basement, Menlo began its steady climb BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

Carol Sheridan, wife of Menlo Innovations LLC CEO Rich Sheridan, has worked at the company for 11 years. Her current title is floor manager, which means wearing a lot of hats as needed, including occasionally being a project manager. She remembers the day in 2001 when her husband got laid off from Interface Systems Inc. “He came home and said, ‘I lost my job,’ ” she recalled. “ ‘OK, what will you do?’ ” “ ‘I’m going to be an entrepreneur.’ ” “I didn’t even know what an entrepreneur was. All I knew was I had four guys in our basement working every day. “Months later, no money was coming in and we kept moving money from our savings to cover the bills,” she said. Soon, though, money had started coming in for the new company, and it moved into a 1,200-squarefoot storefront with one phone on

Fourth Street. That first year, Menlo helped the University of Michigan Health System design a medical information database, and programmed a Web-based store locator for Domino’s Pizza. By the end of 2001, Menlo had broken even on revenue of $200,000, and it was profitable the next year on revenue of $2 million. It has been profitable since. Menlo Innovations operates under a holding company named Menlo Associates. Robert Simms is CEO of the holding company and CFO of Menlo Innovations. Simms said that the holding company has either started or invested in about three dozen companies over the years, often taking an equity stake in area startups in exchange for a cut-rate price on software development. “Clients love equity deals. We’re now in the canoe with them. We do the work basically at cost, paying our bills and keeping the lights on, and take our profit when there’s an exit,” said Simms.

I didn’t even know what an “ entrepreneur was. All I knew was I had four guys in our basement working every day.

”

Carol Sheridan

Accuri Cytometers Inc. is an example of a startup for which Menlo decided to sharply reduce its fees in return for equity, a deal that eventually paid off for both parties. “They helped a scrappy startup save cash,” said Jennifer Baird, who co-founded Accuri in 2004 to build and market a device that automates cell analysis for life science researchers. The company was sold in 2011 to New Jersey-based Becton, Dickinson & Co. for $205 million, garnering a nice return for Menlo. Current companies in the holding company’s portfolio include Ann Arbor-based Accent Reduction

Institute, which provides on-site and online courses and programs to reduce local workers’ foreign accents and improve American-English pronunciation and communication skills; and a startup called GameStart, which is housed in Menlo’s headquarters and teaches kids in the first through eighth grades how to program. A portfolio company that the holding company long ago got rid of best shows Sheridan’s leadership, said Simms. When they formed Menlo Innovations, the company founders also formed a staffing company called Menlo Team as a way to get

their laid-off IT friends some work. “By 2005, it was generating 90 percent of our revenue and 105 percent of our profits,” joked Simms. “But it was not a business we wanted to be in. It had been set up to be a temporary landing pad. It was a fine business, but it wasn’t what we were passionate about. Rich said, ‘We gotta get out of this business. We’re never going to be innovative if we keep that company. It’s taking up too much of our time and energy.’ “So we threw away 90 percent of our revenue, and that was the same week we had lost our two biggest clients at Menlo Innovations. “It was Rich’s decision, and it was the ballsiest decision I’ve ever seen. We have had steady growth at Menlo ever since. “We’ve grown at a 10 percent compounded rate annually, despite going through a recession.” Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

Menlo: Upbeat CEO’s ‘a one-man marketing juggernaut’ ■ From Page 1

team with great technical knowhow, a company still needs a front man to talk the talk. Rich Sheridan is that guy. A poster child for joy in the workplace who wrote a book on the subject last year, he’s been a ceaseless optimist for tech and Michigan’s place in the tech world since he wrote his first piece of code at age 13.

Marketing juggernaut Menlo — which was named for Menlo Park, the New Jersey neighborhood where Thomas Edison had his lab — has 50 workers about evenly split between employees and contractors. It had revenue of $3.6 million in 2012, $4 million last year and $2.3 million in the first six months of this year. And yet it doesn’t have a sales staff. With Sheridan being the prominent face of the company in the community, who needs a sales staff? “He’s community, passion, vision, relationships, a one-man marketing juggernaut that allows (Menlo) to thrive without a sales or marketing team,” said cofounder Robert Simms. “Rich lives in a world of connections, of people and relationships, figuring out what you want to be and working toward it relentlessly.” Speaking of sales, Sheridan sold Rick Snyder on the idea of running for governor, starting his pitch years before Snyder decided not to raise a second fund for Ardesta LLC and instead start raising money for a run for governor in 2010. The persuasiveness comes from a combination of inherent traits and a carefully thought-out approach. Sheridan is tall, 6-foot-5, with a deep voice, a frequent laugh, no need for notes and enough confi-

dence to work a room on foot instead of staying hidden behind a lectern. Not surprisingly, he’s a frequent speaker at such tech events around the state as the annual MichBio Expo and SoftwareGR, a networking group in Grand Rapids, and routinely emcees events in Ann Arbor. “In the early to mid-2000s, Rich brought up the idea that I should run for governor. He pushed me to run for governor, and he did it publicly,” Snyder told Crain’s. “He’d be emceeing something or other and he’d introduce me by saying, ‘This is the guy we need for governor,’ ” said Snyder. “Years later, the governor called me one day and said: ‘Rich, I’m running for governor,’ ” recalled Sheridan. Snyder said Sheridan was one of the first people he got to know well after he returned to Michigan in 1997 to found his first venture capital firm, Ann Arbor-based Avalon Investments. “Rich is very active in the community, and we ended up working on a lot of of projects together, including the IT Zone, which was a precursor to Ann Arbor Spark,” said Snyder, who co-founded that nonprofit economic development organization in 2005. Sheridan is on the board at Spark and has served on such other boards as the Ann Arbor Chamber of Commerce, the United Way of Washtenaw County, the Washtenaw County Community College Foundation and the Ann Arbor Hands-On Museum. “He spends a lot of his time looking out for others,” said Thomas Zurbuchen, a professor of space and aerospace engineering and the associate dean for entrepreneurship at the University of Michigan. “He’s ahead of others in thinking

about organizations, the use of space and business processes. And Menlo is brilliant at getting software to solve manufacturing processes.”

Tempering the joy Simms took notes during the first meeting he, Goebel and Sheridan had in 2001 to decide whether to start a company. In hindsight, the notes show how mission-focused the trio was. “I realized that not once had we listed financial outcome as one of our objectives,” said Simms. “We had talked about taking the pain and suffering out of technology. And we had just come out of the Internet bubble bursting and had seen behavior we didn’t like, so we aspired to be ethical to the bone.” “For years, the industry treated customers as if they were stupid and then wrote books for dummies,” said Sheridan. “The key isn’t to make people think like computers, it’s to make computers think like people.” In other words, make the experience enjoyable again. “We wanted to return joy to one of the mankind’s most unique endeavors: software,” said Sheridan. “Joy” is a word Sheridan uses a lot. It was at the heart of his book, Joy, Inc.: How We Built a Workplace People Love, whose chapter titles include “My Journey to Joy,” “Freedom to Learn,” “The Power of Observation,” “Fight Fear, Embrace Change” and “Growing Leaders, Not Bosses.” His co-founders tease him about it. Sheridan’s partners say the CEO’s overflowing optimism is balanced with his partners’ more down-to-earth view of the business world. “I’m not a joy guy. I’m the guy who sets up revenue streams that

create annuities and royalties. I hate every new idea for at least the first 24 hours,” said Simms, the CFO. “I’m the anchor. You need someone who thinks it’s cool to sit at spreadsheets.” As for Goebel, the COO, Simms said: “He’s the classic Edison type. Think out of the box? For him, there is no box. He puts the innovations in Menlo Innovations.” When asked if Sheridan has any shortcomings, the partners point back to his strengths. “Rich gets overcommitted. At one point, he was on like every other board in the county,” said Goebel. “There’s always that question of balance, but he wants to change the world. And him out there all the time is obviously a great marketing tool for us.” Said Goebel: “Rich and I are very different. Rich will talk about joy and I’m going, ‘Huh? Really?’ When Rich is on a stage, it’s unicorns and Care Bears. I’m more of a curmudgeon. But Rich realizes my curmudgeon, jaded view is a very productive way of seeing what problems there are for us to solve. ”

Starting young Sheridan created his first computer code in 1971 when he was 13 and a freshman at Chippewa Valley High School in Clinton Township. He was sitting at a teletype machine that was connected by phone to what was then called a minicomputer at the Macomb Intermediate School District office nearby, a Hewlett-Packard machine that was the size of a refrigerator. “I typed in two lines of code, hit enter and the computer said, ‘Hi, Rich.’ I knew right then that that was what I was going to do for the rest of my life,” he said. At 15, he won an international

programming competition for a computer baseball game he wrote so he and his friends could play baseball in the winter. “I was a huge Tigers fan. I still remember that Norm Cash wore No. 25, Al Kaline was No. 6, Jim Northrup was No. 9. I got the Baseball Register and entered the entire thing into a computer,” he said. After he won the competition, Sheridan was hired as a part-time programmer at the intermediate school district office by Tom Hartsig, the head of computer education. He worked after school and in the summer. Soon after he was hired, in 1974, “I wrote my first email program, although we didn’t call it email. But any teacher in the county could send a message to any other teacher,” he said. “I thought the world was my oyster.” Sheridan worked for the district for three and a half years, continuing to work part time while he got 40 hours of credit at Macomb Community College before transferring to UM, where he earned an undergraduate degree in computer sciences and a master’s degree in electrical engineering. Sheridan graduated from UM in 1982 and was offered jobs at Bell Labs, Hewlett-Packard and Standard Oil of California. He decided to take his chances on a small startup in Ann Arbor, Manufacturing Data Systems Inc., which wrote software for the fast-growing next generation of manufacturing equipment called numerically controlled machines. After MDSI was sold in 1984, Sheridan went to work for Winterhalter Inc., an Ann Arbor company in the then-red-hot space of creating software that allowed the newSee Next Page

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At Menlo HQ: Kids, dogs, tours … and paper BY TOM HENDERSON CRAIN’S DETROIT BUSINESS

Menlo Innovations LLC markets itself through tours of its Ann Arbor headquarters, a big open space in the basement of a parking structure on East Liberty Street, a cheerful work area despite a lack of windows — and despite its size, 17,000 square feet, which tripled Menlo’s space when the company moved there two years ago. Menlo assigns pairs of programmers to work on a particular project, or a project component, and they share one computer. Teams are broken up every five days to keep bringing fresh views to a project. Renee Pinter, who has the title of experience designer, sets up the tours and helps arrange speaking engagements for CEO Rich Sheridan. An IT veteran, she knew she wanted to work at Menlo when she took a tour there in 2010. “The stereotypical programmer wants to be in a corner by himself with an earbud in,” she said. “Here, people talk to each other all day. I thought it would be cool to be here.” Employees are welcome to

bring their children to work — Pinter brought her son, Braden, in on many snow days last year — and a bowl of dog food and a bowl of water sit in one corner for Murphy, one of the employees’ dogs who is a regular visitor. As of Sept. 30, 202 tours involving 2,247 people had come through, including visitors from Chile, Mali, Qatar and Brazil. Menlo also hosts visitors who pay to study the company’s operations for a week, getting, said Sheridan, “lessons on building an intentionally joyful culture.” Last week, a team from Capital One spent two days at Menlo, encouraged to take notes. On paper. If it’s one thing visitors note at Menlo, it’s paper. Everywhere. Taped to walls, taped to pillars, spread out on long work tables. Michael O’Keefe hired Menlo last year to develop software for corneal-transplant surgeons, and the first thing he noticed when he visited Menlo’s headquarters in downtown Ann Arbor was all the paper. O’Keefe is executive director of

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fangled PCs to talk to their mainframe big brothers. Through a series of acquisitions, Winterhalter morphed into Interface Systems Inc., and Sheridan would rise from lowly programmer to VP in charge of R&D. And the world would remain his oyster until the dot.com bust of 2000.

Tough times The three co-founders who are still at Menlo Innovations —Sheridan; Simms, 58; and Goebel, 49 — were all flying high in the go-go ’90s of Internet-focused growth companies. They were executives at fastgrowing Ann Arbor companies, highly paid, with lots of stock and stock options. (They say a fourth co-founder, Thomas Meloche, was bought out 10 years ago in a disagreement over how to grow the company.) At Interface, Sheridan managed 36 software engineers and had a salary well into six figures. Simms had master’s degrees in electrical engineering and computer engineering and was working at an Ann Arbor startup called Arbor Intelligent Systems when it was bought in 1998 by AppNet Systems Inc., a Maryland company on a buying spree. AppNet also was one of Sheridan’s consultants. AppNet went public in 1999 and was bought by California-based Commerce One in 2000 for $1.2 billion, about the time the bottom was falling out of tech, and soon Simms was out of a job. Goebel was also an executive at Arbor Intelligent Systems and then AppNet and suffered the same fate as Simms. Sheridan’s first-hand account of the rapid industry collapse played out over the course of a family vacation. In March 2000, Sheridan and his family went to Puerto Vallarta,

LEISA THOMPSON

Rich Sheridan wrote the book on joy — no, really, he did. Joy, Inc.: How We Built a Workplace People Love came out last year.

Mexico, on vacation. He remembers looking around the five-star hotel as he was checking in and saying: “I could probably buy this place.” “I had a ton of Interface stock, and it was going through the roof,” recalled Sheridan. “It was at $80 and everyone was predicting it would hit $150.” By the end of the week, the techheavy Nasdaq was in free-fall, and so was Interface’s share price. “We read the newspapers day by day as the Nasdaq got crushed. At the end of the week, I was saying, ‘I hope I can afford this vacation.’” In January 2001, Sheridan was told to fire half his staff. Three months later, he was fired. After they lost their jobs, the founders, including the fourth partner who was later bought out, met at Sheridan’s house in Ann Arbor to plan the business.

Simplifying tech Clients and competitors say Menlo may not have ended all tech suffering, but it has established a reputation for custom-designed software that is bug free, user-

Ann Arbor-based Midwire, a business unit of Midwest Eye-Banks that provides software to help eye banks with data backup, the ordering of corneal tissue online and digital record keeping. It seemed odd to see so much paper everywhere, O’Keefe thought, especially for a company making its living writing software code. The paper makes way on the walls only for all the plaques and awards Menlo has garnered over the years — the Inc. 500 awards for fastest-growing private companies, the Alfred P. Sloan awards for workplace environment and the nearly annual awards as a finalist for Ernst & Young entrepreneur of the year. To O’Keefe’s surprise, he found out Menlo’s employees don’t use computers or spreadsheets to plan projects or track their progress. Instead, they use large sheets of paper. The Menlo team working on a project breaks it into its component parts and estimates how long each will take to accomplish. A large piece of paper represents 32 hours, which is how much time

programmers spend on client projects each week. If one part of the project will take eight hours, a smaller sheet is placed over the larger sheet, covering a fourth of it. If another part of the project is estimated to take 16 hours, a piece of paper covers half the sheet. “If you have 48 hours of work but only 30 hours of budget, how do you want to spend it?” asked O’Keefe. “A piece of paper representing four hours or eight hours makes more sense than a computer spreadsheet. It’s all visual.” Thomas Zurbuchen, associate dean for entrepreneurship at the University of Michigan, said he visited a lawyer in San Francisco recently and a big board in his office was festooned with paper. “Everything he was working on was being tracked on the board,” Zurbuchen said. “I asked him where he got the idea for that, and he said a guy in Ann Arbor named Rich Sheridan.” Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

friendly and intuitive. Menlo creates software meant to eliminate the frustration and anger that too often go with new devices and new systems, whether it’s a warning on your computer monitor that you’ve committed an illegal action, a medical device that requires a week of training to run poorly, or an online tutorial that is incomprehensible. “In technology, you get used to user interface disasters. We all run into them,” said Jennifer Baird, co-founder and former CEO of Accuri Cytometers Inc. “But Menlo has an intentionality that results in delighting users. If I needed some software developed, I would never consider using anyone but Menlo.” Accuri was founded in 2004 to build a smaller, cheaper cytometer, a device that automates cell analysis for life science researchers. It was competing with big companies whose massive devices came with complicated software that often took a week of training or more to use, and even then only with on-site help from an engineer. Before Menlo programmers write a line of code, the company sends what it calls high-tech anthropologists — nonprogrammers with a wide range of professional backgrounds — into the field to observe how potential end users do their jobs. On the Accuri assignment, Menlo employees spent many hours with users of other flow cytometers, seeing what they liked and didn’t like about what they were using. Accuri shipped its first device in 2007 to a user in California. “We shipped it, and I held my breath,” said Baird. “After a few days, I decided to call. I asked if there was any trouble. ‘Oh, no. We took it out of the box and turned it on, and we’ve been going to town every since.’ ” The interface Menlo designed for Accuri’s cytometer was crucial for the company to gain market share. It grew revenue to about $20

million before being sold in 2011 for $205 million to New Jerseybased Becton, Dickinson & Co. Moose Scheib, the founder of Dearborn-based LoanMod.com, hired Menlo in 2012 to create what he envisioned as an easy-to-use Turbo Tax-style software program to help people in mortgage difficulty plan execute a workout with their lenders. “What Menlo came up with was interactive and dynamic,” said Scheib. “Menlo isn’t cheap; it’s pricey compared to other companies, but I definitely got my money’s worth.” Scheib is also CEO of Birmingham-based Cedar Bey International Group LLC, a consulting firm that helps American firms do business in the Middle East and find customers here for Middle Eastern companies. “I’ve been marketing Menlo. I was blown away by them, and now I’m serving as an ambassador,” said Scheib, who said he recently brought a delegation from Qatar to tour Menlo, including a petroleum company looking for help on programming projects. Even Menlo competitors say nice things about Menlo and Sheridan. “I like to hear we’re going up against Menlo. Both our companies do things the right way,” said Shawn Crowley, a vice president of Atomic Object LLC, a Grand Rapids-based company that custom-designs web and mobile apps for clients and designs embedded software for medical devices, Atomic Object opened a Detroit office in 2012 and an Ann Arbor office last year. “When you have companies like us competing on jobs, it makes for a stronger region,” Crowley said. “As both of us grow, we can bring more business in from out of state. Our success and the success of Rich and Menlo help put a lens on Michigan.” Tom Henderson: (313) 446-0337, thenderson@crain.com. Twitter: @tomhenderson2

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REPORTERS Jay Greene, senior reporter: Covers health care, insurance, energy utilities and the environment. (313) 446-0325 or jgreene@crain.com Amy Haimerl, entrepreneurship editor: Covers entrepreneurship and city of Detroit. (313) 4460416 or ahaimerl@crain.com Chad Halcom: Covers litigation and the defense industry. (313) 446-6796 or chalcom@crain.com Tom Henderson: Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho: Covers real estate, higher education, Oakland and Macomb counties. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor: Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Dustin Walsh: Covers the business of law, auto suppliers, manufacturing and steel. (313) 4466042 or dwalsh@crain.com Sherri Welch, senior reporter: Covers nonprofits, services, retail and hospitality. (313) 446-1694 or swelch@crain.com LANSING BUREAU Chris Gautz: Covers business issues at the Capitol and utilities. (517) 403-4403 or cgautz@crain.com

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October 13, 2014

CRAIN’S DETROIT BUSINESS

DMC: Outside housekeeping plan could eliminate 565 jobs ■ From Page 3

Scott Rice, president and COO of Detroit-based Powerlink Facilities Management Services, said hospitals evaluate outsourcing services based on cost, customer service and quality factors. Typical outsourced services include housekeeping, patient transport, equipment management and food service, he said. Powerlink has a contract with Henry Ford Health System to take care of nearly half of Henry Ford’s housekeeping services and has had the contract for Karmanos’ housekeeping since 2012. Henry Ford officials have said Powerlink has saved the system at

least 10 percent annually on staffing housekeeping, environmental services and maintenance over the last eight years. Rice declined to discuss Rice whether Powerlink is in discussions with DMC. “Hospitals try to increase (patient satisfaction) scores and improve quality,” Rice said. “With competition so tough for health care dollars, you can’t afford to

have patients not believe they are receiving the best care.” In many instances, Rice said, the housekeeper may spend more time in a patient room than a doctor or nurse. “They may have a huge impact in how a patient views the hospital and the health care system,” he said. Mallett said DMC is constantly looking at ways to manage costs, improve quality and enhance customer services. “DMC at different points in time has outsourced environmental services and food services,” Mallett said. “The possibility exists that

scale will reduce costs. That is why we are looking at it.” For example, DMC Harper University Hospital a few years ago outsourced its housekeeping services. “We brought it back in-house” because market conditions changed, Mallett said. In 2012, Henry Ford Hospital terminated its food service contract with Aramark Healthcare and decided to move its food service line inhouse with its own culinary wellness brand called Henry’s Culinary Wellness. At St. John Providence, Touchpoint Support Services was hired in 2012 for housekeeping and food

WANT A HEALTH PLAN THAT TREATS YOUR EMPLOYEES LIKE INDIVIDUALS? HealthPlus plans come with the benefits your employees need. From fully-funded HMO, PPO, and Medicare plans to self-funded plans, HealthPlus has options for any budget. And all of our plans come with great benefits like prescription coverage and preventive care. And if HealthPlus is your sole health benefits carrier and you have 51+ employees, the HealthPlus Worksite U™ Wellness Program is free! HealthPlus is accepted at leading hospitals all over Michigan, so call your agent today at 1-800-530-9071 or visit HealthPlus.org. Bryan Cole, HealthPlus Director of Product Development, will be a panelist for the upcoming Crain’s Health Facts 2014 webinar. Join him for this free webinar on Tuesday, October 21st and learn how to Design the Right Plan: Get the Most for Employees. The Right Plan for a Healthier You ©2014 HealthPlus of Michigan, Inc.

services, a spokesman said. St. John previously used Sodexo Inc. for food services and in-sourced housekeeping. Some 900 St. John employees and managers became Touchpoint employees. The change also occurred nationally at all hospitals that were part of St. Louis-based Ascension Health, the parent of St. John Providence. Rice said the only disadvantages to outsourcing are loss of management control over employees and possible clash of corporate cultures. “Organizations may have a greater perception of control if their managers are their employees,” Rice said. That’s one reason hospitals should conduct a thorough due diligence before hiring an outside company to manage one of their services, he said. “You want to have a shared vision in where you are going with a potential partner,” he said. “You also should establish particular benchmarks to show success. This can lead to successful outsourcing because there is a greater accountability.” DMC hospitals potentially affected by the change include Children’s Hospital of Michigan, Detroit Receiving Hospital, DMC Surgery Hospital, Harper University Hospital, Hutzel Women’s Hospital, Huron Valley-Sinai Hospital, Rehabilitation Institute of Michigan and Sinai Grace Hospital. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene

Hertel gets extension on SMART contract The region’s suburban bus system has extended its top executive’s contract for a third time in four years. John Hertel has been general manager of the Suburban Mobility Authority for Regional Transportation bus system since March 2010, and SMART’s board of directors unanimously voted to extend his contract until April 30, 2018. SMART announced the extension in a news release. The extension is Hertel for one year, and Hertel’s salary (after a 2 percent reduction he and all nonunion staff took in July) is $149,852 annually. The new deal comes not long after Hertel’s latest victory: In August, voters in Wayne, Oakland and Macomb counties handily approved a $28 million tax increase for SMART bus services. The ballot question was a four-year, 0.41 mill tax increase from the 0.59 mills it previously levied to 1 full mill. — Bill Shea

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October 13, 2014

RUMBLINGS LCE creates anti-abuse campaign ith help from a behind-the-camera Hollywood heavyweight, the Detroit advertising agency Lowe Campbell Ewald has launched a domestic violence public service announcement awareness campaign for Haven Inc., the shelter for victims of domestic violence and sexual assault in Oakland County. The pro bono campaign includes ads that showcase the hidden and deceptive aspects of many abusive relationships. A 30-second video spot called “Mr. Nice Guy” was directed by Angus Wall, who won Academy Awards for film editing for “The Social Network” in 2010 and “The Girl With the Dragon Tattoo” in 2011. He also did the title design work for HBO’s “Game of Thrones.” The theme of the ads: simple phrases that transform into ugly messages from the abuser. “The campaign takes a fresh approach by focusing on the abuser: who he is, how he works and how dangerous he can be. The cam-

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paign also highlights the fact that abuse is gradual and in most cases victims don’t see it coming,” LCE said. The agency has done pro bono work for Haven for 15 years.

Chamber explains its PAC’s pro-Peters email A recent email sent by the Detroit Regional Chamber encouraging members to support Democratic U.S. Senate candidate Gary Peters at a fundraiser scheduled for Friday at the chamber’s offices surprised some chamber members, given members’ mixed politics. The fine print in the email states, “Paid for by the Detroit Regional Chamber PAC.” But with the chamber’s large-print banner, it reads like the chamber is endorsing Peters. The chamber last week confirmed that its PAC — and not the chamber itself — is endorsing Peters. Communications Director Jim Martinez said it is the practice of the chamber to accept the PAC endorse-

ADVICE TO CRAIN’S FAST 50

WEEK ON THE WEB FROM WWW.CRAINSDETROIT.COM, WEEK OF OCT. 4-10

From Chelsea machine shop to Nobel Prize Ann Arbor native Eric Betzig was one of three scientists recognized last week with the Nobel Prize in Chemistry for devising ways for microscopes to look into the molecular hearts of living cells. Betzig Betzig, 54, now a researcher in Ashburn, Va., for the Howard Hughes Medical Institute, came up with the idea that helped win him the prize while he was unemployed in 1995, Bloomberg reported. He had left his job at AT&T Bell Laboratories the year before, in part because of his frustration with academic science. After a decade away from large-scale science that included a stint working for his father’s machine-tool company, Ann Arbor Machine Co. in Chelsea, Betzig returned in 2005, taking a job at the Hughes Institute. Thanks to tech improvements, he was able to bring his microscope idea to fruition. ment as the PAC is designed to be representative of the chamber’s board and most engaged members. As for the chamber “letterhead” the email came on, the chamber regularly communicates news from its PAC through its communication avenues, Martinez said.

Anime convention expected to fill RenCen Marriott

What keeps executives who run the fastest-growing companies awake at night? Answer No. 1: “Talent,” said Albert Berriz, CEO of Ann Arborbased McKinley Inc. Berriz (pictured at right) was one of three panelists at the event hosted by Crain’s last week at the MSU Management Education Center in Troy to recognize the companies named to Crain’s Fast 50 list of growing companies. The event drew 230 people. The list, published as part of an August report, highlighted companies with rapid revenue gains in the past three years. Finding and keeping good employees is a priority to keeping a company in growth-mode, the three panelists said. And an innovative tactic from McKinley — hiring student-athletes from the University of Michigan for part-time or summer work — leads to two or three full-time hires a year, he said. “They’re used to working 14-hour days,” Berriz said. “They work hard.” Some recent hires include women from the softball and soccer teams. Also pictured (from left) are Lorron James, vice president of business affairs at Detroit-based James Group International, and Bill Gatewood, associate vice president of products and sales at Burns & Wilcox, a subsidiary of Farmington-based Kaufman Financial Group.

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Thousands of anime and gaming enthusiasts will descend on downtown Detroit from Oct. 30 through Nov. 2 for Youmacon, an annual convention marking its 10th anniversary at the Detroit Marriott Renaissance Center and Cobo Center. Last year, Youmacon — “youma” is Japanese for “demon” or “ghost” — brought more than 14,000 people to Detroit from around the world. Morgan Kollin, founder and chairman of the event, said between 17,000 and 18,000 people are expected. “We fill most of the hotels downtown,” Kollin said. The event will include games, guest panels, musical performances, a charity costume ball for Cornerstone Schools, anime and collectibles vendors in 100,000 square feet of exhibit space.

Federal-Mogul opens new plant in Mexico outhfield-based Federal-Mogul Holdings Corp. opened a new piston ring manufacturing plant in Puebla, Mexico. Federal-Mogul spent $15 million to open the plant, which initially employs 120. The company declined to reveal the square footage of the facility.

ON THE MOVE 䡲 Garry Faja, CEO of St.

Joseph Mercy Health System in Ann Arbor, announced he will retire at the end of this year after three decades with the system. Faja Faja spent most of his career as president and CEO of flagship hospital St. Joseph Mercy Ann Arbor and was the first CEO of the St. Joseph system. A replacement is being sought. 䡲 Saju George was named chief administrative officer at Garden City Hospital by new owner Prime Healthcare Services, a for-profit chain based in Ontario, Calif. George, formerly Garden City’s vice president of administration, replaces Gary Ley, who was CEO of the osteopathic hospital for 25 years. 䡲 Gregory Len was named vice president of global sales and business development by Sciemetric Instruments, an Ottawa, Ontariobased measurement and data management company, for its planned metro Detroit office. The company is searching for a location and said it will hire 10 local employees.

COMPANY NEWS 䡲 In a preliminary proxy

statement filed with the U.S. Securities and Exchange Commission, Detroit-based Compuware Corp. filed a copy of a letter it will mail to shareholders urging that they approve the sale of the computer services company to San Francisco-based Thoma Bravo LLC. The proxy statement said the special meeting of shareholders would take place this year at Compuware’s headquarters. 䡲 Madison Heightsbased Easom Automation Systems Inc. was acquired by Cleveland-based Lincoln Electric Holdings Inc. Terms

of the deal were not disclosed; Easom operates three plants in Michigan. 䡲 Warren-based St. John Providence Health System opened a new physician office and outpatient center in downtown Grosse Pointe. The St. John Medical Center-Ralph C. Wilson Jr. Campus includes an internal medicine practice with four physicians, outpatient physical and occupational therapy, diagnostic imaging and lab services. 䡲 The Wilson family’s 55-year ownership of the Buffalo Bills ended when National Football League owners approved the sale by the estate of Ralph Wilson for $1.4 billion to Terry and Kim Pegula, owners of the National Hockey League’s Buffalo Sabres. Wilson died March 25 at age 95 at his Grosse Pointe Shores home. His estate has earmarked the money from the Bills’ sale to benefit the Grosse Pointe Farms-based Ralph C. Wilson Foundation. 䡲 Detroit-based Blue Cross Blue Shield of Michigan and Blue Care Network launched a quality improvement project with an unspecified number of hospitals in Michigan to reduce anesthesiology-related complications and improve patient outcomes. The University of Michigan Health System is coordinating the Blues’ initiative. 䡲 The Miami-based John S. and James L. Knight Foundation awarded $2.48 million to 58 metro Detroit arts projects proposed mainly by small arts organizations, individuals and collectives in the second round of funding for the three-year Knight Arts Challenge in Detroit. 䡲 Crispelli’s Bakery and Pizzeria opened its second location, at 6690 Orchard Lake Road in West Bloomfield Township. The first Crispelli’s opened in Berkley in 2012.

OTHER NEWS 䡲 The boards of Oakland and Macomb counties approved joining the Great Lakes Water Authority to take over operations of Detroit’s water system, AP reported. The votes followed earlier approval by the Wayne County Commission and Detroit City Council. 䡲 Detroit has recruited top municipal and corporate executives from New York to Kentucky to run the city once it leaves bankruptcy, Mayor Mike Duggan testified in the city’s bankruptcy trial as the final witness in favor of a plan to cut $7 billion in liabilities, Bloomberg reported. 䡲 Detroit Mayor Mike Duggan and Wayne County

Treasurer Raymond Wojtowicz announced “Blight Bundle,” an anti-blight effort that packages several properties, including homes and vacant lots, for sale, AP reported. 䡲 Western Michigan University Thomas M. Cooley Law School is closing its Ann Arbor branch at the end of the year. The school is offering $1,500 to Ann Arbor law students who want to take classes at Cooley campuses in Lansing, Auburn Hills, Grand Rapids or Tampa, Fla. Cooley, a private law school, recently finalized a formal affiliation with WMU. 䡲 Eastern Michigan University is launching the Men of Color Degree Completion and Retention Plans to enroll and graduate more first-generation and low-income minority males, AP reported. 䡲 The University of Michigan said it plans to begin training doctors in Africa in reproductive health services after getting a $25 million grant from an anonymous donor for faculty at the Department of Obstetrics and Gynecology to create the Center for International Reproductive Health Training, AP reported. 䡲 The $6.3 million Troy Multi-Modal Transit Center, built after years of debate, is set to open Oct. 14, AP reported. The city initially planned for the project in 2000 and approved a smaller version of the center in 2012. 䡲 The government is urging a federal appeals court to deny former Detroit Mayor Kwame Kilpatrick’s request to have his corruption conviction overturned and grant him a new trial, AP reported. Kilpatrick is serving a 28-year prison sentence after a jury last year convicted him of two dozen crimes, from tax evasion to bribery. 䡲 Usman Butt, former owner of Prestige Home Health Services Inc. of Troy and Royal Home Health Care Inc. of Clawson and Troy pleaded guilty in Detroit federal court for his role in a $22 million Medicare fraud ring. 䡲 Detroit ranked last among 25 cities studied by Liberty Mutual Holding Co. for pedestrian safety. Seattle ranked as the safest, with few pedestrian deaths and investment in infrastructure that residents say makes walking safer.

OBITUARIES 䡲 Joseph “Jeff” Page III,

president of Troy-based law firm Giarmarco, Mullins & Horton PC, died Oct. 6 from complications of multiple myeloma. He was 72.

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