When Jon Irwin listens to music, he uses his Android smartphone to crank out the tunes. As president of Rhapsody International Inc., Irwin wants his customers to be able to listen to any song, at any time, on any device.

“You should never be without your music,” Irwin says.

That’s the motto with which Irwin leads Rhapsody. To provide that level of music access, he is implementing a two-pronged growth strategy that focuses on direct-consumer marketing and alignment with distribution partners to put Rhapsody’s services in front of more customers and increase its service capabilities.

Rhapsody, a 200-employee music subscription service company, has been in business for more than 10 years. Until 2010, it was a joint venture between Viacom, under MTV Networks, and RealNetworks before being spun out on its own.

“That was kind of a great combination, because we were able to leverage the technology within RealNetworks and the marketing prowess of Viacom and MTV Networks to promote the Rhapsody brand to support the business,” Irwin says. “In 2010, we separated as an independent company, and … since that time, we have more than doubled our customer base. We announced last December that we had gone over 1 million subscribers.”

Those 1 million-plus subscribers pay $10 a month for the company’s primary product, which provides access to more than 16 million songs and spins up Rhapsody’s annual revenue north of $120 million.

To keep subscribers happy and gain new ones through the growth of the business and its capabilities, Irwin has already lined up a few key partnerships. Recent acquisitions include Napster’s U.S., German and U.K. businesses.

“What you see in doing that since the spinout is an entrepreneurial company with great resources, that’s operating in this business at scale and has been able to innovate — not only on mobile products but on distribution models through companies like Metro PCS and Verizon Wireless and is expanding internationally by acquisition with Napster,” he says.

Here’s how Irwin is speeding up the tempo at Rhapsody through a dual-pronged growth strategy.

Support your strategy

Rhapsody was the first on-demand music subscription provider. It saw a market with an opportunity and it capitalized on it.

“Most recently, if you look at the trends within this space and what the business has done, we were so far out in front of this business, nobody else even entered it until the second half of the last decade,” Irwin says. “The business really started to grow beginning in 2009, driven by some of the capabilities of smartphones, mobile devices and network capabilities that really enabled music to be truly portable and make it a fantastic user experience for people to take music with them.”

To expand on the capabilities of smartphones and mobile platforms, Rhapsody has partnered with companies in the wireless arena.

“Last August, we launched a partnership with Metro PCS, which actually took the access model of music to a bundled concept,” he says. “Metro PCS is the largest noncontract wireless carrier in the United States, so customers get unlimited music included with their wireless plan. That’s a very exciting way for us to bring our service to folks.”

Rhapsody also saw an opportunity to buy the Napster business from Best Buy as a way to reach more customers. Best Buy had acquired Napster in 2008 and thought it was a natural fit for the music and connected devices sold in the store and subscription music play.

“What had happened over that period of time was there were challenges in the retail space and Best Buy was working on aligning its strategy,” Irwin says.

Best Buy was soon unable to give Napster the attention it needed. Napster’s product innovation and growth began to suffer because of it.

“We approached Best Buy a little over a year ago and started discussing whether it makes sense for Best Buy to alter its strategy a little bit and not walk away from it, but maintain a stake in the digital music business and be an equity stake in Rhapsody and we would take over those customers and operate the business both in the U.S. and overseas,” Irwin says.

“They decided that made a lot of sense, because it allowed them to focus on their core business. At the same time, they were able to stay in the game with the digital music and subscription music business that’s consistent with a lot of the products they sell.”

Rhapsody acquired Napster last November in the United States, and at the end of March 2012, it also closed on the acquisition of the Napster business in Germany and the United Kingdom.

“That gave us our first international presence, which is an indicator and foreshadowing of future expansion we plan to do over in Europe,” he says. “We not only acquired a great customer base to be No. 1 in the market in Germany, but we have a very capable and seasoned team to continue to build the business, not only in Germany and the U.K. but in the rest of Europe. That was an exciting time for us to support that aspect of the strategy.”

Irwin and Rhapsody plan to keep looking for the opportunities that align with the company’s strategy.

“We are bringing the Rhapsody service to consumers directly and are continuing to innovate on the mobile products and work with distribution partners, both in the United States and internationally,” he says.

“This is to include music in their core offerings and work in partnership with those distribution partners, whether those are cable companies or wireless carriers, to make sure the way the service is being delivered to their subscribers is good for everybody involved. I don’t think there is anybody in the business better than us at doing that.”

Grow through acquisition

The acquisition of Napster played right into Irwin’s growth strategy. Napster helped Rhapsody reach more music listeners and the connection to Best Buy allowed Rhapsody to expand the kinds of devices customers could use to listen to music.

“If you go into a Best Buy store, a lot of the electronics they sell have Rhapsody integrations built-in,” Irwin says. “Overall, getting us in front of those customers is consistent with our mission and our goal of having all the music you want within arm’s reach.”

While Rhapsody acquired Napster less than a year ago, it has been a key factor to the company’s recent success because it was such a good fit. Growth through acquisition is successful if that acquisition supports your objectives and strategy.

“For us, scale and being able to acquire those subscribers and bringing them over to the service was a natural fit,” he says. “In the subscription business, scale is important because the more subscribers we have, we’re leveraging the platform that we built. That consistency with business objectives is No. 1.”

Once you have acquired a business, the No. 2 most important thing to keep in mind is the relentless planning and caring you need to do about how you treat the customers of the acquired company.

“You want to welcome them in a way that isn’t disruptive and, in fact, actually delights them and makes them happy they are over in this new house,” Irwin says.

Rhapsody did specific things in the planning and the migration processes so that what was important to those customers was already in place when they transitioned to Rhapsody’s services.

“They may have created playlists on Napster of their favorite songs,” he says. “They certainly had their own user names and passwords that they had created. They had libraries filled with their favorite artists. Their music collection is very important to them.

“So we made sure that as soon as they signed on and they were moved over to the Rhapsody service, all of those familiar characteristics of their music collection were there. Their playlists were there. You were able to continue to recommend music to them based on their listening history. They didn’t have to go create new accounts. We just made it very smooth for them.”

Attention to those migrating customers is crucial, but so too is a focus on the talent from the acquired company that may be beneficial to your growing business.

“No. 3 is there are a lot of very talented people that you can find in companies that are dealing in the technology space,” he says. “How do you combine the two companies, bring them together, merge them and make sure the talent that you emerge with from the acquisition is even greater than you had when you entered it?

“There were some very good business-minded individuals and people with strong technical skill sets that are happy and productive employees that help to carry that across. You have to tap the talents of the potential acquired company.”

Through the leadership of Irwin and the continued execution of the company’s dual-pronged growth strategy, Rhapsody is positioned well to continue to be a strong player in the subscription music space.

“The trajectory that we’re on now over the past 2½ years is pretty exciting,” Irwin says. “We’re a small start-up company coming back into a very exciting industry with tremendous resources, a customer base that has scaled, technology that has matured, and a brand that MTV Networks helped build. So we’re really set up to run forward and have fun.” <<

How to reach: Rhapsody International Inc., (206) 707-8100 or www.rhapsody.com

Published in National

Throughout Ohio, there are companies and organizations that are developing a wide range of innovative solutions to meet energy challenges. In turn, the state has many great assets that lend themselves to the energy industry and help create ways to improve energy resources or provide ideas on how to develop new ones.

As a way to bring together companies, researchers and supply chain manufacturers across Ohio to share ideas for developing innovative, advanced energy technologies and capitalize on common synergies for future business opportunities, NorTech held its Advanced Energy B2B 2012 Conference & Expo Oct. 30 and 31.

“The whole reason that we’re interested in holding this event is to promote the idea of building collaborations and partnerships among our cluster companies,” says Dave Karpinski, vice president of NorTech and director of NorTech Energy Enterprise. “That guides our programming, the design of our event and our target audience.”

The event last year was a mix of discussions on energy sectors and potential growth areas within Ohio such as solar, energy storage and fuel cells, smart grid, biomass, waste streams and energy efficiency, as well as trade show exhibit space.

One of the things new this year was a panel of some of the major projects going on in Ohio from a renewable, advanced energy standpoint.

“The purpose was to give the attendees a sense for the breadth of projects that are going on and where they’re being deployed in different parts of the state,” Karpinski says. “It was a good lesson about matching the technologies with the resources in our state to be able to generate renewable and advanced energy based on our renewable portfolio standard.”

What provided an even more exciting opportunity for economic development are all the products and solutions that can be generated, developed, manufactured here and not only used in Ohio but also exported around the country and around the world.

“If you think about energy and advanced energy, all of these systems are massive, large-scale, durable, good processes with lots of manufacturing, materials and components,” he says. “That’s what we are strong at in Ohio.

“We’re coupling our research and development strengths with our ability to make these things and produce these processes, systems, battery solutions, fuel cells, etc., to have an impact here.”

NorTech also tries to generate local demand for these products in the state so the companies developing these solutions have local customers to work with as they develop and perfect them.

“It’s much more productive if your developing, manufacturing and deploying systems are close by,” he says. “That will make you more competitive as you scale up and export around the world.”

This work surrounding collaboration and partnerships with energy companies is part of what NorTech calls road mapping.

“That process helps us identify where we think we have strengths in the region, what the companies are in these clusters and what the competitive picture looks like against other regions,” Karpinski says. “Then we work with these companies to come up with a game plan for cluster growth.”

One cluster NorTech is excited about surrounds two companies that convert waste plastics or waste polymers back into crude oil. The technology, as oil prices have increased over the years, has become more attractive and viable.

“They’re relatively small output … so there is a little bit of a challenge to get the attention from buyers of oil for really small sources like this,” he says.

NorTech is working with a couple of its companies in the cluster on federal advocacy efforts to open up this waste stream to qualify as renewable fuel for the country’s federal renewable fuel standard.

NorTech is also working with Quasar Energy Group, which produces a technology called anaerobic digesters that take biomass waste and, through a biological process, generate methane.

The methane can be compressed, cleaned and used as compressed natural gas for transportation applications as an alternative to gasoline or diesel fuel.

“One of the challenges that they had was getting equipment for these dispensing stations,” Karpinski says.

Because Quasar didn’t want to be experts in CNG dispensing systems but wanted somebody that could work with them that could develop that, NorTech partnered the company with South Shore Controls.

“We identified that need and have a project ongoing with Quasar and South Shore Controls and are working with our partner Magnet to help design the appropriate piece of equipment such that South Shore could be the manufacturer for Quasar,” he says.

Through these kinds of efforts and the information being shared during events such as the Advanced Energy B2B 2012 Conference & Expo, companies are getting help to achieve their growth targets.

“We hope it will stimulate some interest in working in some of these companies and provide chances for collaboration,” Karpinski says. ?

Published in Akron/Canton

Domestic transactions in October increased 9 percent when compared to the previous month and the value of those deals increased 93 percent when compared to September, according to S&P CapitalIQ. This is a positive sign for the market, but it may not continue.

With the current tax hikes effective in 2013, the upcoming year could be a rocky road.  Of course, with trillions in cash and purchasing power available to both strategic corporate buyers and private equity groups, the unhealthy tax hikes may be counterbalanced with a need for higher yields, distribution of funds and accretive earnings.

On the private equity side, The Riverside Co. completed both an acquisition and an exit. Riverside’s portfolio company, SMS, completed the acquisition of a west coast respiratory equipment company in Premier Medical Corp. Riverside also sold Coeur Holding Co. to Illinois Tool Works.

Resilience Capital Partners completed two acquisitions, the first being the acquisition of CR Brands, a manufacturer of household cleaning and laundry products. Later in the month, Resilience acquired Advanced Communications Inc. through Aero Communications. Advanced Communications is a provider of telecom infrastructure services. Other notable private equity transactions for the month include Blue Point Capital Partners’ acquisition of California-based Smith-Cooper International, a producer and distributor of pipe, valves and fittings, and Morgenthaler’s sale of Avtron Industrial Automation Inc. to Japan’s Nidec Corp.

With respect to corporate buyers, both Steris Corp. and Parker Hannifin Corp. were very acquisitive in October. Steris closed two deals on Oct. 16 totaling $110 million. The businesses, Spectrum Surgical Instruments and Total Repair Express, are leading providers of surgical instrument repair services with combined revenues of approximately $72 million. Parker Hannifin also announced it would acquire two companies during the month and divest the automotive air conditioning portion of its Mobile Climate Systems Division to Germany’s ContiTech.

ALBERT D. MELCHIORRE is the president of MelCap Partners LLC, a middle-market investment banking firm. He is also a director on the ACG Cleveland board. For more information on MelCap Partners, please visit www.melcap.co. For more information about the Association for Corporate Growth, please visit www.acg.org/cleveland.


Deal of the Month

The deal of the month is awarded to our beloved Cleveland Browns and new team owner Jimmy Haslam III. Randy Lerner, the previous controlling owner of the Browns, agreed to sell the team to Haslam at the beginning of training camp in August. The deal closed on Oct. 25 for $1.05 billion after the NFL owners voted in favor of the transaction 32-0. Approximately $700 million for the team was paid current, giving Haslam 70 percent ownership of the team. The other 30 percent will be purchased in four years by Pilot Flying J for more than $300 million. After the return of the Browns to Cleveland in 1999, the team has only made the playoffs once, a trend that will continue this season. Hopefully, Haslam can add value to his $1 billion investment and bring a Super Bowl to the city of Cleveland — or at least wins against the Ravens and the team Haslam was previously involved with, the Steelers.


Published in Cleveland

Over the course of the past six years, Tony Thomas hasn’t had to hunker down in the face of the economic recession — he’s had to plan for 10 to 15 percent annual growth over those six years.

Thomas, who serves as executive director at Welcome House Inc., a 295-employee organization devoted to helping individuals with intellectual and developmental disabilities, has been focused on overcoming funding challenges, diversifying services and continuing growth.

“We don’t really know what people are talking about when it comes to a bad economy or an economic recession; it just hasn’t happened to us,” Thomas says. “There’s been a lot of growth in the developmental disabilities field because the need is so great.”

Within Cuyahoga County alone, there are 600 to 700 people waiting for services. Providers such as Welcome House have been trying to expand services and create opportunities so people with disabilities have quality homes to live in in the future.

“That’s why the recession really hasn’t hit us at all,” Thomas says. “It’s gone in the opposite direction.”

Challenges of Growth

While Welcome House has experienced exceptional growth over the recent years, it hasn’t come without challenges and obstacles to overcome.

“The biggest challenge we have is the number of people who need services far exceed the number of spaces and opportunities that we have,” Thomas says. “What we are trying to do is to look for new and creative ways to serve people.”

The other thing that’s been a challenge for Welcome House has been that both the federal and state government changed their funding restraints.

“They’ve done some different things in their funding cycles, so the traditional programs we used to rely on to build a group home, some of those funding streams have changed,” he says. “So what we’ve had to do is be creative in the way we approach public funding to try to get dollars available to serve the people that we support. That’s really been our biggest challenge over the last four or five years.”

Welcome House has tried to counter this change by creating a home health care agency within the organization to draw new dollars from the federal government through the Medicare program.

“That’s a way we have tried to balance out,” he says. “If something changes in the state system, we try to look for federal dollars to support that. If things change in the federal system, we look at how the state may supplement that or go to the county for some creative ways to work with them. That’s what we are good at doing and that’s how we work.”

Another way around funding changes has been expanding fundraising beyond government sources.

“We try to do events and other kinds of things that will create opportunities,” Thomas says. “People can get behind us and support us through our fundraisers, through our events, through volunteering with us and a whole variety of ways.”

The growth Welcome House has seen doesn’t come to organizations that keep doing the same things over and over. Welcome House looks to differentiate itself from other providers in Cuyahoga County.

“We differentiate ourselves from those other organizations by looking at what the needs are out on the horizon and trying to plan for those services that may be needed two to three years from now,” Thomas says. “An organization like ours needs to change. It’s not something that can stay constant. We really need to change and adapt our organization to meet the growing needs and the changing needs of people with disabilities.”

It’s that kind of thinking that has separated Welcome House from other similar organizations and has contributed to its growth.

“It’s trying to think about what the future is but also trying to think outside the box,” Thomas says.

When it comes to out-of-the-box thinking, you need employees who share your vision and drive to make a difference in the organization.

“You have to recruit people who not just share your vision but also see the need for changing the organization and expanding services in different directions,” he says. “If you’re an organization or business and you’re staying in one line of business and that’s all you do and the market changes or the needs change, you’re not adapting to it. You have to adapt to it and you have to change and you have to have people on board, especially in your leadership positions, that are willing to look at changing the organization and aren’t afraid to make those changes.”

To make those changes a reality, you have to plan things out as an organization.

“If you agree to do something you have to also agree to change your organization to meet that need,” Thomas says. “Our people are very into doing that. They see the need to do it and they see the need to move the organization in a different direction.” <<

How to reach: Welcome House Inc., (440) 356-2330 or www.welcomehouseinc.org


Published in Cleveland

Andy Zynga has been in business surrounding open innovation for more than 10 years now. As CEO of NineSigma Inc., a 70-employee company that engages organizations with external innovation resources, Zynga helps companies prove that open innovation is a valuable resource.

Due to NineSigma’s mission, the Ohio Third Frontier recently awarded the company a $2 million grant to aid small and medium-sized businesses in Ohio in gaining access to open innovation and solution providers around the world.

“The success of open innovation is something that departments of development take note of,” Zynga says. “The Ohio Third Frontier said, ‘Why don’t we help to grow this state and the businesses in this state and create new jobs by giving the smaller corporations access to technologies just like the big guys and let’s find intermediaries that can help to make that happen.’

“That’s where they were looking for companies, such as ours that could do this, and that’s how we ended up winning this $2 million Ohio Third Frontier grant.”

Open innovation can impact a business in numerous positive ways. It is Zynga’s and NineSigma’s goal to help Ohio small businesses achieve success by using it.

Open up

Open innovation has to do with companies going outside their own four walls to find new technologies, knowledge and ideas. That means going above and beyond the trusted network of people you’ve worked with all along.

“The power of open innovation is getting solutions that have nothing to do with your own,” Zynga says. “The very first step is to be able to define the problem in a way that is clear, compelling and concise,” he says. “Then you have to do cross-industry outreach and look around the world for people who may have an answer within your industry and outside the industry. Then thirdly, you have to filter through all the proposals that come in as a result.”

Open innovation helps to accelerate the innovation cycle.

“Rather than sitting there trying to reinvent the wheel, companies all of a sudden get all of these great proposals on their desk within four or five weeks and they get access to all these great technologies from around the world,” he says. “Tapping the global brain is what this is all about and we are, so to speak, the people that tap the brain for our clients.”

To help make this process easy on your business, you should dedicate someone to lead the effort.

“The CEO should make someone dedicated champion of open innovation,” Zynga says. “Somebody who is the process owner that works with the other internal resources in order to utilize the power of open innovation to the max.”

Open innovation is really about creating your own intellectual property with the help of additional pieces that you are using to accelerate the overall IP.

“When clients have internal champions that own the process, typically the success rates are two to three times higher than they would be without a champion,” he says. “That is a big recommendation for the CEOs of the world to find someone internally to understand how this works and get training so they can get everybody around the table when it comes time to review all those great solutions.”

Allow open innovation  to help you

Almost every product development process has some place in it where there is a bit of a challenge or a stumbling stone. Those are the times where open innovation can be your company’s best friend.

“These are the moments when somebody’s got to make a decision to say, ‘Do I go look in the world to see who’s got a solution we could tap into?’” Zynga says. “If the answer is yes, we have seen accelerations by 30, 40 and 50 percent. So people get to market much, much faster and can realize some real savings.”

When companies start to do these technology searches, it also helps to positively impact corporate culture to one of more openness.

“The biggest obstacle in all companies is usually the not-invented-here syndrome,” Zynga says. “Companies say, ‘We can solve this with our own people; why should we even go look outside? We’ve got the smartest people anyway.’ When you receive all of those excellent proposals, you get to see different approaches that people take to solve a particular problem.

“Surely your own R&D people have their own hypothesis as to how that can be solved, but just seeing the different approaches from around the world enhances your knowledge. That means there might be other projects that this may have a positive impact on within the business.”

Open innovation can also de-risk the whole product development process.

“It helps you to see what’s going on out there and what all the approaches are,” he says. “It helps you to say, ‘Am I on the right path?’ You may run a technology-strict project and find out there is no answer out there … it’s so unique no one has done it before.

“Likewise, if there are tons of solutions already for something that you’re developing internally, you may say, ‘Whoa, I didn’t know there are already so many solutions to this.’ It helps to de-risk and it helps to bet on the right horse.” <<

How to reach: NineSigma Inc., (216) 295-4800 or www.ninesigma.com

Published in Cleveland

Sustainability is a key focus for Turner Construction Co. and Merchandise Mart Properties Inc. as construction of the Cleveland Medical Mart & Convention Center continues ahead of schedule and on budget.

Green initiatives began at the design stage – ranging from low-flow water fixtures to a green roof over the Convention Center – and have continued into the actual construction of the complex. More than 98 percent of the demolition and waste products from the old site were recycled, and 30 percent of the material going into the new building will be recycled material.

“Living green is all part of what we need to do for our future – and not our future, but our children’s future and their children’s future,” says Brian Milner, Cleveland MMCC director of operations. “And if we don’t start here from day one on this project, we’re going to be a step behind.”

Executives from Turner gave Smart Business an exclusive video interview to discuss the project's green initiatives:

Watch: "Cleveland MMCC: Green initiatives key to building construction, design"

This 36-month, $465 million construction venture is set to be completed by July 1, 2013 - two months ahead of schedule.

To see the project’s progress for yourself, check out the Cleveland MMCC live webcam.

How to reach: The Cleveland Medical Mart & Convention Center: www.ClevelandMedicalMart.com

Turner Construction Co. – Cleveland: www.TurnerConstruction.com/Cleveland

Published in Akron/Canton
Friday, 08 March 2013 15:37

Why you need a business valuation

Business valuation is an increasingly critical aspect in many financial planning, tax, reporting, and litigation matters. Perfect transactional evidence available between willing and knowledgeable buyers and sellers provides an accurate indication of business value, but in reality, such evidence is rarely available. Conclusions of value must be derived through a delicate combination of analysis and objective professional judgment.

Why Do You Need a Business Valuation?

A business valuation will let you, the business owner, know what your company is truly worth for management purposes and keep you informed of what investors look at when considering the value of your business. Once you grasp the worth of your business, you can plan for its future and determine a preferred course of action, whether that is succession planning, selling the business, or depleting its value either immediately or sometime in the future. A valuation will allow you to comply with the IRS requirements for gift and estate taxes, or purchase price allocations, without burdening your family or estate and can also settle irreconcilable differences with a spouse.

How Do You Arrive at Value?

There are three common approaches to developing business valuations:

Asset Approach – This approach is best suited for businesses that hold real estate or investments, start-up or early stage companies, capital intensive companies, or companies that may be experiencing losses. Basically, the company’s assets and liabilities are reassessed at market value. Consideration is also given to tangible and intangible items that may not be on the balance sheet for book purposes. The difference between what you own and what you owe is the indication of value.

Income Approach – Using this approach, the expected future economic benefits (or free cash flow) is converted into a present value. Often historical earning are analyzed and used as a basis for probable future earnings. If changes are anticipated, then a forecast could be used. The “conversion” considers the cost of capital, which can be viewed as an opportunity cost or the rate the market would require to attract an investor to your company.

Market Approach – Your company is compared to transactions in similar businesses using the market approach. Typically public companies are vastly different than closely-held private businesses. Valuators will look to databases that report transfers of privately-held companies and select a population of similar companies based on the reported data. Price multiples are calculated based on revenues, earnings, assets, equity, or other facts, and then the multiple is applied to your company. The logic of this approach is that the prices paid for similar businesses are a market indication of what your business would be worth.

Discounts and Premiums

Different approaches used to determine the value of a business will arrive at different levels of value. These levels of value may be affected by factors regarding control and marketability.

Minority versus Control deals with ownership rights. Some elements of control include the rights to change board members, set compensation, set policy, acquire or sell property, select vendors/consultants, and decide what markets to serve and what products to offer.

Discounts for Lack of Marketability deals with the ability to liquidate ownership quickly, at low cost, and for a relatively certain price. Factors affecting degree of marketability may include:

  • The greater the dividends/earnings, the lower the marketability discount – investors will rely less on selling the investment to realize their return.
  • The wider the pool of potential buyers, the less the discount.
  • Transfer restrictions increase the discount.
  • Imminent prospect of a sale will lower the discount.

Two distinct discounts may be applied to the preliminary indication of value, which will reduce the value of the ownership transfer. Business owners may benefit from transferring ownership interests without transferring the same level rights. In other words, ultimate decision making remains with you.

Valuations need to consider the following factors:

  1. The nature of the business and the history of the enterprise from its inception;
  2. The economic outlook in general and the condition and outlook of the specific industry;
  3. The book value and financial condition of the company;
  4. The earning capacity of the company;
  5. The dividend paying capacity of the company;
  6. Whether the company has goodwill or other intangible value;
  7. Sales of stock and the size of the block of stock being valued;
  8. The market prices of stock of companies engaged in the same/similar line of business with their stocks traded on an exchange or over the counter.

Companies do not operate in a vacuum. Valuation analysts will relate relevant economic and industry factors to your company using comparisons made using industry benchmarks and trade reportings of your peers. Outside influences and trends will be considered when determining the true value of your business.

The valuation professionals at Zinner & Co. have extensive expertise in accounting, taxation, economics and valuation theory. Just as important, we possess the practical experience and business savvy needed to identity issues at the industry-specific level and evaluate subjective factors that drive business value. We work closely with clients and advisors and develop objective, independent valuations that are tailored to meet our clients’ needs.

Gabe Adler, CPA, is a Partner at Zinner & Co. LLP. Reach him at (216) 831-0733 or gadler@zinnerco.com.

Published in Cleveland

Lee Thomas looks out his 13th floor window of the Huntington Building on Euclid Ave. and East Ninth St. and imagines the view he will have when Ernst & Young’s Cleveland office relocates to its new building along the Cleveland Memorial Shoreway.

Thomas, who is a native Clevelander and a 36-year Ernst & Young veteran, became the Cleveland office managing partner this past January. Ernst & Young, a global, 152,000-employee accounting firm, is the only company he has ever worked for and the legacy the firm has built here in Northeast Ohio is something significant.

As the new managing partner, Thomas plans to keep that legacy going, and the firm’s new office location, which will bear the Ernst & Young name, is a symbol of continuing that legacy here in Cleveland.

“We have a very strong legacy here in Northeast Ohio because back when there was the Big 8, Ernst was the only Big 8 firm headquartered in Cleveland,” Thomas says. “Protecting that legacy and making sure that we continue to provide the right kind of services to the franchise that we have and keeping the brand are the important things that we need to do.”

While Thomas and the firm are excited for a new building in downtown, it’s the firm’s 1,100 employees in Cleveland who will drive that legacy forward among its clients.

Attract and retain talent

In the services industry in which Ernst & Young operates, it’s all about people. The firm’s employees develop many sought-after skills, so Thomas remains focused on recruiting and keeping great talent.

“Attracting and retaining people and helping them get through a changing environment to develop a nice, strong career that they want to be at is the challenge,” he says. “We look for people who have very good social skills, can problem solve and work with teams. It’s a demanding profession so you have to understand how to balance your time, too.”

Thomas is always on the lookout for those talented individuals who could possibly have his job one day.

“No matter who the employer is, we are all looking for certain talents who are going to be part of the succession plan of that business,” he says. “Not everyone needs to be that, but they’re looking for that kind of talent because you don’t find it every day.

“When you do get it, it makes a huge impact on your organization. You grow those people and give them the opportunities and watch them develop because they have the attitude and the skill set to take it to the next level.”

Finding the most talented people for your business is a tough task, but once you have them and they keep getting better at what they do, retaining them in your company is even more difficult.

“Those skills translate very well outside the public accounting arena, and that’s part of the problem we have with retention,” Thomas says. “We lose people because they’re really good, and it’s a great training ground. We want this to be more than just a great training ground though. We want to keep them here, too.”

Ernst & Young prides itself on a good educational program, flexible work schedules and a positive work environment.

“We’re in a rapidly changing environment and making sure we have our people at the top of their game where their specialty is … [and] help continue to build that skill set is important,” he says. “The educational element is very positive in retention.

“We also offer things like flexible work arrangements. We have a lot of people who want to have families, and one of the biggest struggles that the profession has is that it’s very demanding and you never know when the next call is going to be from a client where you have to go do something that’s not in your schedule.”

The firm allows people to have flexible work arrangements where they can work a 70 percent schedule for a couple of years. With today’s technology, it has become much easier for people to also work remotely.

“Flexibility is pretty big today,” he says. “We’re everywhere, and we have to be mobile because our business is conducted where our clients are. So giving your people the flexibility to do what they can do effectively and serve their customer, whether it be internal or external, is really important.”

Another aspect Thomas focuses on to retain his employees is making sure they are challenged and receive new opportunities.

“When we lose people, sometimes it’s because they didn’t get the challenges they wanted,” he says. “That’s the big thing is giving people great challenges and letting them have their chance to succeed. That builds a lot of loyalty within the organization if it’s a challenge that they liked and they achieved and they were successful at.”

Be client-centric

As important as your employees are to your business, without clients a company wouldn’t be able to support a workforce. Thomas makes sure the Cleveland office is always client-focused.

“The real key is having a good listening ear to what our clients’ needs are and what do we have that could help them achieve those needs,” he says. “You have to corral it around the things you can do.

“We can’t do everything, and we have to be one of the first ones to say, ‘We can’t help you there,’ but it would be nice if we could know somebody that can help them there. You have to satisfy your client and they have to know you care what their issues are and want to help them solve them.”

The way Ernst & Young does that is with good people. The firm works with its employees on listening, hearing and understanding what the clients’ issues are.

“If you don’t have those listening ears and don’t understand what you do as a business, that becomes another challenge,” Thomas says. “We do so many things; do our people totally understand all the different things we can do? That’s why we continue to educate our people on that and have our different service lines work with each other and meet with each other and understand them better.”

A critical part of understanding your clients is developing a close relationship so you each have knowledge of one another’s business.

“If you go to a client, you can’t just pop ideas onto them without first understanding what their issues or concerns are,” he says. “It doesn’t work. We have a bunch of products we can go and sell, but that’s not the way you develop a relationship and develop trust and confidence. You understand what their needs are and then you say, ‘How can we help them?’

“It’s making sure our people build relationships and build connections so that those people and our clients feel open with us to talk about what their problems and issues are.”

Thomas doesn’t expect his employees to have a solution for every problem or issue that arises, but he expects that they know how to go about finding the answer.

“They need to understand, ‘Ah, here’s the issue. Where can I go to in the firm with that issue and say how can we help?’” he says.

It has been this relationship mentality within the firm that has helped Ernst & Young grow in Northeast Ohio and become the dominant practice in the area.

“I know our people are proud of that,” Thomas says. “Every day, I get ready for the day at Ernst & Young and on my mind is making sure that our people are challenged and satisfied and that we have clients that are happy with what we do. It’s kind of a simple approach, but if we do that, we’re going to have a very successful firm.

“I always want to make sure that we’re maintaining the legacy that we have here. When I started in 1976 at the firm, I walked right into these offices, and it was Ernst & Ernst world headquarters, and I remember that and would hate to let that down.” <<

How to reach: Ernst & Young LLP, (216) 861-5000 or www.ey.com

Published in Cleveland

Scott Barnyak, Christy Maruca and Chris Simchick make up the impressive leadership team at SDLC Partners LP, a technology consulting firm that focuses on accelerating the strategic initiatives of customers through business transformation, business intelligence and tech solutions. In the past two years, the principal partners have led the company through significant growth, reaching more than 270 employees.

Despite the unstable economic climate, the team has been able to strategically maintain growth while attracting and retaining talented employees. While other companies were making efforts to stabilize, Barnyak, Maruca and Simchick led SDLC in expansion.

Their talent is exemplified in their ability to recognize technology pain points and assemble a team to deliver vertical solutions. Specifically, SDLC’s services have positively impacted the health care industry in areas of business transformation, data analytics and technology implication. After assessing client’s needs and discovering areas of pain, Barnyak, Maruca and Simchick devised a team to deliver data-driven management decision support services.

As a result of their strategic hiring practices and innovative business management skills, SDLC soon outgrew its Monroeville headquarters, and in 2011, SDLC expanded into a second location in downtown Pittsburgh, known as SDLC’s Downtown Solutions Center.

A key aspect that Barnyak, Maruca and Simchick sought to change at SDLC was the human resources strategy. They recognized that success in the consulting services industry was derived from the ability to offer quality services to clients and employ top employees to do so. To build an environment that would build a lasting employee/employer relationship, the team revised the organization’s structure, compensation systems, performance management, sales, marketing and operational processes in an effort to attract and retain valuable employees.

In the Pittsburgh area, SDLC has extended services to the community, making the company a valuable asset. In addition to job creation, the partners created Community Sourcing in 2005, a program designed to keep college graduates in the Pittsburgh region and provide SDLC’s customers another option to manage costs associated with quality and technology-based initiatives.

By building this bond between employer, employee and client, SDLC is positioned to become a leading, full-service technology consulting firm that will revolutionize its industry.

How to Reach: SDLC Partners LP, (412) 373-1950 or www.sdlcpartners.com

Published in Pittsburgh

At just 34 years old, Wayne Zanardelli was promoted to vice president and CEO of the ICM Division, a high point in his 28-year career with the ICM School of Business. In his time there, he watched the company reach new heights and helped establish the first 1,000-hour program in computer programming and systems design and built new facilities in Pittsburgh, Cleveland and Baltimore.

In the midst of his career, ICM was sold to Litton Industries, which then offered to sell the ICM Division to Zanardelli in 1983 following his appointment as CEO. While he operated the ICM Division, he also started Professional Services Group, a computer consulting company. Zanardelli sold ICM in order to devote all of his energy to the company he was building from scratch.

PSG had impressive successes under Zanardelli’s leadership. In just 14 years, the company grew to 100 employees and $30 million with operations throughout the United States. The company worked with clients such as Westinghouse, U.S. Steel, Alcoa and PPG Industries. Zanardelli’s success was largely derived from the innovative methods he employed to keep both customers and employees happy. PSG was sold in 1997 and Zanardelli retired in 1999.

His business acumen has also served him well in his many roles outside of ICM and PSG. Zanardelli was elected president of the Pennsylvania Association of Private School Administrators in 1987. He was also elected to serve on the Pennsylvania Private School Licensing Board in 1989, where he has held various roles for 21 years and counting.

In 1995, he joined the board of trustees for the Pittsburgh Technical Institute, helping the school grow into an accredited two-year, associate-degree granting school with 2,000 students on an 80-acre campus offering six schools of study.

In 2007, he joined the 22-person board of The Early Learning Institute. He served three years on the finance and public relations committees becoming vice president before leaving the board.

With such an impressive career and diverse array of talents, Zanardelli has been able to build a successful business into a globally recognized company, as well as help transform many other organizations for the better.

Published in Pittsburgh