“We sent letters, asking them to cease and desist, and none of them would agree,” he says. “We asked our lawyers what it would cost us to enforce our copyright, and they estimated $50,000 per company. I said, ‘It’s not worth $200,000.’”
Now, as president and CEO of 12 restaurants and five catering facilities, Prentice has given in and the Matt Prentice Restaurant Group has emerged.
“My publicist has been beating me for years,” he says, laughing. “And she’s very happy now.”
Smart Business spoke with Prentice about how the restaurant industry has changed, how he maintains quality control as his company grows and the challenges of running a business in a down economy.
How has the Detroit restaurant scene changed over the last 25 years?
Twenty-five years ago, people didn’t go out to eat the way they do today. Dad worked for the Big Three, made great money and had great benefits; Mom stayed at home and cooked.
Now the two-person income is the norm, so families are bringing in more dollars, but they also have a lot less time. So people eat out now, and eating out is a way of life. Even eating out has changed considerably since 9/11. Group dining is more popular today than any time before.
In Detroit since 9/11, we’ve been pretty much in an economic tailspin. We’re the only area in the country that has not come out of recession. Things are pretty ugly here right now.
How have you grown your company to meet customer demands?
We’ve been taking on management agreements. We got into mass feeding where we’ve diversified into serving elderly people on a campus where we have a restaurant. We have expanded by negotiating deals with General Motors to open Coach Insignia downtown.
We have an operation (expected to open last month) at one of the larger theaters in town; it’s going to be our first soul food restaurant, and it’s a management contract, so there’s no outlay of cash and guaranteed income for us.
We continue to expand our off-premise catering because the way I look at things, when you’re in difficult economic times, the more profit centers you have, the better off you are.
How do you grow your company while maintaining your core principles?
We try to teach our staff to not let the guests get out the door unless they’re happy. We have a guest service seminar that I teach to keep them focused on winning and keeping guests for life.
One of the parables I tell is about Morels, my first fine-dining restaurant. I had a hostess who had just undergone a service seminar, and she was quite sharp. On a Tuesday evening, I had one of those bizarre nights where I had a bunch of big parties, and I had a reservation for six people at 8 p.m. All of the 6 p.m. tables were camping, and we couldn’t get these people down at 8 p.m. The hostess did the right thing. She said, ‘I’m sorry, the tables that I anticipated leaving haven’t left. Let me buy you a round of cocktails at the bar.’ Then they started getting antsy, so she brought out some free appetizers.
Finally, a table got up, but it had been over a half hour ... and when she came back, they were gone. [The guests had told another employee where they were going, and the hostess followed. She went up to the manager, pulled out her own personal credit card and said, ‘Please run this credit card, comp that table from me at Morels, make sure you add a gratuity, and don’t allow the waiter to accept a tip.’ Then when she got the bill, she brought it in for reimbursement.
The moral of the story was, we turned a mad customer into a happy customer, and I’m sure they told everybody they knew about the superlative service they received. That’s what we try to accomplish.
We don’t always hit home runs but we try.
How do you manage your 800 employees and make sure their ideas are heard?
I went into business when I was 20 years old, and I didn’t know what the hell I was doing. As most people do when they’re young and inexperienced, they try to bear-hug everything and try to be singly dominant.
When you get to a certain level of experience, and after you’ve made enough stupid mistakes, you realize you need to allow other people’s opinions to be included in the mix. We’re a very democratic group, but there are times when I have to make a hard decision because I feel I have the best experience to do so.
Even the youngest managers are encouraged to hold me accountable and to give their opinion. When I started the company, I had fresh new ideas, and now my ideas may not be so fresh but there’s new talent coming up that does have fresh new ideas.
HOW TO REACH: Matt Prentice Restaurant Group, (248) 646-0370 or http://www.mattprenticerg.com
According to a 2004 study by the National Committee for Quality Assurance, nearly 66.5 million avoidable sick days at a cost to employers of more than $9.6 billion can be traced to the health care system’s routine failure to provide needed care for just five health care conditions: asthma, depression, diabetes, heart disease and hypertension.
There are specific ways managed-care plans are helping to reverse this trend, especially as it relates to these conditions.
The costs of chronic conditions
Although employees with chronic conditions like those mentioned above constitute less than 10 percent of the work force, this same group accounts for 80 percent of all health care expenditures. That translates into 80 percent of inpatient treatments, 83 percent of prescription drug use and a whopping 50 percent of emergency room visits. It should come as no surprise to employers that providing patients with better care for chronic medical conditions can substantially lower health care costs and improve care.
Disease-management programs reduce the frequency of expensive hospitalization and disease complications by identifying groups of members who fall into defined disease categories and educating these members on how to manage their diseases. These management techniques are based on clinical evidence and play a significant role in improving outcomes. In fact, Michigan’s health plans have some of the best outcomes in the nation for managing chronic illness.
Wellness and health promotion programs help keep employees healthy and on the job. They work by helping members understand their disease, subsequently teaching them practical ways to prevent or control symptoms. Interventions include tactics such as postcards sent to members reminding them to get a check-up, or announcing free education programs.
For example, diabetes patients may receive pamphlets covering the importance of foot care. Asthma patients might receive information on keeping allergens out of the home and how to avoid conditions most likely to trigger an attack. There are also screening tools to help people determine whether they or additional family members are at risk for various diseases and information on minimizing risk.
The importance of patience with patients
Return-on-investment for disease management programs requires a long-term strategy, due to the fact that it takes years to track patient progress in quantitative terms. In well-managed programs, however, financial returns on investments have been reported, especially in the area of congestive heart failure.
The Disease Management Association of America (DMAA) recently released the results of a Thomson Medstat survey of 26 health plans across the country, “showing 71 percent of respondents were satisfied or highly satisfied with the clinical and financial results of their disease management programs. Nearly half reported improved financial outcomes, including returns on investment ranging from 2.5:1 to 4:1.”
Although waiting out the numbers requires patience, the short-term, qualitative impact on employees is evident in their quality of life. Once a chronic disease is under control, patients begin quickly to feel better. This will most likely result in less absenteeism and more importantly, less presenteeism, thereby boosting real productivity.
According to the DMAA, “... we have an industry that’s gone from zero to millions of lives being impacted in less than a decade. This is truly transformational. We have every major health plan in the country either building their own disease management programs, partnering with disease management providers, or planning to in the next year. We have nearly every major employer doing the same.”
News like that should leave employers feeling a little better.
Alice Albu, RN, MSN, director, quality management of Care Choices HMO, a nonprofit health care organization and a subsidiary of Trinity Health. Care Choices HMO is ranked first in Michigan in clinical excellence in health plans, according to the National Committee for Quality Assurance. Reach Care Choices at www.carechoices.com.
Education: University of Michigan, bachelor’s degree, accounting and finance
First job: Lifeguard
Career moves: CPA, Deloitte and Touche, before going to Valassis and serving in a variety of positions, including vice president of the Central Sales Division, director of Insert Operations, vice president sales and marketing, and COO
Involvement: Treasurer, board of directors, American Advertising Federation; board member, Ad Council
On his watch: For the second consecutive year, Business Ethics Magazine named Valassis one of its “100 Best Corporate Citizens” in 2004. The list ranks publicly held companies based on the excellence and integrity of their service to stakeholder groups that include customers, employees and the community. The company has received more than 30 awards since he took over in 1998, and revenue has gone up 40 percent.
What is the most important business lesson you’ve learned?
Always take care of your customers. Help them accomplish their goals and reach their objectives, and they’ll help you grow your business, which allows you to deliver benefit to your shareholders and reward your employees.
What has been your toughest business challenge?
I don’t use that language. Problems are a chance to fix things, get them right. What others might describe as challenges, I call opportunities.
So I’ll tell you about something that’s proven to be a great opportunity for us. We’ve been engaged in a price war with Rupert Murdoch over newspaper inserts for four years. This has prompted us to diversify our product portfolio and broaden our customer base. And this is most definitely a good thing for the company.
Whom do you admire most in business and why?
Warren Buffet. What impresses me about him is threefold. He’s exceptionally down-to-earth despite his extraordinary wealth. He has a simple but insightful approach to investing if you don’t understand it, you shouldn’t buy it.
And he looks beyond the next quarter, balancing short-term pressures with a long-term vision.
Meanwhile, incidents of fraud are increasing. Each week, banks review more cases of check and identify fraud than ever before, especially as computers and printing technology provide avenues for criminals to access company information.
Security measures can prevent financial information from leaking out of authorized hands. Business owners need to establish a system for check authorization, segregate bookkeeping duties, and ensure that all corporate and personal banking information is regulated and stored under lock and key.
Clean out carefully
Fraud can originate in unlikely places. Even company trash bins can serve as a gateway to criminal activity.
Refuse containers are often collection points for valuable corporate documents such as employee records, check copies, voided checks and check registers, tax returns and other documents that reveal financial information.
Do not dispose of these records without first shredding or incinerating them. You can purchase a paper shredder and destroy documents in-house, or outsource the service to a company that will remove trash to a secure Dumpster, where it is incinerated.
Cut out counterfeit checks
Advanced copy machines and laser printing equipment open doors for check duplication. Many small- to mid-sized business use company equipment to print checks, which means they store blank check stock in their facilities. If unauthorized people have access to blank stock, they easily can develop checks for significant dollar amounts and cash or deposit them.
Prevent fraudulent check activity by purchasing quality check stock. Invest in security features such as watermarks, raised seals or marks that can be detected only by black light. While these details might cost more than plain check stock, all it takes is one cashed fraudulent check to make up for the difference.
Also, establish dual accountability when employees sign for check stock. Do not allow only one employee permission to remove stock, print and administer checks. On the same note, limit check signing authority. Only officers and a controller or bookkeeper should hold check-signing authority.
Balance books regularly
Review bank statements immediately, watch for cleared checks and, if possible, view your account for activity daily. Online banking tools allow business owners to check current account status.
By catching mistakes before they are buried under a list of transactions, management is more likely to pinpoint fraudulent activity and prevent future occurrences.
Personal credit cards
It is not uncommon for company officers to give their personal credit card information to key support personnel. But before granting this permission, discuss appropriate use of personal credit cards perhaps to book airline tickets, hold hotel reservations, purchase gifts for clients or handle personal matters carefully detailed by the manager.
Do not leave use discretion to others who hold your personal credit card.
Don’t pile bank statements, tax forms or other vital financial records on a desk. Loose documents invite wandering eyes and criminal activity. Labeled folders are also risky resting spots for this information if they are stored in accessible cabinets or desk drawers. Lock up documents or leave bank statements at home to avoid temptation.
Some companies install security cameras, which serve dual roles as watchdogs and preventive devices. Installing cameras in areas where check stock or financial statements are stored is never a bad idea.
Employers can build an in-house security system of sorts by simply training employees to watch for fraudulent activity. Conduct a session to inform workers on common security pitfalls and how the company will address these risks. Explain procedures for check authorization and financial information disposal and encourage employees to report unusual activity to managers.
Train, don’t just trust, your employees. Your security depends on building a protected corporate environment and communicating the importance of keeping financials under lock and key.
CRAIG JOHNSON is president and CEO of Franklin Bank in Southfield, Mich. Reach him at (248) 386-9860
Let's face it -- we're in a health care emergency for which there is no single remedy. Employers are crying uncle, but health care's economic grip seems as tight as ever.
However, help is on the way, and it's right at our fingertips. E-tools are quietly revolutionizing how we integrate medical care, so employers, providers, employees and health insurers can work together to create a transparent, unbroken communication link.
It's no secret that employees are being asked to share more of the costs and responsibility for their health care, and for their health. Accordingly, there is an increasing need for consumers to be better-informed decision-makers. As consumers become more price-conscious, they are motivated to find ways to save money, and they need reliable information.
Computer software programs that can communicate diagnostic and educational materials to physicians and patients help managed care organizations intervene early and manage patients, and their diseases, better.
Let's use Joe, a new employee of Company X, as an example. Joe has insurance that covers catastrophic medical events and preventive care. He also has asthma. Because Joe is responsible for the cost of physician visits, he wants to avoid the doctor's office as much as possible.
Avoiding asthma attacks will not only make him feel better but will save money by keeping him out of the emergency room. So how does he find out more about his condition?
Many health insurers have, or soon will have, medically approved online libraries available to members like Joe to help research conditions and find practical ways to manage them. Even more compelling is the fact that Joe will be able to use interactive tools to communicate with his health insurer.
For example, he can complete an online health risk appraisal -- a survey that can help identify his risk for certain diseases -- and receive personalized risk information and suggestions for next steps.
Joe will also be able to go to his health insurer's Web site to change his physician, research medical quality data on area hospitals or check his account for status on his claims. In the future, Joe will be able to go to his health insurer's site to use a variety of financial tools that will help him see how much money he's spent on deductibles, for example, so he can track his medical expenses. These services are available 24/7, so Joe can get the information he wants whenever he needs it.
E-tools also offer secure portals to help physicians access up-to-date information such as co-pays, coinsurance and deductibles, and process claims more quickly, leading to more timely payments.
As a result, Joe's health insurer is able to provide better customer service because Joe no longer has to call every time he wants information, his physician has easier access to information she needs for processing payments and the insurer's staff has more time to handle complex issues and offer more substantive assistance to its members.
Company X is pleased because Joe is healthier. He knows how to manage his condition and hasn't had to go to the emergency room because of an asthma attack. He feels better at work and is more productive. And, because Joe is one of many employees who have used these tools, Company X sees an increase in the overall health and productivity of its work force.
Joe's physician is happy because he has fewer payment delays. He and his staff spend less time processing paperwork and can concentrate on what they do best -- providing quality medical care to their patients.
Last, but not least, Joe is engaged in his health care and is healthier because of it.
Laurie Westfall is chief operations officer for Care Choices, a nonprofit health care organization and a subsidiary of Trinity Health. Care Choices HMO is ranked first in Michigan for clinical excellence in health plans, according to the National Committee for Quality Assurance. Reach Westfall at (248) 489-6944 or email@example.com.
Conflicts arise even in the best-run businesses. Disputes involving managers, employees, business partners, suppliers or customers can disrupt work, delay projects, distract management and end business relationships. There are times when litigating these disputes is the only answer.
However, going to court can be costly and time-consuming. You can lose even if you win when the result is a damaged relationship that once was profitable.
While litigation may be necessary for some disputes, mediation can reduce transaction costs by saving time and expense, and can result in satisfactory outcomes for all parties. The parties develop solutions that fit their situation. They control their own destinies.
Disputes are often caused by miscommunication, differing perceptions or interests that go unsatisfied in the work or business-to-business relationship. In mediation, the parties can address these issues and devise solutions that courts cannot offer.
Instead of discipline or damages, a dispute may be turned into revised working arrangements, revamped supply schedules, more accurate product specifications, clearer customer service policies or simply better communication. All parties stand to gain, and that can increase productivity, free management to focus on business and strengthen relationships with those who can help the company prosper.
A neutral third party who is trained in mediation skills and has experience in business matters aids the mediation process. The mediator helps the parties communicate effectively and focus on solving the problem. He or she has no authority to impose an outcome.
Mediation is designed to be a quick, voluntary, confidential and impartial process that enables the parties to find solutions at minimal cost and in a collaborative fashion before running the adversarial gauntlet. It can significantly reduce transactional costs while preserving important business relationships. Successful mediation results in written agreements enforceable in court.
Mediation can be used at any time. Indeed, a dispute that goes to court may very well be referred to mediation under Michigan court rules. Agreeing to mediate early on, by contract or company policy, can create or reinforce a commitment to joint enterprise, including the enterprise of reducing dispute resolution costs.
Mediation is having an impact. In a prominent study of Fortune 1000 companies by the ICR Cornell/PERC Institute on Conflict Resolution with PricewaterhouseCoopers LLP, 80 percent of respondents said that mediation saves time and money. Nearly 83 percent said they used mediation because it enables the parties to resolve disputes themselves.
Eighty-one percent found it a more satisfactory process than traditional methods. Sixty-seven percent said it yields more satisfactory settlements. Fifty-nine percent said it preserves good relationships.
"In sum, these responses indicate that mediation provides not just an alternative means to conventional dispute resolution but a superior process for reaching a resolution," the survey concluded.
Leaders from the Dispute Resolution Association of Michigan, the State Bar of Michigan ADR Section, Michigan State University College of Law and the business community are forming a Michigan business mediation program known as MBA. The purpose of this program is to help Michigan businesses reduce costs and develop solutions in resolving their disputes.
The program will work in tandem with Michigan's Community Dispute Resolution Program, a network of nonprofit conflict resolution centers that serves all 83 counties in Michigan. This program represents a cooperative effort between the business and nonprofit communities to offer a professional service for efficient resolution of business disputes.
Richard L. Braun II is a member in the Detroit office of Dickinson Wright PLLC. He serves as treasurer and as a member of the executive committee of the State Bar of Michigan Alternative Dispute Resolution Section. For additional information on the mediation program, e-mail firstname.lastname@example.org or contact Braun directly at (313) 223-3575 or email@example.com.
But the chairman and CEO of Allegra Network LLC, one of the world's largest print and graphic communications franchises, still describes his approach to management with the down-to-earth imagery of a country boy.
"I'd rather rope in the stallion than kick the mule," he says.
McIntyre's talking about the value of creative, energetic and talented individuals, risk-takers who bring a great deal to the table. But these are the same people who are more likely to make mistakes, bend the rules or step across invisible, but accepted, lines.
"Over the years, I've learned that some of the most effective members of the organization are also the hardest to handle," he says. "My job is to figure out how to capitalize on their skills and manage their weaknesses."
One way he does that is to coach rather than reprimand.
"I don't beat up on people when I know they're trying hard," McIntyre says.
And then he tells a story to illustrate his point.
"A VP at IBM made a very expensive mistake," he says. "He walked into CEO Thomas Watson (Sr.)'s office and handed in his resignation. Watson responded by telling him, 'You can't leave. This company just spent a great deal of money to educate you, and now we're keeping you.'"
Helping employees improve is always worth the effort, McIntyre insists, because people are a company's most important asset.
"I know it sounds like a clich, but it's true," he says. "And you have to give that more than lip service."
McIntyre makes reference to Jim Collins' book "Good to Great," and the idea that getting the right people "on the bus" and "in the right seats" is the secret to outstanding performance.
"Experience," he says, "has taught me that this really is the best guarantee of success."
And success is clearly what Allegra Network has achieved under McIntyre's guiding hand. It ranks in the top 150 in sales among all franchise companies in the world, supporting seven brands with more than 650 locations throughout the United States, Canada, the United Kingdom, Brazil and Japan. System members provide color printing, graphic design, copying, electronic publishing and online file transfer services.
Over the past decade, McIntyre has fueled long-term growth through a series of acquisitions, including the recent purchase of Signs Now Corp., which added the capacity to create and produce professional signs, banners and other visual communications tools.
In 2003, Allegra was ranked the 20th-fastest growing franchise and the best in its industry by Entrepreneur magazine, and last year was the 20th year that the company earned a spot on the publication's Annual Franchise 500 list, ranking it as one of the top business opportunities.
Stick to the basics
The secret to McIntyre's success can be found in the five fundamental values he uses to drive the company, guide its employees and franchisees, and inform all his decisions.
1. Show respect for individuals.
2. Go the extra mile. Most don't even go the first.
3. Attack the market, and don't forget that includes customer service.
4. Be quick to respond. ASAP should be standard operating procedure.
5. Aim high. Play fair.
"We want to be the best, not necessarily the biggest, in our industry," he says. "But this is a $20 billion arena, and we see plenty of opportunity for growth. I believe in the philosophy that a company either grows or dies. The question, of course, is how to manage that wisely"
McIntyre's response is to be meticulous in planning, diligent in monitoring and flexible in executing.
"There are always surprises," he says. "Plans have to be adjusted to meet unexpected realities. It may take more resources or additional people to get things off the ground than you bargained for."
McIntyre took over as president of Allegra in 1991. Under his watch, the company was restructured, re-branded and renamed, and he shepherded it through a dramatic shift in focus. Instead of selling simple printing services to consumers via an ever-increasing number of franchise locations, the company chose to concentrate on serving professional print buyers and increasing the value of existent locations.
As a result, franchise system sales grew to $265 million in 2004, up from $163 million in 1994.
In 1993 -- and again in 2000 -- the business was purchased by investor groups that included McIntyre and other members of the Allegra management team. Domino's Pizza founder and former CEO Thomas Monaghan is currently a principle shareholder in the privately-held company headquartered in Northville, Mich.
One thing that makes McIntyre and his organization different from others in the field is his commitment to Allegra's franchisees. The company provides opportunities for center owners to get together and offer location evaluations.
Not surprisingly, Allegra is considered a leader in franchise training. Operators are taught not only about quality control and production scheduling but also how to control cash flow and run a business by the numbers. It's all part of Allegra's Profit Mastery Program, which McIntyre says is critical to developing a well-educated group of franchisees who are dedicated to success.
McIntyre has also implemented an annual benchmarking study, which he uses to measure everything from profits to turnover. As a result, franchise profitability has increased in each of the last five years.
Technology assistance is another "extra" McIntyre takes pride in.
"We have staff that do nothing but chase down the latest equipment, test it and make recommendations," he says. "We also facilitate group buying."
From providing operational and marketing support to assisting franchisees in acquiring competitors within their local markets, the corporate parent makes the power of the network available to everyone in the Allegra family.
"If our franchise members aren't profitable," says McIntyre, "then we might as well turn off the lights and go home. That's why we put the emphasis on helping them succeed."
In conversation, McIntyre comes across as a regular guy with an approach to leadership -- or at least a way of speaking about it -- that is a combination of folksy wisdom and business savvy. He's funny, friendly and easy to talk to. And during his 40-plus years in business, he's discovered that these qualities are just as important as more traditional management competencies.
"Running a company requires effective people skills," he says. "Nobody tells you this in business school. At least, they didn't tell me. Being a manager is like having a garden. You have to constantly tend it if you want anything to grow."
And as such, McIntyre lays out his vision for what it takes to be a good gardener.
"The goal is to motivate people to work together," he says. "That requires the ability to inspire trust. And I belie ve that's achieved through effective communication. "
Seventy people are employed by Allegra Network's corporate office and its franchisees employ about 3,500. McIntyre likes to communicate with them one-on-one and in small groups. That means he does a great deal of traveling and expects his managers to spend much of their time out of the office and on the road, promoting the company's culture, explaining strategic goals and introducing new initiatives.
"It takes doing a lot of little things, and doing them consistently, to establish rapport, build a team and reinforce the mission," he says.
Part of that includes how McIntyre develops his strategic plans for the future, using a brainstorming technique called mind mapping.
"Using words and drawings, you organize ideas and information into pictures on paper that help you see connections and relationships," he says.
And, it's often a team effort.
For McIntyre, all of this plays into a bigger issue that's at stake every day-- the payback for Allegra from his efforts.
"We're in a fight for market share," he says. "We have more power when we operate like a well-oiled machine, with all the parts working together. At Allegra, that's our real strength."
How to reach: Allegra Network, (248) 614-3700 or www.allegranetwork.com
A quick review of the relevant federal laws and regulations brings a new focus to these requirements, many of which predate Sarbanes-Oxley.
* Regulation S-K. This acts as an instruction manual for companies filing periodic reports with the SEC. Item 101 requires reporting companies to describe their businesses and report on capital expenditures. Companies must review the anticipated costs of environmental compliance, both current and projected.
Item 103 requires companies to disclose any pending, nonroutine legal proceedings. Item 103(5) calls for all administrative or judicial proceedings relating to the environment to be disclosed if the company's potential liability is material to its business or financial condition, the potential liability exceeds 10 percent of the company's assets or a governmental agency is a party and the company's probable liability exceeds $100,000.
Item 303 of Regulation S-K requires management to discuss known trends, events and uncertainties.
* FASB No. 5. Statement of Financial Accounting Standards No. 5 deals with disclosing loss contingencies. It requires a company to establish a loss contingency in its financial statements if available information indicates that it is probable the company suffered a loss and the amount of that loss can be reasonably estimated.
* Sarbanes-Oxley. The most relevant parts of SOX, with regard to environmental due diligence are Sections 302 and 404. Section 302 requires a company's CEO and CFO to personally certify certain items in reports filed with the SEC. This personal responsibility spurs senior executives to demand more detailed information from environmental managers.
Under Section 404, a company has to establish and maintain adequate internal control structures and processes to allow for accurate financial reporting. Senior executives need to annually report on the effectiveness of these processes. Further, the company's auditors must provide an independent report on management's assessment.
Together, these measures require reporting companies to take specific actions, including reviewing environmental liability assessment and reporting practices; disclosing environmental enforcement actions in periodic reports; disclosing and valuing contingent environmental liabilities in financial statements; nd observing internal controls and procedures, including maintaining internal records, establishing milestones for regularly reviewing known problem areas, searching out new problem areas and providing reports to management
Due diligence resources
Many companies are now generating more information than just two years ago, resulting in a trail of reports, assessments and reassessments. Acquiring companies (and their lenders) can now learn about their targets' environmental issues from the inside. Targets should remember that reports generated for internal review may become available to outsiders.
No longer can a buyer simply ask general questions about environmental history. Acquiring companies need to take action.
* Expand the review of publicly available information to include the EPA ECHO list and SEC reports.
* Review the target's internal environmental policies.
* Examine the internal committees charged with monitoring and assessing the target's environmental compliance.
* Obtain all minutes, reports, memoranda and valuations generated by these internal procedures.
Environmental counsel should make sure that due diligence checklists cover all the new information sources. When an acquisition arises, they should get involved in the due diligence process at the outset and stay involved.
Counsel for sellers or potential sellers should review (or establish) reporting processes and systems, and prepare (or monitor) the resulting reports as though they were the subject of a due diligence request. A company with effective internal procedures and controls in place will be more valuable than one without controls.
Mark R. High is a member in the Detroit office of Dickinson Wright PLLC. He has been practicing law for more than 25 years in the areas of international, corporate, and corporate finance. For additional information, visit www.dickinsonwright.com.
"There are some days when I'd trade it to you pretty quickly," he says. "Most days, though, we're excited about what we do. I think the excitement here is this very unique organization, in how entrepreneurial we've made it."
The Detroit Regional Chamber covers 10 counties and 5 million people. It's the largest chamber in the country; with more than 21,000 members, it far outdistances chambers such as those in Los Angeles and San Francisco, says Blouse.
"It's just a very different model that we've created here," Blouse says. "Consequently, we have probably 19,000 of those 21,000 members that have less than 50 employees. We have the General Motors of the world, but we also have many, many small businesses."
Smart Business spoke with Blouse about the Detroit region, its biggest issues and its future.
How do you balance the diverse interests of your membership?
Diversity of membership is a difficult thing to balance, because the General Motors and Daimler Chrysler and Delphi and Comerica banks are looking for more of the public policy agenda, the chamber being a leader in the community and driving the business economy. On the other hand, the smaller enterprises are looking more for things that make their cash registers ring.
It takes a lot of focus. We try to maintain ourselves as a business advocacy organization, meaning that we're not a social service, and any of the public policy items we work on are probably more related to the quality of life of community development or things that are going to help the business development program.
The model that we've created really allows for great growth. We have created a concept where we have contractual partnerships with many different business groups and other ethnic-based organizations. What that's given us the opportunity to do is really delve pretty deeply into a very diverse business community.
Why is it important to include the religious community in the mix?
In any urban community, there's a great deal of power in the religious community. The churches throughout this city and their leadership are pretty entrepreneurial. A lot of business in this city is generated from these churches. And they're not shy at the pulpit in trying to convince their congregations what is the best direction to go.
They're a very strong political force, and the more we can associate with them on certain issues like education, transportation, the better. To create a group like that, there's a great deal of trust-building that has to take place so that each group trusts and understands each other.
How does the economic development arm of the chamber encourage, grow and bring business to the area?
We've created the Detroit Regional Economic Partnership. It's a partnership between 10 counties and the city, and it's an agreement among all of us that we will go out to the global marketplace and compete in a friendly way for that business. The objective is to get that investment into Southeast Michigan. Each of the different players, then, would hope to capitalize on that because our folks that work for us bring the investment here, then they'll work with the different economic development groups in the county as well as the state to try to cement the deal.
That group also tries to bring companies from other countries here, and we are marketing the U.S as well, talking to companies about having a presence in Detroit, particularly in the automotive business.
How do you attract these businesses?
We operate this program on about two, two-and-a-half million dollars a year, but largely it's labor intensive. We've just never had the luxury of having a lot of dollars to do advertising, but we believe the best way to really attract these companies is one-on-one marketing.
So we go to trade fairs around the world. We follow a lot of the automotives in Europe. ... A lot of it is one-on-one, and it's an interesting process because sometimes it takes four or five years of calling on those companies until a deal comes along as an opportunity.
We don't turn anything down. If we can get a company in the south to put a marketing office here, we know someday that may turn into something bigger.
We would like to maintain this area as the brain center of the automotive industry. The R&D aspect of the automotive industry is ours in Southeast Michigan.
What are the biggest issues facing Southeast Michigan?
Anything related to the cost of health care is an important issue for us. It's impacting all the businesses today. Anything related to transportation. We like to think of it more intermodally, connecting all the different areas of transportation, but certainly roads.
Living on the Detroit River with Canada right across the river, anything with border crossing becomes important to us. Environmental issues, workplace issues, workers' comp, unemployment compensation, taxes, are all important issues.
We've long lobbied -- 36 or 37 years -- to get a regional transportation system in place, but we finally got that this year. We feel like we can retire now. We don't have a great transportation system, but at least we have the foundation finally in place to build it. We've been very, very aggressive on road funding. When 9/11 occurred, we had trucks backed up for 20 hours.
The economy here is a just-in-time economy. ... So when trucks are backed up 20 hours, we have really big problems. And the manufacturing plants started to shut down, and we had to get the trucks moving. And there weren't enough resources at the border, so we put our whole team into a very active state for about six months, a lot of lobbying, getting the people together from both sides of the river, Canadian customs and our customs and immigration to sit together and figure out a solution. ... It was a real nightmare for quite some time.
Regional transportation is very, very critical. It's really a piece that ultimately helps this region continue to expand and grow. And it's so far in the future. The time lag to get from a mediocre bus system to integrating those bus systems, to get to the rapid transit, to get the funding in place and go through all the politics, it's years in the future.
And health care costs are impacting the economy here in very dramatic ways. In the automotive industry, the cost of health care and pensions are huge.
And then, just continuing to try to get our region to operate as a region is probably a daily challenge. Things happen in a very slow way.
Last November, voters returned control of the Detroit school district from the state to the city, a move the chamber opposed. Before the election, you stated, 'If we lose it, I fear for the city of Detroit. I believe that it's very possible that the business community will just start to disengage again, as they were back with the old elected board.' Following the loss, what impact do you anticipate?
Five years ago -- and we supported this -- the state took over the city schools and appointed through the mayor the school board, and brought in a CEO to run the school district and to rebuild the schools, and there's been great progress in the last five years.
I had some concern when we got into the campaign. I thought it was, at best, a 50/50 chance that we could win this, but there were two sets of issues out there. The opposition (to keeping the schools under state control) focused on the business community and really put us out in front as leading this effort, and did it in a very negative way. And then there was another group that focused on the mayor having anything to do with the school district. Between the two pieces, it was just an overwhelming victory for the opposition, who spent much less money.
It was certainly a huge loss.
Where do we go from here? They will go back to the old type of governance structure, previous to the reform of governance structure, and time will tell how that works.
We're very disappointed. We obviously felt that a strong CEO form of governance was the right form of governance, regardless of how it was put in place. We felt the model was the best model, still think it's the best model, and were pleased with some of the progress that was made.
But that's the way it happened, and we'll just have to see how it goes. And we'll help when we're asked to help.
In the meantime, we're relooking at all of our policy regarding education in general. There are many other districts in this state that are seeing some severe financial problems, and so we want to look at this from bottom up now.
What projects does the chamber have on the horizon?
One of our newest programs that we (took) nationwide is a health care product that is designed to address the growing number of working uninsured. In Southeast Michigan, there are 600,000 individuals who are working that are uninsured. A large hardware chain with a lot of part-time retail employees, they maybe couldn't afford coverage, but now maybe they can afford some coverage because the premiums can get pretty low, $40 or $50 a month vs. $800 a month.
What chamber programs are an ongoing success?
There's one that's become pretty significant with us and is a model that people from all over the country come to see if they can replicate. Our Mackinac Policy Conference brings together community leaders from the whole state.
It is by far the most successful thing we do.
Attendance is limited, because on Mackinac Island, you have to get a ferry boat out to the island, and once you get to the island, you have to get up on a smelly horse. That's the only mode of transportation.
Most people, when they arrive, they stay there, and for some strange reason, when they cross the water, they seem to leave everything else behind. And you can get people to sit down, and there are a lot of deals that are made on the island and a lot of future legislation originates there.
How to reach: Detroit Regional Chamber, (313) 596-0384 or www.detroitchamber.com
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