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®
www.crainsdetroit.com Vol. 29, No. 4
JANUARY 28 – FEBRUARY 3, 2013
$2 a copy; $59 a year
Page 3
Does Engler point the way
for Snyder on road funding?
Bloomfield Park on market,
but its fate is uncertain
Chaldean foundation reacts
when melting pot spills over
Biggest deals of 2012
JEFF JOHNSTON/CDB
©Entire contents copyright 2013 by Crain Communications Inc. All rights reserved
State could make
play for arena
Emails: Ilitches suggested
strategic fund own Wings’ home
BY BILL SHEA
CRAIN’S DETROIT BUSINESS
The Ilitch family, which owns the Detroit Red Wings, has
privately floated the idea that the state of Michigan own a
new downtown hockey arena proposed for the National
Hockey League franchise.
The suggestion to possibly use the Michigan Strategic
Fund as the venue’s owner was discussed in a November
meeting between state economic development executives
and representatives of the Ilitch family, according to
copies of emails obtained from the Michigan Economic Development Corp. by Crain’s through a Freedom of Information Act request.
This is a project with
“
a lot of moving parts.
”
Steve Hilfinger,
Michigan Economic Development Corp.
See Arena, Page 30
Tax concerns, ready capital
drove ‘insane’ year, Page 11
Crain’s list: M&A of $10M
and up, Pages 15, 17, 18
This Just In
Flagstar to open doors at
One Detroit Center branch
NEWSPAPER
Troy-based Flagstar Bank
will hold the grand opening of
a new downtown Detroit
branch Wednesday morning.
The 3,400-square-foot branch
is in the One Detroit Center
building at 500 Woodward
Ave., which used to be the
headquarters of Comerica Bancorp Inc. before it moved to
Dallas.
In 2011, Comerica Bank
moved out of the building
and consolidated operations
in a building it owned downtown at 411 W. Lafayette Ave.
In September, Flagstar
tripled the size of its branch
near the Wayne State University
campus. A third Flagstar
branch in Detroit is scheduled to open in Midtown late
this year.
— Tom Henderson
Crime-fighting strength in numbers Lear, Denso
expansions
may bring
1,200 jobs
Data becomes
secret weapon
for community
BY NATHAN SKID
CRAIN’S DETROIT BUSINESS
Business owners in Detroit
can’t hide from the data: robbery,
car theft and other types of
crimes happen more often than
they would like to admit.
But community stakeholders
and small and big businesses are
fighting back in some innovative
ways — especially in Midtown and
parts of downtown — with data-driven approaches to crime investigations and preventative measures.
According to newly released
crime statistics, the Detroit Police
Department tracked 5,117 robberies last year, up 2.63 percent
from the previous year’s 4,986.
Other major crimes like aggravated assault, carjacking and
rape were down slightly, while
homicides were up (411, compared with 377.)
BY DUSTIN WALSH
CRAIN’S DETROIT BUSINESS
JACOB LEWKOW
Four years ago, Wayne State University Police Chief Anthony Holt launched
meetings with other law enforcement officials to find and fight crime hot spots.
But a substantial decrease was
reported in burglaries, which
were down nearly 12 percent from
a year ago with 14,280 incidents
compared with 16,147.
Drilling down
down to the city block level.
Every two weeks, a group of
about 25 law enforcement officials, ranging from undercover
detectives from the Wayne State
University Police Department to
state troopers, the Wayne County
Sheriff’s Office, urban planners
One tactic is having detailed —
and frequent — crime analysis,
See Crime, Page 27
Lear Corp. and Denso International
America Inc. last week announced
more than $100 million in expansion projects in Michigan.
The plans are expected to add
more than 1,200 jobs in Southeast
Michigan — a signal that executives and experts say may be the
start of an automotive job renaissance.
Southfield-based Lear will open
a plant in Highland Park with an
investment of $18.75 million to
supply seating systems to Ford Motor Co. Lear is leasing the 141,000square-foot plant with plans to create 334 jobs.
See Jobs, Page 28
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January 28, 2013
CRAIN’S DETROIT BUSINESS
MICHIGAN BRIEFS
ArtPrize plug brings Grand Rapids
back from the land of the dying
Two years after Newsweek magazine honored Grand Rapids with
the coveted designation of “dying
city” — Detroit and Flint were
similarly feted — Time magazine
said the city’s signature celebration of all things art — ArtPrize — is
one of the “Five Festive Events
You Won’t Want to Miss in 2013.”
So there.
Topping Time’s list is the Pasola
festival on the Indonesian island of
Sumba, an, uh, event involving
lots and drinking, blood sacrifices
and chanting under a full moon.
Last fall’s ArtPrize covered 3
square miles with more than 1,500
works of art on exhibit at 162
venues. Organizers said a record
400,000 people attended. Meanwhile, at the end of last year,
Newsweek’s print edition … died.
Panel imposes tariffs on foreign
makers of washing machines
The U.S. International Trade Commission last week ruled that Samsung Electronics Co., LG Electronics
Inc. and other foreign manufacturers have been selling washing machines in the U.S. at below their
market value. The decision means
the U.S. government will impose
duties on imports of the washing
machines.
Q&A: Rick DeVos on college, Kanye and other topics
The man behind one of Grand Rapids’ signature
cultural events — ArtPrize (see item at left) — and one
of its signature entrepreneurial initiatives — Start Garden — took time recently to share insights on issues as
wide-ranging as higher education and Kanye West.
Rick DeVos, grandson of one of the founders of
Amway Corp., responded thusly to questions from
adesholasks.com:
䡲 College: “There is value in it, but it’s oversold or
at least oversubscribed in our culture as a panacea.
I guess it would be better if more people that aren’t
sure what they want to do to take a year or two
working at something or traveling rather than trying to ‘figure things out’ in college and racking up
debt in the process.”
䡲 What inspires you most about startups: “It’s the
closest we can get these days to the Age of Exploration. … I love the hunger, speed, informality and
Benton Harbor-based Whirlpool
Corp. filed a complaint in 2011,
claiming washing machines imported from South Korea and Mexico were being sold at prices below
fair market value, a practice known
as dumping. Imports will face tariffs of 11 percent to 151 percent.
Report: Fox Motors has site for
first dealership outside state
Grand Rapids-based FMG Holdings LLC, which operates as Fox Motors, has zeroed in on a site on
Chicago’s North Side for a new
playfulness.”
䡲 Changes you’ve seen in Grand Rapids: “I think in the
last few years there has been an increase in the general excitement about and pride in the city. We’re increasingly aware that we can do interesting things
here, and they don’t need to just be a hackneyed version of something they’re doing in Chicago.”
䡲 The most important thing you’ve learned from Start
Garden: “Although ideas are usually the most fun
and easiest to get excited about, success is ultimately much more dependent on the entrepreneur.
Their ability to hustle, figure things out and
hunger/desire to do things and get out in the marketplace trumps the sexiness and excitement of the
idea pretty consistently.”
䡲 Kanye West: “He obviously has great curiosity
and hunger and out of that has this drive to push
and experiment. I admire that a lot.”
Ford and Lincoln showroom and
service facility, Crain’s Chicago
Business reported last week.
Fox says its outlet in Chicago will
be its first outside of Michigan,
where the company has dealerships
in cities such as Grand Rapids, Traverse City and Charlevoix. Fox employs about 1,000, its website says.
A new twist: U-shaped storage
wins annual Startup Weekend
More than 12 startups were created recently at Grand Rapids’
fourth annual Startup Weekend, the
Grand Rapids Business Journal reported. It works like this: Anyone
can pitch an idea at the beginning
of the event Friday night. Popular
vote selects which pitches make
the top 10, around which teams
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MICH-CELLANEOUS
䡲 In a June 2011 story in Crain’s
Michigan Business, Schuler Books
and Music co-owner Bill Fehsenfeld
said the bookstores that have gotten in trouble “either expanded too
fast or lost sight of some of the basics people want in a bookstore.”
Last week, after five years in downtown Grand Rapids, the chain
closed the store there. Schuler has
two other Grand Rapids locations.
䡲 The state’s travel and tourism
website, michigan.org, attracted
more visits than any other state
tourism website for the sixth year
in a row, the online measurement
company Experian Hitwise reported.
Find business news from
around the state at crainsdetroit
.com/crainsmichiganbusiness.
Sign up for Crain's Michigan
Business e-newsletter at crains
detroit.com/emailsignup.
CORRECTIONS
䡲 A People spotlight on Page 16 in the Jan. 21 edition incorrectly
stated that Mark Ruma is succeeding Alecia Yezback as COO at Epitec Inc.,
a technology staffing company in Southfield. COO is a new position.
Yezback remains manager of finance. Ruma had been CFO, a position
that remains vacant.
Legal peace of mind
When you partner with the right law
by Sunday afternoon.
The overall winner this year
was U-Turn, an eight-man team that
created a U-shaped storage option.
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CRAIN’S DETROIT BUSINESS
January 28, 2013
Page 3
Snyder mirrors Engler on roads funding
Public anger, political capital may pave way again to increase
BY CHRIS GAUTZ
CAPITOL CORRESPONDENT
After 17 hours of arm-twisting and backroom
negotiations, members of the Michigan House
emerged from the session around 5 a.m. with a
bill to raise the state’s gas tax 4 cents to help fix
Michigan’s crumbling roads.
It was 1997, and memorable political tactics
included a Michigan Department of Transportation
official handing out letters to legislators making them aware that upon passage of the bill, a
bridge would be built or a road repaired in
their district.
Everything old is new again, as Gov. Rick
Snyder is borrowing a page from the playbook
of former Gov. John Engler, who used his will
and political capital to increase transportation
funding in the state.
It’s unusual for a Republican governor to ask
for a tax increase, let alone corral enough of his
fellow GOP lawmakers to go along with the
idea.
Although Snyder is not asking for a direct
tax, the amount of new revenue he seeks is five
times larger than what Engler was able to se-
cure with 56 votes, the minimum needed for
passage.
Within the mechanics of the current funding
plan, talk has shifted to pushing through a user
fee increase that could include increased registration fees, taxing gasoline at the wholesale level and an optional increase in regional user fees.
Or, voters might be faced with the option of
doing away with that plan and increasing the
state sales tax 2 cents and dedicating the revenue to transportation.
See Roads, Page 29
Inside
Committee on committees?
Capitol Briefings, Page 7
Botsford contract tackles
readmissions, Page 19
Survey backs state expansion
of Medicaid, Page 21
Company index
These companies have significant mention in this
week’s Crain’s Detroit Business:
Amherst Partners . . . . . . . . . . . . . . . . . . . . . . 12, 13
Anderson Economic Group . . . . . . . . . . . . . . . . . . 30
Angle Advisors-Investment Banking . . . . . . . . . 11, 12
Arbor Hospice . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Attorneys Title Agency . . . . . . . . . . . . . . . . . . . . . . 26
Chaldean foundation to offer
housing, loans to meet growth
Clients seeking work,
English language training
or other help meet with
social workers at the
Chaldean Community
Foundation’s Sterling
Heights office. “We’re
looking at developing
community,” President
Martin Manna says.
Automotive Component Holdings . . . . . . . . . . . . . . 11
Bank of America . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Botsford Hospital . . . . . . . . . . . . . . . . . . . . . . . . . 19
Center for Healthcare Research & Transformation . 21
Chaldean Community Foundation . . . . . . . . . . . . . . 3
Comer Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 28
CORE Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Denso International America . . . . . . . . . . . . . . . . . . 1
Detroit Red Wings . . . . . . . . . . . . . . . . . . . . . . . . . . 1
BY SHERRI WELCH
CRAIN’S DETROIT BUSINESS
When the Southfield-based Chaldean
Community Foundation opened its second location in Sterling Heights in
2011, it expected to serve about
400 people a year.
But last year, 9,500 Chaldean refugees who had fled
religious persecution in their
native Iraq showed up at the
office, seeking immigration
aid or help to speak English
or find a job, car or health
care.
“A lot of
what we do ...
is to help solve some of (their) long-term
issues,” said foundation President Martin Manna, who is also president of the
Chaldean American Chamber of Commerce.
Refugees are given eight months of
federal assistance when they come to
the U.S., he said. The Chaldean Community Foundation focuses on helping
them assimilate to U.S. culture and
systems so they can apply for permanent residency after a year.
The foundation, which provides services rather than grants, works with a
number of other organizations to help
meet clients’ needs. For example, St.
John Providence Health System
Detroit Thermal Systems . . . . . . . . . . . . . . . . . . . . 11
Dykema Gossett . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Farbman Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Farmlogs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Foley & Lardner . . . . . . . . . . . . . . . . . . . . . . . 12, 13
Ford Motor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Friedman Integrated Real Estate Solutions . . . . . . 28
Grant Thornton . . . . . . . . . . . . . . . . . . . . . . . . 12, 13
Green Dot Stables . . . . . . . . . . . . . . . . . . . . . . . . 27
Honigman Miller Schwartz & Cohn . . . . . . . . . 11, 12
Hospice of Michigan . . . . . . . . . . . . . . . . . . . . . . . 25
Ilitch Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Lear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Michigan Chamber of Commerce . . . . . . . . . . . . . 29
Michigan Community VNA . . . . . . . . . . . . . . . . . . . 25
See Chaldeans, Page 29
Michigan Community Wellness VNA . . . . . . . . . . . . 25
Michigan Economic Development . . . . . . . . . . . 1, 30
Michigan Strategic Fund . . . . . . . . . . . . . . . . . . 1, 26
Midtown Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Mohr Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Newmark Grubb Knight Frank . . . . . . . . . . . . . . . . 28
Original Equipment Suppliers Association . . . . . . . 28
Penske Automotive Group . . . . . . . . . . . . . . . . . 4, 16
Quarton Partners . . . . . . . . . . . . . . . . . . . . . . 11, 12
Residential Home Health . . . . . . . . . . . . . . . . . . . 19
Roxbury Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Signature Associates . . . . . . . . . . . . . . . . . . . . . . 28
Southwest Solutions . . . . . . . . . . . . . . . . . . . . . . . 29
Tecumseh Products . . . . . . . . . . . . . . . . . . . . . . . . 6
University of Michigan Health System . . . . . . . . . . 21
Visiting Nurse Association of Southeast Michigan . 25
Wayne State University . . . . . . . . . . . . . . . . . . . . . 27
KENNY CORBIN
Bloomfield Park for sale; foreclosure rights to go to top bid
BY CHAD HALCOM
AND KIRK PINHO
CRAIN’S DETROIT BUSINESS
GLENN TRIEST
The market value of the never-completed Bloomfield
Park was assessed at just under $12.3 million in 2011.
Bloomfield Park is officially back on the market, more than four years after construction
was halted at the failed 700,000-plus-square-foot
development on the Pontiac-Bloomfield Township border.
But don’t expect the land to fetch much in a
sale, local experts said. Any buyer can expect
seven-figure demolition and redevelopment
costs, and any new projects will be far more
modest than what original developer Craig
Schubiner of The Harbor Cos. envisioned.
William Bubniak, senior vice president of investment sales at the Southfield-based Farbman
Group, confirms the real estate brokerage and
property management company was retained
as exclusive sales agent to market San Francisco-based Wells Fargo Bank NA’s foreclosure
rights on the property.
In other words, Wells Fargo — owed more
than $45 million in loans plus interest and costs
from the Bloomfield Park developers — won a
court judgment in September 2011 authorizing
it to foreclose, but it is selling that right
through Farbman to the highest bidder instead
See Bloomfield Park, Page 28
Wells Fargo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Woodbridge Pub . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Ye Olde Butcher Shoppe . . . . . . . . . . . . . . . . . . . . 27
Department index
BANKRUPTCIES . . . . . . . . . . . . . . . . . . 4
BUSINESS DIARY . . . . . . . . . . . . . . . . 22
CALENDAR . . . . . . . . . . . . . . . . . . . . 23
CAPITOL BRIEFINGS. . . . . . . . . . . . . . . 7
CLASSIFIED ADS . . . . . . . . . . . . . . . . 25
JOB FRONT . . . . . . . . . . . . . . . . . . . . 24
KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 8
OPINION . . . . . . . . . . . . . . . . . . . . . . . 8
THIS WEEK @
WWW.CRAINSDETROIT.COM
Business events
During any given week, useful events tailored to business
are held throughout the region. See what’s happening at
crainsdetroit.com/section/events.
Crain’s on Twitter
Follow Crain’s staffers by
grabbing their handles at
crainsdetroit.com/twitter.
OTHER VOICES . . . . . . . . . . . . . . . . . . 9
PEOPLE . . . . . . . . . . . . . . . . . . . . . . 24
RUMBLINGS . . . . . . . . . . . . . . . . . . . 31
WEEK ON THE WEB . . . . . . . . . . . . . . 31
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CRAIN’S DETROIT BUSINESS
January 28, 2013
Penske Auto
Group expects
a 10% revenue
jump in 2013
We’re vigilant
about the
success of your
business.
BY JAMIE LAREAU
CRAIN NEWS SERVICE
Penske Automotive Group expects
to boost total revenue by at least 10
percent in 2013 as a result of
growth in same-store retail sales
plus acquisitions, according to
CEO Roger Penske.
The company will report its
fourth-quarter and 2012 results on
Feb. 6.
“We would hope to grow our
business by a double-digit percentage this year,” Penske said in an
interview.
Penske said he sees a lot of opportunity for mergers and acquisitions, especially around dealerships that sell premium luxury
brands. Some manufacturers of
those vehicles expect dealers to
make costly store improvements,
and many dealers prefer to sell
their stores rather than invest millions, he said.
Penske Automotive Group
ranks second on Automotive News’
list of the top 125 dealership
groups in the U.S. with retail sales
of 154,829 new vehicles in 2011.
Worldwide, the group sold more
than 330,000 new and used vehicles
in 2012, on an annualized basis,
Penske said.
“One of our primary missions is
to get to a 1-to-1 used-to-new ratio
for the company,” he said.
For 2012, he said, the group sold
about 0.84 used cars for each new
vehicle sold, up from about 0.50 for
each new vehicle a few years ago.
“We have really focused on used
cars,” Penske said. “The Internet
has really helped us draw a customer for a used car from a wider
radius.”
Penske prefers to sell used cars at
retail rather than wholesale, he
said.
“There has been a preponderance of premium luxury cars, so
dealers have wholesaled cars that
are not of the premium make they
represent,” Penske said.
“We’re taking just the opposite
approach. We’re selling everything we trade.”
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CRAIN’S DETROIT BUSINESS
January 28, 2013
Tecumseh Products founding
family out; stock price soars
M&A consultant hired; sale among options
BY CHAD HALCOM
CRAIN’S DETROIT BUSINESS
For the first time in its 83-year
company history, there are no Herrick family members at Tecumseh
Products Co. — and investors don’t
seem too concerned.
Share prices soared more than
30 percent last week and closed at
15-month highs for Tecumseh
(Nasdaq: TECUA, TECUB), and the
Ann Arbor-based company Friday
began taking nominations to fill
former Chairman Kent Herrick’s
seat on the board of directors.
Director Zachary Savas is now interim chairman of the five-member
board until shareholders elect a new
board at Tecumseh’s annual meeting April 24, said Janice Stipp, company CFO and executive vice president. Nominations are open to all
Class B shareholders until Feb. 24.
But Tecumseh, a maker of compressors for the commercial refrigeration and residential and specialty air-conditioning industries, also
followed the departure of Herrick by
announcing it has hired New York
City-based investment bank and
mergers-and-acquisitions consultant Sagent Advisors LLC on “various
strategic alternatives, including the
possible sale of the company.”
Stipp would not elaborate to
Crain’s about what is under consideration besides a sale. She said the
board will make a decision “among
its many options” for the future after consulting with Sagent.
“Our stock price is going up, but
that could be for a number of reasons in the market,” she said.
But winds of change were already
blowing earlier this month during a
meeting between Herrick — the
great-grandson of Ray Herrick, who
founded the company in 1930 — and
James Roumell, president of Roumell
Asset Management LLC, who actually
controls more voting shares of stock
than Herrick does.
Roumell Asset Management
owns about an 18 percent stake in
the company, including 34 percent
of the 5 million B shares of voting
stock, and said Herrick was reticent about offers Roumell had forwarded to the company from outside investors, including an
interest in buying the company’s
Brazilian plants and a foundry.
“I think there was a resistance
on Kent’s part to selling Brazil,
which has been with his family’s
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(Leasing)
©2013 TCF National Bank. Member FDIC. www.tcfbank.com
company for a long time, and I believe his decision to step down is
his acknowledgement that the
management and shareholders,
who don’t have the same attachments that he does, take a different
view,” Roumell said last week.
“And Kent is an engineer. He
has a lot of ideas on the development of compressors and whatnot,
and giving up the Brazil operation
can be giving up his own sandbox
a bit. Without these assets, the
company is more (focused on)
leveraging the brand name and
distribution strength, and outsourcing manufacturing.”
Roumell said he had been approached with two separate investment proposals — one for a Brazilian company to buy Tecumseh’s
assets there for between $50 million and $125 million, and another
for an outside investor to buy a
new preferred stock issuance and
gain representation on the board.
After Herrick’s resignation,
Roumell backed away from supporting the second proposal, but
he said other major Class B shareholders supported him on exploring a Brazilian divestiture.
He also said he had it from reliable sources that private equity
firms had looked at Tecumseh, and
the company had a purchase offer of
$8 a share, but the company in a
statement last week dismissed it as
rumor. Roumell said that’s just as
well, because the company shouldn’t even consider an offer below $10,
and if it can shed its household refrigeration business and complete a
turnaround it could even fetch $15.
“That came from sources we believe are quite legitimate,” he said.
“The company has said it did not
receive an offer at $8, so we believe
them on that point, but they themselves have said they’re talking
with a banker and looking at options including a sale.”
Herrick resigned several days
after the Roumell meeting, citing
the “pace of the strategic decisionmaking” at the company.
Roumell has recommended naming CEO James Connor as chairman and appointing Michael
Noelke, senior vice president of
global sales, to fill the Herrick vacancy. But Stipp said a nomination
committee would review that, along
with any other shareholder recommendations submitted to the board.
Herrick, whose family founded
the company in 1930, became a
board member on a minority faction after a majority voted in February 2007 to remove his father,
Todd Herrick, as CEO and chairman. But he later regained a majority and became chairman after
a shareholder proxy vote to elect
new directors in August 2009.
Tecumseh reported revenue of
$933.8 million in 2011, but has said
it expects to report a decline of 2
percent to 5 percent in global sales
when it releases 2012 earnings later this quarter.
Chad Halcom: (313) 446-6796,
[email protected].
Twitter:
@chadhalcom
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4:51 PM
Page 1
CRAIN’S DETROIT BUSINESS
Page 7
Committee on committees
calls tune for musical chairs
The budget, which SnyLate last week, House
Speaker Jase Bolger ander will present to the
nounced committee asLegislature in two weeks,
signments for the new
will consume this comlegislative session, endmittee, which again has
ing a lengthy and gruelcommitted to completing
ing process of trying to
the process by June 1.
address the interests, seThat is a refreshing
niority, personal backchange for Haveman, now
grounds, capabilities and
in his third term. In his
schedules of the 110
first term, when DemocHouse members.
rats controlled the House
That task is delegated
and Jennifer Granholm
Chris Gautz
every two years to the
was governor, the budget
committee on commitprocess was so broken it
tees. Yes, you read that right. was being completed after the
There is a committee on commit- state’s fiscal year began Oct. 1.
tees, and its job is to slot those 110
䡲 Tax Policy: Rep. Jeff Farrington,
members into more than 400 com- R-Utica, is taking over as chairman
mittee assignments.
after Rep. Jud Gilbert termed out.
Being on the committee on com- This committee post was one of the
mittees has its benefits — sort of bigger fights among those in the
like heading George W. Bush’s caucus and was where a considervice presidential selection com- able amount of important legislamittee for Dick Cheney — as its tion originated last session. The
five members each ended up chair- same is expected this time around.
ing a major committee or an ap䡲 Commerce: Rep. Frank Foster,
propriations subcommittee.
R-Pellston, will assume the chairThe chairman of the committee manship after Schmidt left this post
on committees, Rep. Wayne to run the transportation commitSchmidt, R-Traverse City, will now tee. Foster was one of just two freshchair the transportation and infra- man members last session to begin
structure committee, which will the term chairing a committee.
soon host debate on the package of
䡲 Financial services: Rep. Mike
bills that will ultimately shape Gov. Callton, R-Nashville, will take over
Rick Snyder’s plan to raise about as chairman. Callton is a chiroprac$1.2 billion in revenue for roads.
tor who did not sit on the banking
With such a weighty issue be- committee last session. (He’s also
fore them, it seems odd that 11 of
the 15 members are new to serving
on transportation, including the
vice chair and minority vice chair.
Here are how some of the other
key committees ended up:
䡲 Insurance: Rep. Pete Lund, RShelby Township, remains the
chairman, but much of his committee is brand new. The committee
shrank from 17 to 15 members, and
the majority of the committee members were not on it last year. Of the
eight new members, three are starting their first term. Like transportation, this committee has one of
the heaviest loads to lift right off the
bat: the conversion of Blue Cross
Blue Shield of Michigan into a nonprofit mutual insurance company.
This committee will also deal
with any changes to the auto nofault insurance system, of which
Lund is a major proponent along
with Snyder. It appears it might be
slightly easier for such a bill to get
through committee this time, as the
two Republicans who voted against
the bill in the last session are no
longer on the committee.
䡲 Energy: Rep. Aric Nesbitt, RLawton, is chairman after Rep. Ken
Horn was term-limited out last session. The chairmanship did not go
to last year’s vice chairman, Rep.
Mike Shirkey, R-Clarklake, whose
view in support of raising the 10 percent cap on electricity competition
is the opposite of Horn’s. Many expected Nesbitt, a former staffer for
U.S. Rep. Tim Walberg, to take the
chair. Last session, he chaired a
subcommittee on natural gas, which
is an issue that is expected to come
up often in the next two years.
䡲 Appropriations: Due to term limits, the committee lost its former
chairman, Rep. Chuck Moss, RBirmingham, and will now be led by
Rep. Joe Haveman, R-Holland, who
was vice chairman last term.
Capitol
B r i e fi ng s
quite a harmonica player.)
Bolger’s press secretary, Ari
Adler, said slotting all these committee posts is like trying to figure
out a huge puzzle, and that while
no Democrats are on the committee on committees, the House minority leader’s office was part of
the discussion early on.
However, Democrats didn’t get
everything they wanted.
The two Democrats who voted
against Bolger for House speaker
on the first day of session — a huge
break from tradition — seemed to
have been punished heavily for it.
Rep. Doug Geiss, D-Taylor, and
Rep. Dian Slavens, D-Canton
Township, both serving in their
third term, were given just two
committees each and no minority
vice chair positions.
Geiss at least had fun with it. In
a statement, he said that given his
two decades of experience brewing
beer at home, he appreciated that
this level of expertise did not go
unnoticed by Bolger.
“Given my experience with
hops, malt and barley, I look forward to supporting this important
part of Michigan’s agriculture
community on the Agriculture
Committee, as well as all aspects of
farming in Michigan,” Geiss said.
Chris GautzL (517) 403-4403,
[email protected].
Twitter:
@chrisgautz
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January 28, 2013
CRAIN’S DETROIT BUSINESS
OPINION
Settle new arena
funding issues fairly
W
ill Detroit get a new downtown hockey arena? And
who will finance — and own it?
Bill Shea reports on Page 1 that the Ilitch family,
which owns the Detroit Red Wings, has floated state ownership
and financing through the Michigan Strategic Fund, a littleknown but powerful entity with bonding authority. People close
to the November meeting that explored such a deal aren’t talking.
Public ownership and even financing aren’t uncommon.
Both Comerica Park and Ford Field are owned by a public Detroit-Wayne County stadium authority, which leases both to
Wayne County. The county, in turn, has contracts with the
teams to manage the facilities.
The Ilitch family borrowed $145 million for the ballpark;
the Lions paid for almost all of Ford Field; the Strategic Fund
— the entity the Ilitches have proposed as the primary owner
of a new hockey arena — contributed about $50 million for infrastructure site work for both stadiums.
Taxes on hotel rooms and taxis are repaying the $80 million
in bonds used to finance the rest of Comerica Park.
So can the current county authority take on another arena?
And what should the Ilitch organization pony up? The family
unveiled an ambitious plan for an entertainment complex late
last year.
Expanding entertainment options will benefit downtown
in many ways. But a new arena will benefit the Ilitch organization most. Any financing plan should include a hefty contribution from that organization — including the Ilitch-owned MotorCity Casino Hotel, which likely will benefit from an arena
west of Woodward Avenue.
Answer call for education aid
Michigan faces a lot of priorities for public investment.
Gov. Rick Snyder’s top priority in 2013 is a new way to pay for
road and bridge improvements. We support his quest. But at
the same time, business leaders are also getting behind calls
for more investment at education on both ends of the spectrum
— early childhood and higher education. The nonprofit Center
for Michigan released a report last week that includes a call
for greater investment in early childhood education. The research is there. And nearly 6,000 residents who participated in
one of 250 community meetings around the state confirmed it’s
a priority for them, too.
Vocabulary is considered by many to be the greatest single
predictor of success in school, for a simple reason: Children
who know more words understand more. Many disadvantaged
children begin kindergarten thousands of words behind. More
early intervention would help all children — and Michigan’s
economy — be stronger in the long run. It’s a good investment.
TALK ON THE WEB
From www.crainsdetroit.com
Re: Free Press, Detroit News to move
They have two Albert Kahn
buildings that will be standing
empty. The city does not benefit
from a shell game of moving from
building to building. There is no
net increase in employees, they
are just changing locations.
beth
Re: Other Voices: Island tax haven?
An interesting idea, and it is good
that someone is coming up with
ideas. But as Mr. Mogk implied, the
idea would never fly with Detroit
residents, and it is very doubtful if
the proposal could be made legal
without excessive wrangling and
dispute. … Much better to have the
state lease the park, turn it into a
state park and save the city at least
$8 million a year.
bill t cat
Reader responses to stories and
blogs that appeared on Crain’s
website. Comments may be
edited for length and clarity.
Re: Cottons seed plan for GP Park
There are a number of disturbing
aspects of this plan. The worst two
are closing off Kercheval and getting rid of the old businesses. The
church thing is not cool either.
flairdetroit
Shouldn’t one of the goals of progressive economic development be
to encourage better relationships between Grosse Pointe Park and Detroit, shedding the old, elitist values? If so, why does this plan
envision effectively closing off
eastbound traffic on Kercheval
from Detroit?
Dave in GPP
Re: Kids care less about cars
The article misses a very obvious component. For most of the automobile’s history, youths could
engage with their cars directly.
You could grab a screwdriver, play
with the ignition and see what the
effect was. You could re-jet carburetors — heck, change carbs — and
have an immediate impact on performance (even if it was only sucking down more gas).
Today, there is very little youths
can do to engage with whatever
cars may be available to them.
Carbs are history, as are points
and condensers. Structures and
bodywork are increasingly unfriendly to the backyard mechanic. Changing brakes, fluids and rotating tires is about all Dad’s likely
to let junior do to his computer-driSee Talk, Page 9
Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not
defame individuals or organizations. Letters may be edited for length and clarity. Email [email protected]
KEITH CRAIN: If you can’t rent Belle Isle, then sell it
All of a sudden, Belle Isle seems
to be front and center for attention.
The Detroit City Council seems
reluctant to consider turning over
financial responsibility to the
state of Michigan parks department, even with the potential of
saving millions of dollars the city
doesn’t have. They, the city council, seem to have erected all sorts
of roadblocks to give them some
sort of safe refuge when the citizens find out what’s going on.
Meanwhile, an outlandish idea
has been presented to privatize
Belle Isle and sell it for a billion dollars to private investors who would
turn the island into a
completely separate political entity, like Singapore or “old” Hong Kong.
The
idea
was
spawned by Rodney
Lockwood Jr., who just
ended his term as chairman of the Michigan
Chamber of Commerce,
among other activities.
The idea is so out of
the box that it gets your attention.
Whether it has any possibility of
happening, it certainly has caused
a lot of controversy.
Detroit needs more out-of-the-
box outlandish ideas.
As my old friend Hal
Sperlich has said often,
“big problems need big
ideas.” And he’s right.
There is nothing more
outlandish than turning Belle Isle into a
commonwealth,
but
perhaps that’s something that the city of Detroit should consider.
Detroit should encourage as
many outlandish ideas as possible.
Within those conversations, it just
might be able to come up with
something that might work.
Detroit is in no position to reject
any idea, regardless of how it
might seem on the surface. Ideas
that are welcomed seem to only
maintain the status quo.
It’s time to discuss every wild
idea that anyone can think about
— regardless of how odd it seems
on the surface.
Detroit is rapidly heading for
bankruptcy, and the only thing
that might stop it would be the appointment by the governor of a financial manager. But neither scenario includes a grand idea to
change the culture or add new ingredients to change the dynamics
of this economy.
At a time when Detroit citizens
need jobs and need jobs badly, the
city gives away hundreds of acres
for making a forest, a project that
will employ a handful of citizens
rather than thousands?
It’s going to take a lot more radical thinking to change the economy
and the prospects of our citizens.
When we hear more different
and ridiculous ideas, before we dismiss them out of hand, take a close
look at the end result and they
might not be so ridiculous after all.
Big problems deserve big solutions.
20130128-NEWS--0009-NAT-CCI-CD_--
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11:14 AM
Page 1
CRAIN’S DETROIT BUSINESS
January 28, 2013
Page 9
OTHER VOICES: Talent crisis in manufacturing is real
2014, according to a recent
If you want to know if a
report by University of
problem is real, ask those
Michigan
economist
who are impacted by it the
George Fulton. We are almost — those who are on
ready behind the proverthe front line.
bial 8-ball on the talent criThe “talent crisis” has
sis, and the problem will
received a lot of attention,
only get worse if we don’t
including in a few opinion
do something about it
pieces stating that there is
now.
no shortage of skilled
The gap between supply
workers. But you won’t
Chuck Hadden
and demand will continue
hear this from manufacturers, because they have jobs to grow as more baby boomers exit
they are unable to fill and are the workforce, making it increasworking to change cultural as- ingly difficult not only to hire
sumptions and critical systems to workers for new positions, but to
find skilled workers now and keep fill the existing positions that will
be vacated.
the pipeline full in the future.
Manufacturing led the economic recovery and continues to be an
employment leader in Michigan,
with about 16,000 new jobs in 2012,
10,000 expected in 2013 and 9,000 in
Michigan is a manufacturing
state, and our economic success
depends on the success of this, our
largest economic sector, so we are
all in this together. It is by working together — industry, educators
and government officials — that
we will solve this crisis and meet
the talent needs of advanced manufacturing.
The good news is that progress
is being made in bringing business
and education together to work toward solutions. The Michigan
Manufacturers Association and
the Michigan Community College
Association have launched a coalition called the Manufacturing
Middle-Skill Talent Alliance that
will bring community colleges —
as the No. 1 training partners to
the manufacturing industry — to
the table to work on proactive,
measurable and well-defined projects to help meet the need for
skilled workers.
The next step is to work with the
Michigan Workforce Development
Agency to create statewide talent
networks to tackle the problem at
the community level. All stakeholders will be invited and encouraged to participate. The MMA also
plans to bring manufacturers together to form a talent leadership
group to create, implement and
TALK CONTINUED
■ From Page 8
ven, exotic-materials-containing,
hybrid-hazardous, trip-to-the-dealer-if-you-break-it vehicle.
J.T. Pedersen
Re: Belle Isle: Motown’s Monaco
Love it, but create a detailed 3-D
model of the island and the Detroit
area, (and) show the financial backing and timeline commitment.
Clean up as much of Detroit as possible in structure and services. Get
icons on board whom Detroiters actually respect. Then get Levin,
Stabenow, Dingell on board — heck,
have a VIP residence for them and Detroit/Windsor elected officials to
share, a la the Mackinac Island governor’s mansion.
Michael Johnson
Re: Keith Crain: This is the week
for Detroit to shine
“This is the Motor City. And it’s
going to remain the Motor City forever, we hope.” I think this sentiment is part of the reason for our
paralysis. Sure, the car brought a
lot of wealth here, and it is still responsible for a lot of metro Detroit’s economy.
We must, however, embrace
new technologies to survive. And I
don’t mean cars that can control
my phone or keep me from hearing
the engines idling around me in
rush hour. We should be building
brand-new high-speed rapid transit here instead of importing yesterday’s tech. If road-based vehicles are actually the future, then
we should be figuring out how to
build lasting road infrastructure.
So consider this a letter from a
young Detroiter. I hope Detroit
manages to move beyond the Motor City.
laphoque
Re: Automotive News’ Teahen dies
Jack had a life well lived. As Chuck
Palahniuk wrote in Diary: “We all
die. The goal isn’t to live forever,
the goal is to create something that
will.” I think Jack’s influence on
this industry and those he worked
with will, at the very least, last for
some time into the future.
Trase
Local matters.
But, you already knew that.
We like this state. No, we love this state. It’s who we are. It’s what drives us.
We also like proving that a bank from right here is better for your business.
Not always an easy task. There isn’t a mold, only a model — work harder.
Because local matters today and tomorrow. Thanks for letting us prove it.
Personal • Mortgage • Business • Commercial
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flagstar.com/business
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Member FDIC
promote manufacturing-specific
solutions. And plans are in the
works for a sequel to a recent
MMA/Michigan Economic Development Corp. manufacturing talent summit to expand on the
lessons learned, best practices
shared and connections made.
It will take everyone, working
together, to solve the talent crisis
in manufacturing. Manufacturers,
educators and economic developers need to step up and become a
part of the solutions we are all
seeking.
Chuck Hadden is president and
CEO of the Michigan Manufacturers Association.
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20130128-NEWS--0011,0012,0013-NAT-CCI-CD_--
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11:16 AM
Page 1
CRAIN’S DETROIT BUSINESS
January 28, 2013
Page 11
REPORTER’S NOTEBOOK
Dustin Walsh writes
about auto suppliers,
the steel industry and
the business of law.
Call (313) 446-6042
or write
[email protected]
big deals of 2012
Dustin Walsh
Ford sheds
Visteon plants
It’s been no easy task to reconfigure
the system of plants tied to Ford Motor
Co.’s redistribution of assets.
But the creation of Detroit Thermal
Systems LLC — a minority-owned joint
venture between Redford Townshipbased V. Johnson Enterprises LLC and
French supplier Valeo SA — last year
ended Ford’s seven-year quest to rid
itself of 23 former Visteon Corp.
plants and offices.
Ford created Automotive Component
Holdings LLC on Oct. 1, 2005, to take
over the plant operations from former inhouse parts supplier Visteon Corp. as
the supplier struggled to remain solvent.
Visteon spun off from Ford in 2000 and
filed Chapter 11 bankruptcy in 2010.
Ford assumed operation of the
plants to prevent a massive parts
shortage. Since then, ACH has been
tasked with selling off or redistributing
the businesses.
“The largest challenge early on was
fixing the businesses; they weren’t in
good shape,” said Kevin Liederbach,
director of corporate business
development for Ford. “We needed to
raise the overall quality of the parts
supplier to Ford, sort out technology
and get top line revenue and the cost
structure in order.”
The operations were integral to
Ford’s bottom line, representing 13
percent of its North American
purchasing, Liederbach said.
ACH shuttered several plants,
transferred some back to Ford and
spent years working on deals to transfer
the business units to suppliers.
Liederbach said ACH put extra
effort into maintaining employment
levels for the 22,000 employed at the
ACH-assumed plants. He said 20,000
ultimately secured jobs with the
plant’s acquirer, back with Ford or
took a buyout from Ford.
Ford created two new minority-owned
joint ventures in 2012, including Detroit
Thermal and Detroit Manufacturing
Systems LLC — a joint venture between
Native American descendent Andra
Rush and French supplier Faurecia SA.
In the Detroit Manufacturing deal,
Faurecia assumed partial operation of
the ACH Saline plant and transferred a
bulk of the $1 billion interiors
business to the Detroit Manufacturing
plant in Detroit.
Urbana, Ill.-based Flex-N-Gate Corp.,
owned by Pakistani-born Shahid Khan,
acquired ACH’s Sandusky, Ohio, lighting
and air storage plant in 2012 as well.
The Sheldon Road climate control
plant in Plymouth Township is the final
piece in the ACH puzzle. The Detroit
Thermal JV will take over the equipment,
assets and operations from the Sheldon
Road plant and will transfer to its new
Romulus plant by the end of 2014.
“What was important through this
whole process was the strategy and
who we were selling to — and whether
they would be competitive without
us,” Liederbach said. “Ultimately, we
want them all to be strategic suppliers
to other OEMs, not just us.”
ANDREW TEMPLETON/CRAIN’S DETROIT BUSINESS
Joshua Opperer, partner at Detroit-based Honigman Miller Schwartz and Cohn LLP, notes that “for good companies, there were lots of buyers ... fighting for
the deal” during 2012. His firm advised on a record 150 deals nationwide last year.
Deluge of deals
Tax concerns, ready capital drove ‘insane’ year
BY TOM HENDERSON
CRAIN’S DETROIT BUSINESS
ast year provided resounding proof that dealmaking
in Southeast Michigan has
gotten its swagger back.
“It was insane. It was really
just a tremendous year,” said
Joshua Opperer,
a partner in the
corporate and
How will 2013 securities pracstack up?
tice of DetroitPage 12
based law firm
Honigman Miller
Schwartz and Cohn LLP. Honigman advised on a record 150
transactions nationwide last
year, with an average deal value of $35 million, he said.
“You’ve got to go back a
long, long way to find this
much activity,” said Andre
Augier, managing director of
Birmingham-based investment banking firm Quarton
Partners LLC.
L
LOOK AHEAD
“We got out of the gate
quickly. We got a number of
deals done in the first quarter,
and then it accelerated,” said
Kevin Marsh, partner in
Birmingham-based Angle Advisors-Investment Banking LLC.
According to data
tracked for this
Crain’s Biggest Deals
of 2012 report, the region recorded 95 deals
of at least $10 million
each involving companies based in metro
Detroit in 2012, for an Marsh
aggregate total of
$27.5 billion. Eleven were
deals on which Honigman advised.
And there were nine deals
of more than $1 billion, compared with just three in 2011.
The largest was the $4.2 billion
deal by General Motors Corp. to
buy Ally Financial’s international auto finance business.
Deal total in 2012 was up
nearly 36 percent from the 70
deals done in 2011, and dollar
volume was up more than 42
percent over the $19.3 billion
in 2011.
M&A activity in
Southeast Michigan
was in sharp contrast
to activity nationally.
FactSet Research Systems Inc., which tracks
merger activity, issued a report this
month that showed
deal flow down in the
U.S. in 2012.
FactSet identified
2,069 deals in the nation where
it could verify a deal size of $10
million or more, down 6.3 percent from the 2,207 such deals
in 2011.
There were 64 deals in Southeast Michigan for $18.1 billion
in 2010, and just 46 deals at the
See Deals, Page 12
DEAL ZEAL
Dealmakers were active in
Southeast Michigan in 2012, with
95 deals valued at more than
$10 million each for a total
$27.5 billion. That compares to
70 deals worth $19.3 billion in
2011 and 64 deals worth
$18.1 billion in 2010. Also
worth noting, 2012 saw nine
2012
deals worth more than
$1 billion apiece, compared
$27.5B
with three such deals
a year in 2010
and 2011.
2011
2010
$19.3B
$18.1B
CDB
20130128-NEWS--0012-NAT-CCI-CD_--
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11:31 AM
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January 28, 2013
CRAIN’S DETROIT BUSINESS
Finance
Dealmaking in 2013 expected to match or outpace 2012
BY TOM HENDERSON
DEAL DRIVERS
CRAIN’S DETROIT BUSINESS
By most accounts, 2012 was a
very good year — the best in recent
memory — for mergers and acquisitions.
Most local investment bankers,
deal advisers, lenders and private
equity managers expect 2013 to be
at least as good.
“We think we’ll be slightly softer in the first quarter because of
the spike at the tail end of 2012, but
we think 2013 will be very strong,”
said Andre Augier, managing director of Birmingham-based investment banking firm Quarton
Partners LLC. “Bankers tell us
they’re prepared to lend and to
leverage deals.”
“You’d think there’d be a slowdown in 2013 because of all the activity in 2012. But, no,” said
Joshua Opperer, a partner in the
corporate and securities practice
of Detroit law firm Honigman Miller
Schwartz and Cohn LLP. “I just got
back from meetings with four private equity funds in California,
and they all think this year could
be really exciting.
“There’s a lot of new money at
the table — either companies who
have raised funds, like Huron Capital, or companies that are raising
funds,” he said, referring to Detroit-based Huron Capital Partners
LLC, one of Honigman’s clients,
M&A experts say that while 2012
was a strong year for big deals,
interest will continue this year. The
reasons:
Lots of available capital, more
than $2 trillion on corporate
balance sheets and billions in
private equity funds.
Renewed enthusiasm by banks
to lend.
More confidence in the U.S.
economy.
Clarity on taxes and a smaller
hike in capital gains taxes than
many feared.
Ongoing troubles in Brazil and
Europe will push some investors
into the U.S. market.
More realistic expectations by
those sellers who priced themselves
out of the market in 2012.
which this month announced it had
finished raising its newest and
largest fund of $500 million.
“Everybody’s optimistic. Everybody’s eager. They’ve caught their
breath from the craziness of the
fourth quarter, and they’re ready to
get going,” Opperer said.
“What I’m seeing for 2013 is the
same as last year. There are a lot of
private equity funds that have a
need to put money to work. Banks
have loosened up and are lending.
It’s going to be busy,” said Daljit
Doogal, managing partner in the
Detroit office of Foley & Lardner LLP.
size done,” he said. “I expect that
“My expectations for 2013 are — to continue, but the rest of the
I don’t know if dramatic is the market will only pick up when
right word — but it will be better there’s more confidence on the
than 2012,” said Marybeth Howe, buy side.”
executive vice president of comHe said macroeconomic issues,
mercial
including public
banking for
policy, will conWells Fargo’s
tinue to be probGreat Lakes
lematic. He said
region
of
one issue that
Michigan, Incould slow deals
diana
and
involving smallOhio. “There
er, family-owned
will be a lot of
businesses is the
competition
low-interest rate
for
deals.
environment.
People will be very
They will be less
aggressive. There
eager to take
Marybeth Howe, Wells Fargo
are a lot of players
money out of a
out there.”
business if they don’t have some“Private equity guys are so where to put it where it can apprestarved for deals, they’re looking ciate.
at deals they normally wouldn’t
Peter Weipert, director of transtouch. They haven’t lost their dis- action adviser services at Grant
cipline, but they’re hungry,” said Thornton LLP, said there’s another
Scott Eisenberg, managing part- reason low interest rates could
ner of Birmingham investment slow 2013 deal activity.
banking firm Amherst Partners LLC.
While the cost of borrowing is
Matt Elliott, Michigan state low and will help some deals get
president and market executive done, other would-be buyers will
for global commercial banking at be worried about where interest
Bank of America, was a little more rates, which have nowhere to go
tempered. He said the market seg- but up, will be in four or five years
ment for deals bigger than $1 bil- when they want to sell the compalion should be strong.
nies they are looking at now. If
“As long as the financing envi- rates are high, then deals will be
ronment stays attractive, it’s go- harder to get done.
ing to be easy to get deals of that
Mitigating that, though, said
There
“
will be a lot
of
competition
for deals.
”
Make some news
of your own
We can help, using our unique and
innovative Rehmann Experience.
Weipert, are sellers who overvalued their companies last year.
“Sellers’ expectations were too
high,” he said. “They saw earnings
going up, they saw markets going
up, they saw buyers with more confidence in the economy, so they
thought they could get more than
what buyers were willing to pay.”
Cliff Roesler, a partner in Birmingham-based Angle Advisors-Investment Banking LLC, thinks things will
hum along nicely, driven locally by
a healthy auto supply chain, with
some deals being driven by the
need to acquire capacity, a nice
problem for an industry long
plagued by excess capacity.
“More and more, North America
is the pretty girl at the dance instead of the ugly stepsister,” he
said. “North America is really
where the growth is. It’s going to
be a very exciting market in 2013.
“The large private equity funds
in New York, Chicago and California haven’t typically been interested in the auto sector. Now they’re
starting to make investments,” said
Roesler’s partner Kevin Marsh. “It
used to be only the turnaround
funds were investing in auto. Now
it’s the growth funds being driven
by sustained gains and a run up in
profitability.”
Tom Henderson: (313) 446-0337,
[email protected]. Twitter:
@tomhenderson2. Dustin Walsh
contributed to this story.
Deals: ’12
a big year
■ From Page 11
bottom of the market in 2009.
The deal total for 2009 was the
lowest annual total since Crain’s
began tracking transactions in
1996. The dollar total would have
only been $12.9 billion if not for the
total being greatly inflated by $68
billion in federal bailout money.
Frenzy over the cliff
Everyone deserves headline-worthy service;
contact me today to learn how to get it.
s &
CPA ants
sult
Con
One
Team
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stig
Inve
lth
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o
Advis
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Ann Arbor Detroit Farmington Hills Troy
rehmann.com
Phil D. Bahr, CPA, CGMA
Regional Managing Principal
Southeast Michigan
[email protected]
248.458.7900
Deal totals were pushed by a
frenzy of activity in the fourth
quarter, as business owners tried
to get deals closed by Dec. 31 to
avoid higher income taxes and
higher capital gains taxes.
“We did more than 50 of our
deals in the fourth quarter,” said
Opperer. “You had a hard stop of
Dec. 31, when sellers knew taxes
were going to go up. They didn’t
know how much, but they knew
there were going to go up.
“In the past, if you were working
on deals in November, you knew
some of them were going to go into
the next year. Now, everyone was
eager to sell. It all came together in
a great confluence of activity.”
The frenzy reached a peak after
President Barack Obama’s re-election on Nov. 6, a rush to market
precipitated by those thinking
Mitt Romney would be elected and
higher taxes wouldn’t materialize.
Peter Weipert, director of transaction adviser services at Grant
See Next Page
20130128-NEWS--0013-NAT-CCI-CD_--
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Page 1
CRAIN’S DETROIT BUSINESS
January 28, 2013
Page 13
Finance
From Previous Page
Thornton, said one day in late November five prospective deals
came in the door from owners
wanting his firm to do due diligence and get the deals done by the
end of the year.
One day in the first week of December, six more business owners
asked to get their companies sold.
“It was unbelievable. It was like
a lightbulb went off,” Weipert said.
He said that while his firm got
deals done before the deadline,
some of which that originally had
been scheduled to close in January
or March, most of them were deals
long in progress.
As for the prospective deals that
began in late November or December, “logistically, we just couldn’t
get them done by the end of the
year,” said Weipert.
“The fourth quarter was really,
really busy. We had people working Christmas Eve, we had people
working New Year’s Eve trying to
get deals done,” said Daljit Doogal,
managing partner in the Detroit
office of Foley & Lardner LLP.
Foley & Lardner was one of the
advisers for a deal that the M&A Advisor, a national website, honored
in December as the deal of the year
in the $1 billion to $2.5 billion category: the sale for $2 billion in March
of the Los Angeles Dodgers to Guggenheim Baseball Management LLC, a
group that includes Earvin “Magic”
Johnson, the former Michigan State
University basketball star and partner in Detroit Venture Partners.
ver was a sharp increase in willingness by banks to invest in
deals.
“That meant you had
large strategic buyers with
cash on hand and available
credit, too,” he said.
Banks were still leery of
investing in turnaround situations, but for healthy companies, senior debt meant
multiples on completed
deals that often approached
pre-recession levels.
“For good companies, there
were lots of buyers, both strategic
buyers and financial buyers, fighting for the deal. A year ago, you
were hoping to keep one or two
buyers interested,” said Opperer.
people
“ We had
working
Christmas
Eve, we had
people
working New
Year’s Eve.
”
Daljit Doogal, Foley & Lardner LLP
“Private equity companies
signed a lot of confidentiality
agreements; they looked at a lot of
deals, finding the gems in the coal.
And when they found them, there
was an appetite and the money to
get the deal done,” he said. “A couple of years ago, even when you
found the gems, you might have
had a hard time finding lenders.”
Experts said foreign investors
were a driving force in some deals
as well. Many investors, as they
have in recent years, wanted to
continue to buy technology and
gain access to big markets. Some
foreign buyers may have otherwise
invested elsewhere but were attracted to an economy that, while
tepid by historic standards, was
much healthier than such other
big economies as Europe and
Brazil.
Twenty-two of the 2012 deals, or
23.4 percent, involved foreign companies. from Canada, Brazil, England, Northern Ireland, Switzerland, Italy, India, Germany and
China.
In 2011, 18 deals, or 25.6 percent,
involved foreign companies.
“Foreign buyers interested in
technology drove pricing,” said
Marsh. Angle Advisors closed only
one deal involving a foreign buyer,
in which an Indian company
bought a New Jersey maker of steeltubed products, but many of its other 19 deals saw the closing price driven higher by overseas bidding.
Tom Henderson: (313) 446-0337,
[email protected]. Twitter:
@tomhenderson2
UNLOCKING VALUE IN THE
MIDDLE MARKET
has acquired
Driving the deals
Investment bankers, advisers
and managers at private equity
companies say much more than
just a desire to save on taxes drove
deal flow in 2012.
Other reasons: owners of companies had held off selling during the
bottom of the market and didn’t
want to hold off any longer, and
corporate balance sheets were
very healthy, giving companies a
lot of money on hand to make
strategic purchases.
In addition, private equity companies had dry powder in their
funds and a need to put it to work.
Some firms expected to have their
funds more fully invested before
2012, but a shortage of available
bank lending to help get deals done
meant fewer deals earlier, and
more capital to invest later.
Scott Eisenberg, managing partner of Birmingham investment
banking
firm
Amherst Partners
LLC, said he sold
a modest-sized
metal processing
company
that
had 60 signed
nondisclosure
agreements from
Eisenberg
prospective private equity buyers wanting to look
at the books.
“We were taken aback by that.
They were dying to look at it, to do
a deal,” he said.
Brian Demkowicz, managing
partner at Detroit-based Huron Capital Partners LLC, which this month
announced it had finished raising
its newest fund of $500 million, said
his firm looked at between 800 and
900 deals last year to get seven
done.
Marsh said yet another deal dri-
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Phil Gilbert 248.223.3326 [email protected] | Matt Jamison 248.223.3368 [email protected]
Detroit | Chicago
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DBpageAD_DBpageAD.qxd 1/22/2013 10:25 AM Page 1
Mergers & Acquisitions | Capital Raising | Financial Advisory
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20130128-NEWS--0015-NAT-CCI-CD_--
1/25/2013
11:21 AM
Page 1
January 28, 2013
Page 15
CRAIN’S DETROIT BUSINESS
CRAIN'S LIST: MERGERS & ACQUISITIONS
Rank Acquirer name
Target
Acquirer advisers
Target advisers
Annual
revenue
Date
effective
Description
Value of
transaction
($000,000)
1.
General Motors Co., Detroit
International auto finance
Merril Lynch; Barclays
operations of Ally Financial,
Detroit
Citi; Evercore Partner; G5
Evercore; Lazard Ltd;
Sullivan Cromwell
Pending
Pending regulatory approval
$4,200.0
2.
Royal Bank of Canada, Toronto
Ally Credit Canada Ltd. and Houthoff
ResMor Trust, units of Ally
Financial, Detroit
Citi; Lazard Ltd; Sullivan
Cromwell; Evercore
October
Subject to regulatory approval; expected to close first half 2013.
$4,100.0
3.
ITC Holdings Corp., Novi
Electric transmission
business, Entergy Corp.,
New Orleans
Pending
Following completion of the transaction, ITC is expected to be the
$1,775.0
largest independent electric transmission company in the U.S., with
more than 30,000 miles of transmission lines, spanning 12 states from
the Great Lakes to the Gulf Coast.
4.
Berkshire Hathaway Inc., Omaha,
Neb.
ResCap loan portoflio of Ally
Financial, Detroit
Centerview; Morrison
Foerster
October
Portfolio included 40,000 loans of business unit put into bankruptcy. $1,500.0
5.
Iochpe-Maxion SA, Sao Paulo,
Brazil
Hayes Lemmerz
Barbosa Mussnich;
International Inc., Northville Hengeler Mueller;
Proskauer Rose
Dewery & LeBouef;
$1.8 billion February
Deutsche Bank; Fenwick & est.
West; Skadden Arps; Tozzini
Freire
Iochpe-Maxion paid $702 million in cash and issued $617.7 million
in debt toward the acquisition.
6.
Veritas Capital, New York
Thomson Reuters health
care data, analytics and
performance benchmarking
business, Ann Arbor
Morgan Stanley, Allen &
Co.; Covington & Burling
LLP
$450
million
June
Thomson Reuters sold its health care data company so it could focus $1,250.0
on other lines of business.
7.
Koch Industries, Wichita, Kan.
Guardian Industries Corp.,
Auburn Hills
Jones Day
Shearman & Sterling
$5.5
billion B
December Koch acquired a 44 percent stake in Guardian. Value is based on
Guardian taking on a $600 million term loan and a $600 million
revolving credit line, but some of the money is for future operations,
so the actual value of the deal may be less.
$1,200.0
8.
AltaGas Ltd., Calgary
SEMCO Holding Corp,
Bingham Farms
Stikeman Elliott
Blackstone Group; Goldman
Sachs; Cravath Swaine
August
Bought from Lindsay Goldberg & Co. LLC, New York.
$1,135.0
9.
CVC Capital Partners, London
Majority stake in Alix
Partners LLP, Southfield
Gibson, Dunn & Crutcher
Simpson Thatcher & Bartlett
April
Estimated price by Bloomberg. Stake sold by Hellman & Freidman
LLC.
$1,000.0
10.
Delphi Automotive, Troy
FCI Group's Motorized
Vehicles Unit, Gillingham,
England
October
Acquired company manufactures automotive connectors.
$987.5
11.
FirstMerit Corp, Akron, Ohio
Citizens Republic Bancorp
Inc., Flint
June
FirstMerit agreed to pay Citizens' TARP debt of $345 million. Former $894.3
Charter One President Sandy Pierce named as CEO in Michigan.
12.
ACE Ltd., Zurich, Switzerland
ABA Seguros SA de CV, San Mayer Brown LLP
Pedro Garza Garcia, unit of
Ally Financial, Detroit
October
Subject to regulatory approval expected to close first half 2013.
13.
American Securities Capital
Partners LP, New York
Metaldyne LLC, Plymouth
14.
CIT Group Inc., New Jersey
Flagstar Bancorp Inc., Troy
Bracewell & Giuliani LLP
Sandler O'Neill Mortgage
15.
American Securities LLC, New
York
HHI Group Holdings Inc.,
Royal Oak
Weil Gotshal
Goldman Sachs; Paul Weiss $550
October
million est.
Maker of automotive forged components acquired from KPS Capital $750.0
Partners LP. KPS created HHI in 2005 from several bankrupt assets of
Jernberg Forge, Iron Mountain Forge, Impact Forge, Omni Forge and
Net Forge. In 2008, HHI acquired Delphi's wheel bearings business.
16.
Universal Truckload Services Inc., LINC Logistics Co., Warren
Warren
Latham & Watkins
Stifel Weisel; Mitchell
William; Simpson Thacher
$290
million
Provides custom-developed third-party logistics.
$376.4
17.
Goldman Sachs Capital Partners,
New York
Plastipak Holdings Inc.,
Plymouth
Davis Polk
Cohn & Kelakos
$2.3 billion June
(2011)
GS Capital Partners acquires minority stake, with the family of
founder and CEO William Young collectively remaining majority
shareholders.
$332.0
Athens Acquisition LLC, Detroit
Majority share Greektown
Casino
19.
Lear Corp., Southfield
Guilford Mills, Wilmington, Winston & Strawn
N.C.
20.
Atlas Resource Partners LP,
Pittsburgh
DTE Gas Resources LLC,
Ft. Worth
21.
General Cable Corp., Highland
Heights, Ky.
Prestolite Wire LLC,
Farmington Hills
$170
million
November Acquired company makes wire and cable products and harnesses for $200.0
the transportation industry. Value is estimated.
22.
Fiat SpA, Turin, Italy
Chrysler Group LLC, Auburn
Hills
$63.8
billion
Pending
23.
Charlesbank Capital Partners,
Boston
United Road Services Inc.,
Romulus
Houlihan Lokey
24.
Penske Automotive Group Inc.,
Bloomfield Hills
Isaac Agnew Group,
Northern Ireland
Internal
25.
Rockbridge Growth Equity LLC,
Detroit
Triad Retail Media, Tampa,
Fla.
Honigman Miller; Falcon
Investments
25.
Flextronics International Ltd.,
Singapore and San Jose
Saturn Electronics &
Engineering Inc., Auburn
Hills
25.
Resilience Capital Partners LLC,
Cleveland
28.
Catterton Partners Corp.,
Greenwich, Conn.
18.
J.P. Morgan; Barclays
Goldman Sachs; Skadden, Projected
Capital; Simpson Thacher & Arps, Slate, Meagher & Flom 2013 rate
Bartlett LLP
LLP; Cooley LLP
base:
$3 billion
Jones Day
Sullivan Cromwell; J.P.
Morgan; Dykema Gossett
$470
million
Goldman Sachs; Lazard Ltd.;
Sullivan Cromwell
$1 billion
est.
Rothschild; Ashurst LLP
$400
million
Jones Day; Ledgewood Law J.P. Morgan
$1,316.7
$865.0
December Sold by New York private equity firm Carlyle Group. Value is
estimated by Standard & Poors.
$820.0
December Sold $1.3 loan portfolio in NE U.S.
$779.0
October
Pending
Group led by Dan Gilbert bought a minority share of Greektown
$300.0
Casino in June and made an offer to make that a majority share in
December. The exact size of the share isn't known, but the property is
estimated to be worth at least $583 million, including the assumption
of $440 million in debt. Value is estimated.
May
Acquired maker of automotive and specialty fabrics from Cerberus.
$257.0
$255.0
December Sold by DTE Energy Co.
$198.0
Fiat increasing stake by 3.3 percent.
December Car hauler was sold by The Gores Group LLC, which bought the
company in 2007 for $110 million. Value is estimated.
$160.0
$500
million
January
2012
$108.1
$175
million
December Acquired company creates, manages and operates digital retail media $100.0+
programs for highly trafficked retail websites. Clients include
Walmart, Sam 19s Club, eBay and CVS. Value is more than
$100 million, but an exact figure was not available.
Lincoln International LLC
>$300
million
December Value is estimated at more than $100 million; a more specific figure
wasn't available.
$100.0+
Advanced Communications Kirkland & Ellis
Inc., Canton Township
Fried Frank
>$75
million
January
2012
Company provides variety of services for telecom and cable
companies. Deal was more than $100 million.
$100.0+
ePrize LLC, Pleasant Ridge
Jordan Edmiston Group
$70 million August
est.
On-line marketer bought from founder Josh Linkner and investors,
including Dan Gilbert. Deal is estimated at about $100 million.
$100.0
Weil, Gotshal & Manges LLP $300
million
Purchase price includes repayment of $36.9 million of sellers' floor
plan notes, according to 1Q SEC filing. Agnew represents 14
franchises.
Source: Company submissions, Crain's research and Bloomberg News. Many transactions had multiple sources of information. In some cases, more than one estimated value of a transaction exists. In those cases, Crain's has chosen the value it believes to be
most accurate. The list does not include all 2012 transactions; only transactions valued at $10 million or more are included.
B Forbes estimate.
Continued on Page 17
20130128-NEWS--0016-NAT-CCI-CD_--
1/25/2013
11:18 AM
Page 1
Page 16
January 28, 2013
CRAIN’S DETROIT BUSINESS
Finance
Penske: Publicly owned dealers are in driver’s seat
BY JAMIE LEREAU
CRAIN NEWS SERVICE
Publicly owned automotive retailers with the financial muscle to
buy new stores now have the perfect opportunity to do so, both in
the United States and abroad.
That’s what Roger Penske told
industry leaders in his keynote address at the Automotive News
World Congress this month.
“While the public company peer
group had annualized revenues of
approximately $50 billion last year,
the industry is still over 90 percent
unconsolidated
in the United
States alone and
the worldwide
opportunities
are abundant,”
said
Penske,
CEO of Bloomfield Hills-based
Penske Automotive Group Inc.
Penske
(NYSE: PAG).
Penske said demands by carmakers on their dealers, particularly for
store renovations, are helping to
pave the way for private dealers to
sell to publicly traded ones. The cost
to dealers to “cater to the new retail
environment” can be $15 million to
$20 million for facility investments.
Many dealers are looking at the
costs and considering getting out of
the business, he said, adding that
Penske Automotive is getting “a lot
of calls” from interested sellers.
“It’s very apparent to me that
the public retailers have the capital and expertise to meet these requirements,” Penske said.
Penske also sees new opportunities for dealership ownership in
Russia. He expects public retail
groups to be the first ones there
and expand aggressively in other
markets as well.
“The public company peer
group has a combined market capitalization of over $12 billion,”
Penske said. “Just think about
what that market capitalization
may grow to in the next decade.”
With new retail unit sales of
154,829 in 2011, Penske Automotive
is ranked No. 2 in the list of the top
When Companies Turn to Dealmaking,
They Turn to Dykema.
These are but a few of the major deals that the law firm of Dykema helped its clients close in 2012. From
middle-market businesses to publicly traded institutions, privately held enterprises to large-scale public
financings, clients nationwide look to Dykema for sophisticated counsel, top-tier representation and
customized solutions. When you consider your next transaction, choose Dykema.
AltaGas Ltd.
Perrigo Company
Acquisition of SEMCO
Holding Corporation
Acquisition of
Cobrek Pharmaceuticals, Inc.
ITC Holdings Corp.
and Its Affiliates
Oakwood Healthcare
IT Outsourcing with
CareTech Solutions
$1.135 Billion
$45 Million
Strategic Development
Projects
August 2012
December 2012
2012
November 2012
Michigan Finance Authority
Citizens Republic
Bancorp, Inc.
Michigan State Housing
Development Authority
Merger with
FirstMerit Corporation
$1.2 Billion
Single-Family Homeownership
Revenue Bonds
HFA Series
$166 Million
Revolution Capital Group
Unemployment Obligation
Assessment
Tampa Media Group, Inc.’s
Acquisition of
The Tampa Tribune
from Media General
Revenue Bonds, Series 2012
October 2012
June 2012
Asterand plc
WiseWay
Supermarkets
$2.9 Billion
Announced September 2012
Expected to Close 2013
INOAC USA, Inc.
$120 Million
November 2012
Intelligent Epitaxy
Technology, Inc.
(IntelliEPI)
Sale of Human Tissue Business
to Stemgent and Sale of
BioSeek to DiscoveRx
Sale to Strack & Van Til
Supermarkets
Formation of United States
and Canadian Joint Venture
with ABC Group, Inc.
IPO on the TAIEX Market
July/October 2012
November 2012
June 2012
November 2012
www.dykema.com
California | Illinois | Michigan | Minnesota | North Carolina | Texas | Washington, D.C.
© 2013 Dykema Gossett PLLC Attorney Advertising
125 U.S. dealership groups compiled
by Crain’s Detroit Business sister
publication Automotive News.
Penske told of his retail success
in his speech. After acquiring a
stake in a troubled automotive
company called United Auto
Group in 1999, he quickly went to
work improving the employee culture, factory relationships, brand
mix and store locations. He also
made store improvements and
focused on customer satisfaction.
To attract and keep employees,
he built a field network of human
resource professionals. Penske
started job-suitability testing and
background checks, focused on
compensation, benefits, workplace
safety and training.
In 1999, Penske’s annual employee turnover surpassed 80 percent.
In 2009, his employee retention
rate was 92 percent, he said.
Penske improved his relationships with manufacturers, partnering with them to grow his business. He bought stores in the
United Kingdom and Europe. He
also added several luxury and volume foreign brands to his mix and
invested more than $2 billion into
various facility improvements.
“The premium and volume foreign brands were not overdealered,” Penske said. “Instead,
they chose to grow with the existing dealer base.”
From Automotive News
Exceptional service. Dykema delivers.
NOMINATIONS SOUGHT FOR
BIGGEST DEALS, M&A AWARDS
Involved in a merger or acquisition
in 2012? You might be eligible for
Crain’s M&A Awards.
Crain’s Detroit Business and the
Detroit chapter of the Association
for Corporate Growth will honor
companies and individuals in the
following categories:
䡲 Best Deal of the Year: Two
categories: Under $100 million
and $100 million or more. Deals
must have closed in 2012.
䡲 Dealmaker of the Year/buyer-seller.
䡲 Dealmaker of the Year/adviser:
M&A experts, lenders, CPAs,
consultants and attorneys, among
others, are eligible.
䡲 Lifetime achievement: Seniorlevel executive who has been
involved in significant transactions
and has made a significant impact
on the community. Does not have
to be retired.
Applications are at
www.crainsdetroit.com/nominate.
The deadline is Feb. 4.
Winners will be profiled in the
March 25 issue of Crain’s and
honored at an event May 1.
For questions concerning the
nomination process, contact
Executive Editor Cindy Goodaker at
[email protected] or (313)
446-0460. For help in using the
nomination form, contact Events
Coordinator Kacey Anderson at
[email protected] or (313)
446-6786.
The Detroit chapter of ACG is part
of a global association of
professionals involved in corporate
growth, development and mergers
and acquisitions. For more
information, see
chapters.acg.org/detroit.
20130128-NEWS--0017-NAT-CCI-CD_--
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January 28, 2013
Page 17
CRAIN’S DETROIT BUSINESS
CRAIN'S LIST: MERGERS & ACQUISITIONS
Continued from Page 15
Target advisers
Annual
revenue
Date
effective
Description
Value of
transaction
($000,000)
Fluid Routing Solutions Inc., Jones Day
Southfield
Kirkland & Ellis; Angle
Advisors
$190
million
March
Sold by Sun Capital Partners Inc., Boca Raton, Fla.
$97.5
Varroc Engineering Pvt Ltd.,
Aurangabad, India
Visteon Corp.'s automotive Willkie Farr
lighting business, Van Buren
Township
Rothschild
August
EnPro Industries Inc., Charlotte,
N.C.
Motorwheel Commercial
Internal
Vehicle Systems Inc., Livonia
Lincoln International LLC
April
32.
33.
Booth American Co., Detroit
7.7 percent stake in Grupo
Clarin SA, Buenos Aires
Alaris Royalty Corp., Calgary
Labstat International ULC,
Kitchener, Ontario
Miller, Thompson
33.
NOVO 1 Inc., Dallas
Budco Holdings Inc.,
Highland Park
Honigman Miller, SPP
Capital
35.
Glencoe Capital, Birmingham
Encore Rehabilitation
Services LLC, Farmington
Hills
Honigman Miller; Crowe
Horwath; The Marwood
Group
36.
Amtrust Financial Services Inc.,
New York
Car Care Plan Holdings Ltd.,
Thornbury, England, unit of
Ally Financial, Detroit
The Weather Channel, Atlanta
Weather Underground Inc., Blackstone Advisory
Ann Arbor
Partners LP; Kilpatrick
Townsend & Stockton LLP
38.
TriMas Corp., Bloomfield Hills
70 percent of Arminak &
Morrison Foerster;
Associates LLC, Azusa, Calif. Honigman Miller
39.
TSFR Apple Venture LLC, Livonia
65 company-operated
Applebee's restaurants in
Michigan
Honigman Miller;
CapitalSpring Finance Co.;
Katten Muchin; Richards
Kibbe; GE Capital
Siegfried Bingham
40.
41.
Talmer Bancorp, Troy
Assets of First Place Bank,
Warren, Ohio
Nelson, Mullins, Riley &
Scarborough
Keefe, Bruyette & Woods
BASF SE, Ludwigshafen, Germany
Ovonic Battery Co Inc., Troy
Quarton Partners LLC
42.
Wesco, Pittsburgh
RS Electronics, Livonia
Lincoln International LLC
$60 million
(2011)
42.
44.
45.
Shiloh Industries Inc., Canton
Township
Albany-Chicago Co. LLC
Wegman Hessler &
Vanderburg
Angle Advisors; Reinhart
Boerner Van Deuren
$70 million December Shiloh Industries acquired the aluminum die cast machining firm.
est.
$55.0
Kaydon Corp., Ann Arbor
Fabreeka Group Holdings
Inc., Stoughton, Mass.
J.P. Morgan; Paul Hastings
Sidley Austin
$27 million June
(2011)
$54.0
Federal-Mogul Corp., Southfield
Beru spark plug business,
BorgWarner Inc.
Linklaters
Hengeler Mueller
$80 million September Expected to boost sales by $80 million.
est.
46.
Francisco Partners Management
LLC, San Francisco
Plex Systems Inc., Auburn
Hills
Shearman Sterling; Pacific
Crest Securities
Skadden Arps; Lazard Ltd.
46.
46.
49.
Huron Capital Partners LLC,
Detroit
Bloomer Plastics Inc.,
Bloomer, Wis.
Honigman Miller; Crowe
Horwath
Jones Day
$40 million March
Producer of engineered plastics, to serve as platform company for
$50.0+
other acquisitions. Deal value is estimated at more than $50 million.
Management Group, Huron
Capital Partners LLC, Detroit
Ronnoco Coffee Co., St.
Louis, Mo.
Honigman Miller; Crowe
Horwath
Greensfelder, Hemker &
Gale
$50 million July
Provider of premium coffee and teas, to serve as platform company
for other acquisitions. Deal is estimated at more than $50 million.
$50.0+
October
2006 spinoff from University of Michigan markets an oncology
database. Value is estimated.
$50.0
49.
Georg Fischer AG, Schaffhausen,
Switzerland
Harvel Plastics Inc.,
Pennsylvania, subsidary of
Detrex Corp., Southfield
Baker & McKenzie
January
2012
Larger of Kaydon's two subsidiaries, Harvel is to be integrated into
Fischer's GF Piping Systems division and leaves one Detrex
subsidiary, Elro Corp.
$50.0
51.
The Home Depot Inc., Atlanta
Measurecomp LLC, Oak
Park
McKenna Long
June
Measures carpet; Home Depot vendor bought by company.
$45.0
52.
Pioneer Metal Finishing LLC,
Green Bay, Wis.
Parts Finishing Group Inc.,
Auburn Hills
Godfrey & Kahn
53.
Micron Technology, Boise, Idaho
Energy Conversion Devices'
33 percent stake in Ovonyx
Inc., Sterling Heights
54.
Nordson Corp., Westlake, Ohio
Sealant Equipment &
Engineering Inc., Plymouth
55.
ABM Industries Inc, New York
HHA Services Inc., St. Clair Jones Day
Shores
56.
57.
Private investor, Khosla Ventures,
Braemar Energy Ventures
EcoMotors International,
Allen Park
57.
Versa Capital Management LLC,
Philadelphia
American Laser Centers LLC,
Farmington Hills
57.
57.
57.
57.
Accel Partners, San Francisco
Plex Systems Inc., Auburn
Hills
Huron Capital Partners LLC,
Detroit
Lawson Trucking, Hope
Hull, Ala.
Honigman Miller; Plante
Moran
Gilpin Givhan PC
$20 million July
Food transportation company rolled into Cardinal Agri-Logistics Inc.
$30.0
Huron Capital Partners LLC,
Detroit
IM Solutions Inc., Dallas
Honigman Miller; Crowe
Horwath
Scheef & Stone LLP
$20 million July
Direct marketing services company bought to roll into another
portfolio company
$30.0
Monomoy Capital Partners LLC,
New York
MPI LLC, Southfield
Baker & McKenzie; Ernst &
Young
UBS
$50 million January
2012
Auto partsmaker sold by Revstone Industries LLC of Lexington, Ky.
Deal is estimated at between $10 million and $50 million.
$30.0
Rank Acquirer name
Target
29.
Park-Ohio Holdings Corp.,
Cleveland
30.
31.
37.
Acquirer advisers
Honigman Miller
Motorwheel makes lightweight brake drums for heavy-duty trucks and $85.3
other commercial vehicles. Also sells wheel-end component
assemblies for the heavy-duty market, sells fasteners for wheel-end
applications and provides a full suite of services to its customers,
including product development, testing and certification. Has five
manufacturing facilities in Berea, Ky., and Chattanooga.
$2.2 billion May
Goldman Sachs sold a stake owned by Ralph Booth to Booth
American.
$75.3
$20 million June
Huron Capital sells lab services company. Deal is more than $75
million; exact figure is not available.
$75.0+
December One portfolio company of Glencoe Capital, Birmingham,
recapitalized and folded into another portfolio company. Value is
more than $75 million, but a more specific number could not be
found.
$75.0+
$130
million
Ducker Worldwide; Jacob & $70 million December Bought as part of InvestMichigan fund Glencoe manages.
Weingarten
Digital Capital Advisors LLC $22 million July
est.
Clark Hill plc; Lincoln
Interntional
Angle Advisors; Jaffe Raitt
Dykema; Plante Moran
September TSFR is controlled by the Schostak family. Restaurants were sold by
DineEquity Inc., Glendale, Calif.
$61.0
December Bought 41 branches and $2.3 billion in assets in bankruptcy sale.
$60.0
February
$58.0
Sold by Energy Conversion Devices, Auburn Hills, through Chapter
11 liquidation.
Deal closed via a combination of $22 million cash and a portion of $55.0
first-quarter borrowing against Wesco's receivables line of credit. RS
is a distributor of electronic and electrical products to automotive,
medical device and other contract manufacturers. Value is estimated.
Acquired company makes shock and vibration control pads.
$52.0
Sold by Apax Partners LLP of London; company makes cloud-based
software for manufacturers. Deal is estimated at more than
$50 million.
$35 million November Acquired company provides secondary chemical coating and metal
surfacing and finishing services; has operations in the U.S. and
Mexico. Value is estimated.
$50.0+
$40.0
August
$36.0
Angle Advisors; Bodman
$18 million August
$35.0
Houlihan Lokey; Wiggin &
Dana
$50 million November Deal completed using cash on hand at ABM and subject to closing
cost adjustments. HHA offers food services and facility management
to health care providers and retirement companies, a relatively
untapped market for ABM.
$34.0
$4 million
est.
$32.5
Quarton Partners
Ulmer & Berne
$64.0
July
$58.4
million
Corporate parent renamed The Weather Co. in October to reflect its $65.0
growing cross-platform media makeup. The Ann Arbor database and
website acquisition is estimated to grow TWC to more than 51
percent market share of the U.S. weather forecasting industry in 2012.
Value is estimated.
Acquired company makes packaging for cosmetics and household
products. Becomes a subsidiary of TriMas unit Rieke Corp., Auburn,
Ind. TriMas has option to purchase remaining 30 percent.
$60 million February
(2011)
$210
million
$75.0
$70.0
Pending
Life Technologies Corp., Carlsbad, Compendia Bioscience Inc.,
Calif.
Ann Arbor
Great Expressions Dental Centers, Exceldent, New York
Bloomfield Hills
$92.0
Williams Mullen
Kroll Zolfo; Landis Rath
July
February
$47 million February
Bought 19 dental offices in New York, New Jersey and Connecticut.
$30.0
The company filed for Chapter 11 bankruptcy protection to facilitate $30.0
the sale, listing assets of $80.4 million and $105 million in unsecured
debt in its Chapter 11 filing, according to a Bloomberg News report.
December Accel buys equity stake in software firm from Francisco Partners
Management LLC.
$30.0
Source: Company submissions, Crain's research and Bloomberg News. Many transactions had multiple sources of information. In some cases, more than one estimated value of a transaction exists. In those cases, Crain's has chosen the value it believes to be
most accurate. The list does not include all 2012 transactions; only transactions valued at $10 million or more are included.
Continued on Page 18
20130128-NEWS--0018-NAT-CCI-CD_--
1/25/2013
11:20 AM
Page 1
Page 18
January 28, 2013
CRAIN’S DETROIT BUSINESS
CRAIN'S LIST: MERGERS & ACQUISITIONS
Continued from Page 17
Annual
revenue
Date
effective
Value of
transaction
($000,000)
Rank Acquirer name
Target
63.
General Motors Co., Detroit
GMAC de Venezuela CA,
Caracas; unit of Ally
Financial, Detroit
64.
McLaren Health Plan Inc., Flint
CareSource Michigan,
Dayton, Ohio
65.
Dawson Investments LLC,
Southfield
5.49 percent share of
American Greetings Corp.,
Cleveland, Ohio
66.
Robert Bosch GmbH, Gerlingen,
Germany
Cobasys LLC, Orion
Township
67.
Abingworth LLP, Arboretum
Ventures, Wolverine Venture
Fund, The Novartis BioVentures
Ltd.
Sonitus Medical Inc., San
Mateo, Calif.
68.
Autometal SA, Diadema, Brazil
Century Plastics Inc., Shelby Uria Menendez
Township
69.
First Financial Bank NA,
Cincinnati, Ohio
22-branch Indiana franchise
of Flagstar Bancorp, Troy
69.
TriMas Corp., Bloomfield Hills
CIFAL Industrial e Comercial
Ltda, Sao Paolo, Brazil; Trail
Com Ltd., Auckland, New
Zealand
$21 million July
together
71.
Vail Resorts Inc., Denver
Mt. Brighton Ski Resort,
Brighton; Afton Alps, Afton,
Minn.
$5 million
71.
Glencoe Capital, Birmingham
Arrow Energy Services Inc., Honigman Miller; Blue
Kalkaska
River Financial Group;
Crowe Horwath
Foster Swift
$70 million December Provider of energy drilling equipment and services.
71.
News-Press & Gazette Co., St.
Joseph, Mo.
Majority stake in Online
Tech Inc., Ann Arbor
Spencer Fance Britt &
Browne; RBC Capital
Markets
Lowe Law Firm
$8 million
71.
Webasto AG
Delphi Automotive's Delphi Blaettchen & Partners
Italia Automotive Systems
(Diavia), Molinella, Italy
Angle Advisors
April
71.
Atlas Holdings LLC, Greenwich,
Conn.
Masco Framing Corp.,
Chandler, Ariz.
Angle Advisors; Shumaker
Loop
November Bought from Masco Corp., Taylor. Value is estimated.
76.
Valassis Communications Inc.,
Livonia
Brand.net, San Mateo, Calif. Internal
77.
MDC Partners Inc., New York City WB Doner & Co., Southfield Internal
78.
Wynnchurch Capital Ltd.,
Rosemont, Ill.
R. Cushman & Associates
Inc., Farmington Hills
Monroe Capital
79.
China Xintiandi, Shanghai
TCBL Consulting Ltd.,
Beijing, China, unit of
Taubman Centers,
Bloomfield Hills
Internal
Internal
December The year after it purchased the Chinese company for $24 million,
$15.5
Taubman sold portions of it to China Xintiandi. It will maintain offices
in Beijing and Shanghai under the name Taubman Asia.
80.
Diversified Restaurant Holdings
Inc., Southfield
8 Buffalo Wild Wings units
Dickinson Wright; internal
Internal
September
81.
Barnes & Noble Inc., New York
City
Intellectual property and
Cravath Swaine
assets of Borders Group Inc.,
Ann Arbor
82.
ePrize LLC, Pleasant Ridge
Cellit LLC, Chicago
82.
Greatbatch Inc., Clarence, N.Y.
NeuroNexus Technologies
Inc., Ann Arbor
84.
US Ecology Inc., Boise, Idaho
Dynecol Inc., Detroit
Deloitte & Touche LLP
None
85.
Perseus LLC, Venture Investors
LLC
NanoBio Corp., Ann Arbor
None
None
86.
O2 Investment Partners LLC,
Bloomfield Hills
Mercury Manufacturing Co., Honigman Miller
Wyandotte
NSF International, Ann Arbor
Becker & Associates
Cascade Partners LLC;
Consulting Inc., Washington, Honigman Miller
D.C.
86.
Acquirer advisers
None
Target advisers
Baker & McKenzie
May
None
August
$3 million
est.
Lincoln International LLC
$27.0
Firm controlled by former Pulte Group Inc. CEO James Grosfeld
bought the Class A shares between Oct. 8-23, paying prices ranging
from $16.83 to $17.15.
$26.9
December Samsung SDI Co. Ltd., Korea, sold its portion of the joint venture to
Bosch.
$26.0
$5 million- May
$10 million
Company makes a device that uses vibrations in teeth to restore
hearing for those deaf in one ear. This was fourth round venture
capital equity investment.
$25.0
$78 million October
Brazilian auto supplier Autometal SA purchased a 65 percent stake
in Century Plastics.
$23.5
Leases were assumed on buildings, with sale of $327.9 million of
deposits.
$23.0
August
Andrews Kurth
$29.0
CareSource is a Medicare and Medicaid provider.
$1.7 billion October
Kim & Chang; Shin & Kim
Description
TriMas' Lamons Gasket Co. business acquires CIFAL, a maker of
$23.0
fasteners and stud bolts for the oil and gas industry, while its Cequent
Products division acquired Trail Com as a distributor for towing
accessories and trailer components.
$20.0
December
$20.0
September Acquired company provides data storage and file backup for disaster $20.0
recovery.
Acquired Diavia together with its interest in Diavia Aire, a Spanish
distribution subsidiary. Webasto then purchased the remainder of
Diavia Aire.
$20.0
$20.0
$18.0
Luma Partners
$42 million June
Acquired company specializes in digital displays such as Web
banners and has emerging video and mobile platforms.
David C. Wiener & Co.
$1 billion in March
billings est.
Bought significant minority stake with an option to become a majority $17.5
stake. Value was estimated at $15 million-$20 million by The New
York Times with additional payments contingent on performance.
Acquired company makes military vehicle components. Wynnchurch $16.0
bought a majority stake; remainder was bought by Monroe Capital
LLC, Chicago. Value is estimated.
$14.7
January
2012
Company sold as part of Borders bankruptcy.
$13.9
$6 million
January
2012
Value is estimated.
$12.0
$1 million
February
Company makes neural probes to map brain function and for drug
delivery and optical stimulation.
$12.0
Sold by PVS Chemicals Inc., Detroit. Target company renamed US
Ecology Michigan after closing.
$11.3
$12 million May
est.
November Bought equity stake
$11.0
December Value is more than $10 million, but an exact figure is not available.
$10.0+
DuBois, Bryant & Campbell
LLP; Selzer Gurvitch Rabin
Wertheimer Polott &
Obecny PC
September Largely composed of former Food and Drug Administration officials,
Becker helps companies meet and maintain FDA compliance. The
acquisition positions NSF as a resource to the global pharmaceutical
and medical device industries. Deal is estimated at more than
$10 million, but exact value was not available.
$10.0+
Lincoln International LLC
January
2012
Maker of chassis and brake components and assemblies with 500
$10.0+
employees. Deal was more than $10 million, but no reliable estimate
could be made.
86.
Platinum Equity LLC, Beverly Hills, Concord International Inc.,
Calif.
Troy
86.
Propel Equity Partners LLC,
Greenwich, Conn.
Poof Slinky Inc., Plymouth
Kramer Levin
July
Value is more than $10 million, but exact value was not available.
$10.0+
86.
O2 Investment Partners LLC,
Bloomfield Hills
Greco Aluminum Railings
Ltd., Windsor, Ontario,
Canada
Honigman Miller
August
Value is more than $10 million, but an exact figure is not available.
$10.0+
86.
Mortgage Builder Software Inc.,
Southfield
GCC Servicing Systems,
Portland, Ore.
Internal
June
Acquired company creates mortgage servicing software. Deal was
more than $10 million.
$10.0+
92.
FutureNet Group Inc., Detroit
Smith & Wesson Security
Solutions Inc., Franklin,
Tenn.
Internal
July
Perimeter security unit of Smith & Wesson Holding Corp., Springfield, $10.0
Mass.
92.
Crestmark Bancorp Inc., Troy
Working capital portfolio of In house
First Citizens Bank, Raleigh,
N.C.
June
Portfolio was performing loans and not distressed debt.
$10.0
92.
TAG Shared Vision, Wixom
Schwartz Industries, Warren Seneca Partners
Pathway Partners
$10 million January
2013
Acquired company is a precision molder.
$10.0
92.
Bud Brian, Evolution Capital
Partners
Budco Financial Services
LLC, Highland Park
Internal
$10 million November Purchased from Beringer Capital with Evolution Capital Partners.
Acquired company sells extended warranties to car buyers through
some Ford Motor Co. dealers.
$10.0
Newport Board Group
Internal
>$10
million
Source: Company submissions, Crain's research and Bloomberg News. Many transactions had multiple sources of information. In some cases, more than one estimated value of a transaction exists. In those cases, Crain's has chosen the value it believes to be
most accurate. The list does not include all 2012 transactions; only transactions valued at $10 million or more are included.
20130128-NEWS--0019,0020-NAT-CCI-CD_--
1/25/2013
10:30 AM
Page 1
CRAIN’S DETROIT BUSINESS
January 28, 2013
Page 19
Botsford contract with Residential a bid to avert readmissions
BY JAY GREENE
CRAIN’S DETROIT BUSINESS
Farmington Hills-based Botsford
Hospital has signed a contract with
Residential Home Health in Madison
Heights to more closely manage
care of patients discharged from
the hospital to homes, long-term
care facilities or rehabilitation
centers.
The contract between Botsford
and Residential is part of a nationwide trend between hospitals and
such post-acute care providers as
home health and hospice companies to help lower health care costs
and reduce avoidable readmissions.
Data shows hospital readmissions, which average about 20 percent within 30 days, cost U.S. taxpayers more than $17.5 billion a
year.
Paul LaCasse, D.O. — CEO of
Botsford Health Care, the hospital’s
parent organization — said Residential will help Botsford cut readmission rates and make more effective patient transitions to other
health care facilities, including
Botsford
Commons
Senior
Community.
“For patients with serious and
complex illnesses, transitions
in care settings
often result in
miscommunications, poor coordination of services and a rise
in preventable
adverse effects,”
said LaCasse.
LaCasse
Starting last
Oct. 1, more than 2,217 hospitals
nationally, including most hospitals in Michigan, had their base
pay cut an average of 1 percent for
avoidable patient readmissions
within 30 days of discharge. Those
readmissions also exceeded the
national average for congestive
heart failure, heart attack and
pneumonia.
The cost-containment rule is
just one of several similar provisions in the Patient Protection and
Affordable Care Act of 2010 aimed
at lowering costs and improving
quality.
In 2013, Botsford will lose
$500,000 in base pay reimbursement because its average readmissions are above the national average, said Jim Smith, Botsford’s
vice president of strategy and business development.
“The penalties will double in
2014 and triple in 2015,” he said.
“We already have low margins in
Southeast Michigan. If we can
eliminate the penalty, we can have
positive benefits.”
A new study shows hospitals
that work closely with other
health care providers can cut readmission rates by 6 percent for
Medicare beneficiaries, said the
Jan. 22 issue of the Journal of the
American Medical Association.
“When folks come out of the
acute-care facility, we need to ensure they get necessary follow-up
so they don’t bounce back and
forth (from home to the hospital),”
Smith said. “This relationship will
help to avoid unnecessary readmissions.”
From 2010 to 2012, Smith said,
Residential has cared for 2,500 pa-
We don’t have any estimates on how
“
much we will save in readmissions, but we
know what the penalties are (from
Medicare).
”
Jim Smith, Botsford Hospital
tients discharged from 330-bed
Botsford Hospital to home health
settings. The number represents
34 percent of Botsford’s patients
who required home health or postacute care, he said.
“Our hope is to increase those
numbers going to Residential,”
said Smith, adding that in most
cases the choice of a home health
or post-acute care referral is made
by the patient and physician.
Smith said Botsford has reduced
the number of avoidable readmissions the past three years. In 2012,
Botsford had a readmission rate of
26 percent for heart failure, 21 percent for pneumonia and 22 percent
for heart attack, with an all-payer
rate of 13.5 percent, Smith said.
“We don’t have any estimates on
how much we will save in readmissions (by working with Residential), but we know what the penalties are (from Medicare),” Smith
said.
Over the past three years, as
hospitals, physicians and other
providers have worked to reduce
readmissions, a growing number
of home health and hospice companies have signed contracts or
agreed to work more closely with
hospitals.
Residential has similar arrangements with two other hospitals —
Metro Health Hospital in Wyoming
and Edward Hospital in Naperville,
Ill. — and it is discussing other potential deals with other hospitals
and accountable care organizations, or ACOs, said David Curtis,
president of Residential Home
Health.
“We will work with (Botsford)
on innovating the delivery of services to their patients and helping
See Botsford, Page 20
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20130128-NEWS--0019,0020-NAT-CCI-CD_--
1/25/2013
10:30 AM
Page 2
Page 20
Your Deal
Botsford:
Contract
Starts Here.
■ From Page 19
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Communications,
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to manage post-acute risk for all
associated providers,” Curtis said.
Other home health and hospice
companies also have signed contracts with hospitals. They include
Detroit-based Hospice of Michigan
and Great Lakes Caring in Jackson.
Bruce Carty, CFO of Ann Arborbased Arbor Hospice, said the hospice company has talked with
ACOs and hospitals about possible
contracts.
“Coordination of care is essential when patients are transferred
from hospitals to other settings,”
Carty said. “There is a potential
for a breakdown in care when patients are transferred.”
As part of the Botsford contract,
Smith said Residential nurses will
work with Botsford’s discharge
planners when patients have selected Residential and are ready to
leave the hospital.
“Residential nurses will educate
the family and help develop a posthospital plan,” said Smith. “Residential will send a nurse to the patient’s home or other facility
within 24 hours for timely intervention. It is key to make sure they
don’t get rehospitalized.”
Curtis said Residential also will
provide home telemedicine technology, when appropriate, to monitor vital signs and make sure patients are doing well between
visits.
“We
will
(share medical
information
with each other), so if a patient is readmitted to their
emergency department or hospital,
their
Curtis
physicians have
current vitals,” Curtis said.
Over the past three years, Residential Home Health has been
growing steadily. Curtis declined
to provide revenue growth but
said Residential cared for 15,700
patients in 2012, a 14 percent increase from 13,500 in 2011. Projected growth is 25 percent, to 19,700
patients under care, he said.
“We have been hiring across the
board, not for just Botsford but because we have an increased demand for post-acute care services
from hospitals, nursing homes and
physicians, our three referral
sources,” Curtis said.
Earlier this month, Residential
purchased the hospice program
from Detroit-based Karmanos Cancer Institute. The acquisition is part
of a strategy to expand post-acute
care and work more closely with
hospitals on coordinating care and
reducing readmissions, Curtis
said.
Last year, Residential acquired
Southfield-based CodaCare Hospice
and entered the hospice service
line with a projected daily census
of 80 patients and annual revenue
of about $4 million.
Residential and its affiliates offer home health, pharmacy,
durable medical equipment and
nurse practitioner home services.
Jay Greene: (313) 446-0325,
[email protected].
Twitter:
@jaybgreene
20130128-NEWS--0021-NAT-CCI-CD_--
1/25/2013
12:12 PM
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CRAIN’S DETROIT BUSINESS
January 28, 2013
Doctors say they’d take
new Medicaid patients
Survey backs state expansion
BY JAY GREENE
CRAIN’S DETROIT BUSINESS
A new survey shows 81 percent of
Michigan primary care physicians
are interested in taking on newly
insured patients, including new
Medicaid patients, if the state Legislature this year approves an expansion under health care reform, said
the Ann Arbor-based Center for
Healthcare Research & Transformation.
Of those doctors willing to accept new patients, 90 percent of
family physicians, internal medicine practitioners and pediatricians said they would accept new
Medicaid patients.
About 620,000 uninsured people
in Michigan could be eligible for
Medicaid starting in 2014 under provisions of the federal Patient Protection and Affordable Care Act.
“We were surprised (the numbers) were as high as they were,”
said Marianne Udow-Phillips, the
center’s director. She said many
physicians told the center they
have capacity within their practices to see more patients because
the economic downturn that started in 2009 has reduced the number
of patients they see.
Jack Billi, M.D., vice chairman
of the center and a physician executive at the University of Michigan
Health System, said physicians also
have greater capacity to see patients because of office efficiency
improvements from such projects
as patient-centered medical homes.
The survey, which included 714
physicians, was conducted with
the Child Health Evaluation and
Research Unit at UM and the Michigan State Medical Society.
Another reason primary care
doctors want new Medicaid patients is that this month, Medicaid
payment rates for regular office
visits increased more than 30 percent in Michigan. The rates will remain equivalent to Medicare reimbursement for two years.
“Doctors by and large are willing
to accept new Medicaid patients —
even those doctors who were resistant in the past,” said Billi, chairman of the state medical society’s
health care delivery committee.
But will the Legislature act?
GOP leaders in the state House and
Senate have not expressed interest
in expanding Medicaid, although
Gov. Rick Snyder has indicated he
could be open to the idea if the newly insured patients do not overburden emergency departments.
Earlier this month, Sen. Bruce
Caswell, R-Hillsdale, re-introduced
legislation in the Senate Appropriations Committee that would prohibit Michigan from applying to
the federal government for increased Medicaid dollars.
In a Jan. 22 letter to Snyder, the
medical society, Michigan Health
and Hospitals Association, Michigan
Osteopathic Association, Michigan Association of Health Plans and several
other provider groups threw their
support to expanding Medicaid.
Last fall, a center report concluded that Michigan could save
$983 million in projected health
care expenditures from 2014 to
2023 if the Legislature approves
the expansion this year.
The survey also found:
䡲 Doctors who are not currently
taking Medicaid patients said they
would accept the new Medicaid patients, including 84 percent of pediatricians, 89 percent of family physicians and 88 percent of general
medicine practitioners.
䡲 Some 55 percent of primary
care physicians in Michigan accept new Medicaid patients. Almost all of these physicians expect
to have capacity for newly enrolled
Medicaid patients in the future.
The center at the University of Michigan is a nonprofit partnership with
Blue Cross Blue Shield of Michigan.
Jay Greene: (313) 446-0325,
[email protected].
Twitter:
@jaybgreene
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Page 21
20130128-NEWS--0022-NAT-CCI-CD_--
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Page 22
January 28, 2013
CRAIN’S DETROIT BUSINESS
Corks &
Forks
A Charity Wine Tasting & Strolling Dinner
BUSINESS DIARY
ACQUISITIONS
Agree Realty Corp., Farmington Hills,
acquired a 30,000-square-foot Big Lots
store in Fuquay-Varina, N.C., and a
20,834-square-foot Dollar General Market in Lyons, Ga. The aggregate cost
was approximately $5.3 million.
CONTRACTS
Annually now
in February!
Š February 9th, 7:00-10:00 p.m.
Š The Reserve at Big Rock Chophouse,
Birmingham
Š VIP Tickets $125, General Tickets $75
Š Buy online at www.WinningFutures.org
or by calling 586-698-4364
Botsford
Commons
Senior
Community, Farmington Hills, announced Senior Helpers, Timonium,
Md., as its new preferred provider of
supportive care services.
Franklin Consulting Co. LLC and
Franklin Construction Co. LLC, affiliates of Franklin Property Corp., Birmingham, were retained by Hunter Pasteur Homes, Novi, to provide
development and construction management services for its Stoneleigh
residential development, Lyon Township.
MWW Automotive Group, Howell, a
global design, engineering and manufacturing firm, was selected by GSI International Inc., Scanzorosciate, Italy,
as the finishing supplier for its North
American industrial products.
Clor & Associates LLC, Grosse Pointe
Farms, a sales rep and manufacturers
consulting agency, added Spartan
Sheet and Coil LLC, Detroit, to its
client list.
EXPANSIONS
Nichols, Sacks, Slank, Sendelbach
& Buiteweg PC, Ann Arbor, opened
an office at 209 N. Old Woodward
Ave., Birmingham. Telephone: (248)
594-5776. Website: www.nsssb.com.
Ahern Family Chiropractic, Milford,
opened a second office at 615 Griswold
St., Suite 215, Detroit. Telephone: (248)
529-3947.
Website:
www.ahern
familychiro.com.
H.B. Stubbs Co., Warren, an exhibit
and event marketing firm, opened an
office in Santa Ana, Calif. Website:
www.hbstubbs.com.
Affinia Group Inc., Ann Arbor, a global
leader in the design, manufacture, distribution and marketing of industrial
grade products and services, spun off
its brake businesses. The new organization will be led by the management
team from Affinia Group’s former global brake group, with oversight provided by a separate board of directors.
Website: www.affiniagroup.com.
NAME CHANGES
Medical Network One, Rochester
Hills, to MedNetOne. Website:
www.mednetone.net.
Cultural Alliance of Southeastern Michigan, Detroit, to CultureSource. Website: www.culturesource.org.
NEW PRODUCTS
Acromag Inc., Wixom, released its
TT330 series of four-wire process
transmitters, isolated signal conditioners that support high-density
mounting on DIN rails and provide a
USB connection to a PC for precise
configuration using Windows software. Acromag also introduced its
ACEX4405 carrier card, which hosts
Type 2 or Type 3 COM Express modules in 95mm x 125mm and is designed
for extreme applications.
Sharer Design Group LLC, Plymouth,
released the Sharer Cabinetry Line,
designed by Sharer and custom-made
by Kropp Woodworking, Mt. Clemens.
The American Bar Association published a book on appellate law, Appellate Practice Compendium, featuring a
chapter on the 6th Circuit Court of Appeals co-written by attorneys Mary
Massaron Ross and Hilary Ballentine
of Plunkett Cooney PC, Bloomfield
Hills.
NEW SERVICES
UHY LLP, Sterling Heights, accounting
and consulting, launched a new website, www.uhy.com, as part of its new
marketing and branding effort.
CFI Group USA LLC, Ann Arbor, a customer experience management software company, announced CFI Social
Media Monitor, to capture and analyze social media conversations and
use in conjunction with CFI Group’s
Customer Feedback Insights Platform. Website: www.cfigroup.com.
Linkage Design, Novi, became an authorized Autodesk value-added reseller, allowing the company to offer
Autodesk design software for its
transportation design customers.
Website: www.linkage-d.com.
Community Foundation for Southeast
Michigan, Detroit, launched a new
website, Mode Shift: Move Together,
to advocate healthy lifestyles and encourage community involvement.
Website: www.wearemodeshift.org.
STARTUPS
Cascade Partners LLC, an investment
banking and private investment firm,
at 29100 Northwestern Highway, Suite
405, Southfield. Telephone: (248)
430-6266. Website: www.cascadepartners.com.
DIARY GUIDELINES
Send news releases for Business
Diary to Departments, Crain’s
Detroit Business, 1155 Gratiot
Ave., Detroit, MI 48207-2997 or
send email to cdbdepartments@
crain.com. Use any Business Diary
item as a model for your release,
and look for the appropriate
category. Without complete
information, your item will not run.
Photos are welcome, but we cannot
guarantee they will be used.
20130128-NEWS--0023-NAT-CCI-CD_--
January 28, 2013
1/25/2013
10:31 AM
Page 1
CRAIN’S DETROIT BUSINESS
Page 23
CALENDAR
TUESDAY
JAN. 29
A Fresh Approach: How Does a 32Year Broadcast Veteran Wind Up Running a Bank? 8-9:30 a.m. Troy Chamber. Membership breakfast. With
Mike Fezzey, Southeast Michigan regional president, Huntington National Bank. MSU Management Education
Center, Troy. $19 Troy Chamber members, $29 nonmembers, $5 extra for
registering the day of the event. Contact:
(248)
641-8151;
email:
[email protected]; website:
www.troychamber.com/cal.
Detroit Economic Club Luncheon.
11:30 a.m.-1:30 p.m. With David Levy,
chairman, Jerome Levy Forecasting
Center LLC, Mount Kisco, N.Y., and
Stan Collender, managing director
and partner, Qorvis Communications,
Washington, D.C. Westin Book Cadillac, Detroit. $45 members, $55 guests
of members, $75 nonmembers. Contact: (313) 963-8547; email: info@econ
club.org; website: www.econclub.org.
Fireside Growth Series. 5-7 p.m. Macomb-OU INCubator. With Jake Sigal,
founder and CEO, Livio Radio. Velocity Collaboration Center, Sterling
Heights. Free. Contact: Joan Carleton,
(586) 884-9324; email: [email protected]; website: www.oakland.edu
/macombouinc.
Open Pitch Night. 6-8 p.m. TechTown,
Bizdom. Entrepreneurs with earlystage, technology-based businesses
are invited to refine their skills and
network with other entrepreneurs.
Majestic Café, Detroit. $5. Contact: Diane Love-Suvada, (313) 483-1302; email:
[email protected];
website:
www.techtowndetroit.org.
CRAIN’S HONORS NEWSMAKER
Join Crain’s Detroit Business in
honoring its Newsmaker of the
Year for 2012, Nancy Schlichting,
CEO, Henry Ford Health System.
The event is
11:30 a.m.-2
p.m. Feb. 21 at
Ford Field,
Detroit.
Crain’s
announced
Schlichting’s
award with a
cover story in
the Jan. 14
issue.
Schlichting
Tickets are
$60 for Crain’s subscribers; $55
for guests in groups of 10 or more;
$70 for members of the Detroit
Economic Club, Adcraft or Inforum;
$85 for an event ticket and oneyear subscription to Crain’s; and
$99 for nonsubscribers.
For more information, call (313)
446-0300 or visit
www.crainsdetroit.com/events.
THURSDAY
JAN. 31
How to Manage Employee Electronic
Use & Safeguard Your Business . 9
a.m.-2 p.m. Michigan Chamber Services. Learn how to establish human
resources policies, monitor electronic use and preserve a record of departing employees’ electronic history. With Tom Fredericks , labor law
attorney and professor of labor law,
Michigan State University; and
James Carter, computer forensics ex-
pert witness and president, Techmotives Consulting Group Inc. professional investigation agency. Walsh
College-Novi Campus, Novi. $270
Michigan Chamber members, $295
nonmembers.
Contact:
Aimee
Bahs,
(517)
371-7679;
email:
[email protected];
website:
www.michamber.com.
ACE13 , 2-8 p.m. Annual Collaboration for Entrepreneurship. Conference brings together entrepreneurs,
innovators, investors and business
leaders from the Great Lakes region.
With Terry Cross , founder of Windward Associates, a consulting firm in
Rochester Hills, and leader in the investment communities in Silicon Valley and New York City; Skip Simms ,
senior vice president, Ann Arbor
Spark, and executive director, Michigan Pre-Seed Capital Fund; and others. Burton Manor, Livonia. $225.
Information
and
registration:
www.ace-event.org.
Working Capital In Action
We provide businesses accounts receivable and inventory financing
needed to address growth opportunities and increase cash flow.
Our experienced staff and network resources connect
entrepreneurs with the tools they need to succeed and expand.
UPCOMING EVENTS
How Can Your Personal Brand Serve
You? 3-5 p.m. Feb. 21 . Commercial
Real Estate Women Detroit. Learn to
develop or enhance your personal
brand by leveraging your strengths
and experiences and aligning your
personal brand with that of your
company. With Jill Jordan , founder,
Get Ahead by Getting Known. CREW
Detroit members will receive a
signed copy of GPS (Goals and Proven
Strategies) for Success, published by
talk show host and life coach Sallie
Felton and others. Books will be
available for sale to guests. $40 CREW
members, $60 nonmembers. Baldwin
Public Library, Birmingham. Register by Feb. 15 or pay additional $5.
Contact: www.crewdetroit.org.
Need Cash to Grow? We Have the Solution.
248.658.1100
HennesseyCap.com
WEDNESDAY
JAN. 30
Incoterms 2010: The ICC Rules Explained. 8:15 a.m.-1 p.m. East Michigan District Export Council, U.S.
Commercial Service. Discussion of Incoterms rules, the standard used in international and domestic contracts for
the sale of goods. With Frank
Reynolds, manager, International Projects Inc., a United States export trading/consulting company, and U.S. representative at the International
Chamber of Commerce Incoterms 2000
revision. Automation Alley, Troy.
$195. Contact: www.eastmichigan
dec.org/incoterms_registration.php.
10 Keys to a Healthy Business. 8:30-10
a.m. Michigan CFO Associates. Rapid
sales growth can spell disaster if you
lack staff, equipment, processes and
cash flow in place to support healthy
growth. Automation Alley, Troy. Free.
Contact: Brian Bach, (248) 5637996; email: [email protected];
website:
www.michigancfo.com/
events/workshops.
CALENDAR GUIDELINES
If you want to ensure listing online
and be considered for print
publication in Crain’s Detroit
Business, please use the online
calendar listings section of
www.crainsdetroit.com. Here’s
how to submit your events:
From the Crain’s home page, click
“Detroit Events” in the red bar
near the top of the page. Then,
click “Submit Your Entries” from
the drop-down menu that will
appear and you’ll be taken to our
online submission form. Fill out
the form as instructed, and then
click the “Submit event” button at
the bottom of the page. That’s all
there is to it.
More Calendar items can be found
on the Web at
www.crainsdetroit.com.
PROUDTO BEIN
DETROIT
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20130128-NEWS--0024-NAT-CCI-CD_--
1/25/2013
11:11 AM
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January 28, 2013
CRAIN’S DETROIT BUSINESS
JobFront
PEOPLE
CONSULTING
Matthew Rizik to senior in-house tax
professional, Rock Ventures LLC, Detroit, from partner, PricewaterhouseCoopers, Detroit.
FINANCE
James Schmitz to
senior vice president and managing director, PNC
Wealth Management in Southeast
Michigan, Troy,
from senior vice
president and director of the investment advisers
division at Fifth
Third
Bank,
Cleveland.
STATEWIDE NOMINATIONS ACCEPTED
Schmitz
Nominate Michigan’s best in-house
attorneys and general counsels
HEALTH CARE
DEADLINE: FEB. 6
Karen Jasinski to executive director,
Rivergate Health Care Center, River-
www.crainsdetroit.com/nominate
IN THE SPOTLIGHT
Berg Muirhead and Associates,
Detroit, a
boutique public
relations and
marketing
agency, has
named Peter
Van Dyke as
partner. Van
Dyke, 31, had
been vice
president.
He earned a
Van Dyke
bachelor’s in
public relations at Wayne State
University, and is a former Crain’s
20 in their 20s winner.
LAW
James Stewart to partner in the litigation department, Honigman Miller
Schwartz and Cohn LLP, Detroit, from
shareholder, Thompson & Knight
LLP, Bloomfield Hills.
MARKETING
Katie Francek to OEM operations
manager, Search Optics, Ferndale,
from operations manager.
Sam Aaron to director of market research, DMC Worldwide Advertising
Inc., Detroit, from promotions director, WMXD-FM, Mix 92.3, Farmington
Hills, and marketing director, Splash
Universe, Dundee.
MEDIA
Eric Davies to manager, automotive
view, from executive director, Sisters, Servants of the Immaculate
Heart of Mary, Monroe.
sales and statewide regional accounts,
Outcast Media, Detroit, from regional
digital sales manager, CBS Interactive
Music Group, Detroit.
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Do you know a local rising star?
Crain’s 20 in their 20s recognition program seeks
young professionals who are making their marks in the region.
:(,19(67,13(23/(:(%8,/'/($'(56
Nomination Deadline:
February 4
N O M I N AT E N O W : c r a i n s d e t r o i t . c o m / n o m i n a t e
20130128-NEWS--0025-NAT-CCI-CD_--
1/25/2013
6:35 PM
Page 1
CRAIN’S DETROIT BUSINESS
January 28, 2013
Page 25
Former VNA companies to expand services under new names
The Oak Park-based Visiting Nurse
Association of Southeast Michigan Inc.
has taken care of people in their
homes for 114 years, but competition
for home health and hospice patients
— and the need to help hospitals reduce readmissions — required the
organization in December to seek a
sale of the company and seek capital
to expand its service mix.
VNA Inc., the parent company,
sold its two affiliate companies to
Toledo-based King’s Pointe Capital
LLC, a private equity financing company, for $295,000. Proceeds will be
used to pay VNA liabilities, VNA
CEO Jeff House said.
The contract specifies that funds
left over after
bills are paid
will be donated
to a nonprofit in
Detroit, House
said. VNA Inc.
is being dissolved.
“They asked if
we were interested in selling,”
said he, adding House
that VNA had unsuccessfully explored a sale with local companies.
VNA is King’s Pointe’s first
health care acquisition, said Rick
Scheich, managing member of
King’s Pointe.
“We got introduced to VNA in
2012, when one of our other companies, Oak Creek Capital, provided a
$500,000 line of credit,” Scheich
said. “VNA has good credit, a great
brand name and a long-standing
mission in Southeast Michigan. I
wrote the check, and we are the
proud owners of the company now.”
Under King’s Pointe, the two
VNA Inc. companies will become
for-profits and have been renamed
Michigan Community VNA LLC, the
home health and hospice company, and Michigan Community Wellness VNA, which operates the flu
clinics and the wellness and immunization side of the business.
House, who remains CEO of
Michigan Community VNA and
Michigan Community Wellness,
said the capital will enable the
VNA to hire several marketing,
sales and business employees to
talk with physicians about referring patients for home health and
hospice services.
“We can initiate sales and marketing plans that we didn’t have
funding for before,” said House,
who declined to reveal the amount
of funding Michigan Community
will spend to expand services.
“We have four positions open
right now,” he said. Three will be
sales representatives and the
fourth a vice president of business
development and sales.
“When referral sources realize
the high quality we provide our patients, they will send us more patients, and referrals will increase,”
House said.
Compared with other home
health agencies in Michigan, VNA
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scored above average in helping patients manage daily symptoms and
pain and treat wounds, according
to the latest data from the Medicare
Home Health Compare website.
Another key strategy — pursued
by most home health and hospice
companies in Michigan — is to seek
contracts with hospitals, health systems, accountable-care organizations, health insurers and physician organizations for services after
patients leave hospitals.
“We want to partner with them
under health care reform,” said
House, who noted that hospitals are
being penalized for certain patients
who are readmitted within 30 days.
“We can do a good job in helping
keep those patients out of the hospital” after they are discharged, he
said.
Several other home health and
hospice companies, including Residential Home Care in Madison
Heights and Great Lakes Caring in
Jackson, have pursued similar
strategies in the past several years.
Last month, Residential acquired the Karmanos Hospice from
the Barbara Ann Karmanos Cancer Institute in Detroit. The acquisition
is expected to help Residential
Home Care expand contracts with
hospitals.
In April 2012, a subsidiary of Detroit-based Hospice of Michigan
signed a contract with Michigan Pioneer ACO, owned by the Detroit
Medical Center. Michigan Pioneer
is one of eight accountable-care organizations in Michigan.
Dottie Deremo, CEO of Hospice
of Michigan, said the care model
necessary to work with hospitals
and ACOs in the post-acute-care
setting requires experience in man-
aging complex patient populations.
“Everyone is trying to diversify
and position for health care reform,” Deremo said. “We reorganized in 2010 to prepare and are
well-positioned now for reform.
The problem with other companies
— hospice, home health and chronic disease management — is they
are scrambling to catch up.
“It is hard to take a “subcompact
car” and “turn it into a Maserati.”
Besides providing home health
and hospice services to more than
7,000 people in Wayne, Oakland
and Macomb counties, Michigan
VNA offers patients and physicians wound care services, corporate wellness services, immunizations, disease management and flu
shots, House said.
“We would like to continue to
grow at least 10 percent a year,” he
said.
One of the future keys to success, House said, is integrating services in the post-acute care realm.
“Many home care agencies are
opening their own hospices so they
can do self-referrals, because some
people under home care become
terminal, and it is better for continuum of care” if they stay within the
same organization, he said.
As the population ages, House
said, home health and hospice
agencies need to diversify services
to help people stay in their homes
and out of hospitals and emergency departments.
Over the years, House said, competition among home health agencies in Southeast Michigan has
been especially fierce.
One of the changes in the market has been that some for-profit
companies do not take their fair
share of indigent and Medicaid
clients, leaving some more mission-based agencies, like VNA,
with larger numbers of low- or norevenue clients, he said.
As a newly minted for-profit
company, House said, Michigan
Community VNA plans to “continue the mission that VNA has been
known for.”
Deremo said some for-profit
home health and hospice companies seek patients who have fewer
medical problems and better insurance coverage to increase profits. Others have balanced patient
mixes, she said.
“You have to manage your operations very carefully” to provide
high-quality care and stay in business, she said.
Over the past five years, the
VNA has been improving quality
of care and reducing operating
losses. For example, in 2011, VNA
cut its loss to $693,000 on revenue of
about $12 million. In 2010, VNA lost
$800,000 on revenue of $16 million.
“We had a $4 million drop in revenue because we right-sized payer
sources in the organization,” House
said. “We got out of the pediatric
business and closed some specialty
programs” that were losing money.
Over the past two years, he said,
operational improvements also
have helped strengthen the VNA.
“Instead of being task-oriented,
we now are moving toward helping patients manage their care
more effectively at home,” House
said. “We are seeing fewer ER visits. We were able to reduce our
losses and improve quality.”
Jay Greene: (313) 446-0325,
[email protected].
Twitter:
@jaybgreene
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20130128-NEWS--0026-NAT-CCI-CD_--
1/25/2013
7:05 PM
Page 1
Page 26
The firm worth
listening to
is the firm that
listens to you.
CRAIN’S DETROIT BUSINESS
January 28, 2013
David Whitney Building renovation set
to begin with state financing secured
SM
Talk to Foley. We’re listening.
SM
BY KIRK PINHO
CRAIN’S DETROIT BUSINESS
For 170 years, Foley has made it our mission to find
out exactly what our clients want and deliver it. So
when our Detroit clients asked for local access to
the strength of a national law firm, Foley recruited
the city’s top talent to establish our Detroit office and
provide trusted local advisors who could leverage
our national resources. It’s one more reason Foley
has been recognized as one of the elite BTI Client
Service 30 for nine of the past 10 years in a survey*
of Fortune 1000 corporate counsel.
Learn more about how Foley can add value to your business. Contact
Detroit Office Managing Partner Daljit S. Doogal at [email protected].
With news last week that Whitney
Partners LLC had received $8 million from the Michigan Strategic
Fund, a firm behind the long-in-themaking effort to renovate the nowvacant David Whitney Building in
downtown Detroit says it has the financing to begin construction next
month.
James Van Dyke, vice president
of development for The Roxbury
Group in Detroit, said the $82.5
million project has received support from the state, Bank of America, the Detroit Downtown Development Authority and others in its
effort to redevelop the Woodward
Avenue building at Grand Circus
Park.
The mixed-use development will
contain ground-floor retail as well
as a 135-room Aloft hotel and 108
apartments.
Van Dyke said construction on
the 19-story building is expected to
be completed by the middle of 2014.
The project — which received a
$1 million Michigan Community Revitalization Program performancebased grant and a $7.5 million performance-based loan — is expected
to create 75 full-time jobs, the state
announced.
Whitney Partners was one of 14
companies to receive $1.1 billion
from the Strategic Fund. That total
state investment is expected to create close to 4,600 jobs, the state
said.
Kirk Pinho: (313) 446-0412, kpinho
@crain.com. Twitter: @kirkpinho
KENNY CORBIN
The David Whitney Building
Foley.com
#5*$MJFOU4FSWJDF"5FBN5IF#5*$POTVMUJOH(SPVQ8FMMFTMFZ."
#0450/t#3644&-4t$)*$"(0t%&530*5t+"$,40/7*--&t-04"/(&-&4
."%*40/t.*".*t.*-8"6,&&t/&8:03,t03-"/%0t4"$3".&/50
4"/%*&(0t4"/%*&(0%&-."3t4"/'3"/$*4$0t4)"/()"*t4*-*$0/7"--&:
5"--")"44&&t5".1"t50,:0t8"4)*/(50/%$
ª'PMFZ-BSEOFS--1t"UUPSOFZ"EWFSUJTFNFOUt1SJPSSFTVMUTEPOPUHVBSBOUFFBTJNJMBSPVUDPNF
/$MBSL4USFFU4VJUF$IJDBHP*-tt
Farm software wins
1st round of funding
Ann Arbor-based Farmlogs,
formed by two Michigan men in
November 2011, has received its
first round of venture and angel
capital for its cloud-based software.
Jesse Vollmar and Brad Koch
market Farmlogs to row farmers.
The software includes a feed of
news and weather, inventory
tracking and video feeds of experts.
It allows farmers to share data
with neighbors, crop insurance
agents and agriculture officials.
The $1 million in funding, expected to be announced today, includes $245,000 from two Silicon
Valley investors, the Start Fund and
Andreesson Horowitz, after it graduated from Y Combinator; and funding from Ann Arbor-based Huron
River Venture Partners, the Detroitbased First Step Fund and Chicagobased Hyde Park Venture Partners.
Attorneys Title expands
with asset purchase in Ohio
BY CHAD HALCOM
CRAIN’S DETROIT BUSINESS
Attorneys Title Agency LLC, the title insurance and services company owned by attorney David Trott
of Trott & Trott PC in Farmington Hills, is expanding
into Ohio after acquiring
the assets of Columbusbased Talon Title Agency of
Central Ohio Inc.
The new company
rolls four locations and
40 people into the Attorneys Title organization,
which grows to nearly
Trott
500 employees across 34
offices, said Trott, chairman and
CEO of the Trott firm. As part of
the deal, Attorneys Title formed
an affiliate company, Talon Title
Agency LLC, to acquire the Columbus company’s assets in a deal
that closed Dec. 31.
Terms were not disclosed. The
title services firm expanded into
southwest Michigan a
year earlier by acquiring the assets of two First
American Title Insurance
Co. locations in Battle
Creek and Portage, as
well as Portage-based
Pinnacle Title Agency.
The Attorneys Title
umbrella also covers
subsidiaries Philip R.
Seaver Title Co. Inc. in
Bloomfield Hills, Greco Title Co. in
Mt. Clemens and Midstate Title
Agency LLC in Lansing.
CRAIN’S SEEKS NOMINEES FOR 20 IN THEIR 20S
Do you know a 20-something who is
someone to watch? Crain’s 20 in their 20s
recognition program seeks young
professionals who are making their marks in
the region.
Candidates are not limited to any particular
field or activity but include up-and-comers
who are making waves as young professionals within
a company, have shown success or originality as
entrepreneurs, or have made local impacts in some
other demonstrable way.
Besides the corporate world, candidates are
considered from creative industries,
nonprofits and social entrepreneurship
arenas.
Winners will be profiled in the April 29 edition
and honored at a May awards event.
Nominees must be 29 or younger before April
29. Nominations are due Feb. 4.
To fill out the form, visit www.crainsdetroit.com
/nominate.
Questions? Contact Bill Shea at [email protected] or
(313) 446-1626.
DEADLINE EXTENDED TO NOMINATE IN-HOUSE ATTORNEYS AND GENERAL COUNSELS
As companies across Michigan chart their paths to
growth, so too do their legal teams.
How well have attorneys handled the challenge? Who
are Michigan’s best in-house attorneys and general
counsels?
Crain’s has extended the nomination deadline to Feb. 4
for its third annual General and In-House Counsel
Awards to highlight the best and brightest of the state’s
in-house legal professionals.
Candidates will be judged on measures such as
litigation avoided, reduction in claims, cost containment
and pro bono/community service. New for this year will
be a lifetime achievement award.
Winners will be announced in the April 1 issue of Crain’s
Detroit Business.
Awards will be given out on April 16 at the Crain’s General
& In-House Summit at the Westin Book Cadillac in Detroit.
Statewide nominations accepted. Visit
crainsdetroit.com/nominate to fill out the form.
For questions about the nomination process, contact
Daniel Duggan at [email protected] or (313) 4460414. For technical questions regarding a nomination
form, contact Kacey Anderson at [email protected]
or (313) 446-6786.
20130128-NEWS--0027-NAT-CCI-CD_--
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1/25/2013
7:08 PM
Page 1
CRAIN’S DETROIT BUSINESS
Page 27
Crime: Data becomes secret weapon
■ From Page 1
and the heads of security for leading Midtown employers, gather for
a detailed meeting. The corporate
involvement includes DTE Energy
Co., Henry Ford Health System and
the Detroit Medical Center.
The group reviews every reported crime that took place at Wayne
State and in Midtown over the previous two weeks.
The meetings, which began in
2009, are centered on a data reporting and management system
called CompStat. The system allows law enforcement officers to
review detailed crime mapping.
The information identifies crime
hot spots, repeat offenders and
crime trends. It uses a combination of police reports, a criminal
database and Google Earth to pinpoint precise locations of where
and when crimes took place.
Anthony Holt, chief of police for
the WSU Police Department, said
he began the meetings four years
ago as a way to rein in crime at
Wayne State.
“We look at every single crime
that happened in Midtown and
downtown and look for patterns
and devise a plan off of that pattern,” Holt said. “Two weeks later,
we revisit it and look at the stats.
And we had better show a decrease.”
Mike Solaka, co-owner of Ye Olde
Butcher Shoppe at 3100 Woodward
Ave., on the outskirts of Midtown,
said his business has been broken
into four times since opening in
early November. But CompStat
methods helped stop the problem.
There were 12 break-ins along
Woodward in Midtown within a
short time span, prompting the
CompStat team to designate it a
hot spot.
Holt said they learned the same
person was behind each of the
crimes and was closely monitoring
the routine of police patrols.
Police identified the thief using
a bait car loaned to WSU police by
DTE Energy’s security division.
“If it wasn’t for the Wayne State
police, I don’t know what would
have happened,” said Solaka, who
also owns the Northern Lights
Lounge in New Center. “It doesn’t
have to be violent crime to kill the
momentum in Detroit.”
David Martin, research director for the Urban Safety Program
and Center for Urban Studies at
WSU, said a similar meeting to
the Midtown program takes place
monthly to drill down on crime
stats in Detroit’s Central Business
District.
And he said there are plans to
roll out the program more frequently in downtown and more
widely across the city.
Corporate support
Lyke Thompson, director of the
Center for Urban Studies at Wayne
State University, said companies
like Quicken Loans/Rock Ventures
and the Ilitch family of companies
are also expanding their security
presence in the city and sharing
that information with the Detroit
Police Department.
Charles Wilson, chief of staff for
interim DPD Chief Chester Logan,
said private companies are filling
the void left by budget constraints.
Wilson confirmed the DPD is
NUMBING NUMBERS
Despite fluctuations from 2011 to 2012, crime affects thousands each
year in the city of Detroit:
2011*
2012*
Change
Aggravated assault
8,959
8,777
-2.03%
Burglary
16,147
14,280
-11.56%
Larceny
16,237
16,075
-1%
Robbery
4,986
5,117
+2.63%
* Dec. 26 of previous year through Nov. 25
Source: Crisnet
It doesn’t have to be violent
“
crime to kill the momentum in
Detroit.
”
Mike Solaka, Ye Olde Butcher Shoppe
now working with the heads of security for Rock Ventures and the
Ilitch family of companies to provide crucial information and data
on crime in downtown Detroit.
For example, both Rock and the
Ilitch companies are allowing the
DPD to tap into their camera networks.
“It’s been very effective, especially for major events,” Wilson
said. “We have had multiple occasions where we zeroed in on an incident with their cameras and
made an arrest.”
Wilson said DPD stopped using
CompStat two years ago but
brought a data-driven program
back six months ago. Now, he said,
about 30 law enforcement officials
meet bi-weekly to discuss crime
during that period.
Effective data analysis maximizes meager resources, Holt said,
and can improve response times.
Response times for WSU’s police
unit hovers around 90 seconds.
Overall, crime has dropped by 45
percent in Midtown and Wayne
State since CompStat began.
“If you divide the 60 police officers (that) Wayne State has by the
four square miles they patrol, we
have about 13 officers per square
mile,” Holt said.
According to information provided at the latest CompStat meeting last week, there were three sexual assaults, 12 aggravated
assaults, 11 robberies, 56 larcenies,
and 23 stolen cars, all within a
four-square-mile radius in Midtown from Jan. 1-23.
The figures are significantly
down from years past. For instance, last year during the same
two-week period there were 39
stolen vehicles in the same area.
Street smarts
Besides police efforts, business
owners are adding more practical
security
features such as
better lighting
and video surveillance.
Jacques
Driscoll, owner
of Green Dot Stables, said he
added spotlights
to an exterior
wall last year to Driscoll
light up cars parked along his
restaurant at the corner of West
Lafayette Boulevard and 14th
Street. Cars parked on the street
instead of in well-lit parking lots
are more susceptible to crime.
“(Lights) make it more inviting
and feels safer,” Driscoll said. “We
are installing a security camera in
the coming weeks as well.”
Sue Mosey, president of Midtown
Inc., said Midtown property owners
can receive up to $5,000 in matching grants if they are willing to
have a Wayne State police officer
come to their establishment to
conduct a security audit that includes a crime
history report
for the address.
“Anyone in
the
neighborhood, a business
or property ownMosey
er, can get help
for security upgrades, alarms,
video surveillance and better lighting,” Mosey said. “The reality is
big cities like Detroit have crime.”
Midtown Inc. began the security
grant program in February 2011; so
far 40 individuals have signed up.
But Midtown still faces its challenges. When two teenagers with a
BB gun were unsuccessful in their
attempt to rob patrons at Woodbridge Pub earlier this month, it
created a flurry of posts on Detroitcentric message boards about safety in the city. The pub is off Trumbull north of Warren in the
Woodbridge neighborhood just
west of Midtown.
Jim Geary, owner of Woodbridge Pub, said it was the first
such incident he has witnessed
since opening the pub more than
four years ago.
Geary said the recent attention
paid to crime has nothing to do
with an increase in criminal activity and everything to do with
whom it’s affecting.
“When people who have nothing
go to where people have something, people pay more attention,”
Geary said. “That doesn’t mean
they haven’t already taken from
those who have nothing.”
Geary said he takes simple measures to ensure his guests’ safety.
“I shovel snow for the whole
neighborhood and even bought
two tractors to do it,” Geary said.
“I can’t change the entire city, but
I can fix this block.”
Nathan Skid: (313) 446-1654,
[email protected].
Twitter:
@NateSkid
20130128-NEWS--0028-NAT-CCI-CD_--
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Page 28
January 28, 2013
CRAIN’S DETROIT BUSINESS
Bloomfield Park: Top bid for site will win foreclosure rights
■ From Page 3
of foreclosing on the property itself.
Farmington Hills-based Friedman Integrated Real Estate Solutions
LLC, the court-appointed receiver
for the property since 2009, maintains control of the site for now
and plays no role in the sale, said
Friedman Marketing Director
Danielle Massell.
Because the bank has already
completed a judicial foreclosure
process, a buyer approved by
Wells Fargo needs only to publish
a foreclosure notice and wait out a
borrower redemption period —
generally six months in Michigan
— to become the owner, said Wells
Fargo attorney Alan Greene of Detroit-based Dykema Gossett PLLC.
Farbman started marketing the
property last week, Greene said, so
the bank has no formal offers yet.
There is no list price or minimum
offer the bank will consider, according to Farbman Group, but
Greene said the bank hopes to recover “as much as it reasonably
can” of its unpaid loan balance.
A buyer would have to foreclose
on the entire project site, nearly 90
acres east of Telegraph Road and
north of Square Lake Road, at one
time but could then resell it in
pieces to developers with smaller
projects in mind. Greene said
there is no auction date or formal
timeline to sell the land.
“The question is whether a legitimate group will finish the project,
or whether they are going to …
take it to the ground for scrap value,” said Matt Farrell, managing
director of Birmingham-based
CORE Partners LLC.
Others in the real estate community said the latter is much more
likely, and a foreclosure buyer
would likely pay
less than $5 million to clear the
way for others
to raze it and
erect modest retail or residential space.
“What I don’t
know is, can anything be saved?”
Miller
said
David
Miller of Signature Associates in
Southfield. “I think at the end of the
day, whoever is holding the title”
will have to raze the development.
Wells Fargo originally floated a
$48 million acquisition loan to the
Bloomfield Park developers to take
possession of the land and begin
construction on the mixed-use
commercial and residential development in 2008. Project co-owner
Developers Diversified Realty Corp.
has since repaid a $9.8 million portion of the loan, but the rest has
gone unpaid and the bank later obtained a court judgment for the
balance plus interest and certain
legal costs.
Because the half-completed, 18building project site appears to
contain more concrete than steel,
there will be little to recover in
scrap materials after a costly demolition, and a buyer may need
some time to bring a new development to market, said Steve Morris,
managing partner of Mohr Partners
Inc.’s Farmington Hills office.
“The word ‘carry’ enters into
the conversation for any buyer,”
he said. “You may have interest on
your loan money if you borrowed
it to buy the land, while you hold
the property and pay taxes until
you can redevelop it. That’s going
to lead to a discount on the pur-
chase price.”
Morris, who presents a Bloomfield Park case study in his real estate finance course at the University
of Michigan’s Stephen M. Ross
School of Business, said the most
likely redevelopment scenario is
modest retail along Telegraph
Road and some form of nontraditional housing space on the back
parcels — possibly a church-managed senior housing or assisted
living space.
Some modest medical office
space may also be feasible, he said.
The project site was assessed at
a market value of just under $12.3
million in 2011, according to the
Bloomfield Township Assessor’s
Office and the Oakland County
Equalization Division, but Morris
said he believes a vacant property
at the same location would have a
market value of about $9 million
today.
Subtract the demolition costs,
which could run $2 million to $3
million, and another $3 million for
“carry costs” to a new landowner,
and Morris said he believes foreclosure rights could easily sell for
$2 million or less.
Matt Gibb, the Oakland County
deputy executive who oversees
economic development, said the
county is still “looking for all different types of investors” in the
Bloomfield Park property.
“I think the way that property
was left, being exposed to the elements, makes it nearly impossible
or too costly to continue what was
being built, which makes you start
to think it starts to be a teardown,” said Fred Liesveld, executive managing director of the
Southfield office of Newmark Grubb
Knight Frank.
Schubiner owns 50 percent of
Bloomfield Park, with the rest belonging to a joint venture of Coventry Real Estate Advisors and Developers Diversified. Schubiner in 2009
filed a lawsuit against his co-owners alleging they mismanaged the
property and cost him more than
$160 million in lost profits, but he
lost in a jury trial on that case last
August before Oakland County
Circuit Judge Michael Warren.
He has since appealed, and legal
briefs are due in that case within a
couple of weeks, said Schubiner
appellate attorney Allan Falk of
Meridian Township-based Allan
Falk PC.
The Michigan Court of Appeals
will likely need more than a year
to conduct hearings on the various
legal arguments and reach a decision, but Falk said a change of
ownership for the Park property
has no bearing on the appeal.
Chad Halcom: (313) 446-6796,
[email protected].
Twitter:
@chadhalcom
Jobs: Suppliers expand
■ From Page 1
The plant will ramp up and begin production in June or July, the
company said.
It’s also calling for expansions at
its Integrated Manufacturing and
Assembly joint venture with Comer Holdings LLC. IMA’s two seat
foam plants in Detroit, on Nevada
Street and Davidson Street, will
see the addition of 755 employees
with a $13.85 million investment.
Matt Simoncini, Lear CEO, said
now is the time for the industry to
reinvest in the region.
“Detroit is ripe for investment
for a lot of reasons: 15 percent of all
auto production happens in the tricounty area, we have the infrastructure, brownfield sites and an
educated workforce,” he said.
“Everyone is looking for additional capacity as we move toward 15
million units of production this
year, and it makes investment in
the area very attractive.”
Denso plans to add 176 jobs with
a nearly $46 million investment in
research and development at its
Southfield headquarters.
In West Michigan, Denso is investing $105 million to expand
thermal products production at its
Battle Creek plant, which is expected to add 266 new jobs.
Denso’s expansion is part of the
continued regionalization of automotive manufacturing, Doug Patton, Denso’s senior vice president
of engineering, said at the North
American International Auto Show.
“Basically, the Denso philosophy is to manufacture where the
product is sold,” Patton said.
“What happens when the products
are at sea and there’s an engineering change? That’s how we started
in North America years ago, and
that’s what we continue to do.”
Experts are forecasting vehicle
production to top 15 million this
year, up from 14.4 million in 2012.
Neil De Koker, chairman and
president of the Troy-based Original
Equipment Suppliers Association,
said the investments demonstrate
industry stability, not risk.
“There are still skeptics out
there saying, ‘There they go again,
over-expanding and over-hiring,’
but executives are cognizant of the
need to stay lean,” De Koker said.
“We are so at capacity, and many
are over capacity. We desperately
need to expand and, increasingly,
we are seeing investments that
they delayed as long as possible
that they can’t delay any longer.”
All the investments are supported by grants from the Michigan Economic Development Corp.’s Michigan Strategic Fund.
The Denso expansion in Southfield is supported by a $1.54 million
grant from the MSF and a five-year
property tax abatement from the
city of Southfield. The Battle
Creek project is supported by a
$1.46 million grant from the MSF
and a $1.5 million tax abatement
from the city of Battle Creek.
Gov. Rick Snyder announced
the state grants at a news conference last week.
“The fact that these companies
are choosing to stay and grow in
Michigan reinforces our wellearned reputation as America’s
comeback state,” he said in a statement.
Dustin Walsh: (313) 446-6042,
[email protected].
Twitter:
@dustinpwalsh
20130128-NEWS--0029-NAT-CCI-CD_--
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7:08 PM
Page 1
CRAIN’S DETROIT BUSINESS
January 28, 2013
Page 29
Chaldeans: Foundation reacts as community grows
■ From Page 3
donates medical supplies for the
free health care provided by volunteer Chaldean doctors and nurses,
and Macomb Community College provides English-as-a-second-language
classes. Now the foundation is looking to build a home away from
home for the refugees, in the form
of new housing in the West Bloomfield Township area.
“We’re looking at developing
community,” Manna said.
A lot of the refugees are living in
crowded apartments, some of them
subpar, in the Sterling Heights
area, he said.
“We know we could make an impact by helping them find longterm housing ... it’s part of our
strategic plan to get something announced by Sept. 30,” Manna said.
The foundation is operating on a
budget of $2.6 million, up from $1.6
million last year, thanks to a neardoubling of its contract with the
Michigan Department of Human Services. The foundation also does an
annual appeal and annual golf outing to raise funds.
The organization is negotiating
the purchase of several acres of
property in the West BloomfieldBloomfield Hills area on which it
plans to build long-term housing
and incorporate other supportive
services, Manna said. The foundation is consulting with the Michigan
State Housing Development Authority
as it looks at launching long-term
housing and studying the efforts of
nonprofit housing developers like
Southwest Housing Solutions.
Serving as the developer of longterm housing can be a good source
of income, said John Van Camp,
president and CEO of Detroit-based
Southwest Solutions, the parent of
Southwest Housing Solutions. In
tax-credit projects, there’s an allocation for a developer fee: 15 percent
or $1 million, whichever is lower.
But it can take years to line up financing for projects, and it takes a
certain skill set that wasn’t natural
to Southwest initially, Van Camp
said. It took Southwest a couple of
years to line up the 14 levels of financing it took to aggregate $23.9
million to fund its Piquette Square
veterans housing and supportive
services project in Detroit, he said.
Van Camp said he’s encouraging the Chaldean Community
Foundation to take a long-term
view on the housing development
and hire a development consultant
to line up financing. Then the
group could access its ability to
handle financing for a housing development on its own.
As the nonprofit arm of the
Chaldean chamber, the foundation
has leaders who are used to running businesses and startups, and
looking at spreadsheets and business plans, Van Camp said. That
will help, he said.
While it develops a strategy to
move into long-term housing development, the Chaldean foundation is looking for a larger location
in Sterling Heights to replace its
2,500-square-foot offices, which
connect with the bulk of the people
it serves on a walk-in basis. The
new site will house its growing
staff, which has expanded from 11
a year ago to 20, and soon will add
three more as the foundation fills
positions for two case managers
and a transportation coordinator.
Ideally, the new east side location
will also be large enough to host the
800 to 1,000 Chaldean refugees who
come for quarterly town hall meetings hosted by the foundation.
In addition, the foundation has
started programs to help community members with other basic needs.
Following its 2008 launch of Project Bismutha, which provides free
or reduced primary health care
and discounted medication for the
uninsured in its community, the
foundation launched the Chaldean
Loan Fund in October. The fund
provides low-interest loans of
about $5,000 toward the purchase
of a used vehicle. Both programs
were modeled after similar programs in the Jewish community.
By the end of March, the foundation also plans to launch a microenterprise loan fund to help
Chaldean entrepreneurs. Members
of the Chaldean Community put up
$50,000 for the fund, and the
Chaldean
American
bishop,
Ibrahim Ibrahim of the Southfieldbased Eparchy of St. Thomas the
Apostle, the diocese for Chaldean
Catholics living in the eastern half
of the U.S., matched it, Manna said.
It will grow further based on
fundraising. Since Chaldeans are
highly enterpreneurial, efforts are
focused on helping people find
their niche.
Two-thirds of local Chaldean
households own at least one business, and 39 percent own two or
more, Manna said. Those businesses include supermarkets, cellphone stores and franchised food
establishments.
“One of the challenges we see
with these refugees is ... some of
these women work, but at the same
time they can’t find day care,”
Manna said. “So we’re working
with some of these women to start
a day care.”
Chaldeans, who were Iraq’s indigenous population, are Eastern
Rite Catholic.
Over the past 30 years as it has
fled Iraq, the Chaldean population
of the U.S. has grown from roughly
20,000 to about 220,000, with about
150,000 of those living in the territory of the Southfield-based diocese, according to a recent report
in The Michigan Catholic.
About 8,000 to 10,000 Chaldean
refugees have come to metro Detroit
since 2005, Manna said, increasing
the number living in the region to
about 121,000 by 2008, according to a
survey by United Way for Southeastern
Michigan and Walsh College.
There are 10 Chaldean Catholic
churches in the Detroit region,
making it one of the largest dioceses for the church in the world.
The Chaldean Community
Foundation expects the number of
Chaldean refugees coming to
Southeast Michigan to rise even
further, as they continue to flee
Iraq, Syria and other parts of the
Middle East, he said.
“One of the most gratifying
things to me has been the opportunity to help people understand …
these (refugees) came here because
they had no choice. They were being persecuted,” Manna said.
“Immigration … will be a net
gain for our state for years to
come. The places around the country that are flourishing are welcoming to immigrants.”
Sherri Welch: (313) 446-1694,
[email protected].
Twitter:
@sherriwelch
Roads: Snyder mirrors Engler moves on funding
■ From Page 3
Most supporters of increasing
transportation revenue don’t have
as much of a problem with the
sales tax option, because the money comes in regardless. But business groups are varied.
The National Federation of Independent Businesses-Michigan is not
supportive of increasing registration fees or gas taxes as a way to
fund transportation improvements, but there is support for the
idea of a local funding option.
Rich Studley, president and
CEO
of
the
Michigan Chamber of Commerce,
said although
the
chamber
supports roads
funding, it does
not support the
sales tax option.
Snyder said
the sales tax option would come Studley
from a ballot question.
“I’m going to respect the wishes of
the voters,” Snyder said, adding he
believes the fairest way is a user fee
system because it means those using the roads help pay for them.
In Engler’s case, success came after months of planning before the
bills were ever introduced. The administration and others worked
hard to build so broad a coalition
that when the rollout of the plan oc-
curred, there was no one left in town
to try and shoot it down.
What also helped make it happen was the strong outcry from the
public at the deterioration of the
roads across the state.
“The biggest public relations issue the state had was the condition
of the roads,” said John Truscott,
former director of communications for Engler and now the president of Lansing-based Truscott
Rossman, a bipartisan strategic
communications firm.
He said the foundation had been
laid for improving the transportation system with the road builders
and transit agencies pushing the
issues for years, and that the state
had run out of bonding capacity, so
raising revenue became one of the
most viable options.
And when it came down to the final few votes, bringing members
in to sit down with the governor in
his office typically did the trick.
“The aura of the office and
grandeur of it, it can change minds,”
Truscott said. “I’ve seen it happen.”
Michael Nystrom, executive
vice president of the Michigan Infrastructure & Transportation Association, said there is momentum behind finding a legislative solution
to the state’s returning road funding conundrum.
He is open to the sales tax plan,
so long as the Legislature passes
the user fee increase first.
But where Nystrom said he
would have concerns is if Snyder
continues to push for reforming
Public Act 51, the 60-year-old law
that contains the formula for how
transportation funding is divvied
up across the state, mainly because it will create organized opposition from other groups to
shoot down the funding plan he
supports.
“If you start cutting up the pie
before you grow the size of the pie,
it’s a mistake,” Nystrom said.
“Let’s grow the pie first and then
have an in-depth discussion later
on how it should be distributed.”
Some of that organized opposition could come from the County
Road Association of Michigan.
The group’s director, John
Niemela, said they absolutely support the call for an increase in
transportation funding but have
concerns about potential changes
to the way the road dollars are allocated that could negatively affect
counties.
“I think we’d have a problem
with that,” Niemela said.
While Snyder often cites the
need for changing the state’s road
funding formula, which was created in 1951 and predates the interstate highway system, Niemela
said the act has been amended
more than 100 times since then.
“We feel that the formula is pretty good.”
Studley said he sees a brief window of opportunity to get roads
funding done this time around.
Studley was there in 1997 helping
to persuade lawmakers for the organization and said it is important
to note no lawmaker who voted to
raise the gas tax was defeated in
the following election.
“Historically in Michigan, this
has been a bipartisan issue,” he
said.
The only real opposition then,
and appears the same now,
sources say, is from anti-tax increase conservatives.
Studley said he understands that
perspective, but notes that the only
thing more expensive than having
good roads is fixing bad ones.
“This is an economic development issue,” Studley said.
During an online town hall
meeting last week, Snyder continued to press for changes to PA 51
and indicated he would support
having such changes apply to the
new road revenue that is generated, because he said the current
system “is all goofed up.”
“It doesn’t make any rational
sense,” Snyder said.
Chris Gautz: (517) 403-4403,
[email protected].
Twitter:
@chrisgautz
www.crainsdetroit.com
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20130128-NEWS--0030-NAT-CCI-CD_--
1/25/2013
6:04 PM
Page 1
Page 30
January 28, 2013
CRAIN’S DETROIT BUSINESS
Arena: State could make play for Red Wings’ new home
■ From Page 1
Details of that meeting have not
been disclosed, but a source familiar with the situation, who spoke
on condition of anonymity, confirmed to Crain’s that the Ilitch organization was suggesting state
ownership as part of the preliminary brainstorming for the new
venue.
The fund, which can sell low-interest bonds for projects, is an autonomous board within the quasipublic MEDC and was created in
1984 to promote economic development. The fund owns the Cadillac
Place office building in Detroit’s
New Center area and the Michigan
House of Representatives Building
(Anderson Office Building) in
downtown Lansing, the MEDC
said.
The Ilitches appear to be interested in a similar arrangement for
an arena to replace aging, cityowned Joe Louis Arena.
Pat Harrington of Lansing-based
lobbying firm Muchmore Harrington
Smalley & Associates and William
Danhof, a Lansing-based municipal finance attorney with Detroit
law firm Miller, Canfield, Paddock
and Stone PLC, requested the Nov.
14 meeting with MEDC President
and CEO Michael Finney and
Mark Morante, MEDC senior vice
president of program management, capital markets and incentives group, according to an email
from Morante provided by the
MEDC.
“Bill and Pat want to meet with
you next Wednesday the 14th to
discuss the MSF ‘owning’ the arena in a similar manner as to how
we own the state office building in
the D,” Morante wrote in the email
to Finney.
Danhof is the state’s bond counsel and helped draft the bonding
provisions for the Michigan
Strategic Fund, according to his
Miller Canfield online biography.
Neither Harrington nor Danhof
returned messages. They have
been retained by the Ilitch organization, which declined to comment, to work on the arena project.
MHSA and Miller Canfield both
have done work on behalf of Ilitch
Holdings Inc. in the past.
The MEDC made Steve Hilfinger, its executive vice president
and COO, available to comment on
the situation, but he limited his
words to warning that no decision
has been made on how the arena
will be owned and financed.
“At this point in the discussion,
it’s so preliminary, none of that
has been determined,” he said.
“It’s going to be a long process.
This is a project with a lot of moving parts.”
Hilfinger did not specifically
comment on the Nov. 14 meeting,
but reiterated the state’s support.
“We’re at the point of thinking
about all the things in very preliminary ways. The state wants to support this,” he said.
Any action on the project by the
strategic fund would have to be authorized by its board, which meets
monthly. Finney is the board’s
chairman.
Limited disclosure
The Ilitch family for years has
acknowledged that it wants a new
arena for the Wings, who have
played at Joe Louis Arena since it
Emails reveal details of arena discussions
Other highlights from the
emails released this month by the
Michigan Economic Development
Corp. after a Freedom of Information Act request by Crain’s:
䡲 A participant, by phone, in
the legislative discussions about
the arena project was Steve Kantor, managing director in the public finance arm of New York Citybased First Southwest Co.
Kantor deferred all comment to
the state and Ilitch representatives, and declined to say which
side retained First Southwest, an
investment bank specializing in
public finance for major infrastructure projects including
sports arenas.
Kantor’s name is listed in the
documents amid Ilitch staffers.
䡲 A July 18 email from Mark
Morante, the MEDC’s senior vice
president of program management, capital markets and incentives group, to Detroit Economic
Growth Corp. CEO George Jackson and Brian Holdwick, the
DEGC’s executive vice president
of business development, asks to
confirm $2 million in funding for
the project. The funding is re-
JOHN SULLIVAN
One possible location for a new Red Wings arena is this largely vacant area
north of downtown and bracketed by Woodward Avenue (left), Cass Avenue
(right) and Temple Street (foreground).
opened in 1979. Joe Louis is considered elderly by sports facility standards.
The Ilitches announced in December a proposal for a $650 million district of residential, retail
and office facilities anchored by a
multi-use events center that would
be home to the Wings. No location,
ownership or financing details
were disclosed.
The Ilitches are expected to put
up some portion of the project’s
costs, and they have a notable fortune: They’ve stated that their
companies, with the Detroit-based
Little Caesars pizza chain as the
backbone, generated more than
$2.4 billion in revenue last year,
but they haven’t disclosed details.
What the Ilitches did say publically, via their Olympia Development
business, was done at the time in
support of legislation that repurposed almost $13 million annually
from Detroit’s Downtown Development Authority to the arena project.
The money will pay down bonds issued by a to-be-determined entity
for the construction of some portion of the arena and district.
The cash was money the DDA
collected within its district originally to pay down Detroit Public
Schools bond debt that has since
been retired. The bills were passed
and signed by Gov. Rick Snyder.
A new arena, regardless of its
owner, could generate $5 million to
$8 million annually in additional
team revenue, sports industry insiders have told Crain’s.
The Ilitches are thought to be
looking to build on land they own
in one of three locations: the area
near the Fox Theatre, between
Grand River and Cass avenues
south of I-75, or west of Woodward
Avenue north of I-75.
The Red Wings’ ownership last
May selected Dallas-based HKS Inc.
as the arena architect, according
to Sports Business Journal. The
team declined to confirm or deny
the report.
HKS will design the venue with
Cambridge, Mass.-based architectural firm Chan Krieger NBBJ, the
sports industry trade magazine
said.
Reasons why
Property taxes are a major reason for the Ilitches to not want to
own a new arena, said Neil
deMause, a New York-based journalist and co-author of the book
Field of Schemes, which took a critical look at public funding for professional sports stadiums.
“If the state owns the building,
presumably you don’t have to pay
property taxes. That’s huge. That’s
why a vast number of authorities
are owned by public entities even
if the teams are paying for the construction costs,” he said.
News reports emerged late last
year that the Ilitches were delinquent on city property taxes on
their properties, including Joe
Louis, but Detroit acknowledged
confusion over record keeping,
and it’s unknown if any back taxes
actually are owed.
The Joe Louis lease between the
city and Olympia calls for the Ilitches to rent the building for
$25,000 a month in lieu of taxes.
Not owning a new arena also
aids the Ilitches in the long term,
deMause said.
“If you don’t own the building,
quested from the quasi-public
DEGC and $2 million from Wayne
County.
Wayne
County
Executive
Robert Ficano has said for several
years that county government
would aid the arena project.
䡲 On Dec. 3, Morante emailed
Michael Shore, the MEDC’s managing director of communications, to say that the arena
district legislation effort needed
to be kept a “governor-level
issue” and “not an MEDC project.”
— Bill Shea
you’re not stuck with it down the
road,” he said. “What you want to
own is the revenue for the building. Actually owning the building
means you’re in a situation in
which you want to move down the
road, the property is yours and
you have to figure out what to do
with it.”
The Michigan Strategic Fund
owning the building helps solve
those concerns, and there’s precedent for the fund owning property.
In June 2011, it issued $119 million in bonds to buy the 1.1-million-square-foot Cadillac Place office building in the New Center
area from New Center Development
Inc. — a corporate entity that had
GM, the state of Michigan and several other corporate leaders on the
board — as part of a refinancing of
the building.
Formerly the headquarters of
General Motors Corp., the building
at 3044 W. Grand Blvd. has been
used by the state of Michigan for
its local offices since 1999. The Albert Kahn-designed building had
been owned by a state-controlled
trust, which then leased the space
to the government entities in it.
The fund was used as a low-cost
way to refinance the building, Minesh Mody, CFO of the fund and
MEDC, told Crain’s at the time.
The fund also owns the Michigan House of Representatives
Building (Anderson Office Building) in downtown Lansing.
The fund also could ease
Olympia’s construction costs: The
MSF has the authority to sell a limited amount of tax-exempt private
activity bonds on behalf of private
firms building projects for public
benefit — something that could be
attractive to the Ilitches, who
could get a lower rate on bonds via
the MSF.
Other venues
Three out of the four current pro
sports venues in the region are
owned by public stadium entities.
Comerica Park, home of the Ilitchowned Detroit Tigers, and Ford Field
are owned by the six-member public Detroit-Wayne County Stadium
Authority and subleased to Detroit’s
Downtown Development Authority,
which in turn has operating contracts with the teams to run the
ballparks.
William Wolfson, chairman of
the stadium authority board and
former interim corporation counsel for the county, said the organization has not been in talks about
a new hockey arena.
Comerica Park was built for
$300 million with a mix of public
and private money, as was adjacent $500 million Ford Field for the
Ford family’s Detroit Lions.
The Ilitches paid for much of
Comerica Park but relied on $80
million in public bonds that are being repaid by a county use tax.
Another $80 million was assembled by the city, Wayne County,
Detroit’s Downtown Development
Authority and the Michigan
Strategic Fund and was used for
supporting infrastructure, such as
water and sewer lines, for the site
of the two ballparks.
Joe Louis Arena was built by the
city for $30.3 million in 1979 and financed with municipal bonds. The
team, then owned by Bruce Norris,
signed a deal in 1979 to move into
Joe Louis that season, leaving behind its home since 1927, Olympia
Stadium. Norris also owned
Olympia, which was demolished.
The Palace of Auburn Hills, home
of the Detroit Pistons, is owned outright by team owner Tom Gores,
who bought the franchise and
venue for $325 million in June
2011. Former owner Bill Davidson,
whose death in 2009 led to the
team’s sale, built the Palace in
1988 for $90 million out of his own
pocket. He spent an additional
$112.5 million in subsequent renovations.
The NHL’s current slate of arenas is a mix of privately and publicly owned facilities, much like
pro baseball, basketball and football.
Public dollars, questions
Using public subsidies for sports
stadiums is a controversial issue,
and almost always attracts criticism. Possibly using the strategic
fund to own and finance the venue
already is raising eyebrows.
Patrick Anderson, principal and
CEO of East
Lansing-based
consultancy Anderson Economic
Group and former deputy budget director for
the state, expressed skepticism about the
Michigan
Anderson
Strategic Fund
owning the hockey arena.
“The idea that an economic development authority could own a
sports facility and run it in an attempt to generate a profit is not
one that has a long track record of
success,” he said. “Historically,
they’ve been very poor investments as operating entities. They
tend not to be income producers
for whoever owns them.”
That said, all involved say nothing has been decided on the arena’s
ownership and financing, so how
the fund ends up involved in the
project, if at all, remains to be seen.
“You can expect a lot of creative
ideas, most of which could and
should be shelved,” Anderson
said. “What’s the best way for the
fans, not the taxpayers, to pay for
the majority of the costs of a new
sports facility?”
Bill Shea: (313) 446-1626,
[email protected].
Twitter:
@bill_shea19
20130128-NEWS--0031-NAT-CCI-CD_--
1/25/2013
6:05 PM
Page 1
CRAIN’S DETROIT BUSINESS
January 28, 2013
RUMBLINGS
Page 31
WEEK ON THE WEB
FROM WWW.CRAINSDETROIT.COM, WEEK OF JAN. 19-25
Microsoft
surfing for store
in Detroit?
I
s Microsoft considering a
Detroit store? Why else
would the tech giant be
looking for a store manager?
The Redmond, Wash.based software firm posted
a job opening for a “store
leader” in Detroit through
its website last week.
Microsoft told Crain’s
that it is preparing to open
retail stores in San Antonio; Miami; San Francisco;
St. Louis, Mo.; Beachwood,
Ohio; and at the City Creek
Center in Salt Lake City
(owned by Bloomfield Hillsbased Taubman Centers Inc.).
The company wouldn’t
comment on whether there
is a Detroit store in the
works.
It follows news — first reported by Crain’s in November — that Moosejaw Mountaineering and Backcountry
Travel is considering turning
its temporary Detroit store
into a permanent store.
The idea of a Microsoft
store also joins the longrunning rumors of a downtown retail store by Apple
Inc., a notion on which the
Cupertino, Calif.-based
company has consistently
not commented.
Timekeeper at Grand Prix
Detroit-based upstart
watchmaker Shinola will get
plenty of exposure this year
as official timekeeper of the
Chevrolet Detroit Belle Isle
Grand Prix.
The company will be the
official timepiece and timekeeper of the May 31-June 2
event, as well as the exclusive sponsor of the race’s
“Victory Circle.”
Shinola was chosen because, like the Grand Prix,
the brand is local but appeals to a worldwide audience, Bud Denker, event
chairman of the Grand
Prix, said in a statement.
Fossil Inc. founder Tom
Kartsotis launched the line
of retail products under the
Shinola name in 2011. He
picked Detroit as the site
for Shinola’s watch and bicycle manufacturing operation, and is set to open a
store in Midtown in 2013.
Silverdome ‘renovation’
Reports of the Silverdome’s demise were premature, the property’s ownership group said.
After the image of the Detroit Lions’ former home circulated on the Internet —
originating with a shot by
local traffic copters — the
group’s owners put out a
statement that the condition of the roof is part of a
renovation.
Stadium events coordinator Alex Loewy told The Associated Press that the roof
was deflated Jan. 3 and
eventually will be replaced.
He said the extreme weather actually was helping
bring the roof down. He
said the inflatable roof
would be replaced with a
hard roof by late summer.
The building has been
winterized, and no events
have been scheduled until
later this year. The 80,000seat stadium sold for
$583,000 in 2009 to Torontobased Triple Properties.
Firm locks up firearms
Southfield-based U.S. RAC
LLC had a chance to show off
its heavy-duty firearm security and storage device in
Las Vegas recently.
The firm’s key-lock access device was featured
among the 1,600 vendors at
the massive SHOT Show at
the Sands Expo and Convention Center from Jan. 15-18.
The device, which is
meant to be mounted, secures handguns and rifles,
and uses heat-treated carbon steel and aluminum
that resists up to 4,700
pounds of pressure.
The firm bills the product
— aimed at private, commercial and government
clients — as “tamper-proof,
damage-proof and theftproof.”
The 3-inch model, for single handguns, retails for
$89.99. A 5-inch model, for
multiple firearms, is $99 but
was being sold at the SHOT
Show for $75.
The firearms and hunting
industry trade show is open
only to the media, commercial buyers and those who
work in those weapons
trades.
BITS & PIECES
䡲 Winning Futures, the
Warren-based nonprofit focused on life skills and mentoring programs for students, is honoring two local
entrepreneurs with a new
award in honor of its late
founder. Michael Ansley,
president and CEO of Detroit-based Diversified
Restaurant Holdings Inc., and
Linda Orlans, CEO of eTitle
Agency of Troy, are to receive Sam Cupp Impact
Awards in honor of their
business and charitable endeavors. Cupp, founder of
Hamilton Chevrolet, died in
2012. The awards will be
presented at Winning Futures’ Corks & Forks
fundraiser Feb. 9 at Big
Rock/The Reserve. See
www.winningfutures.org.
BEST FROM THE BLOGS
READ THESE POSTS AND MORE AT WWW.CRAINSDETROIT.COM/BLOGS
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The Detroit Tigers
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field. He was largely
underwhelming at both
jobs, and … the market
has noticed that his skills
are mediocre.
”
Reporter Bill Shea’s “Shea’s Stadium” blog on the
business of sports can be found at
www.crainsdetroit.com/sheasstadium
Auto show break down
“
As you peruse the
North American
International Auto Show, I
urge you to look closer at
the vehicles on display —
particularly at, er, through
the wheels.
”
Reporter Dustin Walsh’s blog on auto suppliers, steel
and higher ed can be found at
www.crainsdetroit.com/walsh
Compuware
board rejects
Elliott offer
s expected, the Compuware Corp. board
of directors voted
unanimously to turn down
a $2.3 billion offer by New
York City-based Elliott Management Corp. to buy the
Detroit-based computer
services company and take
it private.
The vote was announced
days after Compuware announced results for the
third quarter of its fiscal
year, which ended Dec. 31.
The results beat analyst expectations, with net income
of $25.3 million, or 12 cents
a share, compared with
$21.6 million, or 10 cents for
the same quarter last year.
A
ON THE MOVE
䡲 David Gorcyca, the for-
mer Oakland County prosecutor, has joined the Troybased law firm Giarmarco,
Mullins & Horton PC. Gorcyca was elected prosecutor
three times before retiring
in 2008 to enter private
practice.
䡲 Danialle Karmanos is
leaving Wayne State University’s board of governors,
effective Feb. 1, to devote
more time to her family, a
news release said.
COMPANY NEWS
䡲 The Detroit Free Press
and The Detroit News,
along with their joint business and advertising operation, will move 600 employees out of their downtown
offices at 615 W. Lafayette
Blvd. in the next 12-18
months and into a “more
modern building” elsewhere in the city .
䡲 Flint-based Citizens Republic Bancorp Inc. reported
net income for 2012 of $347.9
million or $8.61 a share.
That’s a sharp turnaround
from 2011, when it suffered
a net loss of $16.3 million,
or 41 cents a share.
䡲 Great Expressions Dental
Centers, a Bloomfield Hills
practice management company, is opening a clinic in
Detroit’s Midtown area in
March.
䡲 Ray Wert, the former
Jalopnik.com editor and
Gawker Media executive, is
seeking Detroit office space
for his new automotive digital content and advertising
strategy studio Tiny Toy Car.
The company’s first work
is expected to drop in February.
䡲 A limited-liability corporation controlled by the
Farbman Group purchased
the 241,396-square-foot
Southfield Centre from
Franklin Street Properties of
Wakefield, Mass. A real estate source said the building sold for about $750,000.
䡲 Reported revenue for
Detroit’s three casinos totaled $1.4 billion in 2012,
down 0.5 percent from 2011,
according to figures released by the Michigan Gaming Control Board. The casinos contributed $114.8
million in gaming taxes in
2012 compared with $115.4
million in 2011.
䡲 The Detroit Pistons franchise is worth $400 million,
according to an annual valuation issued by Forbes.com, a
20 percent gain from the
$332 million value the financial news site assigned to
the National Basketball Association team a year ago.
䡲 Ann Arbor-based University of Michigan Health
System will join Grand
Rapids insurer Priority
Health as a participating
provider, effective March 1.
䡲 The former Borders
Group Inc. flagship store in
Ann Arbor has a new tenant: Prime Research of North
America of Ann Arbor. Prime
Research, a Mainz, Germany-based media research firm, employs about
80 in Ann Arbor.
䡲 Southfield-based Warner Norcross & Judd LLP announced that in March it
plans to open its seventh office, in Midland.
䡲 La-Z-Boy Inc. is buying
120 acres from a group of
Roman Catholic nuns to
build a new $50 million
headquarters in the furniture maker’s home city of
Monroe, The Detroit News
reported. Officials said the
project could add 50 jobs.
OTHER NEWS
䡲 The Neighborhood and
Community Services Standing Committee of the Detroit
City Council recommended
that the council reject a proposed lease agreement with
the state for Belle Isle. The
proposal is still set to come
up for the council’s consideration Tuesday.
䡲 The Jan. 18 charity
preview of the North American International Auto Show
brought in $3.9 million for
nine local children’s charities, its highest amount
since before the recession.
Attendance was up 9 percent over last year, to 13,069
guests, organizers said.
䡲 Former Detroit Mayor
Kwame Kilpatrick, convicted
in 2008 for obstruction of
justice and now on trial for
public corruption, was to
spend last weekend in
prison for 14 parole violations, a state corrections
spokesman said.
䡲 Carol Dillon, ex-wife of
Michigan Treasurer Andy Dillon, says a reporter at The
Detroit News threatened to
kill her with a baseball bat if
she declined his friendship
and complained about him
to authorities. A judge
signed a one-year personal
protection order against
Leonard Fleming on Jan. 10.
䡲 Detroit Public Schools
officials project that 28
more buildings will close
and student enrollment
will shrink to fewer than
40,000 over the next three
years, according to the district’s deficit elimination
plan, approved by state education officials and obtained by The Detroit News
and Detroit Free Press.
䡲 Metro Detroit industrial vacancy rates fell by almost 2 percent in 2012, said a
report by Southfield-based
Principal Associates culled
from CoStar Group Inc. data.
Vacancy rates for industrial
properties dipped from 13
percent to 11.3 percent, with
close to 9 million square feet
of space absorbed in 2012.
䡲 The Great Lakes Entrepreneur’s Quest announced
that it would name 10 winners at month’s end in the
first Vision to Action Challenge at its 2013 Annual
Collaboration for Entrepreneurship and move the 13year-old event to Livonia
from Ann Arbor.
䡲 The University of Michigan, Michigan State University
and Wayne State University
surpassed $2 billion in combined annual research and
development spending and
together have created
600,000 alumni earning nearly one-sixth of all wage and
salary income in the state,
according to a report from
East Lansing-based Anderson
Economic Group LLC.
䡲 Fifty-four percent of
Michigan retailers reported stronger holiday sales in
2012 compared with 2011
amid a sharp decline in December, according to the
latest Michigan Retail Index.
An additional 30 percent reported declines.
䡲 A report on Michigan’s K-12 education system released by the Center
for Michigan found that residents statewide grade the
system as “C” or worse.
䡲 Ridership numbers
among Michigan’s three
Amtrak routes increased to
a record 792,769 in 2012, up
from 780,655 in 2011, said
the state Department of
Transportation.
OBITUARIES
䡲 Edward Doucet Jr., who
launched the photography
studio that became the Oakland County advertising
firm Doucet & Associates,
died Dec. 13. He was 91.
䡲 Ted Talbert, an awardwinning journalist, documentary filmmaker and
longtime WDIV-Channel 4
employee, died Jan. 22. He
was 70.
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