Herman Miller Nemschoff purchase required creativity

February 7, 2011
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Last week Herman Miller announced it had settled the Nemschoff Inc. acquisition contingencies. About midway through the first of several intimidating paragraphs, it was apparent that a lot of readers were wandering away to something less challenging.

The Business Journal asked Jeff Stutz, treasurer and vice president of investor relations at HM, if it was possible to translate that news into plain street English.

“What a novel idea. Yeah,” he replied. And he did.

Nemschoff is a manufacturing company based in Sheboygan, Wis., that primarily makes “soft seating” for patient rooms in hospitals. HM decided it needed to acquire that company as part of its strategic growth.

While the deal was in the works in early 2009, the Great Recession had fallen over the land. Credit everywhere was very tight, and fear of what the future might bring induced many companies to reduce their level of risk. They reduced cash outflows, and in a lot of cases, reduced or even eliminated dividends paid on their stock.

The strategy at HM, as at many other companies, was “conserving cash as a way of protecting ourselves, given the unknown future we were facing,” said Stutz.

At the same time, HM top management determined it was “very important that we get this (Nemschoff) deal done.”

So HM got creative. In June 2009, it announced it had acquired Nemschoff “through a combination of $32 million in cash and the issuance of 2,041,666 Herman Miller shares.”

But before that point, there had been a snag. In September 2008, HM stock had touched $30. By June 2009, it was just under $14. “We viewed our future as bright,” said Stutz. “We were comfortable” HM stock would recover in value.

Nemschoff shareholders were not so confident, however. They dragged their feet in negotiations. So HM effectively offered the sellers a guarantee that the HM stock would be at or above $24 in June 2011.

For its part, HM was a little nervous, too. It wasn’t sure how well Nemschoff would perform as the recession dragged on. So a second contingency was agreed upon: HM would pay additional amounts if certain levels in Nemschoff sales were reached before June.

The economy has been improving, and the jitters level has been dropping in corporate board rooms across the land. That HM stock is looking better every day, almost hitting $24 back in January. Perhaps there is also the likelihood of key increases in Nemschoff sales, triggering those additional payments from HM.

Basically, what HM and Nemschoff did the other day was agree to eliminate the contingencies and finalize the deal once and for all, with HM sweetening the deal with an additional cash payment of $3 million to the sellers.

“We felt good about (spending) $3 million to get rid of that overall uncertainty. It felt like a pretty good deal,” said Stutz.

Kim gets the Silver

The American Advertising Federation of West Michigan has selected Yang Kim of Peopledesign for this year’s Silver Medal Award.

“I can’t believe it,” said Kim, who founded the design company in 1997 with two partners, including husband Kevin Budelmann. The company now employs 20 and counts Herman Miller, Jaguar Cars and izzydesign among its clients.

Herman Miller’s Steve Frykholm, who won the same award two years ago, praised Kim’s “design talent, attention to detail, and a questioning and creative mind,” particularly as applied to the office furniture company’s annual report.

“Mainly, what we do is transform things,” Kim said of her firm at 648 Monroe Ave. NW. “We help them transform themselves, or the product, into its new self. We try to do something original, or at least original to us.”

Kim will receive the Silver Medal Award at the annual ADDY Award ceremony slated for 6-9 p.m. Feb. 24 at the Grand Rapids Art Museum. Register for the event by Feb. 15 at www.aafwim.org

In the running

Meeting the Feb. 1 deadline to apply for new nursing home facilities in Ottawa County were North Ottawa Community Health System, Spectrum Health Rehabilitation and Nursing Center at Zeeland Community Hospital and Ciena Healthcare Management.

Trilogy Health Services thought its application — dispatched via a large national delivery system on Jan. 28 well before last week’s snowstorm — had arrived, as well. It had, in Lansing. But for Ottawa County, applications also must be filed with the Grand Rapids-based Alliance for Health.

As of Friday, no one knew the location of the Grand Rapids-bound package.

“We’re trying to work through it. We want Lansing to accept our application,” said Leo Whitt, business development manager for Trilogy, of Louisville, Ky. “It was filed with the Department of Community Health. This supplementary filing just didn’t get delivered.”

Whitt said his firm also is pursuing nursing home locations in Washtenaw and Clinton counties.

Saluting local efforts


Local First named its first-ever award recipients during its recent Local First Annual Meeting & LocalMotion Awards at the Goei Center in Grand Rapids, which was attended by more than 150 people. The LocalMotion Awards recognize outstanding contributions to the West Michigan economy by businesses, organizations and individuals — particularly those whose commitment to local business ownership, sustainability and neighborhood revitalization has had a pronounced impact on the region.

Presenting the awards were Local First board secretary Craig Clark of Clark Communications, and board member Sarah Lachman of Miller Johnson. Award winners, selected by special committee from more than 40 public nominations, are:

  • Atomic Object — The Change Agent Award.

This award recognizes a locally owned business or organization that is growing successfully and has made a significant contribution toward the revitalization of a neighborhood or business corridor.

  • Steve Faber — The Local Hero Award.

This award recognizes an individual or family that has demonstrated a significant shift toward local purchasing and sustainable living.

  • Wealthy Theatre — The Mover & Shaker Award.

This award recognizes a locally owned business that has accomplished a significant shift toward local supply chains in the past year.

  • Curtis Cleaners — The Triple Bottom Line Award (10+ Years in Business).

This award recognizes a locally owned business that has demonstrated a strong commitment to the Triple Bottom Line (economy, environment and society).

  • MadCap Coffee — The Triple Bottom Line Award (Less Than 10 Years in Business).

This award recognizes a locally owned business that has demonstrated a strong commitment to the Triple Bottom Line (economy, environment and society).

  • Rob McCarty and The Image Shoppe — Guy Bazzani Local Legacy Award.

In recognition of his vision and lifelong dedication to Local First and its mission in West Michigan, Local First honored Guy Bazzani, founder and former board chair, by naming its lifetime achievement award as the Guy Bazzani Local Legacy Award. The first-ever Guy Bazzani Local Legacy Award was awarded to Rob McCarty and The Image Shoppe in recognition of a lifetime of service to the organization and its mission.

“Local First is thrilled to celebrate the outstanding accomplishments of our local business community with the first-ever LocalMotion Awards, and we congratulate all nominees and winners,” said Elissa Hillary, executive director at Local First. “Beginning an awards program eight years into our organization’s history wasn’t easy with so many deserving businesses and individuals. So as we celebrate, it’s important to remember and acknowledge all those in West Michigan whose ongoing commitment to local business ownership, sustainability, and neighborhood revitalization is moving us forward.”

A national plug

Local First received a nod last week from “Independent We Stand,” a movement of 22,000 independent business owners across the U.S. to inform their communities about the importance of Buying Local,  and how those efforts bolster local economies. It is an effort sponsored by STIHL Inc., based in Virginia Beach, Va.

Independent We Stand referenced a Local First study that found if 600,000 people shifted 10 percent of their spending to local stores, in one year, the result locally would produce 1,600 jobs, $137 million in new economic activity and $53 million in new wages.

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