Heather B. Hayes Archives - Page 2 of 4

A leap year for Shentel

Historical photos courtesy Shenandoah Telecommunications Co.

Any company that has survived the past 115 years of social, economic and technological change has achieved a major accomplishment. To make that milestone in the turbulent, hypercompetitive telecommunications industry is even rarer.

Shenandoah Telecommunications Co., better known as Shentel, has not only survived, it has thrived.

Founded in 1902 in Edinburg, the company, then called Farmers Mutual Telephone System, initially was owned by its customers. Shentel today is a diversified, publicly traded company providing wireless, landline, cable-television and broadband data services to customers in Virginia, West Virginia, Pennsylvania and Maryland. With its $640 million acquisition of Waynesboro-based nTelos Wireless last May,

Shentel is now the sixth-largest wireless carrier in the country, with more than 1 million subscribers.

“I think we’re the strongest we’ve ever been,” says Christopher French, Shentel’s chairman, president CEO who has worked for the company since 1981. “We are in growing business sectors, and the value that our services bring to customers is just increasing. I’m very optimistic about the future.”

In explaining the company’s longevity, French points to its long-term focus; conservative, disciplined approach to strategy and risk, and willingness to invest in customer service.

“We haven’t changed our approach over time,” he says, noting that many of the company’s current shareholders are descendants of its original telephone customers. “And as a result, we think we’re making decisions today that will hopefully lead to the company’s ability to continue to be successful for another 115 years.”

Shentel has managed to stay ahead of fast-changing market and technological forces throughout its history. It was the first phone company in Virginia to offer direct-dial long-distance service, for example.

The company moved into the cable TV business in 1980 and, with the breakup of the Bell system, began building fiber networks outside of its small telephone service area in 1988. In 1990, Shentel became the first provider to offer cellular phone service to rural Virginians and began offering dial-up internet service four years later.

“We started looking for areas to expand and diversify, and these were areas that were related to telecommunications, things that we had experience or expertise in, and so they gave us some diversification to the regulated revenue base that we had with our legacy telephone business,” French explains. “And then those things gave us a foundation to expand further.”

A big break came in 1995, when Sprint-APC asked Shentel to be its partner on the first-ever commercial personalized communications system (PCS) — essentially a precursor to today’s wireless networks — in the Washington-Baltimore metro area. While Sprint-APC focused on city residents, Shentel filled in the rural gaps, which ran from the Shenandoah Valley, north to Chambersburg, Pa., and across parts of western and southern Maryland.

“This was how our company was founded, serving the areas that don’t always get the new services, the new technologies, first, even though those things are just as valuable to the people living in the rural areas as they are to those in the metropolitan areas,” French says, noting that the partnership also made Shentel Sprint’s first affiliate, a relationship that continues to this day. “For us, it was a good opportunity to grow our footprint, grow the company and diversify our revenue stream, and everything took off from there.”

In very short order, wireless communications quickly became Shentel’s largest business segment. That segment has grown tremendously with the nTelos acquisition. In November, Shentel reported that its wireless revenue rose $63.2 million, 132.3 percent, in the third quarter in comparison with the same three-month period in 2015.

Shentel attributed the increase to the addition of about 580,000 wireless subscribers from nTelos. The soaring wireless revenue contributed to an 84.1 percent rise in total revenue to $156.8 million for the quarter. (Fourth quarter and full-year financial results were not available when this issue went to press.)

Throughout 2017, Shentel officials will focus on bringing nTelos fully on board, an effort that features a $350 million investment to upgrade and expand the existing nTelos network and integrate internal systems. “Just dealing with the increased size of what is a much bigger company and much bigger networks will be one of our major issues,” French says.

Moving forward, French expects Shentel to continue to look for opportunities to grow by increasing its market share and making acquisitions — always in a disciplined manner with an eye to the future.

“There could be a great cable company that comes up for sale in California, but we’re probably not going to take a hard look at that,” he says. “That’s not to say that opportunities have to be adjacent to what we’re doing, but to the degree that we can leverage the networks we have here, where we can branch out pretty easily, that is obviously going to be a key factor in our evaluation of new business ventures.”

Coming together

When Standard Insurance Co. was looking for a site for a new East Coast operations center, Lynchburg and Altavista made the short list — even though they are only about 20 miles apart.

“That was no accident,” says Bob Speltz, senior director of public affairs for Portland, Ore. – based Standard, a 110-year-old insurance and financial services company. “We knew that there would be a great pool of highly skilled, loyal talent to draw from within the region, and we felt like it offers an ideal quality of life, which is so important to attracting and retaining the very best folks in the marketplace.”

Economic development officials in both localities did their best to win the project, but the competition wasn’t a zero-sum game.

As long as one of them landed the deal, then the whole region stood to gain, says Dennis Jarvis II, Altavista’s economic development director.

“When one of us grows, we all grow,” Jarvis states. “Cars are bought. Houses are bought. Goods and services are acquired. We do our very best for our own community, of course, but we think it’s a blessing any time one of our partners in the region is successful, whether it’s the Lynchburg city core or Bedford or Amherst or Appomattox or Campbell County, because we all derive some indirect benefit from it.”

All for one, one for all
This understanding has encouraged regional players to work together more closely. In December 2015, the Lynchburg Regional Business Alliance was formed. It combined two longstanding organizations: the Lynchburg Regional Chamber of Commerce and the Region 2000 Business and Economic Alliance.

“By aligning talent, financial resources and volunteer board members within one organization, we are now all focused on a single mission of leading regional economic development,” says Megan A. Lucas, CEO of the new group.

The new organization’s duties include promoting the region, courting business projects, providing strategic direction, cultivating talent and researching the impact of new legislation and regulations.

“Megan and her team can go out and tell our story and deal with the larger regional issues, which frees up our local chambers to focus on supporting their members and helping them grow and succeed,” says Traci Blido, Bedford County’s economic development director.

The group has developed a comprehensive economic development strategy and organized Virginia’s first regional connectivity study. It also spearheaded an effort to obtain $85 million from the Virginia Smart Scale funding process, formerly known as HB2, to upgrade the region’s roadways.

“I would definitely say that the theme and temperature here is the collective collaboration and cooperation that exists now to advance the region,” Lucas says. “Everyone here and all of our regional partners are working really, really hard, and it’s making a difference.”

On a roll
In the first nine months of 2016, the Lynchburg region saw 603 new jobs and $47 million in capital investments by new and existing businesses.

One of the new arrivals is Standard Insurance. In June, the company decided to put its operation center in Altavista, thanks in part to what Standard’s Speltz describes as “a strong cultural fit,” along with an incentive package that included a $320,000 Tobacco Commission grant. Another key factor was that the town had a vacant building once used as a call center that “is basically turnkey and will give us plenty of room to grow,” he says.

Standard plans to invest nearly $3 million in the facility, which will process claims. The firm now has 30 employees in place and expects to hire another 200-plus benefit and claims analysts by 2020. Their median pay will be $17 to $19 per hour.

Not to be outdone, Lynchburg landed a new insurer less than a month later. Pacific Life Insurance Co., based in Newport Beach, Calif., acquired Genworth Financial’s technology platform for new term-insurance business.

Henrico County-based Genworth, a Fortune 500 company, has operated in Lynchburg since 1955 but has seen major losses in recent years. In October, Genworth announced it is being sold to Beijing-based China Oceanwide Holdings Group for $2.7 billion.

Genworth, which will keep its headquarters in Henrico, will continue to have a customer service center in Lynchburg, which now has about 800 employees. “We expect that they will remain a strong company,” says Marjette Upshur, director of Lynchburg’s Department of Economic Development.

Mike Shadler, Pacific Life’s vice president of Lynchburg operations, explains that his company acquired Genworth’s term-life technology platform and the downtown Lynchburg building that houses it as well as a group of former Genworth employees who have the skills needed to launch the business. The deal, however, did not involve the transfer of existing Genworth policies and policyholders. “We’re building from the ground up here,” says Shadler.

Pacific Life has been known for its focus on affluent consumers, he explains, while the acquired capabilities are designed to target a broader market.

“Those are two very different sets of customers and distribution models, and they require very different capabilities,” he says. “With this acquisition, we now have the capability, processes and people to go after a brand-new market space immediately, without taking away any resources and focus on our existing business.”

Pacific Life will invest $4 million and hire approximately 300 employees, including insurance case managers, underwriters, IT experts, business analysts and HR specialists during the next two years as the business grows. The goal, Shadler says, is to be able to process 100,000 term policies by early 2018 and process another 100,000 policies every year after that.

Other new businesses have also moved into the region. Meat processor Seven Hills Food redeveloped a century-old, 40,000-square-foot facility in Lynchburg and expects to have more than 40 employees within the next three years.

Bedford also will get its first brewery when Beale’s Brewery & BBQ, a project by Petersburg-based developer Dave McCormack, opens a production facility, taproom and restaurant next summer. “We will sell to grocery stores and anywhere you can buy packaged beer, and we plan to be in both the Lynchburg and Roanoke markets,” McCormack says.

Taking stock and rebuilding
The region’s redoubled effort to collaborate more effectively is in part a response to a period of local economic turbulence. The area has lost more than 2,500 jobs in recent years, including 1,000 in 2016, according to Alliance officials.

The insurer Nationwide closed its Lynchburg office as part of a larger consolidation effort in 2015, resulting in the loss of 300 jobs. The Timken Co., which makes transmissions, power trains and other engine parts, is relocating its Altavista operations to another plant in North Carolina, a decision affecting 125 jobs.

Areva Inc., the France-based nuclear energy giant and one of Lynchburg’s largest employers, trimmed its payroll by 50 positions in 2016, the latest in a series of adjustments the company has implemented in response to decreasing industry demand.

Denise Woernle, Areva’s vice president of communications, says the company is diversifying its portfolio of products and services.

Areva’s Lynchburg-based Operational Center of Excellence for Nuclear Products and Services recently developed a more cost-efficient maintenance technique called “cavitation preening,” as well as the most comprehensive nuclear testing facility in North America, which allows the company to more reliably support the long-term operation of the existing nuclear reactor fleet.

No one in the region has had it tougher than Amherst County. Two years ago the county was bracing for the loss of its largest employer, Central Virginia Training Center — scheduled to shut down by 2020 — when Sweet Briar College, its second largest employer, announced it would close. “The combined job loss of nearly 1,500 [positions] represented about 25 percent of all jobs in Amherst County, and it was going to create a huge negative loss of economic activity,” says Victoria Hanson, executive director of the Amherst County Economic Development Authority.

The college was saved through a Herculean effort by devoted alumnae, regional businesses and the local government, but the incident galvanized the community. “There’s nothing like a scare like that to get everybody’s attention,” Hanson admits.

In response, the government obtained $122,000 in grant funding and ponied up $3,000 of its own money to conduct a comprehensive economic development strategic plan.
“It’s unusual for a small rural county to get this much money to take this in-depth level of a look at what we could do, and I like to think that these funders recognized the crisis that was brewing here,” Hanson says. “And the community was overwhelmingly interested and motivated to participate and provide their input.”

In 2016, Hanson and her team began to implement a multi-pronged plan. They are creating a new brand for the county and are proactively performing environmental assessments and leveling sites in its existing business parks. In addition, a new visitor’s center, located in a refurbished train depot, will open this year.

From the ground up
Upshur notes that, while it’s exciting to attract new business prospects, economic development officials in the region are putting most of their focus on supporting existing businesses and developing talent.

Several localities, including Lynchburg and Altavista, are running entrepreneurial boot camps that have helped a number of graduates in starting companies. Lynchburg, meanwhile, kicks off the first of several TechHire training sessions in January to prepare unemployed residents for jobs that are in high demand.

Upshur explains that 15 local employers, including Centra Health, Sharptop, BWXT, RR Donnelley and Porter’s Fabrication, will provide training and paid apprenticeships to 210 people during the next four years. “We are bridging the gap between opportunity and training, such that we’re saying to these employees, ‘If you train with us, you will also be employed by one of these companies at the end of your training period,’” she says.

The region already is benefiting from a number of recent expansions. In Altavista, BGF Industries and Schrader-Bridgeport International are collectively investing $5.5 million in new tools and machinery, which will result in a total of about 50 new jobs, while Abbott Laboratories expects to add another 50 jobs once it completes a nearly $40 million expansion of its nutrition manufacturing facility.

Bedford also has seen a lot of new business activity. Simplimatic Automation, which provides materials handling, conveyor automation and robotics integration, moved from Campbell County to the 500-acre New London Business and Technology Center in April 2015, where it built a 60,000-square-foot facility.

CFO Sara Orange says the company has grown rapidly during the past four years, jumping from 45 employees and $14 million in revenue in 2012 to 110 employees and $24 million in revenue in 2016. “We’re already at capacity,” Orange says, noting that the firm is looking at either expanding its current facility in the New London park or building on an adjacent lot.

Also in the New London park is the Center for Advanced Engineering and Research (CAER), a 10-year-old R&D facility and business incubator. It has worked with 10 companies that have either expanded or relocated to Bedford County. An example is the International Critical Infrastructure Security Institute (ICISI), a nonprofit organization that tests, validates and certifies cybersecurity solutions.

Another new Bedford firm is NanoTouch Materials. It moved to the CAER facility from Lynchburg after receiving a $2 million Tobacco Commission grant to commercialize its self-cleaning mats and surfaces. The company plans to sell its products to hospitals, hotels and facility management firms. The four-person firm, which recently won an international innovation award for new cleaning agents, plans to hire up to 16 more employees and build a facility in the New London park, says co-founder Mark Sisson.

“We’re currently working with the Bedford Economic Development team and the Tobacco Commission to figure out what funds might be available to accelerate that project and [get] that building done sooner, even as we continue working to grow market awareness and sales,” he says.

A vision comes to pass

Liberty University may have started out as a small Baptist college, but its founder, the Rev. Jerry Falwell Sr., always had faith that it would one day be a major institution of higher education.

“His thought was: Why can’t we create for evangelical Christian students what Notre Dame is for Catholics, what Brigham Young is for Mormons and what Yeshiva is for Jewish students?” explains Jerry Falwell Jr., who took over as chancellor of Liberty after his father’s death in 2007.

“Even when the school was just getting started and operating out of church buildings, he would say that Liberty was going to train doctors, lawyers, engineers, really people in every profession to go out and be champions for Christ, not necessarily by preaching but by their example in their jobs and everyday life and by their service to others,” Falwell says.

In almost miraculous fashion, the senior Falwell’s vision has come to fruition during the past decade. In terms of enrollment, Liberty is now the largest university in Virginia and the fifth-largest in the country, with about 15,000 residential and 90,000 online students. Fifty-five percent of its undergraduates last year were full-time students.

The university has more than 450 academic programs, including medical, law, engineering and business schools. It has NCAA Division I athletic teams. It has a newly built 400-acre equestrian center for its two riding teams, and its Liberty Mountain Snowflex Centre hosts year-round skiing, snowboarding and tubing for students.

Thanks to the revenue generated by its online education program, currently the largest nonprofit program of its kind in the U.S., Liberty has cash reserves of more than $1.4 billion.

All of this activity has resulted in more applications and higher-quality students. This year’s freshman class had an average grade point average of 3.36 and SAT score of 1067. Both of those averages have increased every year since 2005.

Tuition and mandatory fees for full-time undergraduates enrolled in Liberty’s on-campus program in 2016-17 total $23,070, which is 30 percent below the U.S. average of $33,365 for private school tuition and fees, according to data reported to U.S. News and World Report.

Students who live on the Liberty campus pay between $6,500 and $10,200, for room and board, depending on the dormitory and meal plan they choose.

What’s more, students’ second-choice schools weren’t other private, Christian colleges but Virginia public universities, led by James Madison, George Mason and Virginia Commonwealth University. Approximately 36 percent of this year’s residential students and 20 percent of its online students are from Virginia. The rest are from 48 other U.S. states and 84 foreign countries.

“Last year, for the first time, we had to turn away a couple of thousand students that applied to our residential program because we are now at capacity,” notes Ron Hawkins, Liberty’s provost, explaining that the school expects to maintain a maximum of 15,000 residential students. “And we had a repeat of that this year.”

While the university has been attracting students, it also has drawn national attention as a forum for political discussion. Presidential candidates Ted Cruz, Donald Trump, Bernie Sanders and Gary Johnson all have made appearances on campus during the election cycle.

Jerry Falwell Jr. has been a vocal supporter of Trump. That position prompted a group of students to circulate a petition in mid-October stating: “Donald Trump does not represent our values and we want nothing to do with him.”
In response, Falwell issued a statement that said he was “proud of these few students for speaking their minds” but also noted that his support for Trump does not represent an endorsement by the school. “I always make it clear to the media that my endorsement of Trump is my personal endorsement only and that I am not speaking for Liberty University, its students, faculty or staff,” he said.

A construction storm
A key requirement for recent Liberty students is the ability to be at peace in the midst of a construction storm. Since 2011, the school has been carrying out a $500 million building and campus transformation campaign. Liberty is tearing down buildings constructed in the 1970s while upgrading others and erecting Jeffersonian-style academic halls, athletic facilities, dorms, parking garages and a library. On any given day, there are up to 3,000 construction workers on campus.

“It’s been hectic, but it’s worth it,” says Kara Witt, a third-year music student who has spent her entire academic career in the shadow of towering cranes and the constant sound of hammers and drills. “We all feel really blessed. The fact that there’s a lot going on here is a good thing.”

That’s especially true for Witt and the nearly 1,400 undergraduate and graduate students who make up Liberty’s School of Music, now the seventh-largest — and fastest-growing — music program in the country.

This fall, they moved into the school’s new $70 million, 168,000-square-foot Center for Music and the Worship Arts, which features an education wing with 50 practice rooms, 42 teaching studios and three recital halls.

The building’s academic area boasts a “box-in-box” design that ensures that each room is fully soundproof (a critical feature since the building sits right next to a rail line).

The center’s 1,600-seat concert hall is equipped with 360 speakers and a Meyer Sound Constellation Acoustic System. That system can be raised or lowered to adjust for the differing sound levels and echo effects of various types of musical events, including classical symphonies and rock concerts. Meanwhile, a new digital studio, set to be unveiled next spring, will be hardwired to the concert hall and other rooms for live recording of performances.

“In terms of technology, there’s not a building like it anywhere in the United States,” says Brad Butler, Liberty’s planning and construction coordinator. “We expect this space to attract members of the community who wouldn’t otherwise come to campus, as this will be a premiere space for concerts, lectures and even, potentially, presidential debates.”

Across the academic commons, students can now hang out at the Montview Student Union, a four-story, 168,000-square-foot building that also opened this fall. It features an eight-lane bowling alley, gaming area, meeting spaces for student clubs and organizations, a veteran’s center and six eateries, including a brick-oven pizza parlor and a teahouse.

On the top floor, a ballroom opens out onto a deck that provides a view of the still-under-construction, 275-foot-tall Freedom Tower, an iconic structure that will resemble a European bell tower. It will house Liberty’s School of Divinity.

“At the center of campus, we wanted to do something special that would symbolize what we do here — which is spread the Gospel,” explains Butler.

Liberty also soon will finish construction on an indoor practice facility for the football team, an indoor track and field center and a natatorium that will feature an Olympic-size competition pool and a 17-foot diving well.

Education pioneers
Ironically, achieving the grand vision required Liberty officials to take an unexpected detour through the valley of the shadow of death. For the first two decades, Liberty was subsidized with donations obtained through the elder Falwell’s television ministry, the “Old Time Gospel Hour.” After high-profile scandals involving televangelists Jim Bakker and Jimmy Swaggart in the 1980s, however, people quit giving money to TV ministries.

Liberty officials suddenly had to make do without millions of dollars in financial support for school operations while coping with more than $82 million in short-term debt. The school soon was teetering on the brink of bankruptcy.
“It was a really difficult, uncomfortable time for everyone,” recalls Jerry Falwell Jr. Having just come on board as the school’s general counsel, he worked closely with his father, other school leaders, lawyers and accountants during the next 15 years to restructure the debt and develop a sustainable business model. “If it hadn’t been for those times of adversity, though, we wouldn’t have had to really stretch and think outside of the box and come up with different measures to operate more efficiently and frugally. It was a blessing, really.”

Fortuitously, school leaders at that time decided to expand the school’s external education program. Initially, college courses relied on worksheets, videotapes and, later, DVDs, to provide instruction. As the internet evolved, Liberty faculty began creating and offering online curricula, and the school developed a highly sophisticated student enrollment and administrative operation.

As high-speed internet service reached more homes in the mid-2000s, Liberty was well positioned to meet an exploding demand for online coursework, says Alan F. Edwards Jr., director of policy studies for the State Council of Higher Education for Virginia.
The school currently offers 267 undergraduate, graduate and doctoral degrees through its online program. Undergraduate students who study full time through the online program pay $390 per credit hour, which is 27 percent less than the cost per credit hour at Colorado Christian University, a direct competitor.

“[Liberty] really got a jumpstart on the other schools, and they’ve remained popular because of the breadth of what they offer, which includes a lot of liberal arts programs, which is very unusual,” Edwards says. “They’ve also got the economies of scale to keep the tuition costs relatively low.”

Hard times also fine-tuned the school’s flexibility and practicality, illustrated in its ongoing efforts to evolve academic offerings in nontraditional ways. The School of Music, for example, focuses not only on music education and performance but also on “closing this huge gap between the university and the real world,” says Hawkins, Liberty’s provost. He notes that the school recently acquired a commercial music label that will give students opportunities to learn about the recording business, training as songwriters, producers, composers, musicians and technicians.

Likewise at the School of Cinematic Arts, Liberty students get hands-on experience writing, producing, editing and distributing faith-based films. Liberty also recently purchased the nearby New London Airport to give its School of Aeronautics and Aviation more flexibility in training mechanics and pilots.

“We really have a pioneer spirit here, even now,” says Jerry Falwell Jr. “We take calculated risks, and our faculty are not afraid to think outside of the box.”

Sustaining growth
Now that the residential program is at capacity, Liberty officials are focused on managing growth. “Literally, when you look on a line graph of our growth over the past 10 years, it looks like an Olympic ski jump, and probably the steepest Olympic ski jump I’ve ever seen,” says Randy Smith, Liberty’s chief operating officer. “The revenues grew so fast that, for the last dozen years, we’ve just been in catch-up mode, trying to keep up with everything.”

Officials have recently started analyzing assets, expenses and growth plans to boost efficiency, weed out waste and determine what additional construction is needed. “We don’t want to build more than we need,” says Hawkins. “We want to be good stewards of what we have.”

Officials have long predicted an eventual decline in online revenues. For the past two years, the school has experienced a 2 to 3 percent drop in its online enrollment figures, due to increased competition from other nonprofits, including Southern New Hampshire University and Colorado Christian University.

“We don’t have any illusions that we are always going to be the only game in town,” says Falwell. “We’re actually planning as if that business was not there at all, so anything that online brings to the university will be icing on the cake.”

There’s enough still coming in, though, that Liberty officials expect to soon take the last step needed to not just achieve but also permanently sustain its founder’s vision: Once construction is completed, officials expect to quickly reach $2 billion in cash reserves, which will then provide enough interest income for the college to pay for basic annual operating costs for the resident program and still continue to keep tuition costs low and provide more than $200 million in financial aid.

“We’ll be able to subsidize the resident program permanently, and that’s if we only earn a conservative 2 or 3 percent on our investments,” says Falwell. “That’s been the plan for a while now, and we’re almost there.”

View a gallery of images of Liberty University's growth below. Photos by Jill Nance Waugh

Transforming treatment

Inova Health System announced plans five years ago to create a first-ever cancer research center focused on personalized treatment.

When he learned of the project, Dwight Schar, the founder of Reston-based homebuilding company NVR Inc., was determined to help in any way he could.

First, Schar drew on his real estate experience to help Inova acquire the property needed for the new center. He served as a negotiator in the 2-year, $180 million acquisition of the former ExxonMobil corporate campus and its 1.2 million-square-foot former headquarters. Inova will open that building in 2018, after it is renovated, equipped and staffed at a cost of approximately $270 million. The facility will house all of Inova’s existing clinical cancer specialists and treatment facilities — which now are scattered around the Fairfax area — along with new cancer research programs.

Once the campus deal was completed last year, Schar and his wife, Martha, decided to give $50 million to the effort to create a world-class cancer treatment and research center for patients and clinicians. The gift is, by far, the largest single donation Inova has ever received (and the largest for any health-care organization in Virginia), and the still-in-development center has been named the Inova Schar Cancer Institute.

“That Dwight would come to me and be that generous and reach for such an outsized goal does not surprise me at all,” says Inova CEO J. Knox Singleton, who has been a friend of the Schars for more than 20 years. “He is someone who is extremely humble and doesn’t like the limelight, but he’s also an achiever who loves taking on a challenge, whether it’s a societal problem or a building or a business, and making something where there wasn’t something before.”

Seeking $200 million
The Schars’ donation jumpstarted Inova’s campaign to raise the $200 million it needs to recruit top physicians, scientists and clinical investigators in the emerging field of personalized cancer genomics.

The Schars’ gift, however, isn’t just about providing the money needed to begin hiring. Singleton says the size of the gift has been critical to establishing confidence and credibility in the project.

“Even getting the first one or two top people to think about moving here is largely dependent upon them believing and trusting that we can raise the total amount of money that we need and that the project is actually going to come to fruition,” Singleton says. “This gift set the bar high enough to give that confidence to the kind of top people that other clinicians and researchers want to work with. And their presence then inspires other philanthropists to give and support us in the next round of giving.”

Inova already had recruited several pre-eminent names in the personalized medicine discipline, including Dr. John Niederhuber, a former director of the National Cancer Institute, and Dr. Donald L. “Skip” Trump, the former CEO and president of the Roswell Park Cancer Institute, but since the Schars’ gift was announced, a number of prominent clinicians have come onboard. They include Dr. Joan H. Schiller, who is internationally recognized for her work in lung cancer research; Thomas P. Conrads, who previously served as the chief scientific officer of the Department of Defense Gynecologic Cancer Center of Excellence and as head of the Cancer Biomarkers Facility in the University of Pittsburgh Cancer Institute; and Dr. Stephanie Akbari, a pioneer in breast cancer surgery.

What’s more, Inova has also received a gift of $10 million from developer Milt Peterson and several smaller but significant donations. When added to the $50 million the Schars gave, the campaign has already raised nearly $75 million of its $200 million goal. Singleton says the Inova Foundation will continue to quietly seek out donations (including those as high as $25 million) during the next two years.

“For a project like this, you need to set in motion this huge virtuous cycle, kind of a flywheel, and the Schar gift has clearly started that flywheel in a big way,” Singleton says.

Touched by cancer
For the Schars, the support and hands-on effort they’ve provided to cancer institute is personal.

A number of the Schars’ close relatives have battled cancer, including Dwight’s mother, who died in 1968 with a type of cancer that today would be curable.

“Everyone is touched by cancer in some way,” Dwight Schar says. “How many of us have known someone who, had they gotten better treatment earlier, could have been a survivor rather than a victim of cancer?”

The answer to that question is at the heart of Inova’s vision for cancer research. The new center will focus on discovering and applying personalized cancer treatments. It will individualize care, focusing on the specific genetic makeup of each patient and type of cancer being treated.

“The historic approach with cancer was to give everyone the best drugs we had and hope for the best, but the reality is that one treatment that works on one person doesn’t necessarily work on someone else,” says Singleton. “So almost everything that we do here will be identifying the genetic subtleties of different types of cancers and finding drugs that more effectively treat those cancers; discovering new genetic tests that help us determine which drugs work best on which patients; or figuring out which cancers are going to metastasize rapidly and which aren’t and being able to tell the difference so we can tailor treatment to the exact type of tumor someone has.”

The Schar, as the institute is informally called, also will be distinctive because of its integrated, synergistic approach to personalized cancer treatment. Not only will the center have clinical care, applied research programs and an education component for physicians and other clinicians, but in time, the campus will be further developed to house biotech firms that commercialize the research developed at Inova.

“This will not only be a clinical engine, but it will also be an economic engine that’s going to grow companies, employment, the tax base and, hopefully, the quality of life in Virginia,” says Singleton. A study commissioned by The Schars found that the new center will have an economic impact of $2 billion in construction, operations, commercialization and related lodging, restaurant and retail spending.

The Inova project perfectly fits the Schars’ philanthropic philosophy and strategy: They always have tried to give to causes and projects that can have a transformational effect on basic human needs, such as education and health care. The couple, for example, provided the majority of funding for a new nursing school and athletic complex at Dwight’s alma mater, Ashland University in Ohio. In May, Dwight gave $10 million to the George Mason University school of policy, government and international affairs, which will be renamed the Schar School of Policy and Government. Other recipients of major donations from the Schars have included United Way, Elon University, Child Helps and Youth for Tomorrow.

The new cancer institute “is clearly a case where the leverage of the gift is going to be many-fold the amount of the actual contribution,” Schar explains. “This new center will save lives in a significant way, not just in Virginia and the region, but across the country.”

Schar, who is a part-owner of the Washington Redskins, also characterizes his efforts with Inova as a small payback to the region that has played such a huge role in his life.
“Local people in this area will now have access to world-class but timely and convenient cancer care without having to travel to Minnesota or Manhattan or Boston or wherever to get the latest cutting-edge treatment,” he says. “And it will bring a lot of jobs and economic opportunity to Northern Virginia. It’s just an amazing opportunity to be part of something that will make a difference in so many lives.”

Getting the word out

During the past decade, Liberty University has grown into the biggest college in Virginia, but that reality isn’t well known beyond the Lynchburg region, admits the school’s president, Jerry Falwell Jr.

He often has to spend the initial minutes of conversations with other university presidents and high school students in other parts of Virginia explaining how much Liberty has changed in recent years.

“People still tend to think of us as a small, Baptist college that’s mainly geared toward training church workers and pastors,” Falwell says, noting that business administration and psychology now are its most popular programs. “We’ve grown so much and so fast that the perception of who we are just hasn’t kept pace.”

Since 2005, enrollment at the 44-year-old educational institution has exploded, in large part because Liberty has been highly successful in combining the hands-on experience of a residential program with the easy access and revenue generating potential of online education. In fall 2015, the university had a total of nearly 80,500 students, with just over 66,000 online and nearly 14, 500 on the Lynchburg campus. Nearly 35,000 of those students were studying full time while more than 42,500 were part time. Liberty now offers more than 450 undergraduate, graduate and professional programs, including medicine, law, engineering, cinematic arts and aeronautics.

During the past 10 years, the school’s annual budget has jumped by nearly 450 percent, from $109 million to $591 million. Liberty’s financial team also has managed to accumulate cash reserves and endowments of more than $1.3 billion, which puts it financially on par with a number of Ivy League schools.

To better promote itself, the school will kick off a major national television advertising campaign in 2016.

“The dream here was always to create a world-class university for evangelical Christians, much like what Notre Dame is to Catholics, Brigham Young is to Mormons and Yeshiva is to Jewish students,” Falwell says. “We’ve essentially grown to become that, but we’ve still got a lot of work to do to make sure that we’re promoting that and getting the word out.”

Symbiotic relationship
For Lynchburg-area residents and businesses, it’s impossible to overlook Liberty’s transformation. That’s because the school’s explosive growth is “having a remarkable and demonstrative impact” on the city’s population, demographics, economy, culture and quality of life, according to a 2015 impact study by Richmond-based Mangum Economics.

The report estimates that Liberty generates more than $1 billion a year in economic activity for the Lynchburg area. That figure includes construction. The school is in the midst of a $500 million campus rebuild that has added, among other things, a $40 million Center for Medical and Health, 170,000-square-foot library, an ice rink, other athletic facilities and six, eight-story student residence halls.

With more than 8,300 faculty and staff, Liberty has surpassed Centra Health as the city’s largest and fastest-growing employer, according to Mangum. The report also notes that Lynchburg’s population between 2000 and 2010 grew at a 15.8 percent clip, faster than all but six independent Virginia cities.

“I tell every business here and every organization considering moving here that they have to figure out how to ride the wave of what’s happening on that campus because we all benefit,” says Christine Kennedy, a Liberty alum who previously served as executive vice president of the Lynchburg Regional Chamber of Commerce. She now is chief operating officer and executive vice president of the Lynchburg Regional Business Alliance. “More students mean more opportunities for retail establishments and restaurants, and it means we have a more highly qualified workforce to draw from. It’s a ripple effect.”

The relationship is symbiotic. The Lynchburg region’s business community is going through its own transformation, and Liberty students have more career opportunities in the area than they’ve ever had before, according to Kennedy.

“In terms of opportunity for growth, we have a lot of elements coming together at the right time,” she says. “We’re really in the midst of a perfect storm.”
Those elements include a still relatively low cost of living and doing business, a downtown revitalization effort that finally is taking hold, access to a high-speed fiber pipeline that runs through the area and numerous site-ready development properties in the four counties surrounding Lynchburg.

In July, Lynchburg became the headquarters location of a New York Stock Exchange-traded company. That occurred when the Babcock and Wilcox Co. (B&W), which has long had a division in Lynchburg, decided to spin off its power generation business as BWX Technologies Inc. (BWXT). B&W remains based in Charlotte, N.C.

BWXT, which has 2,500 employees in Lynchburg and almost as many in Ontario, is the sole manufacturer of nuclear reactors and other major components for the U.S. Navy’s submarines and aircraft carriers, as well as a supplier and repair and maintenance provider to the commercial nuclear power industry. BWXT also has a growing government services business, providing environmental remediation activities and facilities operations for the Department of Energy, NASA and other agencies.

“We have an extremely good business with a very large backlog, but it is a business that we believe that we can do more with and now we have the total focus to do that,” says John Fees, the executive chairman of BWXT.

Meanwhile, Centra Health, which runs Lynchburg General and Virginia Baptist hospitals, has acquired a number of medical practices recently, including Lynchburg Hematology Oncology and Neurology Associates of Central Virginia.

The nonprofit health-care system also is building a number of ambulatory and urgent-care centers. These include a $23.8 million medical center and emergency room that opened in Gretna in late 2014, a 50,000-square-foot medical center that opened in Farmville in August and a $9 million urgent-care clinic that will open in Amherst next fall.

“We’re not just acquiring businesses to add to our portfolio,” says Centra spokeswoman Diane M. Ludwig. “We chose these locations based on improved access, new services and programs and to improve our continuum of care.”

Lynchburg’s growing supply of health-care services meshes nicely with Liberty’s increasing enrollment of health-sciences students. Deanna Clark Britt is dean of Liberty’s nursing program, which has nearly 1,000 students. She estimates that 10 to 15 percent of her graduates, who complete 800 clinical hours at local medical facilities, end up taking jobs with Centra Health or other local health organizations.

“From what I have heard from students, they see Lynchburg as a town that has a small-town feel but with the advantages of bigger-town resources,” Britt says. “They believe that this region would be a great place to settle down, begin a career and eventually raise a family.”
Becoming a tech hub

Lynchburg’s changing business community is especially attractive to startups and expanding high-tech companies.

True IA, a Sterling-based cybersecurity firm, opened an office in downtown Lynchburg’s Riverviews Artspace in October at the recommendation of two former Liberty students: Seth Wade, the company’s director of marketing and business development, and his brother, Nathaniel, who is vice president of cybersecurity.

“I was very familiar with the area and what was happening here,” says Seth, a Lynchburg native and an Army veteran. “The company was looking to add new positions, and I said, ‘Look, if we put those positions in Lynchburg, we’re going to gain a number of things: We’re going to get at least a 30 percent better cost average on overhead, and we’d have easy access to some really talented people, not just the college students coming out of Liberty and other colleges in the region — but also people employed by regional Fortune 400 companies who want to stay in Lynchburg but want to try a different career challenge.’”

True IA holds prime contracts with the Department of Defense, the IRS and Washington Headquarters Services and is a subcontractor for major work with L3 Communications. The Lynchburg office has five full-time employees and five independent consultants and expects to add more full-time personnel over time.

Nathaniel, who served as a combat Marine in Iraq, says that the Lynchburg office focuses on increasing the company’s presence in Virginia and North Carolina and adding to its client list.

“A lot of our work and a lot of the dollars that come into this office are from outside the region, so that’s going to be an economic net gain for Lynchburg and bring in a lot of value,” he says.

Lynchburg added to its economic development toolbox last summer when it became the first Virginia city to receive the TechHire designation. This White House-led initiative will enable local employers and schools to compete for $100 million in grants to support accelerated learning for low-skill workers.

True IA, which offers a series of online cybersecurity courses, will apply for TechHire funds, as will Sharptop Co., a small software programmer and training firm also located downtown.

Sharptop partners with companies to build websites and computing and mobile applications. Beginning in 2016, it also will offer software and Web development “boot camps.” Sharptop’s founder is Tony Erskine, an Army veteran who also has a Liberty connection. He took a number of Liberty’s online classes and later worked for the university’s IT development office.

Erskine and the Wade brothers plan to collaborate on projects and hope to play a role in boosting the city’s reputation as a hub for STEM education and entrepreneurship.

“We want to build the Lynchburg economy and ecosystem, be a great partner to Lynchburg-area businesses and help make it a little easier for those trying to start companies by providing those businesses with great applications and solutions,” Erskine says. “We’re not a Christian company, but we are a company of Christians, and we want to make sure that we’re pleasing God in everything that we do.”

Telling a better story
Like Liberty officials, local economic development officials are taking steps to get the word out about Lynchburg’s changing economic landscape. As a first step, the Lynchburg Regional Chamber of Commerce merged in late 2015 with the Region 2000 Business and Economic Alliance to form the Lynchburg Regional Business Alliance.

The merger will provide a larger regional voice and promote better strategic collaboration, says Megan Lucas, former CEO of Region 2000, who is now president and CEO of the new organization. “We’re not merging because we have to. We’re merging because it’s the right thing for our community,” she says. “We’re all much stronger operating together than in silos.”

With a combined budget of $1.4 million, the Lynchburg Regional Business Alliance plans to boost economic development spending by 124 percent to create a global brand for the region. For example, it will run commercials during Liberty athletic events on ESPN and other networks.

“Because of Liberty and all that’s happening here, we’re getting more international exposure than ever, but we need to capitalize on that,” Lucas says. “We have everything we need to attract great businesses and great employees. We just need to do a better job of telling our story.”

Waiting and wondering

For more than six years, short-term interest rates have hovered near zero, but that could change soon. Federal Reserve Chair Janet Yellen reaffirmed in July the central bank’s plan to start raising interest rates before the end of the year.

If and when that happens, G. William “Billy” Beale, CEO of Richmond-based Union Bankshares Corp., which operates Union Bank, will be thrilled. In anticipation of Fed action, Union has been restructuring its balance sheet to be more asset-sensitive. Its actions have included tying more loans to floating rates, shortening the average life of its investment portfolio and emphasizing lower-cost, less reactive deposit vehicles like negotiable orders of withdrawal (NOW) and money market accounts.

“Essentially, if rates start to rise, our assets will reprice faster than our liabilities, and that would translate into improved profitability for us pretty quickly,” Beale says. “It would be a great thing.”

Unless, of course, the economy isn’t strong enough to absorb the rate hike.

“A quarter point [increase] doesn’t sound like much. A half point doesn’t sound like much,” Beale says. “But a rise in the prime rate will increase the cost of borrowing, and it could put some of our commercial customers under more stress. The question is: Will they be able to handle that increase or adjust their rents or pricing fast enough to not go into a negative cash-flow situation? That’s something we definitely worry about.”

Ups and downs
For all the hopes the banking industry has been putting on rising interest rates, an actual Fed move “will bring a lot of anxiety, in addition to great optimism, for both community and national banks,” says George Morgan, SunTrust Professor of Finance at Virginia Tech’s Pamplin College of Business.

“Everyone is expecting rates to rise, and banks that have effectively prepared will see their returns go up in the short-term,” he says. “Beyond that, though, there are a lot of scenarios that could play out, and there’s no way to predict what will happen.”

The big fear, of course, is that rising interest rates will cause the economy to weaken or even slide into recession resulting in a new round of loan defaults. Another possibility? The Federal Reserve could raise rates too quickly, effectively flattening the yield curve between short- and long-term rates and minimizing profitability for banks. The Fed also could raise rates temporarily and then drop them again, effectively hurting the same banks that the interest rate increase initially helped. And any change could create market volatility.

The last scenario, says Morgan, would play in favor of national banks that offer trading operations, M&A advisory services and other fee-based services. “Increased volatility creates more volume for those kinds of transactions, and so I think they’ll do very well in that environment,” he says.

Fortunately for smaller community banks, the Federal Reserve appears to be fully aware of the danger of moving too quickly, says Chadwick Curtis, assistant professor of economics at the University of Richmond’s Robins School of Business.

In a March speech, he notes, Yellen used the term “gradual” 13 times in describing her expected monetary policy.

“The big news is the speed at which rates are going to increase, which is likely to be a little slower than initially expected,” Curtis says. “It will probably be a quarter percent each time, and that will hopefully give everyone time to adjust, and the economy will withstand it.”

Making preparations
Most community banks have spent the last several years preparing for the possibility of both interest rate hikes and the ongoing uncertainty. Morgan notes that banks with a strategic portfolio of floating rates loans, which will reset quickly in a rate increase, and retail deposits, with rates that will rise more slowly, are sure to fare well when the Federal Reserve initially raises rates.

Reston’s John Marshall Bank is one of those banks. Its asset and liability committee intensively analyzes the interest rate gap and the potential impact interest rate changes will have on various bank operations and metrics. The committee will continue its work in earnest when the Federal Reserve finally acts.

“We try to set the mix of our loan portfolio and our deposit portfolio so it’s as closely matched as possible,” says Bill Ridenour, the bank’s president and chief administrative officer. “The way we’ve structured our assets and liabilities, we expect that when interest rates rise, it will at the very least have a neutral impact and very likely a positive impact on our earnings.”

Over the duration of the low-rate era, John Marshall Bank has controlled its expenses, managed its overhead and maintained one of the highest efficiency ratios in the industry.

“As long as you understand where your portfolio is, and you manage that interest rate risk, then an interest rate hike done in a controlled fashion will likely be very positive for banks, as long you watch what you’re doing and don’t get too far out with fixed interest rates on loans,” says Ridenour.

The fixed-interest rate loans pose a major risk, he says, “as there will continue to be a lot of competition for quality borrowers, and in a rising rate environment, those borrowers will want to get a long-term fixed rate if they possibly can.”
Danville’s American National Bank has spent the past six years restructuring for the inevitable day when rates finally start to rise. CEO Jeffrey Haley says that focus has been on “making everything as short as possible,” including commercial loans and bonds and “trying to squeeze every penny or basis point out of core deposits and vigorously lengthening our maturity of time deposits.”

Taking the long view
Michael Joyce, president and CEO of JoycePayne Partners, a financial management firm in Richmond, says that many banks have used the low-rate era to hedge their bets against future interest rate volatility by adding new sources of non-interest-rate-reliant revenue.
“They’ve done a good job of diversifying, which has stabilized their revenue streams and also allowed them to more easily comply with capital requirements,” he says.

Many smaller banks, for example, have joined national banks in putting an emphasis on fee-based wealth management services. According to data from Fiserv Intelligence Solutions published in American Banker magazine, trust income grew by 21 percent for the banking industry from 2012 to 2014 and accounted for 70 percent of wealth management income in 2014.

Leading the pack was Union Bank, which effectively doubled its trust revenue through its acquisition of Charlottesville-based Stellar One in January 2014.

Beale notes that trust income, along with other fee-generated income, such as mortgage underwriting and service charges, currently accounts for 21 percent of Union Bank’s total revenue.

“We hope to grow that to 25 percent by putting even more emphasis on mortgage and wealth management,” he says. “And it’s where we have chosen to focus a lot of our resources by adding people and trying to build out platforms so we’ll have that more stable, steady income and become less dependent on our margin.”

American National also has added variety to its income stream. The bank has had a Trust Investment Services Department in place since 1927. After the Great Recession, Haley says, the bank took steps to bolster that service, increasing assets from $531 million in 2011 to $750 million today, a 41 percent jump.

The bank also has provided merchant services and bankers insurance, emphasized debit card and debit interchange income, and eliminated fee waivers on commercial analysis and other fee-based services. Officials also have worked to cut expenses, most significantly by encouraging customers to switch from paper to electronic statements.

“We’ve dug way down and made all these little things a major strategic priority, which have all added up to a big number,” Haley says.

As a result of these preparations, Haley, like other bank officials, is guardedly optimistic. “Hopefully, all of us have our balance sheet in order, we have our expense structure in order, and then we can all benefit and the industry will have a nice pickup as rates go up in the short-term,” he says. “At the same time, I’m very concerned about the longer term: Will the Fed continue to go slow, or will rates get out of control and stifle or cut off growth? That’s the big unknown.”

No takers for ‘elderly islands’

When Bill Garlett and his wife, Jan, discussed where they wanted to settle after Bill finished a 26-year Army career, retirement havens like Florida and Arizona never came up.

They considered only locations where they had family or career connections, such as New Jersey, Wisconsin and Georgia. The place they talked about most, though, was the Hampton Roads area where Bill, an Army band commander, had been assigned frequently.

“We both loved it down here,” says Bill, 63. “I had spent most of my adult life here, because my dad’s family was here and because of my career. We knew the community. We had friends here. It just seemed natural to come back to this area.”

A year ago, the Garletts moved into an eighth-floor apartment at the Chamberlin, a waterfront senior living community on the former Fort Monroe property in Hampton. They no longer need to cook (they can eat chef-prepared meals in the community dining room) or worry about home maintenance issues, but that doesn’t mean they’re taking it easy.

Jan meets frequently with longtime friends and takes walks with Bill on the nearby seawall. Bill is the conductor of a local 60-piece wind ensemble and frequently goes to Joint Base Langley-Eustis in Newport News to participate in U.S. Army Band alumni concerts. He also helps with the Chamberlin’s landscaping.

“We wanted to be freed up to do more of what we wanted to do, but we’re not ready to settle down,” says Bill. “And here, we don’t have to. It provides us the best of all worlds.

Staying active
The Garletts are part of a growing trend. Many retirees are passing on the idea of “getting away from it all.” Instead they choose to remain closely tied to their communities, families or ongoing interests.

“Baby boomers and even the current generation of retirees no longer want to be on what I call ‘elderly islands’ that are built out in the middle of nowhere that cut them off from the larger community,” explains Andrew Carle, executive-in-residence and founding director of the Program in Senior Housing Administration at George Mason University in Fairfax. “And they don’t want to sit on the front porch with people their own age watching the sun go up and down. They want the trifecta: They want active. They want intellectually stimulating. And they want intergenerational environments.”

Virginia senior housing operators are well aware of the trend, and in response, they are rethinking where they build retirement communities, the types of activities and programs they offer and how they market themselves, Carle says. “What’s become really important is figuring out, ‘How do we integrate these communities into the larger community around them so people can stay engaged?’ ”

Virginia retirement communities are adapting to the trend. Harmony Senior Services, a Roanoke-based company that operates five retirement communities in Virginia, including the Chamberlin, now is situating its newest developments near universities or in busy neighborhoods.

COO Brent Russell says Harmony will open four new communities in Virginia this year, with another 12 communities under development for next year and 2017. These include the Crossings at Blacksburg, which is less than three miles from the Virginia Tech campus; the Crossings at Chantilly, located close to a number of parks and within 10 miles of George Mason University; and the Crossings at Suffolk, which is within walking distance of a Starbucks and across the street from the Harbour View West Shopping Center.

“We’ve definitely seen a change where people have a relationship in the community, whether it’s their church, their favorite restaurant, an activity, their family members or a group of friends, and they don’t want to move far away from that,” Russell says.

That was certainly true for Ercelle Morris, 93. She had the option to move to California to be closer to her daughter and grandchildren but opted instead to move into the Crossings at Bon Air, which is just five miles from her longtime home in Richmond. “My friends are here, my doctors are here, everything that is familiar to me and that I enjoy is right here, so I never seriously considered leaving,” says Morris. A lifelong Virginian, she still attends a meeting every month at the Epworth United Methodist Church, which her grandfather helped build, goes out to dinner with friends and plays in several different bridge clubs.

Many retirees don’t want to break with lifelong connections they’ve forged with institutions and employers. Falcons Landing in Potomac Falls is a niche, or “affinity,” community for retired military officers and senior civil-service employees who share a bond over public service and a love of the D.C. metropolitan region.

For The Colonnades, a retirement community in Charlottesville, the link is the University of Virginia. Executive director Mark Kastan estimates that at least 40 percent of residents taught or worked at U.Va. or have an adult child who works there now, while many others had a child or grandchild attend the school.

“Having the university in town definitely drives demand for the community here,” he says, noting his residents especially enjoy going to the campus to see lectures, concerts, plays and U.Va. sports events or just to walk around and mingle.

Cultivating community ties
Location is only part of the equation, however. Real-world and intergenerational involvement is increasingly fostered by the retirement communities. “We spend a great deal of time organizing and putting in place transportation away from the development,” says Russell. “We’ve got a bus and a van at each site, and they are always running.”

At the Chamberlin, residents have opportunities to accompany the kitchen staff in digging for clams they’ll eat for dinner, and at other Harmony sites, residents go to local farms to pick strawberries and blueberries, shuck corn and make goat cheese. At the Harmony’s Chesterfield County community, a certified water aerobics instructor takes residents to a local community pool for lessons. “They get out and have a blast,” says Russell.

Atlantic Shores, a retirement community in Virginia Beach, went well beyond organizing daytrips a few years ago when it initiated the “Puppy Love” program. For 14 months, resident volunteers raised puppies for the Guiding Eyes for the Blind dog school. As part of the effort, residents took the puppies to weekly training classes and out into the community for exposure and socialization.

“We enlisted the help of two local elementary schools, and we would take the puppies there on a regular basis,” recalls Beth Pursley, spokeswoman for Atlantic Shores. “Right from the start, the kids were involved with the residents and the puppies, and so it was a wonderful way to bring the generations together.”

The Colonnades frequently puts together trips to area wineries, historical sites, restaurants and various music and arts venues. For large sports events, Colonnades officials worked out an agreement with U.Va. so residents can get off at a venue’s entrance and go directly to their seats. “Our residents like going out, but they still want comfort and convenience,” Kastan says. “They don’t like the idea of being pushed or jostled in a big crowd.”

For this reason, communities are also increasingly going out of their way to bring in the outside world. When lecturers or musicians come to U.Va., Kastan invites them to also make an appearance at the Colonnades. Harmony’s Richmond community works with the Virginia Commonwealth University School of Medicine to bring in medical students to “practice” taking the medical history and vitals of residents.
Atlantic Shores opens its 100-acre campus to the public each May for an annual tour of residents’ homes and gardens, as well as displays of their artwork. Two years ago, it began hosting an annual, free “Evening with Downton Abbey,” an on-site party that provided residents and other fans of the PBS show with the chance to dress up in period clothing, dance to 1920s music and enjoy British-inspired cuisine.

Enabling and accommodating
Retirement communities also are investing in technology and capital improvements that help increase engagement.

The Colonnades offers Wii bowling, Wii Jeopardy and other Internet-based games, which allow community members to interact with their family and each other. Meanwhile a computer center offers all manner of social media and videoconferencing resources, including Skype, for long-distance calls.

Atlantic Shores will soon unveil MyAtlanticShores, an internal social media site for residents, their family, friends and staff. “It’s a way for everyone to stay connected and share with each other and know what’s going on in the community, but it’s only for people associated with the community, so it’s very private,” says Pursley, noting that it also includes online sign-up sheets for trips and events.

Harmony has started incorporating outdoor living areas, complete with double grills, patios and sail-flag covers, so residents can host barbecues for family and friends. It also features on-site theaters at each development and makes them available to the community, including for support groups, meetings and entertainment.

Russell says that these types of accommodations increasingly are critical to a community’s growth. “Because of where the economy has been, I think people are supporting each other now more than ever and keeping check on one another,” says Russell. “And we see more families and friends coming in and spending time with their loved ones much more frequently. It’s not just a quick pop-in type visit. They’re staying, taking part in activities and really enjoying those visits.”

And as the 78-million-member baby boom generation continues to flood the retirement rolls, Carle says, it’s critical to understand this changing reality.

“It’s not enough to have a beautiful campus and buildings — you’ve got to study and fully understand what this generation wants,” he states. “They may be retiring, but they don’t want to stop living. They really want to continue to contribute to their communities and be fully engaged with the people they care about and share interests with.”

Setting a future course

Phoenix Group LLC, a service-disabled veteran-owned small business in Chesapeake, recently was awarded a $282,000 contract to provide firefighting equipment and gear to a new firefighting school in Southeast Asia.

Given that more than 80 percent of the company’s other work is for the U.S. Department of Defense, this latest contract doesn’t rank as its biggest or most prestigious. It may, however, be one of the most meaningful to its long-term viability.

Why? It’s the first major international contract that the Phoenix Group has gained since enrolling in the “Going Global” Defense Initiative (GGDI) to diversify its revenue streams. Virginia Economic Development Partnership (VEDP) began the program to help defense contractors offset the effects of federal budget cuts by finding opportunities in new markets.

Through the program, Phoenix Group has received:

legal assistance in the complex registration process required to become an export-compliant company;
money to create video and other digital marketing materials and to translate the company website into five additional languages (through services provided by two Virginia Beach firms, Studio Center and Ingenuiti); and
opportunities to travel on trade missions to Poland, Germany and other countries where company officials met with potential (and fully VEDP-vetted) customers and product resellers.

“We couldn’t have done any of this without the work and guidance from VEDP,” says Stephen Clock, Phoenix Group’s national sales director. In addition to its work with the firefighting school, the company also has sold hazmat suits, respiratory equipment and other products to customers in Europe and Taiwan.

Clock expects to hire two new employees soon to handle international sales. “Honestly, it would have taken years of work on our end just to make the connections that VEDP was able to provide to us, much less the rest of what we’ve been able to accomplish,” he states.

Program’s future uncertain
Phoenix Group is one of 224 Virginia-based defense contractors that have enrolled in GGDI since its start in mid-2013. The program began with a $2 million budget from state appropriations and a federal grant and was renewed for another year.

Its future now, however, is uncertain. No money was set aside for a third year of GGDI operations in the revised budget recently passed by the Virginia General Assembly. VEDP, however, is attempting to identify enough savings from its existing appropriations to apply for — and win — a matching federal grant.

“We’re hopeful that we’ll pull together the funds,” says Paul H. Grossman Jr., vice president of international trade for VEDP. “We wouldn’t be trying if we didn’t think it was possible.”

From the start, Virginia’s defense contractors enthusiastically signed up for GGDI, Grossman says. All of the program’s available slots were filled quickly, with 160 companies accepted in the first year (and more placed on a waiting list) and an additional 64 enrolled the second year.

“You can interpret that in one of two ways: It’s great that the program has been oversubscribed, but it’s bad because it reflects how desperate Virginia defense companies are with regard to declining federal spending,” he states.

Virginia is a leading recipient of federal dollars, and a major portion of that money involves defense spending. More than 5,000 defense contractors make their home in the Old Dominion, largely in the Northern Virginia and Hampton Roads regions. They had $41.5 billion in DoD contract awards in fiscal year 2013, according to a report from the department’s Office of Economic Adjustment.

Sequestration — automatic federal budget cuts that took effect in 2013 — hit Virginia companies and the commonwealth’s tax coffers especially hard. That is one reason many GGDI enrollees are pivoting their focus to overseas revenue opportunities — either by selling to foreign defense agencies or by developing nondefense applications for their products and technologies.

“To be a company that has never sold overseas is pretty scary, because, if you don’t conform to U.S. export law, you, as principal, can go to jail,” says Grossman. “So, through this program, we’ve been able to bring in not only our own staff, but we can contract with law firms, consultants and other experts in the field to help these defense companies feel comfortable about pursuing and doing business internationally.”

Through the end of 2014, more than 50 GGDI companies had completed the compliance requirements of U.S. export control laws, and 185 companies are now participating in VEDP’s export promotion programs. VEDP’s network of in-country consultants in 57 nations has helped GGDI members complete 315 market research projects, 25 technical translation and adaptation programs and seven international product certifications.

The 224 GGDI companies, which have 30,000 employees, now are projecting, on average, a 120 percent increase in international sales during the next two years.

International leap
One of them is Cask LLC, an economically disadvantaged-woman-owned business and technology services firm in Stafford whose customers include the U.S. Marine Corps and U.S. Navy. Thanks to a $12,000 grant through GGDI and VEDP’s guidance and advice, Cask has put together a robust export compliance program in eight months and now sells to international customers.

“We’ve gone from being able to do absolutely zero work overseas to what is now unlimited potential,” says George Judd, director at Cask. He notes that, before enrolling in GGDI, approximately 70 percent of the company’s business was with U.S. defense agencies. “It’s opened up the world to us.”

For example, Cask recently performed work in Romania, defining the requirements and technical specifications for a new legislative affairs system, and now is providing support services as part of a mergers and acquisition effort for a global shipping company in Singapore. Cask also has submitted proposals for projects in Brazil and Colombia and soon will travel to Saudi Arabia to create a joint venture with a Saudi company.

According to VEDP, the average Virginia defense contractor gets 68 percent of its revenues from U.S. defense agencies. “It’s simply not diverse enough to be a good business model,” Grossman says.

Most companies have long recognized their vulnerability to budget cuts, but they haven’t had the funds, time or resources to pursue new revenue sources, especially overseas.

GGDI has helped companies overcome that hurdle, says Matt “Race” Bannon, director of strategy and marketing for Airborne Tactical Advantage Co. (ATAC), a Newport News-based contractor that provides supersonic aircraft training and exercises to the Pentagon.

“We have such a narrow niche focus, and we knew that we had to go international if we wanted to expand our business base, so this program allowed us to go exactly where we already wanted to go with our strategic plan,” Bannon says.

ATAC used program experts to help it navigate the thorny issues of export compliance and develop a company video targeted at international markets. ATAC officials also traveled with VEDP on several trade missions.

“We’ve been able to get out in front of different markets, so potential customers can get a sense of what we do,” says Bannon, adding that the long lead times involved in ATAC’s business means that it likely won’t see any results soon. “Time will tell if this will bring any upside to our revenues, but it’s not hurting, I’ll say that much.”

Renewed U.S. engagement in the Middle East and support for the Ukrainian government in its fight with pro-Russian insurgents could spark renewed U.S. defense spending, Grossman says, but any increases likely will be targeted and temporary. “The dynamics of ever-increasing defense budgets are gone,” he says. “So defense companies need to continue their diversification efforts.”

They might have to do that without the help of GGDI, however, which will cease to exist on June 30 without further funding.

Stephen Clock at the Phoenix Group hopes that the VEDP finds the money to keep the program going. “We’re off to a great start, but we’re not where we need to be yet,” he says. “We still need help to keep growing internationally.”

All together now

When officials from Hampton Roads-based TowneBank considered acquiring Franklin Financial Corp., the parent corporation of 81-year-old Franklin Federal Savings Bank, they saw plenty to their liking.

Franklin, like TowneBank, had a strong capital base and was showing near-record profitability. Moreover, because all eight Franklin branches are in the Richmond area, the deal would allow TowneBank to expand its footprint west to the Virginia capital.

However, what finally sealed the $275 million deal was the fact that the two institutions shared a similar corporate culture, says G. Robert Aston Jr., TowneBank’s chairman and CEO.

“The first time I visited Franklin, it didn’t take long to recognize that how they dealt with each other and with their customers was very, very comparable to the way we approach things,” he says. “Having a similar culture is critical to us. In fact, we have walked away from some very attractive potential transactions where culturally the fit would be like oil and water.”

Bringing together two relatively similar organizations is not without its bumps and hurdles, of course, but a drawn-out and difficult cultural integration can result in problems that could cancel the deal’s benefits, Aston says. These pitfalls include a drop in employee morale, the loss of top personnel and customers, declines in productivity and efficiency, and weaker earnings performance.

“If things are not working from the employees’ perspective, then, chances are, it’s not going to be working from a financial perspective, and it’s that financial perspective that you’re going to clearly be measured on in terms of whether the transaction has worked the way you anticipated it would,” he says.

Giving culture its due
A successful merger or acquisition involves four elements, says L. Jay Bourgeois, a business strategy professor at the University of Virginia’s Darden School and a senior fellow at the Center for Global Initiatives. Those elements are: strategy, vision, operational logistics (including integrating IT systems and processes) and culture.

“They’re equally important, and they’re interdependent,” Bourgeois says. “Getting one wrong will have implications for the others, so they all have to be addressed.”

During a deal’s due-diligence process, it’s easier to analyze revenue and expense trends than it is to determine how corporate values, communications style, institutional work ethic and the relationships between management, employees and customers will impact post-merger operations.

Giving corporate culture low priority is a mistake, especially for community banks, which rely heavily on relationships to attract and keep customers, says Bruce Whitehurst, president and CEO of the Virginia Bankers Association. “When you’re talking about introducing to your organization a whole new set of employees who are anxious about their jobs and their future, then I think culture has to be very high on the list of things to tend to and look after,” he says.

The 2014 Bank M&A Survey, conducted by Indiana-based Crowe Horwath LLP in association with BankDirector.com, bears out that conclusion. While only 23 percent of respondents cited cultural fit as the biggest challenge their boards of directors expected to contend with in an acquisition, 43 percent said that, after the deal was completed, cultural compatibility remained problematic.

G. William “Billy” Beale, CEO of Richmond-based Union Bankshares Corp., says that bridging the cultural divide has become more challenging as the pace of banking mergers and acquisitions has picked up.

In May, Beale’s company completed its acquisition of Charlottesville-based StellarOne, which before the deal had 56 branches and 700 employees throughout Central and Southwest Virginia. The $445.1 million all-stock deal made Union First Market the largest community bank in Virginia (with $7.1 billion in assets) and one of the 90 largest banks in the country.

“It was a significant acquisition — StellarOne was 75 percent of our size, but the analysts and institutional investors were only going to give us about nine months to get it together, and when we didn’t immediately get the loan growth they were expecting, they took 15 percent off of our stock price,” Beale recalls. “So the patience of some is not what it used to be, and, as a result, culture is becoming more important, because the faster you can go and get everybody assimilated and moving in the same direction and performing, the better.”

Bringing people up to speed
In recognizing this situation, Union First Market officials, like those at TowneBank, now take time to assess carefully the culture of a potential acquisition for compatibility. They also start early in educating incoming employees on the bank’s values, processes and culture.

For example, Beale explains, his bank has sometimes conducted upfront surveys of acquisition employees to determine exactly what types of cultural gaps exist so they can be addressed with training, communication strategies and other supportive measures. A year after the merger, his team surveys employees a second time to find out how the integration is going, what gaps still remain and what concerns employees have.

“Those types of surveys are really critical to finding out what’s really going on with the cultural integration, because otherwise, frankly, you’re just guessing,” Beale says.

TowneBank provided its newly absorbed Franklin employees with an early-stage introduction to the company’s philosophy, vision and culture right after the merger was announced and then held a more intensive orientation among smaller groups of teams.

“The more we can expose folks to our company, the quicker they’ll come along and the more comfortable they’ll feel,” Aston says. “But we keep on reinforcing our style and culture and the whys at each step along the way because no matter how much time you put into it upfront, it’s still going to take a while, at least a year, for them to quit looking forward to the past and get focused on their future with us.”

More recently, acquiring banks have begun assessing for cultural fit during the due-diligence phase and then building any expected cultural challenges into the overall plan, says U.Va.’s Bourgeois, who teaches, among other courses, an MBA elective on successful post-merger integration.

“I am actually now seeing some of the financial modeling for bank acquisitions include what’s called an integration risk premium,” he says. “It basically says, ‘We know there will be bumps, and we know that there is some downside risk to our expectations, so we’ll build that into our model.’”

The difficulty with effectively addressing culture is that no two companies or acquisitions are alike, and efforts to align the different cultures can run into trouble at various points, especially at the beginning when emotions are running high and when employee layoffs start to occur, says Whitehurst.

“It’s really important to come in and be extremely straightforward and honest by saying, ‘Here’s what we can tell you now about how we think this is going to go and here are the things that we don’t know yet or are not yet in a position to be able to say,” he explains. “And then you should pay attention to and talk about the shared vision and the shared values that everyone does have. I think if you do that, you will greatly reduce the likelihood of doing things you will later regret and improve your odds that the new employees will find your culture attractive and appealing and be more willing to get on board with it.”

Finishing touches

In early 2013, José Bustillos, a sophomore accounting major at the University of Richmond, was struggling to navigate college life challenges when Shelley Olds Burns stopped by one of his classes. Burns, director of the Center for Professional Skills and Development at UR’s Robins School of Business, invited students to an upcoming program known as Q-camp.

Bustillos wasn’t enthusiastic. “To be honest, I had enough on my plate just starting to dive into business school,” recalls the Tucson, Ariz., native. “The only reason I went was because my professor strongly suggested that I go.”

The Q-camp process, the brainchild of Paul B. Queally, a UR alumnus who heads a New York private-equity firm, is a 3-year-long series of events designed to give undergraduate business students opportunities to meet with business professionals and learn real-world career skills.

Bustillos, now a senior, is glad he tried the program. The experience motivated him to think well beyond his academic load, gave him new confidence and over time directly led to a job offer from a top accounting firm.

“I didn’t understand at first how it would help me, but when I got there and started to meet all these professionals doing what I love, well, it gave me a lot of motivation to improve myself in these areas and learn what was necessary to make me a better candidate and eventually a better employee,” he says.

Preparing students for the nuances of the business world is not a new endeavor, but school officials have intensified their offerings in recent years as the recruiting process has become more competitive.

Employers no longer base hiring decisions on top grades and well-written résumés. They expect business school graduates to have professional polish and the ability to communicate, negotiate, network, collaborate and be team players.

Hitting the ground running
In a 2014 survey conducted by Harris Poll on behalf of CareerBuilder, 77 percent of responding employers said these “soft” skills are just as important as the technical skills an employee needs to perform a job. Sixteen percent of respondents said soft skills are actually more important.

“Employers are getting to the point that they expect students to be able to hit the ground running, unlike in the past where it was more acceptable to learn a lot of this on the job,” says Tom Fitch, associate dean for career services and employer relations at the University of Virginia’s McIntire School of Commerce, which offers etiquette dinners, networking events and workshops. “They expect this type of skill set to be well-established. They look for evidence of it in interviews, and they look to see what experience students have had to prove that they can communicate effectively with clients and interact with peers and work in a group setting.”

Other driving factors in this approach are the general loosening of the social structure and the trend toward less personal, electronic communication. Compared with previous generations, millennials spend more time texting and less time in face-to-face conversation. They also have had fewer opportunities to attend functions or classes where manners and etiquette are taught.

By contrast, the business culture remains highly structured, with its own set of social rules and etiquette standards, clear expectations of what is and is not professional behavior, and a strong reliance on personal interaction and relationship building.

“In the end, networking is still what gets the deal closed,” says Takeisha Brown, director of career services at Virginia Union University in Richmond. “And millennials who have grown up in the technology age and are used to texting and emailing will go into this environment facing a new barrier because this type of face-to-face networking is just not what normal communication looks like for them.”

To prepare students to enter the work world, Virginia business schools are teaching a variety of non-academic skills. They include the basics of playing golf, crafting and using a LinkedIn profile, and strategically entering and exiting a conversation.

Jordan Young, a UR senior, says his Q-camp experience helped him differentiate himself during a summer internship as an equities investment analyst at Guggenheim Global Trading in Purchase, N.Y. Young, who played golf competitively in high school, was advised to play up that fact on his résumé, and during his internship he ended up hitting the links with some of the firm’s senior executives.

“Because of the Q-camp experience and all the interaction I’d had before this, I understood that success was going to be as much about how I managed relationships as it would be about knowing how to pitch a stock or value a company,” he says. “I felt really comfortable in that environment because I had a much deeper understanding of how to network and knew a lot of the unwritten rules, like what’s appropriate to talk about and what’s not appropriate and how to keep in contact with people.”

Same goal, different approach
Virginia schools, by virtue of their demographics and size, are taking different approaches to bringing students up to speed on the realities of life in the work world.

Brown’s team, for example, puts on etiquette dinners and leadership training programs while inviting students to personalized sessions with career counselors. Networking events with local employers also are held on a regular basis.

“Everything is happening much earlier than it did before, when the first interaction with an employer was likely to be that first job interview,” Brown says. “Employers want to meet potential recruits even before they hire for internships, and students have to be prepared for that. They have to know how to present themselves with confidence, they have to know how to shake someone’s hand and look them in the face and have a conversation with that person on the spot.”

Kathleen I. Powell, assistant vice president of student affairs and executive director of career development in the Cohen Career Center at the College of William & Mary, agrees, noting that schools are able to put on intensive programs because outside forces are more willing to get involved. These include alumni, employers and even parents.

“The way we do career services has definitely shifted to more of an engagement model as opposed to the old placement model where an employer came and did on-campus recruiting, offered a student a job, and that was it,” Powell explains, pointing out that the Mason School of Business surveys employers each year to find out what soft skills they’re looking for in candidates. “Now, it’s all about those touch points with our external constituents and partners who are champions for our students and giving students opportunities to practice and make mistakes with those champions rather than just going out there and stubbing their toe on the real deal.”

Mason students can interact with these participants in etiquette dinners, mock interviews and “work the room” events. Powell’s team also puts on quick, informal “meet-ups” and “connect” opportunities with employers and business professionals that are pushed out using the school’s Twitter feed, Facebook page and other social media tools.

“We have a lot of what look like ‘one-offs’ but on the backside, it’s all part of this program schedule that reinforces what we’re constantly teaching about career etiquette and the business culture they’re going to be entering,” she says.

Virginia Tech’s Pamplin School of Business also offers cultural and etiquette training, though it can’t be quite as programmatic as other schools, largely because it has over 4,000 enrollees.

“It’s a little bit different level of service: We have to kind of shepherd the flock, moving them from one direction to the other, as opposed to maybe taking the staff and reeling them in,” says Stuart Mease, the school’s director of undergraduate career services, explaining that he visits at least 100 classes a year as part of his efforts to recruit participants. “Sometimes we have to hit them with several messages before they really get how important this is.”

Students get out of the program what they put into it, Mease says. “It’s a little bit like Virginia Tech as a whole: They can make it as big or as small as they want it,” he explains. “We’re here, and we try to help them as much as we can, but they’ve got to really make the effort.”

Getting students to understand how important these less tangible, less academic skills are to business success remains a hurdle for business schools, Powell admits.

“A lot of students want to prepare for the business world like they have college with a check-the-box list, and we’ll go over the soft skills that employers want and students will say, ‘I got that skill and that skill,’” she says. “And my response is: It’s one thing to ‘have’ them, but you need to be able to talk about them and demonstrate them in a job interview and on the job. And to do that, you have to practice while you’re in school — and practice a lot.”

The softer side of learning

Virginia’s business schools offer a range of programs and opportunities for business school students to refine their soft skills and business etiquette. The following is a sampling of what’s available:

University of Virginia — The McIntire School of Commerce’s Career Services and Employer Relations Department offers etiquette dinners, structured events around networking, an employer-in-residence program and a variety of workshops, including some geared to introverts who are less comfortable in social situations. Third- and fourth-year students also have a chance to immerse themselves in the business culture during New York networking trips.

Virginia Tech — The Pamplin College of Business offers mock interviews, résumé workshops, branding strategy sessions, networking events with company officials and one-on-one counseling. Virginia Tech’s Division of Student Affairs also holds an annual etiquette dinner.

University of Richmond — Q-camp is a 3-year-long soft skills program that gives UR’s Robins School of Business students an opportunity to learn how to: develop a professional network, assess organizational culture, use LinkedIn effectively, create a personal brand, adopt dining and workplace etiquette and network during a golf game. The sessions are designed to work in concert with mentoring and executive-in-residence programs.

Virginia Union University — The Career Services Department provides a number of events designed to prepare all university students for the work world, including etiquette dinners, leadership training programs, networking events and one-on-one counseling.

Old Dominion University — ODU’s College of Business and Public Administration’s Executive Mentor Program partners high-achieving undergraduate business students with executives, entrepreneurs and public-sector leaders to help them practice networking, communications and other soft skills.

Virginia Commonwealth University — VCU’s School of Business Career Services offers students the opportunity to attend etiquette dinners with faculty and local employers, participate in mock interviews and interact with company representatives at employer information sessions.

James Madison University — JMU’s Career and Academic Planning Department provides career-related workshops on a number of soft-skill topics, including speed networking, interview and dining etiquette and career attire, as well as practice interview sessions and networking opportunities with employers.

George Mason University — The School of Business offers an “Ask the Professional” Career Panel and Networking series, as well as practice interview sessions with local businesses. The George Mason Alumni Association also holds an annual etiquette dinner that provides networking opportunities.

College of William & Mary — The Cohen Career Center works with the Mason School of Business to help students learn soft skills such as networking, self-branding and face-to-face communications through programs such as a five-course etiquette dinner, weekly networking events, mock interviews and various employer-student connection opportunities, including “Meet the Firms Friday” and “From DoG Street to Wall Street.”

Directory of Business Schools in Virginia

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byline: Heather B. Hayes