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Pretty in Glass

September 29, 2002


Sep 29, 2002

On again, off again.

And so the deal went for five frantic weeks, as managers of a local company attempted to buy the stained-glass business they had built from almost nothing.

They were pitted against a tough New York private equity firm. They were never sure they could pull it off. South, meet North.

In the end, it was roses for the management team of Glassmasters.

“Don’t let us get in your way,” said a congratulatory note tucked in a bouquet of pastel-colored roses. “You are a great partner and a great competitor.”

The note was from The Kier Group, the New York owner that resisted and tried to derail management’s effort to buy the company.

“This is the same company that kept trying to fire me,” said the soft-spoken Martha Gibby, chief executive officer of Glassmasters of Richmond. Gibby and her business partner, Mitch Fox, persisted and prevailed a few weeks ago.

Glassmasters’ Richmond timeline1985: Robert Kline, chairman of the U.S. Historical Society in Richmond, acquires and moves Glassmasters from New York City to Richmond. Martha Gibby is consultant.

1986: Gibby develops a marketing base for Glassmasters in return for an equity position.

1992: Glassmasters becomes the operating subsidiary of Omnia Inc., created so the company could attain for-profit status.

1995: Hall accepts CEO position at Kmart and Gibby stays as CEO of Omnia.

1999: Mercantile Venture Partners acquires Omnia and The Museum Co. and merges the two under The Museum Co. name.

January 2002: The Museum Co. files for Chapter 11 bankruptcy protection.

April 10, 2002: The Kier Group acquires The Museum Co. (and Omnia) in bankruptcy court.

Sept. 10, 2002: Gibby and Mitch Fox, with equity partner Michael Anthony of Brookstone stores, buy Omnia from The Kier Group.

Glassmasters works with the world’s finest museums, making reproductions in stained glass of great art master and designer pieces to be sold in museum and retail shops. The company was once part of the U.S. Historical Society.

Clients include the New York Metropolitan Museum, the Frank Lloyd Wright Foundation, Shakespeare Folger Library, the United Nations, the Art Institute of Chicago, Walt Disney, the Jim Henson Foundation, Thomas Kinkade and The Smithsonian.

Prices range from $30.00 for a 5-by-7-inch oval with a handful of colors to $750 for a floor lamp with a stained-glass shade. Glassmasters pays royalties to the museums based on the number of stained-glass pieces sold. Pieces are also sold through boutiques, galleries and high-end catalogues, such as Touch of Class and Bloomingdale’s By Mail.

No other company can match a Glassmasters reproduction, said Fox, who was once in charge of operations and is now president.Glassmasters can stain as many as 23 colors into a piece, making for precise replications. Other companies are limited to about five colors. They simply do not have the technology, Fox said.

A sample can take up to 10 weeks to produce. Even then, museums are fussy. “Every curator is a frustrated artist,” Fox said. “They want the blue a little bluer or the green a little greener.”

An inferior product – one, say, with a tiny bubble – is smashed, never sold at a discount.

The company’s 38 employees are referred to as craftsmen. Four are full-time artists.

Gibby and Fox were dead-set on protecting the craftsmanship and culture.

Plus, they were tired of being buffeted about through acquisitions.

When the latest parent company, The Museum Co., got hit by the recession and filed for bankruptcy protection in January, Gibby and Fox had been through enough upheaval.

“We got our nerve up,” Gibby said.

They hired an investment banking firm, Dominion Partners of Richmond, and bid in bankruptcy court on the small but profitable Glassmasters portion of the business.

They were competing with five or six bidders, all of whom wanted the whole package, including The Museum Co.’s chain of 50 retail stores.

The Kier Group emerged victorious.

New owners often get rid of the old managers and bring in their own people to run the company.

But money doesn’t always equal power. And not everyone in every company is dispensable.

Gibby had developed contacts with museums and artists in her 20 years in the business. Fox, in his 27 years with the company, was the production expert.

Outbid but not undone, they pressed forward to buy the company from the new owner.

Their strength was the owner’s weak link. The Kier Group couldn’t operate the business without Gibby and Fox, said Frederick T. Naschold, principal of Dominion Partners.

“They knew that long-term, for Glassmasters to do well, they had to have (Gibby’s and Fox’s) good will,” Naschold said.

Besides, if Gibby and Fox were cut loose, they could open a competing business, Naschold said. They had the contacts, the know-how and the support of the national trade association. Neither was restrained by a non-compete contract.

In effect, The Kier Group was forced to the negotiating table. If the group could get a fair price for the business and retain Glassmasters as a supplier, a deal was possible. But the equity group, which was not available for an interview, was not inclined to make the process easy.

“We practically lived in the (Glassmasters) offices,” recalled Katherine K. Wagner, senior vice president of lending for Citizens & Commerce Bank of Richmond.

The West Point-based bank has helped three management buyouts in the past year or so, Wagner said. “This was the most challenging to negotiate and close. I am not sure the sellers wanted to let go of the operation. They gave us all hurdles to jump through.”

Gibby described the last three weeks as “rocky.” In one 30-minute period, the deal was on and off six times, she said.

“The sellers had no tolerance if the bank or (Fox) had to go home on a Friday at 8 p.m. and couldn’t be there on Saturday,” Naschold said.

“This was not a multibillion-dollar transaction, but they treated it like it was.”

Gibby and Fox said they offered a fair price, declining to specify. The price was never in question. Just the details needed to be hashed out.

The duo brought in an equity partner to help finance the deal, in addition to the bank loan.

“Our goal was to free the company from its encumbrances,” said Michael Anthony, chairman of Brookstone, a high-end gadgets retailer in Nashua, N.H. As an equity partner, Anthony is chairman of the Glassmasters board.

“It’s a good story: The company gets to become a local company after going through all the trauma with various owners,” he said.

“My whole attraction was this is such a neat business and the people running it are dedicated to making a quality product. They are passionate about what they do.”

Near the cut roses was a potted pink-edged orchid, also sent to congratulate Gibby on the buyout.

“You are a rare kind of success,” said the note from Floyd Hall, who left The Museum Co. in 1995 to become the CEO of Kmart Corp.

“We have always admired your exotic style.”

Copyright (c) 2002, Richmond Newspapers, Inc.

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