Barsanti immediately set up a series of semiclosed-door meetings to discuss buyout options. One given was that no dads were allowed in the discussions. "It was very possible," Barsanti explains, "that under the terms of the purchase agreement, Bob and Gil would have walked out the front door of Color Art and not been allowed to walk back in. Period." He pauses for emphasis. "As difficult as it is to imagine cutting the cord like that, I found it interesting that once the possibility was raised, every single subsequent discussion I had with the kids began with the understanding that the fathers would not be available."
Working under IRS guidelines, Barsanti boiled down the options. For starters, he said, all unrelated shareholders would have to have their stock redeemed by the company at a universally agreed-upon price; that would be a straight capital transaction. Next, he would seek an IRS ruling allowing such jointly held stock as that of Mr. & Mrs. Bob Reim and Mr. & Mrs. Gil Lorenz to be valued as a 50/50 split. That, Barsanti thought, would allow the situation to fall under a technical definition the IRS refers to as "substantially disproportionate" stock redemption. If the IRS agreed -- acknowledging that the deal truly rearranged the ownership of Color Art -- the fathers could stay attached to the company if they wished, and could still count their income from the buyout as capital gains. Should that strategy fail, Barsanti counseled, they might change Color Art's status to an S corporation and let the company leverage the buyout through income paid to the new principals.
Either way, whether on the payroll or out the door, the fathers would end up having cashed in their control. In return, each would get about $330,000 up front and around $1 million plus interest over the next decade. In any case, stock scattered among a variety of shareholders would be pulled in (or redeemed) and concentrated in two family voting trusts. John Dodson, a longtime employee and now head of the furniture business, would see his equity grow from 3% to 20%.Bob Fox, the new comptroller, would hold another 10%. The two Garys would vote their family shares, for a total of 70%.
Their fathers' reaction to the whole thing was predictable.
"I'd walk by those meetings on my way to the bathroom," says Bob, "and think, 'Uh oh, the parade's passing me by.' Secretly? I hoped this would happen."
"I was happy for [my kids]," adds Gil, "but even happier for the rest of the employees. They responded so positively."
And so it was arranged that an orderly transfer of power would commence. On April 1, 1984, after extinguishing his equity holdings, Gil Lorenz was feted at a lavish party marking his retirement as president. Precisely two months later, Bob Reim was the guest of honor at an equally sumptuous bash -- Color Art loves parties, the bigger and wilder the better -- celebrating his stepping down as CEO. On July 2, Gary Reim moved into his father's office.
One of his first visitors was Paul Laster, a union typesetter with about 20 years' tenure. He drew up a chair opposite Gary's.
"How's the company doing?" asked Paul.
"Rockin' right along," said Gary. "Anything on your mind, Paul?"
"Not really," said Paul. "I just always used to have these little chats with Bob, and I was wondering if I could do the same with you."
Bob Reim himself is now, thanks to IRS amnesty, a Color Art consultant. The position is decidedly part-time, which is lucky: His latest "retirement" project is a national golf-and-travel club he is putting together with Professional Golfers' Association tour star Hale Irwin, a hometown pro. Deeply tanned, Reim recently returned from a month on the links in Hawaii, which is Gil Lorenz's next destination.
Like father, like son, the saying goes, and certainly the old adage lives in the case of these families. While he was at Color Art, Bob Reim was the "idea man." At the same time, he devoted 12 years to local government and has been a visible leader in St. Louis political affairs, all the while cultivating a pretty formidable golf game. Gary Reim also loves sports (he used to publish a monthly St. Louis sports magazine) and politics (he recently ran for the city council in Kirkwood, winning a four-year term), and he enjoys the challenge of reconceptualizing management. Gil Lorenz, says partner Bob Reim, was "the tough guy, the nuts-and-bolts guy," of the company, and served as national president of the Optimists Club International. Cary lorenz, an ex-union cardholder, describes himself as a "hard-line" negotiator when it comes to labor relations; he is a member of various national printing organizations.
It will be left to other generations of Reims and Lorenzes to decide just what was heredity and what was good family planning."I wanna work at Color Art just like you, Dad," one of Garry R.'s sons has already said to him, "so I can be rich when I grow up"; Gary L. has two daughters "who, given the way things are changing, may be running this company someday," says Dad earnestly. Inheritance, happenstance, or cunning, the passing of torches at Color Art should be remembered around the Kirkwood area for generations to come. It isn't that often, after all, that families can pull this sort of thing off.
"For it to happen," says Gary Reim, "a little bit of letting go has to happen, and that's painful. A little bit of reaching out also has to happen, and that's also painful.You have to be ready to give something."
Yes, but look what you get.
