KELLY-MOORE
nary efforts after acquiring this distressed business, they simply couldn’t overcome the unexpectedly large challenges, and will be exiting the business.”
Miami-based investment firm Flacks Group bought Kellymoore in late 2022. Kelly-moore had $400 million in annual revenue and 1,200 employees at the time. It sold paint through 157 company-managed stores and resellers.
One of the first things the company did after the acquisition was to move its headquarters from San Carlos, Calif., to Irving. Gassenheimer said at the time that his goal was to grow revenue to the $800 million to $1 billion range.
The paint-maker has been fighting lawsuits for years over using asbestos in its cement and texture products. The practice, banned in 1981, has cost the company over $600 million to settle claims. The company estimates it faces another $170 million in future asbestos liabilities.
“Through the cumulative cash drain caused by legal settlements and the cost of defending evercontinuing case filings, the company’s ability to reinvest in the business — including investments needed to address historical supply chain challenges that were exacerbated by the recent pandemic — has been severely constrained for an extended period of time,” the company’s announcement said.
Clayton Tageson, a 33-year store manager in Clovis, Calif., said he learned by email Friday afternoon that he was out of a job. He started with Kelly-moore as a part-time driver and worked his
way up.
“I just feel relieved now,” he said. “This is better than sitting in the dark or hoping that something might change while knowing nothing’s gonna change. At least I have an opportunity now to go find another job.”
Tageson said he and his coworkers had suspicions about the company’s financial condition since his store had been operating for months with limited inventory. “But no one was answering our questions,” he said.
“We were constantly having to tell customers that we didn’t have what they wanted. Maybe (Flacks Group) saw the financials coming down, but that message didn’t come down to us.”
Gassenheimer said the company
exhausted all alternatives for rescuing the business. Not even filing for bankruptcy or in-court liquidation could save it, he said, since the company is out of money, leases all of its facilities and doesn’t have assets to pay creditor claims.
“My deepest sympathy goes out to our loyal employees, customers, industry partners and the communities where we do business, who have supported Kelly-moore throughout its long history,” he said.
The move to Texas was supposed to mold the company for the future by exploring new supply-chain partnerships, planning technology and store upgrades, and resolving many asbestos claims, the company said. But attracting
investors or acquirers proved to be futile with additional asbestos suits hanging over the company’s head.
Gassenheimer said he’s disappointed with the outcome.
“The ownership group’s commitment from Day One was to fix the business if we could,” he said. “Sadly, no matter how great the Kelly-moore team, products and reputation for service, we simply couldn’t overcome the massive legal and financial burdens that have been weighing on the company for many years.”
Kelly-moore was one of the nation’s largest independent paint companies, selling 90% of its products to professional paint contractors and other trade professionals.