Olaplex created a 10 billion buyout bonanza

Advent International acquired Olaplex Holdings Inc. in January 2020. Leading the acquisition and in just over two years, the firm has nearly tripled its initial investment and is sitting on approximately ً 9 billion worth of shares – if it can maintain those gains. .

Despite a 38% drop in Olaplex’s stock this year, the return is still 10 times higher than the actual deal price, making it one of the most profitable private equity transactions in the United States, according to Pitchbook data. In contrast, the acquisition of Blackstone Inc.’s hotel chain Hilton Worldwide Holdings Inc. earned 14 14 billion, a threefold increase in its investment over an 11-year period.

The Olaplex Dell stands out not only for its spectacular return but also for being engineered almost entirely by women – a rarity in the male-dominated shopping business.

Epidemics also played a key role in the astonishing growth of the company, which was founded in a garage in California less than eight years ago, but the recent decline in shares has highlighted the risks of investing in active consumers.

To conclude the deal,  Bloomberg  reviewed the public filing and spoke with some of the key players involved in the deal, including Olaplex CEO JuE Wong, who was finalizing the Advent deal, and investor Emily White. An early enthusiast. Advent refused to comment.

The story begins in 2014 in a garage in Santa Barbara. In addition to lawn chairs and surfboards, co-founder Dan Crystal, whose family was in the hair care business, developed a compound to help repair hair bonds with the help of two chemists from the University of California. The substance became the patent cover of Olaplex, founded in July of that year by Dean and his wife, Darcy Crystal.

The following year, the company received an identity shock when Kardashian stated that it uses Olaplex. This was part of the company’s initial success in reaching out to celebrity influencers and increasing the number of fans through social media. He helped during the epidemic, when people were looking for ways to make him feel better in the lockdown.

Since its inception, the company has been pursuing salons with direct sales. White – the former chief operating officer of SnapChat – had his first brush with Olplex after being treated by his stylist. It worked “like magic,” said White, who has been president of Anthos Capital since 2018 and a member of the Olaplex board since August 2021 – one of nine women on the 11-member board.

But the company L’Oréal SA and Procter & Gamble Co. Like an industry dominated by global corporations, and wanted to sell crystals. White set up Olaplex more than four years before Anthos, but the investment firm was approved because owning companies was not part of its strategy.

Olaplex remained on the market, and in the summer of 2019, Advent’s managing director Tricia Glynn approached White about a deal. The two became acquainted with each other when they met another Adventure del Lululemon Athletica Inc. Serve on the board of

In early 2019, bankers who hired the founders of the shampoo company approached the investment firm. Arrivals passed months later before reaching the owners again.

By November 2019, a deal framework – put together by Glenn and Advent’s senior partner David Musfer – was in place. The next issue was finding someone to handle the business. That’s where Wong came in.

At the time, the Olaplex employed only about 30 people, and Advent decided to form a new team. Wong was a good fit, boasting of companies that run track records for private equity advocates, including the position of cosmetics company Elizabeth Arden Inc. She joined in the closing of the agreement in January 2020.

According to Wong, the investment paper was simple. Consumers had adopted expensive skin care products and started doing the same with hair. Olaplex is not cheap: the hair care kit costs 16 and a complete repair set costs $ 196.

By purchasing Olaplex, Advent was taking over a segment of the fast-growing luxury hair care market, valued at approximately ً 20 billion in 2019 and is expected to grow at a compound annual growth rate of 5.9% by 2027, Grand View Research According to. .

While the Corona virus epidemic – which emerged as a global threat just weeks after the deal was struck – posed a serious challenge by closing the hair salon, Olaplex delivered sales directly to consumers. I was helped by her social media presence.

During this time, Wong urged TikTok to expand. Olaplex-tagged posts on the video sharing service have garnered more than 650 million views, helping the brand topped the shopping site Cosmetify’s 2021 report.

“People with lockdown were spending a lot of time on your phone or screen,” Wong said. “For many companies it was no longer possible to outdo each other, it was really a company that could engage, connect and change with online users.”

Outreach boosted sales by 90% to 28 282 million in 2020 and paved the way for the company’s initial public offering in September 2021. This allowed Advent to sell some shares and receive a dividend on the transaction, which was $ 2.15 billion compared to the initial. $ 800 million equity investment.

The firm currently owns 77% of the stock and will need to carefully develop any exit strategies. Doubts have already been raised, and Olaplex is now trading below the price of its offer.

Maintaining its momentum will actually be a challenge as epidemics ease and beauty routines change again. Wong acknowledged that the “explosive growth” of the past two years had taken him and the company by surprise.

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