BH Cosmetics hired The Sage Group to consider a transaction, and the brand has closed a deal with MidOcean Partners.

WHO: LA-based BH Cosmetics launched in 2009, and is a leading direct-to-consumer, digitally native color cosmetics brand focused on the Millennial / Generation Z consumer. BH offers a full range of color cosmetics, brushes, and accessories at value pricing. The company has a worldwide social media following across multiple platforms and utilizes a deep influencer network to drive brand awareness and customer acquisition. Given the company’s heritage as a digitally native e-commerce color cosmetics brand, BH has developed an advanced e-commerce platform with proven capabilities in customer acquisition, consumer engagement, and customer loyalty.

Established in 2003, MidOcean Partners is a premier New York-based alternative asset manager that specializes in middle-market private equity and alternative credit investments. Since inception, the focus of the private equity funds has been on high-quality middle-market companies with attractive strategic, operational, and financial growth opportunities in the consumer and business services sectors. 

WHY: This transaction will give BH the ability to expand in the US and globally, and capitalize on new wholesale opportunities.

IN THEIR OWN WORDS: Fred Sadovskiy, BH co-Founder and CEO, commented, “We are very excited to begin our partnership with MidOcean. MidOcean has tremendous resources and experience building branded consumer products platforms and has a proven track record of helping take founder-led consumer businesses to the next level. We are confident that MidOcean will be an excellent partner for BH as we look to continue BH’s expansion in the color cosmetics market.”

Kirill Trachtenberg, BH Co-Founder and Chief Strategy Officer, added, “BH was launched in 2009 with a focus on eye palettes and has since developed a full suite of cosmetics with high quality products at value price points. The partnership with MidOcean will enable us to dedicate additional resources to key areas of our business including innovation and product development, marketing and branding and customer service. We believe there is a tremendous opportunity to accelerate BH’s growth and have been very impressed with MidOcean’s collaborative approach to developing and helping implement a growth strategy for BH.”

Robert Sefaradi, BH co-Founder and COO, further stated, “MidOcean’s experience building leading consumer brands and deep understanding of the industry makes them the ideal partner for BH. We have successfully accelerated BH’s growth in recent years by expanding into wholesale and international markets. With MidOcean’s partnership and guidance, BH will have the resources, industry knowledge and expertise to help take our Company and brand to the next level.”

Jonathan Marlow, Managing Director at MidOcean, concluded, “We are incredibly excited to partner with BH, a leading color cosmetics brand with a strong direct-to-consumer and digital marketing business model and multiple levers for continued growth. MidOcean has significant experience building strong consumer brands with founder-owned businesses and we believe that BH Cosmetics has substantial opportunities for continued growth and expansion fueled by appropriate investments in people, infrastructure and marketing. We see numerous opportunities to increase BH’s presence across channels and geographies and look forward to working with Fred, Kirill, Robert and the talented team at BH to drive this growth.”

DETAILS: 

  • According to WWD, industry sources indicated the brand has between $50 million and $60 million in net sales, is very profitable and does most of its sales online. 
  • According to data from Tribe Dynamics, BH’s EMV was up 66% year-over-year for the third quarter of 2017 and has grown its community with a 278% increase in ambassadors, and grew its posts by 448%.
  • BH will continue to be led by founders Fred Sadovskiy (CEO), Kirill Trachtenberg (Chief Strategy Officer), and Robert Sefaradi (COO). 
  • BH will look to expand the company’s reach in current and new markets in partnership with MidOcean’s considerable operating resources.
  • Kirkland & Ellis acted as legal advisor to MidOcean.
  • The Sage Group acted as exclusive financial advisor and Sheppard Mullin Richter & Hampton LLP acted as legal advisor to BH Cosmetics.