In Finance

Industry sources say General Atlantic has taken a 60% stake in Morphe Cosmetics at a $2.2 billion valuation. General Atlantic will partner with Morphe Holdings’ management, its founders, and existing investor Summit Partners to lead the company’s next phase of growth with the development of a global beauty platform focused on building a portfolio of next-generation, digitally led beauty brands.

WHO: Founded as a professional makeup brush company in Los Angeles in 2008 by Chris and Linda Tawil, Morphe has grown into a global beauty brand with a highly engaged and loyal base of customers. Over the past decade, Morphe has expanded its category mix and developed an innovative, influencer-led platform. Morphe’s differentiated offering has earned it a strong following with today’s digitally focused consumer and enabled the company to capture a share of the global beauty market.

General Atlantic is a leading global growth equity firm providing capital and strategic support for growth companies. Established in 1980, General Atlantic combines a collaborative global approach, sector-specific expertise, a long-term investment horizon, and a deep understanding of growth drivers to partner with great entrepreneurs and management teams to build exceptional businesses worldwide. This is General Atlantic’s third significant investment in beauty and beauty services in the past four years, along with Too Faced, in which the firm sold its stake to Estée Lauder in 2016, and European Wax Center, in which the firm invested in 2018.

Founded in 1984, Summit Partners is a global alternative investment firm that is currently managing more than $19 billion in capital dedicated to growth equity, fixed income, and public equity opportunities. Summit invests across growth sectors of the economy and has invested in more than 500 companies in ecommerce, technology, healthcare, and other growth industries. These companies have completed more than 140 public equity offerings, and more than 190 have been acquired through strategic mergers and sales.

WHY: General Atlantic will act as a strategic partner to Morphe Holdings in helping fuel the Morphe brand’s continued global expansion. The investment will also accelerate the company’s next phase of growth as the platform of choice for emerging artists, talented creators, and next-generation beauty brands.

IN THEIR OWN WORDS: “We are proud of what we have achieved through the success of Morphe Holdings and our marquee brand Morphe,” said Myles McCormick, Chief Executive Officer of Morphe Holdings. “General Atlantic’s investment will position us for our next phase of growth as we continue to grow Morphe and expand to develop a new global platform with a portfolio of next-generation beauty brands.”

Mr. McCormick continued, “With its experience in partnering with founder-led brands, General Atlantic will enable us to leverage additional resources and expertise for founders in the future as we seek to grow our portfolio and help next-generation beauty brands rapidly scale their businesses.”

“Morphe Holdings, underpinned by the strength of the Morphe brand, has developed a unique approach that truly resonates with its customer base,” said Andrew Crawford, Managing Director and Global Head of General Atlantic’s Consumer sector. “We see considerable opportunity to leverage this approach into creating a differentiated portfolio of brands and scaling it across channels, geographies and categories.”

Andrew Ferrer, Managing Director at General Atlantic who leads the firm’s beauty investing, added, “We have known Morphe Holdings’ industry-leading management team for years and closely followed the company’s growth. We are thrilled to be partnering with Myles and the team to continue the company’s existing momentum and help build Morphe Holdings into a global beauty platform.”

General Atlantic has extensive expertise in geographic and digital expansion of its portfolio companies. This is General Atlantic’s third significant investment in beauty and beauty services in the past four years, along with Too Faced, in which the firm sold its stake to Estée Lauder in 2016, and European Wax Center, in which the firm invested in 2018.

DETAILS:

  • Morphe Holdings and General Atlantic formed a new partnership in which General Atlantic will acquire a majority stake in the company alongside existing investor Summit Partners and co-founders Chris and Linda Tawil. Additional terms of the deal were not disclosed.
  • According to WWD, industry sources say the private equity firm is said to have taken a 60% stake in the business at a $2.2 billion valuation.
  • Morphe is said to be on track to do nearly $500 million in net sales for 2019, with about $130 million in earnings before interest, taxes, depreciation, and amortization.
  • Siblings Linda and Chris Tawil bought the company in 2008 when it was a trade show-based brush operation, and gradually built it out into a full-fledged beauty brand.
  • Elevate Brand Partners, which is backed by private equity firm Summit Partners, invested in 2017.
  • Morphe Holdings’ existing management team, led by CEO Myles McCormick, will remain at the helm of the company.
  • In conjunction with General Atlantic’s investment, Andrew Crawford and Andrew Ferrer will also join the Board of Directors alongside existing investor Summit Partners. Additionally, Morphe founders Chris and Linda Tawil will remain on the board and be heavily involved in the brand.
  • All existing Morphe Holdings shareholders will retain ownership in the company.
  • Jefferies acted as Exclusive Financial Advisor to Morphe Holdings. In addition, Jefferies led the financing of the transaction.
  • Morphe Holdings was also advised by Kirkland & Ellis LLP.
  • General Atlantic was advised by Paul, Weiss, Rifkind, Wharton & Garrison LLP.

Photo: Morphe via Twitter

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