Key Takeaways:
In a beauty industry saturated with headlines about private equity (PE) acquisitions and strategic brand consolidations, one legacy haircare company has taken a bold, countercultural approach. Rather than selling to a corporate conglomerate or an investment firm, Malibu C, a pioneer in vitamin C-based personal care, has transitioned to 100% employee ownership through an Employee Stock Ownership Plan (ESOP).
The move, spearheaded by founder Tom Porter, offers a rare alternative to traditional exit routes, demonstrating how brand integrity, legacy preservation, and employee empowerment can coexist without compromising growth. Malibu C was born in 1985 under the name C Free Enterprises, before evolving into what is now the brand arm of Malibu Wellness, Inc. The company made its mark as one of the first in the world to introduce vitamin C in external beauty applications.
Today, the brand is headquartered in Indianapolis, Indiana, where it continues to formulate, manufacture, and distribute all products through its own vertically integrated facility, MWI Labs. Despite a competitive and rapidly consolidating industry, Malibu C has retained independence and focus. “Over the last 40 years, many companies have come after us, but unfortunately, what’s happening is that most products labeled as vitamin C today aren’t using true ascorbic acid,” Tom Porter noted to BeautyMatter, referencing Malibu C’s technical differentiation.
Enter the ESOP
That independence, it turns out, was no accident. As Porter approached his 70s, he began reflecting on how best to secure the company’s future. “It wasn’t that I wanted to exit. I loved being the CEO, the President, and the founder of Malibu,” he said. “But in my 60s, it just became clear that I needed to formalize an exit plan and a strategy for the next chapter.”
While conventional options like a strategic acquisition or PE sale were on the table, Porter was wary. “I have decades of experiences when companies are acquired by other companies, immediately they start cutting to save expenses. Very often in personal care, they will change formulations, shift packaging, etcetera,” he said.
This concern for product integrity and brand ethos was central to his thinking. “We built this company on education. I wanted to ensure that the quality of the products and the quality of the customer service were maintained and continued to excel. Those were the fundamental principles that I built my decision on.”
When a colleague introduced Porter to the concept of an ESOP, the model immediately resonated. “It checked every box,” Porter said. “Knowing that team members helped my wife, myself, and my son grow this company; knowing that I still wanted to stay involved, and knowing that I wanted the brand to retain the integrity of what we had created, was paramount to me.” In 2017, Malibu Wellness established the ESOP and sold 30% of company shares to the ESOP trust. Now, the transition is that its employees now own 100% of the company.
An ESOP, while still relatively rare in the beauty industry, is a regulated trust governed by the U.S. Department of Labor. Shares are allocated to employees annually, based on salary and tenure. To be fully vested, an employee must work at the company for three years, and payouts begin after five years, typically during retirement. This isn’t just symbolic equity. “There are ESOPs in the world where I’ve read clerical staff became millionaires,” Porter noted. “That’s the potential, and I can see how that could happen very easily even within our own company.”
The View From Inside
Still, it hasn’t been an overnight mindset shift. Many Malibu C employees, especially those on the factory floor, were unfamiliar with the concept of shareholding, let alone the implications of being a stakeholder. “They’re sitting and taking a product from one place and putting it in another. Many of these individuals had a very difficult time in the beginning realizing that this is real,” said Porter.
But that’s changing. “My replacement, Loretta Mottram, who is CEO, has led an incredible initiative to help those individuals really gain more insight, more pride, and more excitement about the ESOP,” Porter explained. “The culture of the company has just continued to elevate.”
Indeed, the shift is beginning to show in day-to-day operations. Kelly Cochran, President and COO, recounted a moment that revealed how the ESOP is affecting employee mindset. “After a spill on the manufacturing floor, an employee came to me and, once we confirmed no one was hurt, asked, ‘How much did that cost us?’” she shared with BeautyMatter. “It was the first time someone had directly connected an incident to the broader impact on the ESOP. Moments like that show employees are truly beginning to understand the value of ownership,” she continued.
A Culture of Long-Term Thinking
For Cochran and others on the leadership team, the ESOP represents more than just a retirement benefit. It’s a cultural anchor. “When I learned about the ESOP, I immediately recognized it as a valuable retirement benefit and felt inspired to share that insight with fellow employees,” she said. “Beyond individual impact, I see it as a powerful tool to strengthen the company by reducing turnover and encouraging long-term commitment.”
In her summary of the transition, she said, “Exciting! I was genuinely thrilled to learn more about how this would positively impact not only my future, but also the futures of all our employees.” For all its internal value, Malibu C’s ESOP story is also backed by solid performance. According to Mottram, the company’s year-over-year growth has averaged over 13% for the past five years, with strong sales across both retail and professional segments. Bestsellers, including Hard Water Wellness products, Swimmers Wellness products, and Un-Do-Goo pH9 Shampoo, as well as in-salon professional services like Malibu C Crystal Gel and Head Lab Crystal Gel XL, are key drivers.
“We also produce customized products on a contractual basis for many well-known industry brands. We continue to expand our sales footprint, striving to provide wellness solutions for people around the world, and we currently provide vitamin-based wellness products in 37 different countries,” Mottram revealed.
Malibu C’s approach raises important questions for beauty founders, investors, and employees alike. What happens to innovation when founders leave? Can brand equity survive when absorbed into a portfolio, and does consumer trust erode when legacy brands lose their original leadership? Porter believes ESOPs offer real answers. “It’s quite lucrative, potentially,” he said. “I never dreamed that people could become as wealthy from this as I believe they will in the future.”
In a business climate where exits often mean dilution of vision and voice, Malibu C is writing a new playbook, and it is one that prioritizes shared value over shareholder value. In doing so, it may well have given the beauty industry its first truly sustainable exit strategy.
