Acosta ADS Bare Escentuals Carter's Crown Castle EWS The Holmes Group

Bare Escentuals (BE), through its two primary brands Bare Escentuals and MD Formulations, is the market leader in the fast growing mineral based cosmetics and skin care category. The Company's products are distributed through a variety of channels including direct response television (infomercials and QVC), wholesale accounts (Ulta and Nordstrom), BE wholly owned retail boutiques, and spas. Strong consumer response to the "healthy" aspects of mineral based skin care solutions has resulted in very rapid growth for BE, which, while exciting, has also tested the organization as it has sought to remain at the forefront of its category.

What did BE seek from a private equity investor?

BE's owners and management knew they had a "tiger by the tail." By the time Berkshire met the Company in early 2004, revenues were on pace to have more than quadrupled from 2001 to the end of 2004. BE's shareholders and management wanted to denominate some of the resulting equity value that had been created, but also knew that they needed help to address the Company's key resource needs as it continued its rapid growth. These needs were concentrated in such areas as developing management depth, strategizing and prioritizing which growth initiatives to pursue, ensuring product quality and fulfillment, and otherwise facilitating all of the general corporate development required to stay ahead of rapid change. Furthermore, any financial transaction had to be done minimizing distractions from management's core activities, and also had to result in a capital structure that would support the Company's ongoing expansion.

BE's owners and management quickly realized that they needed to focus on private equity investors with a proven track record of helping companies to grow, especially in the general area of consumer products. Discussions were driven by more than just valuation; instead by "how can you help?" Fortunately Berkshire could answer this challenge, and as a result, was selected to become management's partner.

Berkshire's role

Berkshire rolled up its sleeves and went right to work alongside management. The first step was to recruit a seasoned interim COO/CFO who was immediately available to work with BE management on multiple fronts. A post-closing joint strategy session, facilitated by Berkshire, helped clarify the Company's priorities and helped to further establish strong working relationships between the individuals. Recruitment initiatives were launched that resulted in the rapid identification of a new COO and new CFO who were well prepared from prior experience to help meet the challenge of BE's strategic plan. All of these steps enabled the BE CEO to focus on what she enjoys most, driving the business through product development and being in the marketplace with consumers and BE front-line personnel.

Berkshire took further steps to assist the CEO in identifying candidates for broadening the Board of Directors, bringing in talented people who could provide channel perspective and other skills that would help ensure smart decision making as opportunities and operating issues were debated. In short, all aspects of "company building" were identified and tackled with a coordinated plan to continuously improve BE's ability to remain the category leader in its segment of the cosmetics industry.

Outcome

Since Berkshire's investment in mid-2004, BE's growth has continued its robust pace. BE's initial public offering took place in 2006. The Company is listed on the NASDAQ stock exchange under the symbol "BARE".

The early post-recapitalization push for careful planning and new resource identification has enabled the Company to successfully manage its rapid growth, even as new product ideas and channel opportunities proliferate. We continue to stay close to this "tiger" and have enjoyed watching the Company's great success.