People familiar with the process told WWD that such a move is under consideration, but stressed that nothing is certain and that other options are on the table, including out of court agreements with creditors.
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A spokesperson for Forma said: “Forma Brands is engaged in constructive discussions with our financial stakeholders regarding ways to strengthen the company financially and enable us to reinforce our focus on the opportunities we see ahead for our brands. We are excited about the products we will continue to bring to our customers.”
Majority owner, private equity firm General Atlantic, declined to comment. The news was first reported by Reorg Research.
General Atlantic acquired a 60 percent stake in Morphe in 2019, which was at the time a popular brand run by brother and sister Chris and Linda Tawil that grew in large part due to partnerships with influencers. The deal valued the company at $2.2 billion.
The Tawils had already taken Morphe from being a trade-show makeup brush brand into a full-fledged operation by aligning themselves with the early makeup influencers such as Jeffree Star and James Charles.
When General Atlantic became involved, the business was at a high and profitable — at the time of its investment, Morphe was said to be doing about $500 million in net sales, with about $130 million in earnings before interest, taxes, depreciation and amortization.
But then several factors occurred that weighed on Morphe’s performance. First, COVID-19 struck, leading color cosmetics sales to decline industry wide. Then Morphe cut ties with Star and Charles amid allegations of inappropriate behavior. Plus, supply chain issues plagued the business.
Forma, the parent company, was formed in 2020 as part of the business’ diversification efforts. The business also launched a sub brand, Morphe 2, and made several acquisitions, including Lipstick Queen and Playa, and incubated brands, including Bad Habit. In March, former Too Faced executive Eric Hohl joined Forma as chief executive officer, taking over from Myles McCormick, who led the business through its growth era. Hohl was president at Too Faced when General Atlantic sold it to the Estée Lauder Cos. for $1.45 billion in 2016.