The founder of Playa Hair Care is suing Morphe and General Atlantic

Shelby Wilde, founder of hair care line Playa, is suing beauty brand Morphe and its majority owner, private equity firm General Atlantic, in New York state court, alleging the companies failed to adequately support her brand after the acquisition in 2020.

Playa was one of several brands acquired by Morphe after General Atlantic acquired a majority stake in the retailer in the summer of 2019. In August 2020, around the close of the Playa deal, the entire portfolio was relaunched as Forma Brands, a “beauty incubator” that would turn new businesses into category giants.

At the time of the deal, Playa was a small but fast-growing brand. Founded by Wilde, a former stylist, in 2017, it was sold at Sephora and received positive reviews in publications such as Attractiveness and Fashion.

Ahead of the acquisition, Wilde said General Atlantic discussed with her plans to turn Playa into a business with $50 million in annual revenue over five years, according to court filings. Instead of receiving cash up front, the founder agreed to “longer-term incentive-based compensation through an employment contract,” according to court documents.

The Wild received a $200,000 signing bonus as part of the deal. But the prospect of a bigger payout quickly began to look remote. According to internal Forma Brands documents seen by BoF, sales for Playa in 2021 were $1.9 million, up from $400,000 in 2020, but less than half what Forma had projected.

Until early 2022, Forma’s efforts were focused on reviving Morphe, its biggest brand, which saw sales fall from $500 million in 2019 to $295 million in 2021. Forma also had ambitious plans for Ariana Grande’s makeup line, REM Beauty, which launched last November.

In internal filings, Forma Brands said it will “develop new products for Playa and Bad Habit,” the beauty brand it launched in November 2020. Playa’s sales are projected to reach $2 million in 2022, up slightly from the previous year. to internal documents. Earlier this year, the retailer confirmed that Sephora had dropped Playa.

Wild left the company in March. In the lawsuit, Wild alleges that General Atlantic falsely represented itself as an incubator that would provide “the long-term logistical, operational and financial support the brand needs to reach its full potential.” She is seeking $15 million in damages, the maximum amount she said she would be owed in “performance-based incentives” over four years. The lawsuit was filed last week in New York State Supreme Court.

“Almost as soon as they took him on, it became clear that General Atlantic had sold me on a false promise,” Wilde told BoF. “This culminated in their refusal to pay me the compensation I was supposed to sell for my company.”

General Atlantic declined to comment.

“We believe this lawsuit is completely without merit, and we look forward to vigorously defending Morphe against these baseless allegations,” a Forma Brands spokesperson said in an email.

It’s the latest in a string of setbacks for Morphe and Forma Brands, which were rumored to be filing for Chapter 11 bankruptcy in October. Reorg Research estimates the company is between $600 million and $700 million in debt.

https://www.businessoffashion.com/articles/beauty/playa-hair-care-founder-sues-morphe-and-general-atlantic/ The founder of Playa Hair Care is suing Morphe and General Atlantic

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