Great Barrington —One of the largest and most iconic employers in South County is going through a changing of the guard. This week, Jane Iredale Mineral Cosmetics Ltd. announced that a California private equity firm had acquired a majority stake in the company.
Terms of the deal with San Francisco Equity Partners were not disclosed but Jane Iredale, the president and founder of the company, said she and her husband, chief financial officer Robert D. “Bob” Montgomery, will retain their positions and remain shareholders in the company they created 25 years ago.
“We spent a lot of time looking for the right partner,” Iredale said in an interview. “We wanted to keep the company in Great Barrington and maintain our quality of products. We’re a premium brand that will continue to stay that way.”
Scott Potter, managing partner of SFEP, confirmed the acquisition in a telephone interview. He said SFEP, which was founded in 2005, has partnered with about 10 companies in such categories as apparel, food and beverage, health and wellness and cosmetics.
Citing Securities and Exchange Commission regulations, he declined to disclose the total value of assets under SFEP management. He did add that “Jane and Bob will still own a significant minority [of company stock] going forward.”
“All we do is invest/acquire consumer businesses with between $20 million and $100 million in revenue,” Potter said. “We replicate the model over and over.”
Potter called Iredale’s cosmetics “a brand with uniquely strong products and unsurpassed consumer loyalty,” adding that SFEP is “thrilled to be chosen by Jane to help guide the brand to new heights.”
Iredale Mineral Cosmetics markets itself as “a skincare and mineral makeup company that embraces the holistic approach to beauty” — a company that “was the first to offer healthy skincare benefits in addition to beautiful coverage.”
Iredale said SFEP was selected in order to help grow the company, especially its retail and e-commerce operations. Iredale cosmetics can be found at Nordstrom’s and Neiman Marcus. Beginning in April, her products will also be sold at Bergdorf Goodman.
In addition to luxury retail, in more than 50 countries Iredale products can be found in spas, salons, destination resorts, apothecaries and medical offices. Two years ago, Iredale opened what she calls a “concept store” in downtown Great Barrington, on Main Street where Tune Street used to be located.
“We really love what we’re able to do there, meeting the consumer head-on and getting feedback,” Iredale said of the Great Barrington store.
As for e-commerce, in addition to selling on its own website, Iredale has a presence on a variety of other venues, including the above stores and Amazon Luxury Beauty.
“We do well in e-commerce but the important thing now is the retail environment is changing and e-commerce is becoming so terribly important,” Iredale explained. “We really need a lot of expertise in that area.”
The company has between 150 and 160 employees, 100 of whom are in Great Barrington. Iredale has a warehouse and e-commerce building on Church Street. Its world headquarters is located across the street in the former Bryant School, while Iredale and Montgomery live on Church Street right across from the Bryant building.
In 2010, Iredale secured a $4.6 million Recovery Zone Facility Bond from Mass Development to pay for the purchase from the town and the renovation of the Bryant, which closed in 2005 when the Berkshire Hills Regional School District consolidated its elementary and middle schools to new campuses on Monument Valley Road.
At a total of some $14 million, the adaptive reuse project of the historic late 19th century, 12,000 square-foot school proved to be far more expensive than originally thought, running about $10 million over budget. The LEED certified building, designed by renowned New York architect Randy Croxton, increased usable space to 21,000 square feet without expanding the perimeter walls. The Iredale headquarters opened in 2014.
Some in the community have expressed privately to The Edge that they are concerned that Iredale has essentially been acquired by a private equity firm whose goals might not align with hers. Some private equity firms have the reputations of acquiring distressed companies, wringing efficiencies out of them and selling them relatively quickly.
Iredale dismissed those concerns, insisting that SFEP is not that kind of firm: “One of their brands they have had for 10 years. The whole idea was to grow the brand and the company, not pare it down and milk it … You can’t flip a company unless you’ve grown it.”
Great Barrington resident Chip Elitzer, managing director of the business advisory group Sagebrook Partners, is a specialist in mergers and acquisitions, some of which involve private equity firms.
Elitzer said he has no inside knowledge of the Iredale-SFEP deal, beyond what was in the press release the firm put out through its public relations company. Though he said the average holding period of an investment in private equity is almost five years, Elitzer dispelled the stereotype of the rapacious private equity firm.
“Most private equity firms don’t want to do that,” Elitzer said. “They’re looking to invest in growth potential, and more investment to help the [acquisition] grow even faster. It would seem to me that this is the case with Iredale.”
Elitzer explained that there are two major categories of acquisition: financial buyers and strategic buyers. In the case of Iredale, a strategic buyer might be another cosmetics company that would look at avoiding redundancies and achieving efficiencies by closing the Great Barrington headquarters, for example. A financial backer such as SFEP, however, has no such incentive.
“It seems to me there is a lot better chance for it to stay in place in Great Barrington because control has shifted to a financial buyer and they typically don’t try to relocate companies or interfere,” Elitzer explained. “They want to help them grow.”
However, SFEP does own another cosmetics company, Japonesque, based in San Ramon, California. But Potter, who was at Iredale headquarters on Monday, insisted Iredale will remain distinct and in Great Barrington.
Our investment strategy is to be exclusively focused on consumer growth companies,” Potter explained. “We create value by helping them grow. Our take on Iredale is it’s a fantastic brand with tremendous consumer loyalty … We’ve been effective at helping businesses at this.”
Potter said that while Iredale has “had early success with e-commerce,” SFEP wants to “double down on that.” He also cited SFEP’s “deep experience in prestige and specialty retail” and “helping the business thoughtfully explorer those channels.”
The Iredales are beloved by many in the town. They have been notable philanthropists in the Berkshires, giving generously to such as charities such as Berkshire Children & Families, the Elizabeth Freeman Center and the Berkshire Humane Society. They also designed and built Giggle Park, a popular children’s playground in Great Barrington behind Town Hall. Jane Iredale is a native of England but received both a bachelor’s and master’s degree from New York University while working full-time.
