Mineral makeup company Colorescience of Dana Point has been acquired by Irvine private equity firm VMG Equity Partners.
Terms of the deal weren’t disclosed.
Colorescience founder Diane Ranger was not immediately available for comment. VMG also did not return calls.
It’s unclear the role Ranger will continue to play with the company.
In a previous Business Journal interview, VMG’s managing director Bob Schult said that once VMG buys a company, it plans to work with management to improve operations.
“We have no rule book,” Schult said. “Different management teams have different things going for them. We’re not arrogant enough to think we can run their company better.”
Colorescience has estimated yearly sales of $30 million to $40 million. It counts 16 workers at its 7,000-square-foot Orange County headquarters as well as 25 sales representatives and 35 employees at a factory in Houston.
It had been on VMG’s radar for some time.
Schult earlier indicated that the private equity firm was eyeing a local skin care company that had generated celebrity interest.
Schult said that VMG raised $325 million and planned to acquire small OC companies that make products for consumers including skincare and household products.
VMG’s goal is to grow these businesses and sell them to larger ones, Schult said.
“Trends start here in California,” Schult said. “There’s a history of companies here that have been bought by bigger companies based in New York and Chicago.”
VMG, which has offices in Irvine and San Francisco, said that it was looking to acquire a few local companies,as many as 60% of those in OC,by the end of the year for as much as $80 million.
At the time, Schult had said that the firm planned to invest $20 million on average in a company and that it hoped for a return of three times its initial investment in three to seven years.
Crucial step
The deal marks a crucial step for Ranger, a mineral makeup pioneer who saw her first business venture blossom without her.
Ranger started San Francisco’s Bare Escentuals Inc. in the late 1970s, which went public last year and counts a recent market value of $2.3 billion.
Ranger left Bare Escentuals in 1990 after an unsuccessful, two-year bid to grow the company’s retail locations when she and her former partners sought $1 million in venture capital.
Bare Escentuals ended up in debt and was bought out of a foreclosure for $160,000 by investor John Hansen in 1990.
Hansen brought in investors and hired cosmetic industry mogul Leslie Blodgett as chief executive in 1995. Bare Escentuals came out with its own version of mineral makeup called bareMinerals.
Bare Escentuals started selling the makeup line through infomercials and home shopping channels. The products now are sold at Moet Hennessy Louis Vuitton SA’s Sephora stores. Bare Escentuals had sales of $395 million last year.
In an earlier interview with the Business Journal, Ranger said she felt pushed out of Bare Escentuals. Walking away from a company that she started was a painful learning experience, she said.
“I built it up and lost everything,” Ranger said. “You don’t even know what that time was like for me … it took a long time to get over everything and start over.”
Losing Bare Escentuals in 1990 left Ranger wary of creating a new concept, yet she started her second business that same year.
She started Body Chemistry Manufacturing Inc., which specialized in retail and wholesale custom-blended mineral makeup and body products. It attracted some customers, but not as many as Bare Escentuals, she said.
Ranger moved Body Chemistry to Houston in the late 1990s after she married Chet Ranger, a retired investor.
Body Chemistry started making mineral makeup for cosmetic brands such as Jane Iredale and La Bella Donna.
By 2000, Ranger was itching for her own brand again. She created Colorescience and had all of its products made by Body Chemistry, which she still owns.
Since its inception, Colorescience’s focus has been on natural ingredients.
Its makeup is made from minerals such as bismuth oxychloride, iron oxide, micronized titanium dioxide and zinc oxide. It’s targeted at women with wrinkles, fine lines, acne, pigmentations and rosacea. Older women who get Botox injections, chemical peels and laser treatments are Colorescience’s target audience, Ranger said.
Rather than selling through stores, Colorescience sells to dermatologists, plastic surgeons, spas and upscale hotels.
In 2002, Diane and Chet Ranger moved to OC to be closer to his children and grandchildren. Colorescience came along, while Body Chemistry stayed in Texas.
Up until recently, Ranger said she would’ve never considered selling Colorescience to a private equity firm. Her experience with Bare Escentuals left a bad taste in her mouth, she said.
Ranger said she was open to bringing in investors or taking Colorescience public, but only if she could have a say on how things are run.
“A few years ago I would’ve said ‘no way,'” Ranger said. “But if that kind of opportunity came to me again and I got another chance to be a real player in this industry, I would have to consider it.”
It’s unclear whether VMG plans to keep Colorescience a niche brand or expand its products.
VMG’s management team is no stranger to brand building.
Schult is a former chief operating officer at Nestle USA Inc., where he managed food brands such as Nestle, Stouffer’s, Hills Brothers, Libby’s, Carnation, Buitoni and Friskies.
Before starting VMG, Schult was managing director for food products at TSG Consumer Partners, a San Francisco-based private equity firm that sold Irvine-based PureOlogy Research LLC to L’Oreal for an undisclosed amount in May and bought Irvine’s Yard House USA Inc. in August.
Fellow partners Scott Elaine Case and Michael Mauze also come from TSG.
Fourth partner David Baram is the chief operating officer and director of The Firm, a talent agency and brand developer. The Firm’s managed Justin Timberlake, Kelly Clarkson, Snoop Dogg and Martin Scorsese.
VMG’s first acquisition was San Francisco-based bag maker Timbuk2 Designs Inc.
