Anastasia Beverly Hills: An Eyebrow-Raising Story

Welcome to the 201st Pari Passu newsletter.

After an exciting 200th edition on Multi-Color, today we are covering Anastasia Beverly Hills, a prestige makeup company that became the dominant name in eyebrow products. Founder Anastasia Soare, a Romanian immigrant, turned a Beverly Hills brow salon into a global brand that reached ~$180mm of EBITDA by 2017. Around this time, TPG and CPPIB invested $700mm at a $3bn valuation in a dividend recapitalization that added $650mm of debt to the business. Soon after, the bold brow trend that built the company’s popularity faded; the pandemic drove down makeup demand; and a downmarket pivot further diluted the brand, driving earnings down nearly 80% from its peak. In August 2025, ABH skipped a payment on its term loan, months after moving the rights to its brand IP into unrestricted subsidiaries.

What followed is one of the more unusual LMEs of the past few years. In December 2025, ABH closed a fully pro rata, out-of-court recapitalization including a unique form of deal-away threat. As part of the transaction, Soare personally invested hundreds of millions of dollars to retain majority control of the company.

In today’s writeup, we will cover ABH’s business model and corporate history, TPG’s 2018 investment, the path to distress, and the failed initiatives that preceded the default, before detailing the 2025 recapitalization featuring a hybrid dropdown structure and concluding with what this deal suggests about the future of LMEs.

Anastasia Beverly Hills (ABH) is a makeup company known in the industry as a seller of "color cosmetics," products such as lipstick, eyeshadow, foundation, and brow pencils that add color or definition to the face. Within the makeup industry, ABH competes in the "prestige" tier, meaning that it prices below luxury houses such as Chanel and Dior but above mass market brands that fill drugstore shelves such as e.l.f. Cosmetics and L’Oréal Paris [1]. For context, the company’s average price point per product is roughly $21 per unit, compared to approximately $7 at a mass market player like e.l.f. Cosmetics [2]. The company is best known for a category it effectively created: eyebrow products. When ABH was founded, eyebrow grooming was an afterthought in the American beauty routine, and the company built its reputation on the premise that precisely shaped eyebrows are central to a balanced, symmetrical face [3].

The foundation of the business is the patented Golden Ratio Eyebrow Shaping Method, a technique developed by the company’s eponymous founder, Anastasia Soare, that applies the mathematical "golden ratio", a proportion long used in classical art and architecture, to an individual’s bone structure to determine where a brow should begin, arch, and end [1]. Nearly every product that ABH sells traces back to this patented technique, which is important context for later in this writeup. 

As is common in the color cosmetics industry, ABH outsources manufacturing to third-party contract manufacturers, and as an ABH operations executive explained to us, since the formula quality between mass and prestige products is often similar, the premium customers pay is earned through packaging, brand equity, and marketing [2]. Since ABH owns no factories, the model carries little fixed cost and produced exceptional profitability at the brand’s height. At its peak in 2017, Fitch estimated that EBITDA was approximately $180mm against roughly $400mm in revenue, a margin above 40%, a level we usually see in software, not consumer companies. For comparison, Estée Lauder, the largest US prestige beauty company, generated an EBITDA margin of roughly 19% in 2018 [4][5][6].

ABH’s product portfolio spans four categories. The brow category is the anchor and the company’s core concentration, led by the Brow Wiz pencil, which retails for $26, and the Dipbrow Pomade, which retails for $25 [7]. Eye, lip, and face products round out the range, with lip products the strongest online sellers and face products, such as foundation and contour, competing in the most crowded corner of the market [8]. 

Another important aspect of the business that an ABH e-commerce executive flagged to us during our research is that, rather than inventing new products, ABH’s product innovation primarily comes through new product formats, including new ways of packaging and combining existing products [9]. The best example is the company’s Glow Kit, which bundles several shades of highlighter, a powder that adds shimmer to the cheekbones, into one palette, creating a bestseller that competitors widely copied.

Marketing is the second defining feature of the business, as ABH was one of the first cosmetic brands built entirely on social media. Soare’s daughter, Claudia Soare, made ABH one of the first cosmetics brands to bypass traditional print advertising and beauty counters in favor of a digital direct-to-consumer strategy via Instagram, years before influencer marketing became standard practice [10]. This marketing playbook pairs educational brow tutorials with a tiered network of paid creators. The company is also supplemented by celebrity ambassadors and retail partnerships that move viral products onto shelves within weeks. This digital-first model carried the brand from a single salon to a global name with roughly 17 million followers by 2018 [5].

Wholesale is the company’s primary distribution channel, meaning ABH sells inventory to retailers such as Sephora, Ulta Beauty, Nordstrom, and Macy’s, which resell it to shoppers across more than 30 countries [1]. The wholesalers provide reach and keep a portion of the final sale price. However, this comes with concentration risk, as a significant share of revenue flows through just the Sephora and Ulta stores [11]. The company also runs direct-to-consumer sales through its own website, which was localized across 200 international markets through a partnership with cross-border e-commerce provider Global-e. Newer digital channels, including TikTok Shop and Amazon, are a growing share of the mix [7][12].

ABH traces its roots back to 1989, when Anastasia Soare emigrated from Romania to Los Angeles as a single mother, arriving with "not even a coin". After finding work as an esthetician, she quickly identified a gap in the American cosmetics market: the brow grooming that European beauty culture treated as standard was barely offered by American salons [13]. 

In 1997, Soare opened her first namesake brow salon in Beverly Hills. Drawing on her formal training in art and architecture in Romania, she formulated the Golden Ratio Eyebrow Shaping Method described in the previous section. The salon’s precision-shaping service eventually built a celebrity clientele that included the Kardashians, Jennifer Lopez, Michelle Obama, and Oprah Winfrey, earning Soare the nickname "eyebrow queen" [14]. In 2000, she converted the salon service into a consumer product, launching the brand’s first retail offering, a brow kit that packaged her patented eyebrow stencils with a dual-shade brow powder so customers could replicate the salon technique at home [13]. The kit built a cult following, and over the following decade ABH rolled out into premier retail shelf space at Sephora, Ulta Beauty, Nordstrom, Macy’s, and more.

Two decisions in 2013 and 2014 turned a respected niche brand into a phenomenon. First, as we covered in the Business Model section, Claudia Soare started building the Instagram engine in 2013, giving ABH a first-mover advantage in social media marketing that no incumbent could match. Second, in 2014, the company leveraged its brow authority into a full-scale color cosmetics expansion across eyes, lips, and face, transforming ABH from a single-category specialist into a multi-category prestige brand.

The timing could not have been better. The US prestige beauty market was in the middle of an Instagram-fueled acceleration, growing 7% to $16bn in 2015 with makeup sales up 13%, driven specifically by the highlighting and contouring trends that ABH’s Contour Kits and Glow Kits had helped create [15]. Following this wave, the company reached an EBITDA of $180mm on $400mm in revenue by 2017. Remarkably, up until this point, the company achieved all of this while remaining entirely family-owned and without any debt [6]. 

TPG Ownership

That success eventually attracted institutional capital, and in June 2018, ABH completed a leveraged dividend recapitalization at a reported $3bn valuation. The company raised a $650mm first lien term loan due August 2025 and put in place an undrawn $150mm revolver due in 2023 [6]. Alongside the debt, TPG, together with the Canada Pension Plan Investment Board (CPPIB), invested a combined $700mm into ABH for a ~38% minority stake, with TPG contributing approximately $600mm of the total in the form of preferred stock and CPPIB contributing the remaining ~$100mm [16]. The company then combined the debt and equity proceeds and paid the bulk out to the existing owners, the Soare family, as a one-time dividend that we estimate exceeded $1bn [6][17]. All in, the deal valued the company at roughly 17x its ~$180mm LTM EBITDA.

TPG’s rationale was straightforward: ABH was one of the fastest-growing beauty brands, with a category-defining position in brows, industry-leading profit margins, and a rapidly compounding social media following [5][16]. The structure itself was conservative. Moody’s assigned ABH a B2 rating, noting a moderate 3.6x leverage ratio while flagging the company’s small scale, heavy reliance on Sephora and Ulta, and intensifying competition. Behind the $650mm term loan, TPG’s $600mm preferred detached at roughly 7x EBITDA, a reasonable level at close. What made it risky was not the detachment point but the volatility of the earnings beneath it, which rode a single trend that would soon turn.

As we noted above, TPG’s $600mm investment took the form of class A preferred stock, which accrued at an estimated ~7% annual rate and carried redemption rights that would matter significantly later: if the company had not completed an IPO or sale by August 2024, TPG could request to be bought out, and if the company failed to redeem, TPG gained the right to force a sale or an IPO [16][18]. 

ABH exited the 2018 recapitalization at a leverage of 3.6x which screened healthy, but the $180mm EBITDA the company generated that year was earned at the very top of a trend the company itself had created. Over the next seven years, three forces would drive the company’s earnings down nearly 80% from that peak. First, in 2019, the bold brow look that ABH made famous began to fall out of fashion. Second, in 2020, the pandemic eliminated makeup demand and ABH’s retail channels at once. Third, from 2021 through 2023, the company moved downmarket to chase its budget rivals, a strategy that backfired.

Shift in Consumer Sentiment

The first cracks in the company came within twelve months of the buyout as customer taste shifted. As a reminder, the company’s growth up to this point had been powered by the "Instagram brow" that ABH turned into a global standard and by the look that its patented Golden Ratio shaping method helped construct. By 2019, that look began to fall out of fashion, giving way to the softer, more natural brow that would dominate the next several years and pulling demand away from the heavily pigmented products ABH was known for. As demand softened, ABH cut prices and ran promotions to defend its shelf space at Sephora and Ulta. At the same time, costs rose as the company built out a senior management team it had never needed as a founder-run business. As a result, sales declined by roughly 15% to $290mm in 2019, and EBITDA fell roughly 30% to ~$105mm. Leverage reached 6.3x by September 2019, up from 3.6x at the close a year earlier [11][19]. 

The COVID Shock 

Before ABH could address this shift, the COVID-19 pandemic arrived in 2020, turning a difficult period into a collapse. Of all consumer categories, makeup was among the most exposed. Since the segment is discretionary and bought for public wear, the pandemic’s lockdowns removed the social occasions that drove people to buy ABH’s products, as mask mandates covered the lower half of the face. At the same time, ABH’s wholesale concentration in Sephora and Ulta, a manageable risk in normal times, became an acute liability when both chains temporarily closed their stores, collapsing the bulk of the company’s sales even as its smaller direct-to-consumer channel kept running. EBITDA fell to roughly $40mm, an almost 80% decline from the company’s peak of $180mm just three years earlier [5][11].

Brand Dilution and the Liquidity Drain 

In the years following the pandemic, the company initially looked to recover. By October 2021, earnings were rebounding faster than expected, driven by the reopening of physical retail and the rollout of ABH products into new doors at Kohl’s and Target, and the company had accumulated $126mm in cash [20]. However, this rebound was misleading. The growth came from the overall market reopening rather than from ABH regaining customers it had lost to competitors [21]. Revenue of roughly $210mm still sat a third below its 2018 level, and the company’s debt load left it with little cash to reinvest in marketing and product development at a time when its rivals were better-capitalized and spending aggressively. Additionally, at the term loan’s S + 3.75% floating rate, cash interest on $650mm of debt was estimated at $50mm by 2023, roughly the company’s entire EBITDA, leaving no capital for reinvestment after debt service. 

ABH’s response to this squeeze proved counterproductive. Rather than defend the prestige positioning that justified its price points, ABH moved downmarket, rolling out a wave of cheaper, trend-chasing products designed to compete with the low-priced brands eating into its sales, such as e.l.f. Cosmetics and ColourPop, both fast-moving, budget makeup lines popular with younger shoppers [5]. 

The strategy failed in both directions. It could not match the value brands on price, and it alienated loyal customers who paid premium prices for premium quality and had no interest in what one industry commentator dismissed as a "drugstore makeup with an ABH logo" [5]. The clearest evidence of the brand’s decline was the stall of the social media engine it had pioneered. ABH’s Instagram following, roughly 17 million in 2018, added only about 1.3 million followers over the following eight years. By the third quarter of 2023, the business was again declining double digits year over year, with EBITDA down more than 30% [5]. Liquidity followed earnings down, with the cash balance falling from $126mm in late 2021 to $51mm by March 2024, consumed by operating losses and the term loan’s interest burden [21][22].

By early 2024, the company also faced a maturity wall. The revolver, which had earlier been reduced from its original $150mm to $104mm and extended from 2023 to May 2025, and the $650mm term loan in August 2025 placed the company’s entire capital structure inside a single four-month window [22]. Facing that timeline, ABH had four options: draw on its existing liquidity, refinance or extend the debt, find an exit through the sale or IPO that TPG’s preferred stock was designed to force, or grow earnings enough to make the debt refinanceable. Over the following eighteen months, the company attempted each, without success.