Revolution Beauty, a UK-based cosmetics company known for its affordable and inclusive beauty products, has found itself at the center of a financial controversy involving its founders. Adam Minto, who co-founded the company in 2014 alongside Tom Allsworth, is currently in negotiations to settle a dispute over allegations that he breached his fiduciary duties to the company.
The London-listed group, which made a splash in the beauty industry with its mass-market range and collaborations with popular media properties like ITV's "Love Island," has experienced a tumultuous period following its stock market debut in 2021. The company's value took a hit due to a series of governance and operational crises, leading to a significant drop in market capitalization from nearly £500m to just £81m as of late November 2023.
Minto, who stepped down as CEO over a year ago, is reportedly in advanced talks to repay nearly £3m. This settlement is part of an effort to address the legal proceedings initiated against him after his departure, which was linked to events following Revolution Beauty's initial public offering (IPO). The company's shares were suspended from trading on AIM in September 2022 due to substantial delays in the audit of its financial results for 2022, resuming trade only in late June of the following year.
An investigation by the company's auditor, BDO, revealed a series of accounting and management failures, including personal loans made by the co-founders to distributors and a senior employee, amounting to around £1m. These revelations have led to a legal fight with Minto, who received a letter of claim in May 2023, alleging that his actions contributed to the delay in the audit and the suspension of the company's shares. In addition to Minto's situation, his co-founder Allsworth is also in discussions with Revolution Beauty to amend the timetable for deferred payments owed to him for his stake in Medichem, a haircare and skincare manufacturer.
As Revolution Beauty seeks to navigate through these financial and legal challenges, the company has undergone a leadership overhaul, appointing Lauren Brindley as the new CEO. The brand continues to be sold through thousands of outlets, including Superdrug stores in the UK, and maintains a strong following among younger consumers, thanks in part to its use of influencer marketing and social media platforms like Instagram and TikTok. The potential settlement with Minto could represent a step towards resolving the ongoing disputes and stabilizing the company's financial standing.
