How a Distinctive Beauty Brand Fell Apart, Sinking Almost $700 Million With It

Carlyle, the global private equity firm, has $425 billion in investor money powering companies that make aerospace equipment, wind turbines and airport terminals. But this year, when the firm experienced one of its biggest failures, it was on account of little bottles of cleansing scrubs and vitamin C serums sold in people’s living rooms.

Three years ago, in May 2021, Carlyle invested roughly $600 million in a skin care company called Beautycounter. Jay Sammons, who ran Carlyle’s consumer products business, had already helped OGX hair care products generate high returns for Carlyle. He had been watching Beautycounter’s progress under its charismatic founder, a woman named Gregg Renfrew, and reckoned it could be even bigger.

Ms. Renfrew had built the decade-old company around a mission: making cosmetic products without a host of commonly used chemicals. The products were distributed through independent sellers in a multilevel marketing model that has been used for vitamin supplements, cosmetics and Tupperware. Beautycounter was like a newfangled Mary Kay with an additive-free gospel and bottles of $87 antioxidant cream.

When Carlyle bought its controlling share, Ms. Renfrew got about $50 million for selling part of her stake, according to three people with direct knowledge of the deal, and stayed on as chief executive. She and the private equity firm were aligned in their big plans: Raise annual sales from where they stood, about $400 million, to $1 billion, and take Beautycounter public.

“I felt like I’d gotten engaged or won the lottery,” Ms. Renfrew said in a recorded virtual meeting with Carlyle’s Mr. Sammons and Beautycounter salespeople not long after the deal closed. “I couldn’t be more excited about partnering,” she said, referring to both Mr. Sammons and Carlyle.