Learn how Cult Beauty’s curated platform stood out in the saturated beauty market, leading to its £275M sale to The Hut Group.
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In this week’s episode, Jessica DeLuca walks us through the history of building and selling her company, Cult Beauty to The Hut Group for nearly $400M. I found this episode interesting in that it walks us through the various stages of building a consumer brand business: niche identification, technical start-up, initial fund-raising (friends and family), growth and adoption through communities, marketing through influencers, navigating follow-on capital raises (loans, equity, convertible debt, preferred equity, etc.), preparing the business for sale, determining valuation range, vetting sale options (M&A, Private Equity, IPO, etc.) and final deal terms. I think it's excellent how humble Jessica is about her mistakes over the years and how much she learned as she went through the process, even identifying some early mistakes that ultimately cost her millions of dollars. I have two key takeaways: 1. You will make mistakes, so forgive yourself. 2. Educate yourself about the process of valuing and selling your business. Do it early and surround yourself with trusted advisors! I also loved hearing about all the millionaires she made along the way and the financial security her investors found after the sale. Some timestamps to consider if you are short on time:
11:20 – Starting Cult Beauty
20:35 – Capital Raise Considerations
27:00 – Valuations
30:00 – The Deal Sheet (The Value of Creating Competitive Offers)
39:40 – Industry Multiples
46:40 – The Sale Decision (When? Why?)
53:30 – “The Power of Competitive Tension”
56:00 – Why The Hut Group? (100% Cash Deal, No Earnouts, Staff Security, Brand Continuation)
59:00 – Positive Outcome for Investors
About this Episode
Jessica DeLuca co-founded Cult Beauty in 2008, creating one of the UK’s leading online beauty retailers. In this episode of Built to Sell Radio, Jessica reveals the path that led her to selling the business for £275 million to The Hut Group (THG).
DeLuca’s background in tech shaped the business, with her love for data and precision leading to a meticulously curated platform.
Frustrated by the lack of unbiased information in the beauty industry, she built a database of expert advice, allowing customers to search products tailored to their needs—an approach that set Cult Beauty apart from the competition.
In this episode, you discover how to:
Use niche expertise to build credibility and trust in a saturated market.
Navigate early funding rounds and avoid common pitfalls.
Structure a business for acquisition from the start.
Keep competitive tension alive during the acquisition process to maximize valuation.
DeLuca’s journey offers invaluable insights into transforming frustration into a unique value proposition, building a niche brand, and securing a life-changing exit for her and her team.
About Our Guest
Jessica DeLuca
Jessica DeLuca is the visionary founder of Cult Beauty, one of the most influential online beauty retailers in the world.
With a mission to cut through the noise of the beauty industry, Jessica launched Cult Beauty to curate the most effective and innovative beauty products available, backed by scientific integrity and expert recommendations.
Under her leadership, Cult Beauty became renowned for introducing niche, game-changing products before they went mainstream, attracting a global customer base.
Definitions
Due-Diligence: This is a comprehensive appraisal of a business or investment undertaken before a merger, acquisition, or investment. It seeks to validate the information provided and uncover any potential risks or liabilities.
Earn-out: This is a financing arrangement for the purchase of a business, where the seller must meet certain performance goals before receiving the full purchase price. It reduces the buyer’s risk and aligns the interests of both parties post-acquisition.
Letter of Intent (LOI): This document outlines the basic terms and conditions of a deal before a formal agreement is drawn up. It serves as a mutual commitment between the buyer and the seller to move forward with the transaction on the agreed-upon terms.
Re-Trading: This occurs when a buyer attempts to renegotiate the purchase price of a deal after initially agreeing to one. It is often seen unfavorably as it occurs after due diligence, seemingly exploiting newly discovered information.
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