Estée Lauder paid $1.45B for Too Faced, then wrote off $641M of it

In November 2016, Estée Lauder agreed to buy Too Faced, the Los Angeles makeup brand behind the cult Better Than Sex mascara, for $1.45 billion — the largest acquisition in the company's history. Founders Jerrod Blandino and Jeremy Johnson sold alongside General Atlantic, the investor that had backed the brand since 2013 and watched its 'massive growth in revenue and profits'. Too Faced was the hottest name in prestige makeup, and Estée Lauder paid for the heat.

Three years later the deal was souring. By December 2019, prestige makeup was in decline across North America and competition had intensified; Too Faced, BECCA and Smashbox all revised their internal forecasts. Estée Lauder recorded a $777 million pre-tax impairment charge ($663 million after tax) across the three brands. Too Faced alone absorbed $641 million — $430 million in goodwill and $211 million in its trademark — and Smashbox a further $68 million. The company cited 'continued softness in the makeup category generally in North America'.

The write-down came in a quarter when Estée Lauder still earned $561 million: the company was profitable, the acquisition was not. The deal had priced Too Faced's momentum as if it would compound forever; instead the category turned within three years of closing, and almost half the purchase price was erased from the balance sheet.