Ventures

Drink to This: How V&E Helped Drunk Elephant’s Founder Make Her Dream Come True

“Tiffany wanted to make sure she had the right protection going forward since she was going to stay on with the company following the transaction.”

In the heady pursuit by a bidder, a company founder must protect her company. This is especially true when the founder intends to stay on with the brand she built from the ground up. With such a goal in mind, Houston-based entrepreneur Tiffany Masterson sought legal representation as she planned the sale of her prestige skincare line, Drunk Elephant.

She turned to V&E.

“Tiffany wanted to make sure she had the right protection going forward since she was going to stay on with the company following the transaction. She wanted to maintain a quality standard for the brand,” said Claire Smyser Campbell, a senior associate in Capital Markets and Mergers & Acquisitions. Campbell, along with V&E corporate department head Keith Fullenweider and partner Shane Tucker, led the V&E team representing Masterson. V&E associate Sara Bloom also played a key role in the matter.

“It was great to see someone who obviously has a passion for her company,” Bloom added.

To understand why Masterson was so steadfast in her vision for Drunk Elephant, it’s important to know the celebrated company’s beginnings. Masterson started Drunk Elephant while she was a stay-at-home mom in Houston in 2013. She was inspired by personal skincare concerns: When she couldn’t find products that met her needs, she created her own.

Masterson maintained strict standards. The formulas for her products had to contain biocompatible ingredients that were good for the skin. They also had to be free of what Drunk Elephant has deemed the “Suspicious 6” — essential oils, drying alcohols, chemical sunscreens, fragrances/dyes and sodium laurel sulphate — ingredients the company says can cause skin issues. The company’s website notes, “It is equally, if not more, important what we leave out of the products as what we put in.”

Drunk Elephant’s philosophy resonated with consumers. Word-of-mouth buzz propelled exponential growth. Drunk Elephant built up a leadership team, including a CEO, while Masterson took on the role of chief creative officer. By 2019, Masterson and the team were ready to take the next step: partnering with a larger company to help Drunk Elephant expand its reach. Drunk Elephant hired Sidley Austin LLP to represent the company as it vetted potential bidders, while V&E represented Masterson and a consortium of Drunk Elephant’s shareholders.

Both Campbell and Bloom had followed Masterson’s rise through the Houston business ecosystem over the years.

“It was easy, in that respect, to come into something where you already know the brand and where it started from,” Bloom said.

Ultimately, Shiseido Americas, a subsidiary of personal care giant Shiseido Company Limited, emerged as the buyer of choice. Masterson later said that joining with a “powerhouse” beauty company like Shiseido was “a dream come true.”

“We share similar values, most importantly an unwavering commitment to the consumer,” Masterson said in a statement announcing the sale to Shiseido.

But significant work remained before the deal could be finalized. That included hammering out critical points of Masterson’s employment agreement with Drunk Elephant’s future owner. Through careful negotiations with Shiseido, an agreement was reached that left all parties feeling like they got what they wanted.

“There were obviously some sticking points that took longer to negotiate, but I think Shiseido was very responsive and cared a lot about the same things that were important to Tiffany,” Bloom said.

Shiseido and Drunk Elephant announced the sale agreement in October, and the deal subsequently closed the first week of November.