When Capital Isn’t Neutral: Lessons from TPG’s Takeover of ABH
I’m DEEEEEEP in the beauty world, and for years Anastasia Beverly Hills (ABH) was that girl. Honestly, I had so much makeup at one point, my bedroom was a mini Ulta, but I digress. ABH eyeshadow formulas were elite and the brow pomades were staples. Products had time to breathe and you could actually hit pan on a palette before the next one showed up. Modern Renaissance. Soft Glam. Amrezy x ABH. I watched YouTube tutorials hourly, planned purchases around launches, waited for special edition collabs like events. That brand wasn’t just makeup. It was a relationship I was faithfully committed to and was ready to marry.
Look courtesy of Modern Renaissance palette.
Subculture could never.
Enter TPG, the 3rd party who ruined the love affair.
Product quality tanked, especially the shadows. Launches came faster and louder. Less anticipation, more noise. It felt like the brand went from confident to frantic. From intentional to pushy. At the time, I couldn’t have told you what changed operationally. I just knew something wasn’t the same.
Last week I walked past the ABH section at Ulta Beauty. I stopped. I looked. I felt nothing. I hadn’t bought a single ABH product in years, and browsing the shelf and the website didn’t pull me back in. Zero excitement. No curiosity.
So what happened? How did a brand that once defined the “Golden Ratio” of beauty lose its soul and end with TPG effectively losing its $600 million investment?
The Investor Enters the Chat
In June 2018, ABH struck a strategic partnership with TPG Capital, valuing the company at a staggering $3 billion. Most founders would read that number and see a trophy. I dug deeper and discovered the $650 million debt hidden in the deal. That’s when I realized this wasn’t just a partnership. It was a mandate dictating every decision, every product, every marketing push.
TPG didn’t just invest money into ABH as a passive partner. Instead, they used a leveraged buyout (LBO) structure, which is a type of deal where the majority of the purchase price is funded with debt that the company itself has to pay back, not the investor. So ABH suddenly had a huge $650 million loan on its own balance sheet, even though the company itself didn’t need that cash for operations.
The deal structure matters because it forces the brand to operate under financial pressure that overrides creative control, transforming how the company behaves long before any P&L reflects the effect.
Overnight, ABH went from a profitable, debt-free family business to a company with a mortgage so large that taking a year off to be creative was no longer an option.
The physics of the company changed immediately: timelines shortened, incentives shifted, and the cadence moved from artistry to velocity. To pay the interest on that loan and justify a $3 billion valuation, ABH had to sell more, faster, and often before products were truly ready. Most times products were nowhere near ready, in my humble opinion.....
The shift wasn't subtle. The company moved from a founder-led cadence, driven by artistry and patience, to one dictated by investor timelines and the need for speed.
What Changed First (It Wasn’t the P&L)
If you're a founder staring at a term sheet, look closely at ABH. The breakdown didn't start with red ink on the P&L; it started with operational shifts that looked "rational" in a boardroom but felt chaotic to the customer.
1. The Velocity Trap
Pre-investment, ABH launched 1-2 major products a year. In 2019, the year after the deal, they released more major palettes than in the previous five years combined. We’re talking Riviera, Alyssa Edwards, Jackie Aina, Carli Bybel, and three volumes of Norvina palettes back-to-back.
We were NOT impressed by what we saw.
2. The Supply Chain "Optimization"
To feed this new velocity, the supply chain had to break. You can’t iterate a formula 50 times for perfection when you have a monthly launch quota.
The Shift: Core palettes like Modern Renaissance were made in the USA or Italy.
The Result: Newer palettes, like the Norvina Pro Pigment volumes, were marked "Made in PRC" (China).
3. The Inventory Glut
They over-manufactured to show growth. When the products didn't sell fast enough, they ended up at TJ Maxx. Nothing kills "luxury status" faster than seeing your $45 palette sitting next to a discount candle for $20.
The Customer Noticed Before the Board Did
Trust fades faster than revenue. The board was probably patting itself on the back seeing how many palettes stores ordered but the joke was on them. We weren’t actually buying anything. Don’t believe me? Just check YouTube for the flood of complaints after TPG entered the picture.
We noticed the formula change instantly. The Subculture palette was the canary in the coal mine—powdery, hard to blend, and changing color once it hit the skin. I genuinely wanted to love that palette—the color story was incredible—but the formula was an absolute disaster. Then came the "pressed pigment" controversy. To churn out neon colors quickly, the brand used pigments that required warning labels because they weren’t cleared for use near the eyes.
By the time the revenue slowed—falling to an estimated $243.6M by 2023—the emotional damage was already done.
Why This Matters for Any Product-Driven Founder
This story isn’t just about beauty. It’s about every founder whose product earns trust and loyalty. Once that trust is broken, you can’t just re-launch a “new formula” to fix it.
Customers notice quality and cadence long before the P&L does. Whether you’re selling cosmetics, supplements, health tech, or even hardware, shortcuts demanded by the wrong capital partner don’t just reduce margins. They quietly erase belief in your brand.
The lesson is universal: the wrong capital can rewrite how your company operates long before it shows up in the numbers and it’s much harder to rebuild trust than revenue.
A Better Question to Ask Investors
When you’re sitting across from a VC or PE firm, stop asking, “How big can we get?” Instead, ask: “What will this money force us to do?”
Does this valuation require us to triple our SKU count next year, even if our current cadence builds customer trust?
Does this timeline force changes to our supply chain or production partners that compromise quality?
How will the debt, investor mandates, or expected exit shape product launches, marketing cadence, or customer experience?
The point: capital comes with invisible strings. Every check embeds incentives that subtly (or not so subtly) rewrite how your company operates. Asking these questions upfront surfaces the operational tradeoffs before you sign anything. It flips the conversation from growth potential to survivable growth.
The Takeaway
In 2025, TPG exited ABH, taking a massive loss on their investment. Anastasia Soare is reportedly injecting her own capital to save the ship. The brand survived, but the aura and trust is gone.
If your product works because customers trust it, your capital must protect that trust—NOT outpace it. Every term sheet, every debt covenant, every investor mandate embeds incentives that quietly change your operations, your product cadence, and the very relationship you have with your community.
Before you raise, think: will this money amplify your mission or force compromises you’ll regret? Your growth plan isn’t just a chart; it’s a set of behaviors your company will start living tomorrow. Misaligned capital can rewrite those behaviors faster than revenue ever signals a problem.
Protect your operating system first. Everything else flows from that.