Jameson CampAdvising on AI and GTM | 2x Exits

Deals aren’t always what they seem #entrepreneur #rhode #haileybieber

30 May 2025 · 1 min

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In this commentary, the speaker clarifies the actual financial terms of Hailey Bieber’s acquisition of the brand Rhode, debunking the headline that she received a $1 billion cash payout. The deal consisted of $600 million in cash, $200 million in e.l.f. stock, and a potential $200 million earnout tied to future performance. The speaker uses this example to illustrate broader acquisition mechanics, emphasizing that most deals involve a mix of cash, equity swaps, earnouts, and sometimes liquidation preferences that can even leave founders with no cash at all. The key takeaway is that headline valuations often mask the complex, multi‑component nature of real-world transactions.

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Okay, so Hailey Bieber didn't really get a billion dollars for Rhode, although the transaction was really cool. Let's break it down exactly what happened. So $600 million in cash, an insane amount of money, but the reason I wanna talk about this is everyone thinks that all these deals means everyone gets a bunch of cash, which is not normal. Normally you get stock, you roll in equity, you get an earnout, there's a million ways to skin the cat. So they got $600 million in cash, $200 million in e.l.f. stock, which by the way has done incredibly well on the news, and then another $200 million in earnout that hypothetically they get if the business does certain numbers moving forward. Just remember when you see these numbers come out about valuations and acquisitions, it's almost always stock for stock, stock swaps, earnouts, things like that. Even sometimes founders get $0 because the way the investors structured liquidation preferences.