How Jamie Kern Lima Negotiated a $1.2-Billion Deal for IT Cosmetics
IT Cosmetics has been a true disruptor in the cosmetics industry since it's launch in 2008. Founder Jamie Kern Lima has experienced a remarkable journey as a former news anchor, to building a global brand, which was recently acquired by L'Oreal for a reported $1.2 billion in 2016. Kern Lima is also the first woman to maintain her role as CEO in L'Oreal's 108-year history.
With all of the success of IT Cosmetics, Kern Lima remains humble and gracious as a founder of a billion-dollar portfolio, which continues to experience expansion today, thanks to partnerships with QVC, Ulta Beauty, Sephora and more. I had the honor of spending time with her in IT Cosmetics' Jersey City headquarters recently to discuss women, leadership and her advice on partnerships.
From the moment you walk into Kern Lima's office, which has epic unobstructed views of the New York City skyline and Hudson River, there is a feeling of appreciation and gratitude. "I did not come from a cosmetics background, but I always knew I was destined for greatness. I was ambitious from an early age, often having multiple jobs," says Kern Lima.
Kern Lima's success is a testament to all high growth entrepreneurs, especially women, about the importance of building and maintaining valuable relationships while developing a clear exit strategy, which will protect the value and integrity of the company. What I did not realize is the sale of IT Cosmetics to L'Oreal, though monumental, was a three-year journey, filled with several false starts and promises along the way. In the end, Kern Lima knew that partnering with such a global legacy brand was the right move to continue to grow the company in the right direction, while securing a historic partnership.
The acquisition of IT Cosmetics is a valuable lesson about confidence, resilience and fierce negotiation. Here are four lessons that you can learn from Kern Lima's determination about the importance of negotiating for your value as a business leader.
1. Identify the key players.
Kern Lima shared her experience of attending an event, where the president of L'Oreal's luxury division was speaking. She says, "After the event, I went back to my office and wrote her a handwritten note that stated: I loved your speech and top 10 brands you listed, but IT Cosmetics was not on your list. If you try IT, you will love IT." Kern Lima also enclosed a few samples, without knowing if the note was ever received.
IT Cosmetics continued to grow, without a response. However, there was a moment of fate when a mutual friend introduced Kern Lima personally to the president of the luxury division for L'Oreal, which led to identifying the value of the opportunity of partnering with IT Cosmetics.
The key takeaway of negotiating is identifying all of the important decision-makers and building relationships. This is especially imperative if your goal is to add your brand to a larger portfolio. There are often several gatekeepers in the negotiation process that you must identify before leveraging a conversation about partnerships.
2. Highlight your unique value proposition (UVP).
After a series of meetings with the president of L'Oreal's luxury division, the next step was to ensure that all of the stakeholders at L'Oreal's HQ in France also understood the IT Cosmetics vision. "Our brand, products, messaging and imagery were all original. I wanted to assure [them] that we create products with a luxury formula at a prestige price point, which is inclusive luxury," says Kern Lima.
This part of the due diligence process allows the other party to consider if your brand is a fit for their portfolio. Never assume all parties understand what you offer, although your concept is in the same category. Take a moment to highlight the problem you solve with your innovation before moving to the next phase of negotiating.
3. It may not happen on the first try.
There were several moments throughout the discovery process where IT Cosmetics was close to reaching a deal, and talks fell through at a moment's notice. After a year of due diligence, both sides could not make a find middle ground.
Kern Lima boasts about remaining flexible and patient during that time, as she was assured that L'Oreal was the best partner for IT Cosmetics, and a deal could be reached. Never become emotionally invested in the negotiation process. If you have identified the best partner for your company, it will take time to fully understand your value proposition, hence delaying the deal. Remain flexible by hosting open-ended conversations to learn what it will take to earn their commitment.
4. Competition increases market value.
One of the most valuable lessons I learned from Kern Lima was the importance of allowing the market to determine valuation. During the due diligence period between IT Cosmetics and L'Oreal, other companies also expressed interest in acquiring the company, which increased its value. Competitive interest increases demand and market value.
"By the time they [L'Oreal] made a decision, there was activity in the market to acquire IT Cosmetics. The deal happened pretty quickly, thanks to such an extended history with them and understanding the brand, " Kern Lima adds.
An effective negotiation is a multi-tier process, which involves multiple stakeholders, patience and grit. If you are confident, willing to invest time and know your value, it will lead to a successful outcome.