Citing sources familiar with the matter, Bloomberg reported on Jan. 29 that The Honest Company was preparing to go public, with one person saying the company could seek a valuation of about $2 billion in an IPO. In fact, the magazine’s sources said Honest was possibly making a confidential filing for an IPO with the U.S. Securities and Exchange Commission that very day.
The Honest Company is exploring “various financial strategies and options.”
Amid the latest IPO chatter, Honest is keeping its cards close to its vest. A representative gave a vague comment to Bloomberg, saying, “As we continue pursuing our mission to inspire everyone to love living consciously, we regularly explore all various financial strategies and options.”
L Catterton, the private equity firm that invested $200 million in The Honest Company as a strategic minority investment in 2018, had no comment on the possible IPO.
The company has been talking about an IPO since 2014.
Alba launched The Honest Company alongside Brian Lee, Christopher Gavigan, and Sean Kane in 2011, with the quartet focusing on nontoxic cleaning and baby products. “I founded The Honest Company on this idea: Everything that touches you and your family—everything in your home—needs to be nontoxic, needs to be effective and beautiful to look at, and needs to be affordable,” the actress explained to Inc. magazine in 2014.
In 2016, Bloomberg reported that The Honest Company was working with Goldman Sachs Group and Morgan Stanley on an IPO, adding that Brian Lee, the company’s co-founder and CEO, had been talking about taking the company public since at least 2014.
The Honest Company has had some controversies in the years since.
The Honest Company hit a rough patch in 2016, when The Wall Street Journal reported that laundry detergent sold by the company contained significant amounts of sodium lauryl sulfate, a cleaning agent The Honest Company had vowed to avoid. (A 2014 blog post on the Honest Company website reiterates that vow.)
The company countered that it actually used sodium coco sulfate, a different compound, but independent chemists told the Journal that sodium coco sulfate is a mixture that includes sodium lauryl sulfate.
The Honest Company also faced class-action lawsuits over its ingredients and claims and voluntary recalls of its baby powder around the same time, and in 2017, the company suffered stalled sales and a drop in valuation from $1.7 billion to less than $1 billion, according to The Wall Street Journal.
The Honest Company was reportedly considering a sale in 2020.
In September 2020, The New York Times reported that The Honest Company was working with Morgan Stanley and Jefferies on a sale process with hopes of a $1 billion valuation. The newspaper speculated that possible buyers could include larger consumer companies or a special-purpose acquisition company (SPAC) that could merge with The Honest Company to take it public.