For more than 25 years, Sundial Brands, the maker of popular natural skin care and hair care products under the brands SheaMoisture and Nubian Heritage, has been independent, family run, and Black owned. Now, things are a little different.
Private equity firm Bain Capital, LLC has taken a minority stake in Sundial — a move the Sundial’s founder and CEO, Richelieu Dennis, says was about right timing.
“What’s interesting is that we’ve been approached by just about every multinational [company] that is out there over the last year, two years and for us it was, and has always been about being family owned, community owned for the last 25 years,” Dennis said. “We remained independent all that time we had gotten approached. We knew we didn’t want to sell but [the question was] how to compete with all these multinationals focused in on our consumer trying to make similar products. Faced with the dilemma of how to grow without sufficient capital, Dennis said the answer was to take on an investor.
“We had to make some decisions on how we could remain family owned and remain a community focused brand. When you think about where Black businesses have issues, it has always been [the lack of] access to capital. One of the hardest things to do is to get capital. That’s where we as Black business struggles. And the other place we struggle is scale and because we don’t have an access to capital we cannot scale. We…are not interested in growth for the sake of growing; we are interested in purposeful growth. [The investment deal] had to be with a partner that had a social mission at the core of its business model.”
The new development is a delicate one for Sundial, as its brands have become a favorite, mainly with the African-American consumer looking for natural, certified organic and ethically-sourced ingredients. Dennis launched the company in 1992 with his mother, Mary Dennis, and his college roommate, Nyema Tubman, shortly after graduating from college when he found he would be unable to return to his home country of Liberia because of civil war in the African nation. Dennis crafted the company by using culturally-authentic family traditions passed down from his grandmother, first making natural bath and body formulations.
Consumers liked the idea of the company being family and Black owned. But Dennis said Sundial customers should not worry that that’s changing. Dennis will continue to provide vision and leadership for the company, and Sundial will remain majority family-owned and operated including board, management and day-to-day operations. The deal was simply a matter of long-term survival.
“As a kid growing up, one of the brands I thought was tremendous was Karl Kani…and I don’t see Karl Kani today. I want to see SheaMoisture tomorrow,” declared Dennis. “Once a company develops out of its consumer base you will often see a well-funded multinational company come in and take over that space. The Black-owned company either stays a niche company or just disappears. This is something we don’t want to happen…Now with this investment, it allows us to make moves that will keep this company in the family for another four generations and beyond. My goal is to have my children take over and their children and so on.”
According to Dennis, the Bain deal for a good fit for Sundial. “We wanted to stay true to our values as a company, true to our community and customers, and true to our mission. Bain has had a history in being interested in helping socially minded companies like ours. We looked at their investment in TOMS shoes (each pair of shoes you purchase, TOMS gives a pair to a child in need); and we knew the business was socially driven,” he said.
Sundial says it will keep its commitment not only to its community in the U.S. but to the African cooperatives it works with to get Shea ingredients. Sundial is a certified B Corp company with a Fair for Life social and fair trade certification. “Through its Community Commerce purpose-driven business model, the company creates opportunities for sustainable social and economic empowerment throughout its supply chain and communities in the United States and Africa, focusing on entrepreneurship, women’s empowerment, education and wellness,” states its website.
Speaking to that focus, Dennis added, “In Ghana we have over 4,000 women we work with in the cooperatives; we provide them infrastructure, training, education–and we provide these things through the revenue we generate.” In other words, the more money the company brings in the bigger impact it can have on the lives of these African women and their small businesses.
“The investment from Bain will also allow us to have a greater impact on the community here in the U.S. as well. For example, we want to extend the Sundial Community Commerce Entrepreneurs Fellowship at Dartmouth Tuck School of Business to reach 12 women, up from six per year,” Dennis said. “We also want to be able to provide products for our client throughout her life cycle. We have had product ideas but this investment will let us fulfill our vision. The needs of our customers change as their lifestyles evolve and we want to be able to go through the different life stages with them and provide the products they need.”
Sundial did hit a bump in the road with its client base earlier this year when some perceived SheaMoisture ads featuring white children was a sign the company was turning its back on its loyal consumers. Dennis insisted the campaign was not a planned ad or a marketing strategy. “It wasn’t even a marketing campaign. It was just a social media post,” he noted. Taking a positive spin on the backlash from the company’s Black consumer, Dennis said. “What that incident really showed us was the passion our customers have for our brands. It also showed what a huge responsibility we as a company have to the community.”
Still Dennis is hoping Sundial’s customers realize the need for his company to eventually reach out to the general market. “Black companies, like every other company, have to grow and broaden its customer base. If Black business don’t do this this, they die on the vine.”
Further explaining the company’s reasoning for taking on an investor is Sundial’s “10 Reasons We Partnered with Bain Capital” listed on its website.