Revolution Beauty is reportedly in negotiations with co-founder Adam Minto over a £3m settlement agreement.
Minto is said to be in advanced talks to settle the lawsuit filed against him by the cosmetics brand, which claims he breached his financial duties to the company, Sky News reported.
The business was founded by Minto and Tom Allsworth in 2014, but the duo stepped down from their roles in November 2022 amid an accounting probe into the company.
The investigation by BDO was launched after the business failed to file its final results for the 2022 financial year, resulting in Revolution Beauty’s shares being suspended on 1 September.
Allsworth is also in talks with Revolution Beauty to reach a revised agreement on the terms of its acquisition of Medichem.
The pharmaceutical company was acquired on 26 October 2021 and was wholly owned by Allsworth.
But the probe found that only £7m had been paid on completion, with the deal being worth an estimated £26m.
Revolution Beauty said it remains in negotiations with both parties, but stressed there is “no guarantee” that agreements will be reached.
“Should agreements be reached, they would likely be treated as related party transactions and an appropriate announcement made at that time,” the company added in a statement.
BDO, the beauty player’s auditor, published the results of its investigation in January 2023, which uncovered a string of serious accounting and management failures.
Both Minto and Allsworth were found to have made personal loans of around £1m to distributors and a senior employee, which were not disclosed to the company's board.
BDO also raised concerns about sales made to Revolution Beauty’s three key distributors in February 2022, the final month of its full-year accounting period for 2022.
This included various discrepancies such as the sales volumes, timing, terms and rationale.
Following Minto and Allworth’s resignation, Revolution Beauty fell under the leadership of Bolt Holt, former Interim Chief Operating, and CFO Elizabeth Lake.
In June, Boohoo, the beauty brand's largest shareholder, staged a coup to overthrow the new leadership team, after claiming the board was not delivering shareholder value.
Revolution Beauty eventually ended its public spat with the fast fashion retailer in July, with a settlement agreement that saw Holt and Chair Derek Zissman resign.
Lauren Brindley was later appointed as Group CEO in September, and oversees the beauty brand’s global operations and its strategic growth.
Despite the challenging year of trading, Revolution Beauty’s most recent financial results signal a potential positive turnaround.
The brand returned to profit in the first half of FY24, after reporting profits of £400,000.
This is an increase on the £13.7m loss it posted during the same period last year, and was supported by sales growth across all of the brand’s key operating markets.
Read more:
- Revolution Beauty and Boohoo’s boardroom battle explained
- Revolution Beauty settles month-long spat as Boohoo takes over board
- Revolution Beauty accounting probe uncovers ‘unacceptable’ issues
- Revolution Beauty shareholders revolt over CFO reelection
