European Wax Center, after rancorous court battle, gets backing from GA

  • EWC settled with Princeton Ventures, Brazos last year
  • Company claimed firms were trying to surreptitiously gain control
  • GA represents new growth phrase for company

In the wake of a rancorous court battle between European Wax Center and its original investors Princeton Ventures and Brazos Private Equity, the company has welcomed a new backer.

General Atlantic said Aug. 21 it invested an undisclosed amount in EWC. The firm said it would partner with EWC to add to its portfolio of franchisees, expand its footprint, explore opportunities in digital innovation and move into new markets.

As part of the investment, General Atlantic’s head of consumer, Andrew Crawford, Principal Shaw Joseph and Vice President Mei Shi will join European Wax Center’s board.

David and Joshua Coba first opened a European Wax Center in 2004. The business generated adjusted Ebitda of $20.4 million for the year ended Dec. 31, 2015, court documents said.

Late last year, EWC settled with Princeton Ventures and Brazos over charges the firms tricked the company’s founders into gradually turning over control of the company.

The sides reached the agreement before the case was scheduled to go to trial Dec. 18, Buyouts previously reported. Terms of the settlement were not disclosed.

Princeton Ventures and Brazos had already decided to redeem their investments last year and argued that decision rendered the complaint moot, which the judge denied.

The firms had argued the case was without merit and an attempt to “rewrite a core provision in the agreement because plaintiff has belatedly become unhappy with the deal it struck.”

Neither firm retains an interest in the company, said Laura Henson, a spokeswoman for EWC. No one from Princeton Ventures or Brazos responded to requests for comment.

Princeton and Brazos in 2013 invested an undisclosed amount in EWC for a 30 percent stake. The founding Koba family had sought to reform or rescind the deal with the two firms last year, arguing it amounted to a “surreptitious takeover of the company.”

The disputed provision in the deal contract gave Series A shareholders an interest in the company (upon conversion into common units) that incrementally increased their ownership at an annually compounding rate of 8 percent. That right could be offset only by a non-pro-rata payment to the preferred shareholders if they consented to such payment.

The two sides argued about what constituted such a payment, with the founders saying they made such payments to keep their ownership whole.

No one from GA or European Wax Center responded to requests for comment.

Update: This story was updated with information about ownership stakes in EWC.

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