Put yourself in Rhian’s shoes for just a moment. And this is...

Put yourself in Rhian’s shoes for just a moment. And this is relevant for all the other posts claiming that the founder is winning here and HLF shareholders are losing.

Think about this for a moment.

If this all fails miserably and takes down HLF with it (which I’m not by any means suggesting it might) then all Rhian ends up with is a cash payment of $2.8m.

Of the $22m total consideration (incl $5m earnout), for which Rhian owns 50%, so $11m for her, Rhian gets:

• $2.8m cash upfront
• $3.2m in shares
  • Issued at 12c, so already worth $2.7m at 10c
  • Partially escrowed for 12 months, rest at 24 months
• $0.5m cash in September 2022 if earnout 1 targets are met (rev >$25m, EBITDA >$5m)
• $2.0m in shares in September 2022 based on above targets
• $0.5m cash in September 2023 if earnout 2 targets are met (rev >$30m, EBITDA >$6.5m)
  • $2.0m in shares in September 2023 based on above targets

So, in summary, a lot of Rhian’s payout (in fact $8.2m of the $11m, or 75%) is reliant on:

• THM hitting the earnout targets (remember revenue has been broadly flat for ~5 years so to grow it 25% over 1 year and 50% over 2 would be significant)
• HLF doing well and her escrowed shares being worth more than or equal to their issue price in 12 and 24 months time

Otherwise all she is guaranteed to get is $2.8m cash upfront and whatever her HLF shares are worth.

Think about it a bit more.

$2.8m is not a huge sum for a business that she has spent 11 years building, where she invested $300k of her money upfront (just that invested well elsewhere ie property (she sold her home to start the business) would be worth $1m+ today) and reinvested all the profits along the way.

Appreciate she would have received a partial payout ($5m?) when WhiteOak came in (when revenue was $10m) but the overall point I am trying to make is she isn’t “cashing in now”, she isn’t saying farewell, she is far from throwing in the towel!

She is receiving only 25% of the value of THM now with the other 75% contingent on THM and HLF as a whole performing well.