The getting might not be as good as it was in the private funding markets — at least for Honest Co.

The healthy living firm cofounded by Jessica Alba was reported on Friday to be exploring an initial public offering, which experts took as a sign that it is starting to outgrow its current base.

“To take it to the next stage, I think that they probably need to take it to a new corporate structure,” said Neil Saunders, chief executive officer of retail research firm Conlumino. “I don’t think it’s a great time to go public because the markets are very erratic at the moment.”

While there’s been plenty of rough and tumble on Wall Street this year — the Dow Jones Industrial Average fell 211.61 points to 16,204.97 Friday — one banking source noted that markets could calm in the coming months as Honest works on an IPO in the background. The potential of an offering could also be used to get the best price from a would-be buyer since it would signal that the company has other options.

IPO rumors have swirled around Honest for years as the size of its venture rounds increased — it raised a $70 million Series C round in 2014, followed by a $100 million Series D round in August. According to S&P Capital IQ, investors for the latest round included Alliance Bernstein, Fidelity Management & Research Co., Glade Brook Capital Partners, Institutional Venture Partners and Wellington Management Group.

The funding last year valued Honest at $1.7 billion, which is high enough to deter other venture capital investors from pouring more money in, financial sources said.

Gregg Fatzinger, managing director and head of consumer retail for the Americas at Nomura, said private companies that have a diverse base of institutional minority investors such as Honest can find themselves between a funding rock and a hard place.

If some minority holders want to sell, the most natural private buyer would be a private equity company that would also want some operational control.

“While there is a ton of private equity money floating around, that private equity money is going to want to be an active shareholder,” Fatzinger said. “And you’re not going to be able to re-create a broadly diversified universe of private shareholders.”

If the company were to consider a sale, one source named Unilever, Colgate or Henkel and L’Oréal as potential suitors. Industry sources consider private equity firms less likely potential buyers in a sale process because of how much Honest has already grown. Nonetheless, that growth, the celebrity of Alba and the recurring revenue streams of a consumer products business are generally attractive to private equity buyers, sources say.

“It’s a tough task for them because they’re going to have to generate their returns through really superior growth,” Conlumino’s Saunders said. “That’s quite a tall order.”

Turning to the public markets would be a way for current shareholders to cash out while letting Alba and Co. retain control.

Honest focuses on selling safe, effective and responsible products, including baby and personal-care items. In September, the company was hit with a lawsuit that alleges its “natural” products contain chemicals and synthetic preservatives and that its sunscreen is ineffective.

“Ethical” companies need to be extra cautious in the public markets. “That is their central piece, being ethical and honest, and being very disciplined around these areas,” Saunders said. “The problem when you’re in the public domain is that not only do you have some problems with sales or how to rebuild customer trust, but you often take a knock on your stock value and therefore your market cap.”

Financial sources also indicated that existing as a public company doesn’t necessarily best suit Honest’s brand. When it comes to the public markets, investors can be focused on short-term gains, sometimes to the detriment of longer-term strategies. “For companies that focus around things that are more ethical, it’s a bigger problem because they by their very nature don’t want to be short-term,” Saunders said.

Morgan Stanley and Goldman Sachs have reportedly been tapped to explore the process. Both banks declined to comment. Honest also declined to comment.

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