Schedule 13D
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CUSIP No. 04035M102
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Page
5
of 10 Pages
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The Issuer was formed in connection with the IPO and all of the Issuers business operations are
conducted through Arhaus, LLC, and its wholly-owned subsidiaries. Mr. Reed is a founder of and the Reporting Persons were members of Arhaus, LLC. Prior to the closing of the IPO, through a series of reorganization transactions, the Issuer
became the indirect parent of Arhaus, LLC, the members of Arhaus, LLC received Class A common stock and Class B common stock in exchange for their membership interests and the individuals who served as directors and officers of Arhaus, LLC
were appointed to serve as directors and executive officers of the Issuer (the Reorganization).
ITEM 4. PURPOSE OF TRANSACTION
As described under Item 3, the Reporting Persons acquired the Class B common stock pursuant to the Reorganization to facilitate the IPO of the
Issuer.
Mr. Reed is the founder, Chief Executive Officer and a director of the Issuer. Accordingly, the Reporting Persons may have influence over
the corporate activities of the Issuer, including activities that may relate to items described in clauses (a) through (j) of Item 4 of Schedule 13D. Subject to the Investor Rights Agreement, Registration Rights and Lockup Agreement described
below, the Reporting Persons may, from time to time, purchase or sell securities of the Issuer as appropriate for his personal circumstances.
In
connection with the IPO, each of the Reporting Persons entered into the Investor Rights Agreement, dated as of November 8, 2021 (the Investor Rights Agreement), by and among the Issuer, FS Equity Partners VI, L.P., a Delaware
limited partnership (FS Equity), FS Affiliates VI, L.P., a Delaware limited partnership (FS Affiliates and together with FS Equity, the Freeman Spogli Funds), the 2018 Reed Dynasty Trust u/a/d
December 24, 2018 (2018 Trust), Reed 2013 Generation-Skipping Trust u/a/d October 22, 2013 (the 2013 Trust), and The John P. Reed 2019 GRAT u/a/d December 31, 2019 (2019 Trust
and, together with the 1985 Trust, the 2013 Trust and the 2018 Trust, the Class B Trusts), and each of the Reporting Persons.
Pursuant to the terms of the Investor Rights Agreement, the Freeman Spogli Funds are entitled to nominate (a) two directors for election to the
Issuers board of directors for so long as the Freeman Spogli Funds collectively hold 60% or more of the shares of Class A common stock held by Freeman Spogli Funds immediately prior to the completion of the IPO, and (b) one director
for election to the Issuers board of directors for so long as the Freeman Spogli Funds collectively hold 20% or more of the shares of Class A common stock held by Freeman Spogli Funds immediately prior to the completion of the IPO.
Pursuant to the terms of the Investor Rights Agreement, the Freeman Spogli Funds, Mr. Reed and the Class B Trusts agreed to vote in favor of the Freeman Spogli Funds nominees and Mr. Reed or his designee to our board of
directors. The Freeman Spogli Funds have nominated Brad Brutocao and John Roth for election to the Issuers board of directors. In addition, subject to certain conditions, the Investor Rights Agreement provides the Freeman Spogli Funds with
certain rights with respect to board committee membership, except to the extent that such membership would violate applicable securities laws or stock exchange or stock market rules.