M&A activity in the Beauty Care sector remained depressed in Q4’22, down 33% from Q4’21. Despite the drop from last year, the beauty care M&A markets ended the year on a high note with 30 deals in the fourth quarter, a 20% increase in deal volume over Q3’22. Despite the summer slowdown over the last two quarters as well as continued macroeconomic challenges, the year finished with more than 100 Beauty Care M&A deals, representing less than an 18% decrease versus the record high in 2021.
Strategic acquirers led the quarter with deals announced by Heyday, Beiersdorf, Havea, Silverwood Brands, and Starco Brands. Private equity activity slowed but there were notable investments from KKR, TSG Consumer, Stride Consumer, Manzanita Capital, and 5th Century Partners. The quarter also highlighted increasing private equity interest in the beauty services sector as highlighted by KKR’s investment in SkinSpirit and TSG Consumer’s acquisition of Sola Salons and Woodhouse Spas.
Despite continued volatility in the public markets, the quarter witnessed a flurry of Beauty Care IPOs including Perfect Corp., Shanghai Chicmax Cosmetic Co., and Giant Biogene. In addition, there was an increase in venture capital activity in the sector for high-performing brands. Lastly, the quarter brought further beauty shutdowns including color brands Vapour Beauty and Lilah B.
With inflationary pressures and macroeconomic uncertainty, Intrepid expects continued softness in the Beauty Care M&A markets moving into 2023. Despite challenges, Intrepid remains optimistic on the sector – in particular for high-quality brands, which we believe will continue to benefit from strong category interest and favorable supply-demand dynamics- resulting in attractive valuations for such sellers.
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Q4’22 Beauty Care M&A highlights include:
- Deal volume was up 20% from Q3’22 but down 33% from Q4’21.
- Strategic buyers led the quarter with deals announced by Heyday, Beiersdorf, Havea, Silverwood Brands (which announced three deals this quarter), and Starco Brands.
- Continued investment activity from private equity including deals announced by KKR, TSG Consumer, Stride Consumer, Manzanita Capital, and 5th Century Partners.
- Increasing private equity interest in the beauty services sector as highlighted by KKR’s investment in Skin Spirit and TSG Consumer’s acquisition of Sola Salons and Woodhouse Spas.
- Flurry of Beauty Care IPOs including Perfect Corp., Shanghai Chicmax Cosmetic Co., and Giant Biogene.