As anticipated, the Beauty Care industry experienced a significant drop in M&A volume in Q2’20, down 39% from Q2’19 and 23% from Q1’20. While the percentage decline was material, the Beauty Care M&A markets proved resilient with 20 transactions, only six fewer than Q1’20, in light of a global pandemic, business closures, financial uncertainty, contraction of the financing markets, and the inability of buyers and sellers to meet in person. Furthermore, the quarter witnessed a number of high profile Beauty Care M&A transactions, including acquisitions by L’Oréal, Puig, Amorepacific, and Coty alongside continued private equity investments with deals announced by KKR, L Catterton, and Main Post Partners. In addition, three transactions topped enterprise values of $1 billion each.
The 20 announced deals certainly benefited from deal momentum and processes that began prior to the first wave of stay-at-home orders in mid-March. As such, Intrepid expects continued and material softness in the Beauty Care M&A markets in Q3’20 driven by the disruption of processes in Q2’20, continued market uncertainty, and logistics challenges.
However, Intrepid is already witnessing signs of a rebounding Beauty Care M&A market with increasing deal inquiries from strategic and private equity acquirers and the re-engagement of select M&A processes – particularly for brands that have either not been impacted by or are a beneficiary of stay-at-home and social distancing orders. Given the timing of typical deal processes, such signs of activity will likely manifest in increased Beauty Care M&A announcements in Q4’20 and early 2021.
Q2’20 Beauty Care M&A highlights include:
- Deal volume was down 39% from Q2’19 and down 23% from a strong Q1’20.
- Strategic acquirers remained active with deals announced by L’Oréal, Puig, Coty, and Amorepacific – although most such deals were already in process prior to the material market disruptions in mid-March.
- Private equity groups continued to invest in beauty with deals announced by L Catterton Asia, KKR, and Main Post Partners.
- Increasing M&A activity in the fast-growing beauty ingestibles category with investments in Vital Proteins, Lashilé Beauty, and Sundaily.