Beauty Care M&A Falls Back to Reality

Newsletter BeautyCare MAReport Q1 22

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Beauty Care M&A came back down to earth in Q1’22 with 29 transactions, following the unprecedented and unsustainable volume levels seen in Q4’21. Despite the drop from Q4’21, M&A activity in Q1’22 kept pace with the same period in 2021 and trended above the average of the two years leading into the outsized Q4’21.

Deal volume in Q1’22 was dominated by strategic buyers including Henkel, PZ Cussons, Procter & Gamble, and L’Occitane. The quarter witnessed the third beauty care deal by Procter & Gamble in the last two quarters and the second by L’Occitane in less than five months. Private equity also continued to invest in the Beauty Care sector with minority deals announced by Brentwood Associates and Aria Growth. In addition, Beauty Care contract manufacturing continued to experience significant M&A activity.

Intrepid anticipates Beauty Care M&A deal volume will remain strong by historical standards in 2022. While volatility in the stock market and increasing recession fears may result in some wait-and-see attitudes among sellers, Intrepid believes strong Beauty Care M&A fundamentals, simple supply-demand dynamics, and a backlog of deals as seen in our own pipeline will continue to support M&A volume into the next couple of quarters.

Q1’22 Beauty Care M&A highlights include:

  • Deal volume was flat with Q1’21 and down over 35% from unprecedented Q4’21 levels.
  • M&A volume was bolstered by robust activity from Procter & Gamble (which acquired Tula on the heels of the OUAI Haircare and Farmacy Beauty deals last quarter) and L’Occitane (which acquired Grown Alchemist having recently announced the Sol de Janeiro deal in Q4’21).
  • The quarter also witnessed the return of key strategic acquirers to the M&A market with Henkel making its first beauty care acquisition since 2020 and PZ Cussons announcing its first beauty brand acquisition in over a decade.
  • Private equity interest remained high in the beauty care sector with minority investments in Pacifica Beauty by Brentwood Associates and The Inkey List by Aria Growth, along with a majority investment in Ilia Beauty by the Courtin-Clarins investment fund Famille C.
  • Contact manufacturing remained an attractive sector with multiple deals led by strategic acquirers and private equity platforms.