Sector Deals of the Week—Another Big Private Equity Group Enters Beauty Care Arena with Ares Acquisition of DevaCurl

Ares announced the acquisition of DevaCurl, a leading professional and prestige hair care brand dedicated to curly hair, from Tengram Capital Partners and select company shareholders. The acquisition marks Ares’ first investment in the beauty and personal care sector. With approximately $25 billion of assets under management, it is speculated that DevaCurl will serve as the initial investment for the Ares Private Equity Group in creating a broader beauty care platform.

Founded in 1994, DevaCurl offers a complete line of sulfate, silicone and paraben-free cleansers, conditioners, styling products and treatments formulated for curly, super curly and wavy hair. The company sells through professional salon distributors, prestige retail partners including Sephora and Ulta Beauty, company-owned Devachan salons, DevaCurl’s Academy and online. Under the Ares ownership, DevaCurl will focus on further geographic and educational expansion both in the U.S. and internationally. According to industry sources, the transaction values DevaCurl between $250 million and $300 million. DevaCurl expects to generate $65 million in net sales for 2017, representing a revenue multiple of approximately 4x to 4.5x.

Following a host of early stage private equity investment in beauty care, the Ares acquisition reemphasizes the ability of private equity to effectively compete with strategic acquirers for larger beauty care assets, in particular for high-profit margin brands such as DevaCurl.