Beauty Care M&A Volume Strong but Deal Quality Lags in Q1’16

M&A activity in the Beauty Care sector posted strong results in the first quarter of 2016 with 23 closed deals, matching the previous high over the past three years. While deal volume showed strength, quality fell short, with no marquee beauty care transactions, limited private equity activity, and a high volume of smaller deals. However, based on market conversations and our own beauty care client roster and pipeline, the quality of the deal flow began to improve in the second half of Q1’16.

We expect improvement in Q2 and a very strong second half of 2016. Case in point, the Paula’s Choice and Strength of Nature deals highlighted herein were announced days after the quarter end.

Q1’16 Beauty Care M&A highlights include:

  • Deal volume in Q1’16 rose 21% from Q1’15 and posted a 10% increase over Q4’15.
  • Procter & Gamble continued its planned divestment of non-core beauty and personal care brands with sales to Henkel, Johnson & Johnson and Kimberly-Clark.
  • Strategic buyers dominated the M&A landscape with activity from Estée Lauder, Godrej Consumer Products, Henkel, Nestlé Skin Health and L’Oréal.
  • Private equity remained relatively silent throughout the quarter with no platform additions (note that it was reported that TA Associates would buy Paula’s Choice just after the quarter ended).

The year is off to a good start—we believe the best is yet to come in 2016!

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