Over the past two to three years, multinational players such as L’Oréal, the Estée Lauder Cos., and Puig have ramped up their beauty M&A activity.
The period has been volatile on numerous fronts. Contributing to this, for one, are the high interest rates, causing many investors to be more risk-averse. In beauty — as in all industries — the interest rate hikes have contributed to the drying up of capital and a correction starting to be underway of the exuberant valuations seen over the past few years.Droin expects there still will be a lot of deals, and that beauty will remain a hot sector this year.
“Valuations have been affected for assets which are not good, like brands that are not profitable or that are mono-channel, because there is a perception that it’s too risky, particularly if you are dependent on d-to-c,” said Joël Palix, founder of strategic and M&A advisory Palix Unlimited. There is also uncertainty because of the weakening of the tech sector and, most recently, from last week’s collapse of“The pure tech investors are probably going to stay out or be less active in beauty,” Droin said.Investors say they’re shining a light on a number of categories today, including niche fragrance, hair care and differentiated skin care.
“If there was any slowdown, it’s probably behind us in beauty,” Palix said. “Tech is a different story. Funds are looking again at targets and I believe a little bit more in Europe than the U.S. I wouldn’t be surprised if we have a strong second half.”platforms have bubbled up such as Silverwood Brands in Europe and Waldencast in the U.S. — that are like a fund-and-strategic hybrid.
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