Big question: Is beauty M&A back?
With several exciting beauty deals already concluded in the first half of this year, are two L'Oréal acquisitions announcements in one month enough to justify real optimism?
I write about beauty a lot, from a general outlook on the industry based on earnings reports to note-worthy acquisitions and shutdowns. It is head & shoulders (proud of that one!) above other topics within the consumer industry for me in terms of personal interest. Working in Private Equity, M&A activity in the sector always captures my attention, not least because deal flow has stuttered a bit in recent years: 2022 deal volume equalled that of 2019 but value was only half, and recent upsets around iconic brands such as The Body Shop going into administration and REN being shuttered left both fans and finance folks reeling.
The May announcement that e.l.f. will be acquiring buzzy Gen-Z brand rhode for a cool $1B ignited a tiny spark of hope in the industry:
Is beauty M&A back?
It’s a loaded question, not only because of the stall in deal volume and general economic uncertainty due to tariff wars, actual wars, and a seemingly endless list of unprecedented events. For beauty specifically the macro environment has been worrying: A once-resilient industry, the lipstick effect now shows signs of waning: Recent quarterly earnings reports from the biggest beauty conglomerates were a mixed bag, with Estée Lauder and Coty down and LVMH Perfume and Cosmetics flat. But if news-worthy deals are still being executed, perhaps the coverage is more alarmist than it needs to be.
rhode wasn’t the first notable beauty acquisition in 2025: Earlier in the year General Atlantic bought Huda Beauty’s fragrance brand Kayali, and L’Oréal took a minority stake in Jacquemus, entering into a “long-term, exclusive beauty partnership” with the independent French fashion icon. Towards the other end of the private capital spectrum Lys, Wonderskin, and (at the end of 2024) Violette_FR closed Series A and Series B funding rounds.
This became the theme of this week’s newsletter when it was announced that L’Oréal is taking a majority stake in science-backed premium skincare brand Medik8. Financial details of the deal are left undisclosed (don’t you just hate it when they do that?) but the seller, private equity firm Inflexion, will maintain a minority stake, and founder Elliot Isaacs will continue to serve on the board.
And then, while writing this, came the announcement that the beauty conglomerate will also be acquiring Color Wow, a premium haircare brand I personally love for having a masque called “Money”, for “expensive-looking hair”. While Medik8 and Color Wow are very different businesses, it’s worth noting that both of these acquisitions are of brands operating in the premium space. Medik8 will technically sit under L’Oréal’s Dermatological Beauty division rather than Luxe (which, confusingly, includes Kiehl’s but not Skinceuticals), and Color Wow under Professional. Luxe saw the highest growth by division in the company’s latest quarterly earnings reports (up 7.3% YOY), and regardless of how brands are grouped within the four divisions, there’s no denying that good products (that is key) at the higher end of the price spectrum are a safer bet right now than the large and messy middle of not-quite-prestige-but-not-super-affordable-either brands that tend to see the most pressure during a downturn.
rhode, Medik8, and Color Wow are exciting deals for the first half of the year, and there may be more potential (and potentially attractive) acquisition opportunities lined up for 2025. Selena Gomez’s Rare Beauty has been looking at a sale or IPO for over a year now, and in the first half of last year makeup brands Merit and Makeup by Mario hired Goldman Sachs and JP Morgan respectively to explore potential sales (we’ll exclude Glossier from this list for now because the company feels like the beauty world’s gorgeous but slightly unstable teenage daughter and is, once again, going through a lot).
If those deals are feasible, they may still happen within this year. And more deals will mean… more deals: Each one of these is a vote of confidence in acquisitions in this space and after years of a slow climb, industry players on all sides will be keen to get back to pre-pandemic levels of activity. After all, investors and beauty aficionados are both looking for the same thing: Results.