Beauty M&A Update – December 2025

Consumers Continue to Prioritize Beauty Spending Despite Financial Constraints, Beauty M&A Poised to Accelerate in 2026

The Beauty sector has continued to capture above-market sales growth despite discretionary spending pressure seen throughout the wider Consumer industry; however, deal volume has seen a minor contraction year to date (YTD) due to concerns on the immediate and mid-term impacts of the shifting trade landscape. Customer scrutiny over perceived value has favored highly efficacious beauty products at more moderate price points, driving strong demand in masstige and mass market goods. This shift has propped up merger and acquisition (M&A) activity to date as sector participants reshape portfolios, round out capability gaps, and capture market share through inorganic growth.

There are a lot of moving pieces in the Beauty sector caused by macroeconomic conditions and impact on the consumer. Several large public players are focused on improving internal operations which include divestitures, spin outs and rebranding. Upcoming indie [independent] brands are thriving and mass marketed brands are doing particularly well in these markets. Past feeding frenzies of large players and sponsors gobbling up these businesses, are largely absent from the market. The inherent demand does not dissipate and only builds with time. The key question is when do the buyers return and fuel a much anticipated heated market for beauty players? The exception being the Fragrance market, which has seen strong growth and increased M&A activity.

Ken WasikHead of Investment Banking, Capstone Partners

Perceived Value Drives Masstige and Mass Market Beauty Sales

While consumers have faced pressure from rising prices of goods and services following the pandemic, households have largely remained financially healthy to date, providing solid footing for Beauty sector sales. Notably, consumer net worths have risen 49.7% between Q2 2020 and Q2 2025 while the Consumer Price Index (CPI) has risen 25.2% in the same period, evidencing that consumers have largely remained in healthy financial positions as household balance sheet growth has far outpaced inflation, according to the St. Louis Federal Reserve (Fed).^{1, 2} Despite overall wealth accumulation across U.S. households, lower-income consumers have faced mounting financial constraints. The bottom 25% of earners have enjoyed wage growth higher than any other income cohort from May 2015 to January 2023, accelerating from 3.2% to 7.2% over the period, according to the Atlanta Fed.³ This has since decelerated, with these consumers seeing wage gains dropping to 3.6% in August 2025. Persistent inflation above the Fed’s target rate, combined with deteriorating wage gains, has led middle- and low-income consumers to more thoroughly scrutinize discretionary purchases.

Budget tightening among middle- and lower-income consumers has propelled mass market beauty sales, with this pricing category seeing sales grow 4% year-over-year (YOY) to $34.6 billion in H1 2025, according to Circana.⁴ Notably, prestige product sales growth has decelerated, growing just 2% YOY to $16 billion in H1 while fragrances continue to be a bright spot in both mass market and prestige. Lower- and middle-income consumers, who may have traded up to prestige beauty products during the periods of strong wage growth, have shifted back to masstige and mass market goods amid mounting financial pressure. Notably, consumers have held onto product effectiveness expectations during this transition to more accessibly priced beauty products. The majority (56%) of beauty company executives expect consumer scrutiny on perceived value to the biggest theme to shape the sector in the next few years and 63% of consumers do not think premium beauty products are higher-performing than mass beauty goods, according to McKinsey.⁵ This emerging consumer sentiment has highlighted unit volume as the key growth driver moving into 2026 as opposed to price.

Beauty players have begun repositioning portfolios through reformulations, price reductions, and stock keeping unit (SKU) pack architecture to address the shifting consumer expectations across price and efficacy. “In a post-COVID era, I think a lot of the beauty products have increased dramatically in price around the world. So in some instances it allows us, and it’s the decision we’re taking this year, to reposition some products. You’ve seen the new foundation of M-A-C Studio Fix that we’ve decreased the price. We’ve relaunched the DML with a new SPF [sun protection factor] product in Europe, where we also decreased the price and we’re seeing the momentum, a lot more consumers are re-engaging with the brand…We are also conscious that there’s a lot of pressure on consumers around the world…being able to bring small sizes or innovation at the right price point allows us to win,” said Stéphane de la Faverie, CEO of Estée Lauder (NYSE:EL), at the Barclays (LSE:BARC) Global Consumer Staples Conference.⁶ This re-evaluation of portfolios and SKUs will likely persist through 2026 and introduce new organic and inorganic growth opportunities. Companies that balance price and efficacy with strong bottom-line fundamentals are anticipated to emerge as highly sought after assets in the sector.

Beauty M&A Dips Slightly, Strategic Buyers Continue to Utilize M&A as Key Growth Lever

Beauty M&A activity has continued at a slightly slower pace, with deal volume dropping 6.7% YOY to 56 transactions announced or completed YTD. In contrast, the broader Consumer industry has seen M&A activity decline 24.2% YOY through YTD 2025, evidence of the Beauty sector’s resilience amid broader consumer dealmaking headwinds. Expectations for an influx of beauty M&A transactions have persisted, supported by the proven sustainability of demand in the sector, above-market growth compared to other Consumer industry verticals, and the continued rise of independently-owned brands achieving scale. However, market uncertainty has capped Beauty M&A market expansion through YTD 2025. Buyers have begun to place more value on bottom-line fundamentals given the shifting trade landscape that has captured headlines through much of 2025. Targets offering vertical integration, clean beauty and wellness exposure, and international expansion—particularly those enabling foreign buyers to build capabilities closer to end consumers, establish local market presence, and deepen customer relationships—have continued to garner increased acquisition interest. Additionally, specialty retail and direct-to-consumer (DTC) brands have seen a rise in consolidation efforts as buyers look to scale these brands into multiple distribution channels. Brands operating, or those with the potential to operate, across category boundaries have commanded strong buyer appetite as beauty and wellness trends continue to merge. Dermatologist support and clinically-proven efficacy have remained key differentiators in the Beauty market—a trend likely to continue into 2026.

Strategic buyer activity in the sector has remained healthy with transactions rising 22.9% YOY to 43 deals YTD. Private strategic deal volume has increased to 34 deals in YTD 2025 from 30 in YTD 2024 while public buyers have tallied nine transactions YTD compared to five in the prior year period. Major public beauty players have looked to shore up portfolios via capital markets transactions amid shifting drivers of consumer purchasing behavior—namely holistic wellness and beauty regimes, price, and efficacy. While this increase signals a potential resurgence in sector M&A activity, deal volume from this buyer group has remained below historical levels. Public buyers of beauty brands have averaged 24 acquisitions annually between 2018 and 2023, or 29.1% of total sector deal volume. However, these buyers represented only 9% of deal volume in 2024 and have continued to remain below the historical average at 16.1% in YTD 2025. Portfolio optimization efforts will likely accelerate  acquisition activity among public strategics as companies turn to the buy-side after trimming non-core brands, positioning the Beauty M&A market for a healthier 2026. Of note, LVMH Moët Hennessey Louis Vuitton (ENXTPA:MC) has reported exploring a sale of its 50% stake in Rihanna’s Fenty Beauty, according to Reuters.⁷ Additionally, Kenvue (NYSE:KVUE) is considering divesting its Skin Health & Beauty unit, including its smaller brands such as Clean & Clear and Maui Moisture to focus investment into its profitable, core products like Neutrogena and Aveeno, according to Reuters.⁸ These reports indicate a growing, target-rich environment for acquirers looking to scoop up divested assets that expand product offerings and address elevated consumer focus on value.

L’Oréal (ENXTPA:OR) has been one of the most active participants in beauty capital markets to date, participating on the buy-side across six transactions globally—spanning majority acquisitions, minority stake investments, and venture capital funding rounds—and executing one divestment. In March 2025, the company announced its plans to sell U.S. hair, body, and skincare brand Carol’s Daughter to its founder Lisa Price and beauty entrepreneur Joe Wong (undisclosed). This deal was followed up by its majority acquisition of U.K.-based skincare brand Medik8 ($1.1 billion) and announced purchase of U.S.-based haircare brand ColorWow (undisclosed), both in June 2025. In November, L’Oréal announced a $4.7 billion deal with Kering (ENXTPA:KER) to acquire Creed Fragrance. The multi-billion dollar sticker price also comprises the beauty and fragrance licenses of Houses of Kering and an exclusive joint venture (JV) to explore business opportunities in luxury, wellness, and longevity. As part of the deal, L’Oréal will obtain a 50-year exclusive license for the creation, development, and distribution of fragrance and beauty products for Gucci after its current license with Coty (NYSE:COTY) ends in 2028, as well as 50-year exclusive licenses under the same provisions for Bottega Veneta and Balenciaga. The deal adds the number three brand in the Niche Fragrances market (Creed) to L’Oréal’s portfolio, which currently represents an underpenetrated market for the company, according to its Q3 2025 Sales and Revenue call.⁹ These transactions and reports of new sellers coming to market have bolstered expectations of vibrant Beauty sector M&A in the near-term as public companies continue to fine-tune portfolios.

Financial Sponsors Step Back from Beauty M&A Amid Market and Exit Uncertainty

Private equity (PE) buyers have pulled back from the Beauty M&A market as underlying macroeconomic uncertainty prevails and exit visibility remains somewhat clouded amid muted public acquisition activity. Fund managers have emerged with weaker appetites after a robust year for PE platforms in the Beauty sector. The space saw 21 platform deals in full-year 2024, the highest number recorded between 2018 and YTD. Direct investments have declined 55.6% YOY to eight deals YTD, though the figure is less alarming given the strong year for platforms in 2024. Notably, PE firm TSG Consumer Partners announced its acquisition of Phlur from Prelude Growth Partners for an undisclosed amount in July 2025. Phlur operates as a fragrance brand with a product portfolio including Vanilla Skin, Heavy Cream, and Missing Person. The company launched in 2015 as a digitally-native brand selling exclusively online through PHLUR.com and has since scaled the business through its website and retail partners such as Sephora, Amazon (Nasdaq:AMZN), and Space NK. Phlur is expected to record more than $150 million in retail sales in 2025, according to a Business of Fashion article.¹⁰ The deal underscores key characteristics financial sponsors have targeted in platform investments to date—a strong foothold in a high growth category across both mass market and prestige price points with adjacent category and distribution channel expansion opportunities, brand authenticity, emotion storytelling, and founder creative vision.

The influx of recently established platforms bodes well for add-on activity moving into 2026. Add-ons have declined by just two deals YOY to five transactions YTD. Looking ahead, the fundamentals behind PE investment in the Beauty sector have remained strong. Strategic repositioning—highlighted by announced divestitures and reported sale explorations of key assets—has increasingly fostered a target-rich environment with highly attractive assets amid a resilient consumer demand backdrop. Debt capital has remained accessible as the Fed has lowered interest rates 150 basis points over five cuts beginning in September 2024, while private credit lenders have maintained competitive pressure and driven tighter spreads charged above base rates—signaling a borrower-friendly environment. These factors will likely support more robust sponsor activity in the Beauty market in 2026.

Beauty M&A Targets Continue to Exhibit Premium Pricing

Beauty brands have continued to receive premium pricing due to resilient and above-market growth. M&A multiples in the sector have averaged 14.9x EV/EBITDA in YTD 2025, more than five turns higher than the Consumer industry average of 9.8x in the same period. Skincare and fragrance brands have become hotspots for beauty M&A, though compelling market niches with clear paths for category expansion have been sought after assets as well. A sampling of recent Beauty sector M&A deals is below.

• Rare Beauty Brands to Acquire Kate Somerville Skincare (October 2025, Undisclosed) – Rare Beauty Brands announced its acquisition of Kate Somerville Skincare from Unilever (LSE:ULVR) for an undisclosed amount in October 2025. Rare Beauty Brands has a history of acquiring and scaling independently-owned beauty brands; its portfolio includes Patchology, Dr. Dana, and Dot Dot Dash. Rare Beauty Brands will acquire the Kate Somerville skincare line and its facial studio in Los Angeles as part of the transaction. Unilever’s divestment marks the latest move in the ongoing portfolio repositioning of its Prestige Beauty division. Kate Somerville underwent a turnaround effort focused on stabilizing performance while under Unilever’s ownership. “The acquisition of Kate Somerville is a significant milestone for Rare Beauty Brands. We have long admired the brand’s innovative spirit and its commitment to results-driven skin care, which aligns perfectly with our mission to create products that delight, communities that empower, and brands that inspire,” said Chris Hobson, CEO of Rare Beauty Brands, in a press release.¹¹
• Society Brands Acquires Crunchi (September 2025, Undisclosed) – Society Brands, an e-commerce aggregator focused on functional health and personal care brands, acquired clean label cosmetics and skincare products brand Crunchi in September 2025 (Undisclosed). Crunchi skincare, makeup, and body care products are Environmental Working Group (EWG) Verified, Leaping Bunny Certified, and 4Ocean Certified Plastic Neutral. Additionally, its pure play DTC model leverages a micro-influencer advocate network, aiding in the collection of high-value customer data and the development of customer loyalty. “We’ve spent years carefully crafting a brand that reflects our personal values and commitment to health, sustainability, and performance. Partnering with Society Brands allows up to scale that vision without compromising on what matters most to us and our customers,” noted Melanie Petschke, Co-Founder of Crunchi, in a press release.¹²
• Bansk Group to Acquire BYOMA (September 2025, Undisclosed) – In September 2025, consumer-focused PE firm Bansk Group announced its acquisition of science-backed omnichannel skincare brand, BYOMA, from Yellow Wood Partners. Terms of the transaction were not disclosed. BYOMA’s skincare products focus on strengthening and protecting the skin barrier, with its suite spanning cleansers, serums, moisturizers, toners, lip oil, and eye gel. The company asserts that its prestige formulas undergo significant clinical and efficacy testing and are offered at an accessible price point. Founded in 2022, BYOMA sells its products via its branded website, which includes a skin analysis test and educational resources, as well as Amazon, Shoppers Drug Mart, Target (NYSE:TGT), Ulta (Nasdaq:ULTA), and Urban Outfitters (Nasdaq:URBN). BYOMA joins Bansk’s portfolio of Beauty sector investments which includes AMIKA (May 2022, Undisclosed), Eva NYC (May 2022, Undisclosed), and Ethnique Beauty (December 2020, Undisclosed). “In what can often be a sterile and confusing category for consumers, BYOMA stands apart by simplifying the skincare journey and delivering efficacious, prestige formulations at an accessible price point. Today’s consumers are more intentional than ever, seeking products that are not only effective but also transparent, inclusive, and rooted in real education,” said Chris Kelly, Senior Partner at Bansk, in a press release.¹³

Consumer demand in the Beauty market has remained resilient despite shifting preferences toward high efficacy at more affordable price points given pressured budgets at the lower end of the income spectrum. Dealmaking appetite has remained strong among private strategics, while public companies have increasingly returned to the M&A market as trade volatility and market uncertainty have tempered. Coupled with pervasive catalysts for an influx of PE dealmaking, Capstone expects beauty M&A to accelerate in 2026 as the sector remains target-rich and resilient.

To discuss key business characteristics acquirers favor in the current beauty environment, provide an update on your business, or learn about Capstone’s wide range of advisory services and beauty M&A knowledge, please contact us.

Andrew Woolston, Associate, was the lead Market Intelligence contributor to this article.

Endnotes

1. Louis Federal Reserve, “Households; Net Worth, Level,” https://fred.stlouisfed.org/series/BOGZ1FL192090005Q, accessed October 31, 2025.

2. Louis Federal Reserve, “Consumer Price Index for All Urban Consumers: All Items in U.S. City Average,” https://fred.stlouisfed.org/series/CPIAUCSL#, accessed October 31, 2025.

3. Atlanta Federal Reserve, “Wage Growth Tracker,” https://www.atlantafed.org/chcs/wage-growth-tracker#Tab1, accessed October 31, 2025.

4. Circana, “US Beauty Industry Grows in the First Half of 2025, Circana Reports,” https://www.circana.com/post/us-beauty-industry-grows-in-the-first-half-of-2025-circana-reports, accessed October 31, 2025.

5. McKinsey & Company, “The State of Fashion: Beauty,” https://www.mckinsey.com/~/media/mckinsey/industries/consumer%20packaged%20goods/our%20insights/state%20of%20beauty/2025/the-state-of-fashion-beauty-june-2025-f.pdf, accessed October 31, 2025.

6. The Estée Lauder Companies, “Barclays 18^th Annual Global Consumer Staples Conference,” https://event.webcasts.com/starthere.jsp?ei=1728276&tp_key=5a8f7b2cf2&tp_special=8, accessed October 31, 2025.

7. Reuters, “Exclusive: LVMH Explores Sale of its 50% stake in Rihanna-backed Fenty Beauty, Sources Say,” https://www.reuters.com/business/finance/lvmh-explores-sale-its-50-stake-rihanna-backed-fenty-beauty-sources-say-2025-10-21/, accessed October 31, 2025.

8. Reuters, “Kenue Mulls Sale of Some Skin Health and Beauty Brands, Sources Say,” https://www.reuters.com/business/finance/kenvue-mulls-sale-some-skin-health-beauty-brands-sources-say-2025-06-12/, accessed October 31, 2025.

9. L’Oréal, “L’Oréal CA Q3 2025,” https://edge.media-server.com/mmc/p/mui8ug8e/, accessed October 31, 2025.

10. Business of Fashion, “TSG Consumer Partners Acquires Phlur,” https://www.businessoffashion.com/articles/beauty/phlur-acquisition-tsg-consumer-partners/, accessed September 23, 2025.

11. Unilever, “Unilever Announces Sale of Kate Somerville,” https://www.unilever.com/news/press-and-media/press-releases/2025/unilever-announces-sale-of-kate-somerville/, accessed October 31, 2025.

12. PR Newswire, “Society Brands Partners with Crunchi, a Certified Clean Cosmetics and Skincare Brand,” https://www.prnewswire.com/news-releases/society-brands-partners-with-crunchi-a-certified-clean-cosmetics-and-skincare-brand-302570349.html, accessed October 31, 2025.

13. Bansk, “Bansk Group to Acquire a Majority Stake in Skincare Brand BYOMA,” https://www.banskgroup.com/press-Bansk-Group-to-Acquire-a-Majority-Stake-in-Skincare-Brand-BYOMA.html, accessed October 31, 2025.