What to Watch: The Beauty M&A Slowdown

Beauty M&A is no longer booming. Beauty companies, private equity firms and venture capitalists have spent billions in the past few years buying up beauty brands, but now experts say a beauty M&A slowdown is upon us. It’s not a full stop. Several deals — including the sale of Drunk Elephant — are likely to come before the end of the year, sources said. But assets of scale are few and far between, and it will likely take two to three more years to see which companies come out on top of the current generation of indie brands. That means fewer billion-dollar deals and a continued uptick in smaller indie investments. The beauty deal slowdown is due, in part, to the crazy M&A boom. Some of the big buyers during that period simply don’t need to make more acquisitions right now, sources noted, especially as price tags for “good” brands stretch into the billions. “Where we are in M&A today, there’s a cautionary tale between the past and present,” said Andrew Shore, managing director at Moelis. When the makeup category was strong, purchase prices for brands went way up, Shore noted. “You found that every year, lower quality assets were sold at higher prices,

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