Beauty M&A Activity Reportedly Slowing
Dealmaking in the beauty sector has reportedly cooled, with overall activity down 21.6% year-over-year in 2025. The slowdown suggests investors are becoming more selective. This trend, combined with consolidation pressures such as Kenvue's job cuts amid its Kimberly-Clark acquisition push, may lead to increased surplus inventory opportunities for the off-price channel.
- While overall 2025 deal volume in the U.S. saw a slight decrease of 6.7% year-over-year, acquired beauty brands continued to command premium prices. The average M&A multiple reached 14.9x EV/EBITDA, significantly higher than the 9.8x average for the broader consumer industry. - Investor strategy has shifted towards a more disciplined approach, targeting brands with specific attributes like biotechnology, strong R&D capabilities, and founder-led indie labels with high growth potential. Private equity buyers, in particular, have pulled back amid market uncertainty, while strategic buyers accounted for a growing majority of transactions. - The Kenvue and Kimberly-Clark merger is a transaction valued at over $40 billion and is expected to be finalized in the second half of 2026. Ahead of the deal's closing, Kenvue announced plans to cut its global workforce by 3.5%, a move estimated to incur about $250 million in pre-tax restructuring costs in 2026. - Economic uncertainty and excess inventory from industry consolidation are creating a "bonanza" for off-price retailers. The global off-price retail market was valued at $317.4 billion in 2024 and is projected to grow, with the beauty category estimated to represent 8-10% of that total. - Certain beauty segments remain hot spots for M&A activity, bucking the broader slowdown. Fragrance and science-backed skincare are expected to see continued M&A volume, and the hair care subcategory is also predicted to see significant growth. - M&A related to K-beauty hit a post-pandemic record in 2025, with 26 deals valued at approximately $1.8 billion. Investors are showing increasing interest in the category, which is known for its continuous innovation and appeal to Western consumers. - Despite a more cautious M&A environment, consumer demand for beauty remains strong. In the UK, the pharmacy, health, and beauty sector was the best-performing retail category in 2025, with 9.5% year-over-year growth, driven by the "lipstick effect" and a sustained wellness boom. [
