The Latest Acquisition Targets Are Indie Beauty Brands
More than half a century ago, Revlon founder Charles Revson famously described the true business of cosmetics makers: “We sell hope.” Today the same could be said about what the large, established beauty houses see in small, social media-driven makeup companies. The prospect of wooing the millions of millennials who base their makeup and skin-care purchase decisions on online likes, follows, and reviews from influencers has sparked a feeding frenzy for small, hip brands. The 52 acquisitions in the beauty and personal-care industry last year were the most in a decade, and some of the hottest targets were private brands with massive social media fan bases, according to investment bank Financo LLC.
If there’s any slowdown this year, it’ll only be because demand for buyout candidates outstrips supply, says Colin Welch, a managing director at TSG Consumer Partners LLC, which bought a minority stake in a little line called IT Cosmetics in 2012. The company reached sales of $182 million last year, when TSG orchestrated its sale to L’Oréal SA for $1.2 billion. “There’s a lot of capital chasing investments,” says Welch.