Yahoo Finance Taking the Pulse of Beauty M&A 2024: Makeup Is Off to Slow Start, but New Skin Care Players Are Emerging
What was meant to be a year of makeup deals is taking a turn.
After a glut of makeup brands flooded the market, progress — and those respective deal processes — are off to a slow start. Skin care, meanwhile, is showing signs of life with Byoma venturing into market, and rumors swirling around other brands.
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In the makeup world, Glossier, Kosas Cosmetics, Rare Beauty, Merit and Jane Iredale are all yet to transact, despite having hired bankers earlier this year.
Rare Beauty is working with Goldman Sachs and Raymond James; Kosas Cosmetics with North Point; Glossier with Morgan Stanley; Merit with Goldman Sachs; and Jane Iredale with Jefferies.
For Glossier, WWD understands that profitability numbers, which weren’t as high as potential investors had hoped, were a turnoff for some strategics and that the deal process has essentially paused. Industry sources estimate that Glossier’s overall retail sales are around $275 million. Morgan Stanley declined to comment. Glossier did not respond to request for comment by press time.
As for Kosas, the Los Angeles-based makeup brand founded by Sheena Zadeh-Daly in 2015 that was first out of the gate to market, some sources believed its process had paused while others stressed it was still out there but interest was lukewarm. Both Zadeh-Daly and North Point did not respond to request for comment.
And while sources close to Rare insisted that a process is yet to formally begin, the understanding among industry sources is that with net sales of $350 million last year, the brand is too big for many traditional players to acquire, with some speculating that the price could reach $2 billion.
The three-year-old brand has been a breakout success in the celebrity brand world with a strategy that leverages founder Selena Gomez’s transparency around her struggles with mental health and focuses on a message of healthy self-esteem.
But multiple sources told WWD that a traditional sales process is looking less likely. While they expect something to happen eventually, it will most likely come in the form of an initial public offering or an investment from an unexpected player, sources said.
With revenue on track to be between $150 million and $200 million in 2024, Makeup by Mario, which recently hired JP Morgan, is considered among industry watchers to be the most highly sought after, although one source told WWD that they’re not even sure it will secure a deal in the current environment.
Another source, who was surprised that no one has yet transacted in the space, said people are nervous about brands that are very dependent on Sephora, which is Makeup by Mario’s main point of distribution.
In skin care, industry sources told WWD that Byoma is exploring deal options, tapping Raymond James. Raymond James declined to comment, as did the brand.
The skin barrier-focused brand for Millennials and Gen Z launched in 2022 and not long after entered Ulta Beauty. At that time, retail sales were said to exceed $300 million in the following three years.
Glow Recipe is also garnering chatter, especially given its retail sales growth to $300 million in 2023. The founders denied it was heading to market.
“Glow Recipe has been experiencing tremendous growth and reaching new fiscal milestones, operating as an indie, founder-led skin care company,” said Sarah Lee and Christine Chang, the brand’s cofounders and co-chief executives. “We currently do not have plans to kick off the M&A process.”
Most likely, other sources said, Glow Recipe and its investors will want to see the outcome of the Summer Fridays process before officially launching.
Also on the skin care front, Osea tapped Raymond James in March to oversee a process.
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