Beauty is still booming, and these brands are expected to be some of the hottest M&A targets in 2019.
Barbara Sturm, the doctor behind the eponymous line, has been able to drum up a cult following for her luxury skin-care and supplement products, which contain hero ingredient purslane. The brand has been expanding distribution in the U.S. both at retail and in the professional channel, and is said to be on the way to more than $40 million in sales for 2019. TriBeCa moms aren’t the only ones buzzing about this brand — the private equity set is, too.
Nestlé said back in September that it would consider strategic alternatives for its Nestlé Skin Health division. From the beauty side, Cetaphil, known for “gentle” skin-care formulations at mass-market prices, is thought to be the hottest target in the group. Industry sources said Cetaphil could draw interest from big-name private equity firms or potentially big consumer packaged goods companies.
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The deal rumors are swirling around this one. The brand of makeup guru Charlotte Tilbury has switched gears in the U.S., launching in specialty retailer Sephora, and is said to be doing about $150 million in sales — making it one of few independent, big makeup brands. The business received an investment from Sequoia Capital in 2017, and is said to be a hot target, potentially for a strategic buyer that could bring in industry expertise.
Dose of Colors
Dose of Colors, the makeup brand founded by makeup artist Anna Petrosian in 2013, is on fire, sources said, largely due to sales at Ulta Beauty. The vegan and cruelty-free makeup brand is thought to be doing between $50 million and $100 million in retail sales, and is said to be in the process of interviewing potential bankers, sources said.
Sources said the clean beauty brand, founded by Tiffany Masterson in 2014, did roughly $100 million in retail sales for 2018. Drunk Elephant got an investment from VMG Partners in 2017, and is said to be growing quickly. While sources said the brand is not yet formally out in the market again (yet), it is expected to draw interest from large funds and strategic buyers alike.
Elemis, a high-end skin-care brand with $140 million in net sales and $40 million in earnings before interest, taxes, depreciation and amortization, is out in the market with Jefferies and Nomura. Bids from a pool of strategic buyers were due Dec. 20, and a deal for the brand is expected to close in 2019. Elemis is growing, and net sales are expected to hit $185 million for 2019, with EBITDA of $55 million.
The French antiaging skin-care line is said to be garnering significant interest from strategic buyers. Filorga, backed by HLD, sells products both at retail, through pharmacies and beauty stores, and is said to have a significant business in China. Industry sources estimated it has 50 million euros in EBITDA and is expected to come to market in February with Goldman Sachs and BNP Paribas.
Wellness and beauty company Moon Juice has definitely drawn the interest of the investor set, sources said. The fast-growing business started out with wellness “dusts” like Brain Dust, $38, and Beauty Dust, $38, and in 2018, expanded into more traditional beauty with Beauty Shroom, a line of skin-care products that launched at Sephora. Industry sources said the company is nearing $50 million in retail sales, and that skin care could potentially make up $5 million of that total number.
The masstige skin-care and makeup brand is said to be growing quickly and has been seen out in the market, flirting with a host of potential private equity suitors. Sources said the brand hired Focal Point to consider doing a deal, but the investor community seems to be confused on whether the brand is actually going to go through with something. It hasn’t stopped them from being interested though — especially since Pixi is thought to be generating around $30 million in sales.
Another one that’s not officially up for grabs, Tatcha nearly doubled its size in 2018, to about $150 million in retail sales. The Geisha-inspired skin-care business founded by Victoria Tsai in 2017 year received a minority investment from Castanea Partners in 2017, and while it hasn’t formally come back to market, sources say that with that growth rate, it’s likely to receive additional investor interest.