Goldman Sachs has a new set of eyes on fashion and beauty.
The investment banking giant tapped Janki Lalani Gandhi to be a managing director in its Cross Markets Group, which focuses on companies with enterprise values under $2 billion.
That’s not exactly new territory for Goldman since the bank has worked on smaller deals in the past. But the group, which was established last year, marks a more dedicated presence in the middle market — an area of growing interest, particularly in the beauty sector.
Gandhi comes to Goldman from Lincoln International, where she was a managing director in Los Angeles and helped build the firm’s presence in fashion, accessories and beauty.
At Goldman, she is covering similar territory, focusing primarily on the beauty and personal-care sectors but also looking into the worlds of apparel and accessories on a more selective basis.
Goldman has already has a strong track record in beauty, having helped Laboratoires Filorga Cosmétiques’ in its sale to Colgate, Honest Co. as it sold a stake to L Catterton, Too Faced as it came under the The Estée Lauder Cos. Inc’s umbrella and more.
Beauty dealmaking has been something of a runaway train over the past few years, but Gandhi said it can keep going.
“I do strongly believe that beauty and personal care will continue to have strong momentum behind it,” Gandhi said. “What’s going to happen is that there will be a shift within the sub-sectors in terms of where the interest moves. We’ve seen that color cosmetics was extremely hot and now there’s been more of a focus on skin care.”
Hair-care and direct-to-consumer businesses also remain of interest.
While private equity firms have been snapping up fast-growing beauty brands with an eye toward selling them to one of the big strategic players, such as Lauder or Unilever, the playbook could be evolving.
“You will continue to see private equity be very active,” Gandhi said. “Many of the private equity firms, as they’ve done more and more transactions in beauty and personal care, I think they’re setting up their own beauty platforms.”
That sets them up to sell to a strategic or stage an initial public offering when it comes to exiting the investment.
At the same time, the strategic players are looking at smaller brand themselves, taking stakes in budding names earlier.
The active market is fed by the large pool of willing buyers — a key component missing on the apparel dealmaking scene.
“When you look at the end game of having a strategic exit [for an investment in an apparel brand] — there are a handful of strategies on a global scale that are selectively buying companies,” Gandhi said. “When you work backward, that’s the reason that potential investors or buyers have not been as aggressively pursuing opportunities in [the fashion] space even with some solid assets out there.”