We have compiled a database of significant M&A transactions in the beauty and personal care industry from 2015 to date. Through this, we hope to gain insights into what is driving M&A in the category, so that we and others can benefit from tracking what makes for an attractive acquisition. Companies can assess and compare the size of the transaction, along with other relevant factors that go into M&As in the industry in order to help them navigate whichever path they wish to take their company on. You can access the database here.
Our database contains over 150 different mergers and acquisitions. Revenue multiple information is available for over 40 transactions. The data is organised into 9 distinct beauty sub-categories including skin care, hair care and color cosmetics. Our database allows you to easily filter the results based on various criteria such as category, deal size and revenue multiple size.
What We Learned
First, it should be noted that this database is comprised solely of publicly available information and as a result, some data may be incomplete. We wish to grow this database over time and any additions by you would be greatly appreciated. We hope that, as the database grows, the inflow of transaction information will continuously help to paint an accurate picture of M&A in the industry.
With that caveat in mind, here is what we’ve learned from this exercise:
1) Size Matters
The companies that were able to sell at the highest revenue multiples were all billion dollar plus companies and there is a correlation between size and revenue multiple. From our data, the top 6 deals with the highest revenue multiples were all over a billion dollars. The average revenue multiple for deals over $1 billion was 6x. Deals between $100 million and $1 billion had an average revenue multiple of 3.1x. Deal sizes under $100 million had much lower revenue multiples. The average revenue multiple for deals under $100 million was 2.1x. As we can see, the transactions that have great multiples mainly happen to larger companies. Outliers skew – redo without
Not surprisingly, this observation also held true for EBITDA multiples. Average EBITDA multiple for transactions over $1 billion was 15.7x. Average EBITDA multiple for transactions between $100 million and $1 billion was 15.5x. Average EBITDA multiple for transactions under $100 million was 10.35x. Outliers skew – redo without
Point about speculation as to why this occurs ? e.g. bigger, well established companies that the acquirer knows it can leverage and grow versus smaller, riskier, less well-established brands where the growth potential is uncertain or the acquirer is not getting much synergies/cost savings in the deal???????
2) Skincare is where it’s at!
Skincare represented the highest number of deals, but not the highest share of dollars, though this might have been skewed by XYZ large deals. Also, multiples in skincare were higher/lower…
We will mainly focus on skin care, hair care, color cosmetics and personal care categories as these were the categories in which the most mergers and acquisitions occurred. From our data, transactions involving skin care companies were most popular, representing over 32% of the deals completed, while personal care was second with 22%, and then hair care and color cosmetics both representing approximately 12% each.
Average transaction size per category – Grid?
Comment on outliers
This indicates that numerous smaller firms are being acquired in the skin care category while larger, and fewer, deals are being made in categories such as color cosmetics and personal care.
Valuations by Category ***ebitda don’t have many data points – accurate?
Skin Care had an average revenue multiple of 3.6x and an average EBITDA multiple of 15.3x. Personal Care had an average revenue multiple of 6.4x and an average EBITDA multiple of 11.7x. Color Cosmetics had an average revenue multiple of 6.9x.
Hair Care had an average revenue multiple of 4.6x.
3) Strategic Acquisitions vs Private Equity Acquisitions
Strategic acquisitions amounted to 84% of total acquisitions while private equity acquisitions amounted to 16%. Strategic acquisitions were dominant across all categories, the most notably being skin care. In the skin care category, strategic acquisition amounted to 92% of total acquisitions in that category compared to only 8% of private equity acquisitions.
In the hair care category, strategic acquisitions amounted to 89% of total acquisitions in that category while the remainder, 11%, amounted to private equity acquisitions.
In the personal care category, strategic acquisitions amounted to 81% of total acquisitions in that category while the remainder, 19%, amounted to private equity acquisitions.
Finally, in the color cosmetics category, strategic acquisitions amounted to 75% of total acquisitions in that category. Color cosmetics had the highest percentage of private equity acquisitions, totaling 25%.
Deal Size of Private Equity and Strategic Acquisitions
We found, from our data, that 91% of acquisitions with a value greater than $1 billion were strategic acquisitions. 81% of acquisitions with a value between $100 million and $1 billion were strategic acquisitions. Finally, we found that, from our data sample, 100% of acquisitions with a value below $100 million were strategic acquisitions.