Beauty and wellness has been a hotbed for investment and M&A activity for years, but the pool of potential investors and strategic buyers has expanded while SPACs have given start-ups an alternative way to go public. For brands looking to raise capital, the universe of potential investors has never been more diverse.
Powered Brands was founded by serial entrepreneur Katherine Power, co-founder and CEO of media company Who What Wear and founder and CEO of beauty brands Versed and Merit and Dana Settle, founding partner at venture capital firm Greycroft. The goal is to a global conglomerate of sustainable and digitally focused beauty, wellness and personal care brands. Powered Brands is reported to be looking to acquire between $800 million and $1.5 billion worth of assets. The business is trading under the Nasdaq ticker under the ticker POWRU.
Waldencast Acquisition Corp is a multi-brand beauty and personal care company that was formed by Michel Brousset founder of beauty investment firm Waldencast Ventures and former Group President of L’Oréal who will serve as CEO and Felipe Dutra former CFO Anheuser-Busch InBev who will serve as Executive Chairman. Waldencast is expected to looking for deals in the $1.5 billion to $3 billion range. The business is trading under the Nasdaq ticker WALDU.
AF Acquisition Corp. is led by Chief Executive Officer Jordan Gaspar, Chief Financial Officer, Christopher Bradley and President and Chairman of the Board, Andrew Scharf. The company intends to focus its search on companies in the food and beverage, health and wellness, beauty, personal care and pet industries. The business is trading under the Nasdaq ticker AFAQU.
Harry’s Inc. incubator Harry’s Labs may have quelled some of the IPO speculation given the failed Edgewell acquisition in 2020 and the eventual need for an exit.The Harry’s Lab portfolio currently consists of four brands Harry’s Inc, Flamingo, Cat Person and Headquarters. The brand confirmed it will continue incubating brands but it’s also open to acquiring them. It’s been reported they are looking to acquire 2-3 small-medium size, highly disruptive CPG brands each year that have some traction in the marketplace. “Historically, we focused a lot on starting new brands. That’s something we’ll definitely continue to do, but as we look toward the future, we’ll identify brands and become partners through M&A to help these brands further grow,” Tehmina Haider, head of Harry’s Labs and vp said to Glossy.
e.l.f. Beauty shared with WWD they could be in the M&A market looking for “small, tuck-in acquisitions” that bring the business into an adjacent space of a new capability that could leverage the team and infrastructure that has been built. The brand made its first acquisition in February, snapping up clean beauty brand W3LL People for $27 million.
Yatsen Global, the holding company for C-Beauty brands Perfect Diary, Little Ondine, and Abby’s Choice, plans to use the proceeds from $617 million in a US IPO, valuing the company at $7.82 billion, for business operations, potential strategic investments and acquisitions, development of data analytics technology, product development, and offline store network expansion. In October, Yatsen bought skincare brand Galénic from French group Pierre Fabre for an undisclosed sum.
Ipsy Chief Executive Officer Marcelo Camberos said they will also look for more acquisitions in the subscription commerce sector: “For us, it’s about really just creating an undisputed leader in subscription, where we have such a large percentage of the market.” The brand acquired Miami-based rival BoxyCharm Inc., merging the top two beauty subscription services in a $500 million deal.
Morphe has officially made the shift to a multi-brand business and could be preparing for an IPO. Forma Brands (formerly known as Morphe Holdings) will be an incubator, curator, and accelerator investing in and partnering with like-minded brands with the goal of accelerating and realizing each founder’s vision by enabling them to leverage the strength, experience, and reach of the Forma platform. “When and if it does make sense, or the company could be a public company, we want to be prepared to do that,” Forma Brands Chief Executive Officer Myles McCormick said to WWD. “That’s the goal—we want to be a company that’s capable.” The new entity acquired Lipstick Queen from Manzanita Capital in October and made an investment in Playa Beauty in August.
Groupe Batteur made a significant minority investment in spa pioneer Cinq Mondes and confirmed an appetite for external growth, so more acquisitions could be in the future.
IEVA Group acquired L’Atelier du Sourcil, and founder Jean Michel Karam said there will be more acquisitions in the future. Karam is a microelectronics expert who previously launched IOMA, the customized skincare brand acquired by Unilever.
Grove Collaborative, an online shopping destination that targets millennial customers with clean household and beauty products, has expressed a commitment to an M&A strategy, acquiring gummy skincare company Sundaily earlier this year and sexual wellness band Sustain Natural in August of 2019. Grove founder and Chief Executive Officer Stuart Landesberg told WWD that the company may continue to acquire more consumer brands, noting that the economic shutdown caused by the coronavirus pandemic has made for a challenging environment for small brand founders. “Access to capital is going to get harder, it’s harder to meet people,” said Landesberg. “We’re well-positioned [to acquire].” In September of 2019, Grove Collaborative raised $150 million in a Series D funding with a valuation of over $1 billion.
In an interview with WWD, The Hut Group founder Matthew Moulding said regarding plans for future acquisitions, “Beauty brands for sure. We are there to invest in brands across the industry. We’ve got a relatively small portfolio today, nothing like the scale of the big houses, so there’s lots and lots of road for us to invest in small beauty brands, big beauty brands, hair care brands. We’re very passionate about brands, and we think that we can make a massive difference to them. We have a large M&A team that is constantly trying to find brands. I’d be disappointed if we didn’t do more in that space.” Hot off a $7 billion IPO in September, the business added Perricone MD, Dermastore, and two nutrition-based product suppliers to its portfolio that includes Eyeko, Illamasqua, ESPA, SkinStore, RY, Glossybox, Lookfantastic.com, and Grow Gorgeous, Ameliorate, Acheson & Acheson, Christophe Robin, and Mama Mio.
The Detox Market acquired Canadian e-commerce business Clementine Fields in August. The company has quietly acquired other Canadian beauty and wellness companies. In 2015, The Detox Market took over the operations of Toronto Retailer Husk, and in 2016 purchased the e-commerce company FreshFaced.ca.
SuperOrdinary, the China distribution company who received a minority investment from Alliance Consumer Growth in January and announced the company will also look for joint venture opportunities and develop its own brands via acquisition or incubation. The focus for any future deals will be on companies that resonate with Chinese consumers. Founder Julian Reis told WWD, “There’s an opportunity for us to truly become the next form of investors in a way where we’re able to provide a lot of feedback to these brands and be able to help guide them on product development and give them a lot of the data that we think is important as they expand.”
Investors have poured almost $1 billion this year into companies that are buying up successful Fulfillment by Amazon (FBA) brands on Amazon to try to build digital consumer goods conglomerates akin to Procter and Gamble or Unilever. A growing ecosystem of Amazon seller acquisition companies, often referred to as seller rollup companies, are investing in successful FBA Amazon businesses, creating Amazon product portfolios that are category agnostic. According to industry analysts, independent Amazon merchants made up more than $200 billion in sales this year, and tens of thousands of them have revenues in excess of $1 million, creating an opportunity to roll up businesses with promise and scale them. During 2020, seven start-ups in the US and Europe Thrasio, Heyday, Perch, Boosted Commerce, Razor Group, SellerX, and Heroes that launched or raised capital in 2020.
Consumer VC firm Coefficient Capital raised its first fund of $170 million in March with the intent of investing in consumer brands able to weather a recession; fast-forward through the rest of the year and the firm has placed some big bets on disruptive consumer trends. The fund invested in digitally native men’s grooming brand Hawthorne and wellness ingestible brand Hydrant, the Oatly oat milk business, Magic Spoon, a low-carb high-protein cereal brand, and spirits brand Haus.
HatchBeauty co-founder Ben Bennett announced the formation of a new business in January 2020 called The Center with the intention of incubating brands and making investment. In November the group acquired Make Beauty.
Present Life is a new global wellness and beauty company founded by Camillo Pane, former CEO of Coty, conceived to create and acquire plant-based brands that do not compromise on performance and do not harm the planet. The Craftory invested $20 million in Present Life. The first acquisition was One Ocean Beauty.
Chicago private equity firm Core Industrial Partners has closed a majority investment in Arizona Natural Resources. This is the firm’s first beauty deal, but the firm has plans to build out a major North American beauty manufacturing platform through organic growth and future acquisitions.
Kyle Shaw, founder of ShawKwei, said of their ICS investment and acquisitions, “Over the last 30 years, Sue [Nichols, founder and CEO, ICS] has built ICS into a highly respected cosmetic packaging supplier supporting many of today’s global brands. We will be working with Sue to pursue strategic acquisitions in Asia, US and Europe to increase the depth and breadth of ICS’ already extensive capabilities and customer offerings.”
Shaw went on to discuss the timing of the investment, continuing, “We began engaging with Sue in the fall of 2019 and have been impressed with ICS’ continued acquisition of new customers. Cosmetics and beauty packaging is a US$25 billion industry and ShawKwei has always been a long term investor. This will be the first of multiple acquisitions as we build a global platform with Sue and ICS.”
