When Shiseido paid $845 million for Drunk Elephant in 2019, it was hailed as proof that clean, founder-built skincare could command legacy-conglomerate money, although it came under fire a few years later for veering outside of its intended audience. Six years later, the beauty industry has seen further seismic consolidation. L’Oréal absorbed Kering’s entire beauty portfolio for $4.7 billion in 2025, even as once-white-hot brands like Drunk Elephant and Mielle Organics struggled to hold their footing post-acquisition.
P&G’s acquisition of Mielle Organics is perhaps the clearest case study in the genre. Backlash began before the deal even closed, with longtime Black customers openly worried the brand would be reformulated to “appeal to a wider audience” once P&G took over a month later. Unlike Drunk Elephant, where the reckoning came and went, Mielle’s controversy hasn’t resolved. TikTok videos alleging the reformulated products caused hair damage and loss have circulated for over two years, some with millions of views, keeping the “Did they change the formula?” question alive well past the news cycle that usually buries these stories.
These aren’t isolated events. They’re the reference points beauty consumers now reach for instinctively the moment a founder-led brand announces new ownership, and it explains why the first few comments under some acquisition posts are reliably some version of RIP. That reflex isn’t paranoia; instead, it’s pattern recognition, built deal by deal, reformulation by reformulation.
To understand what’s actually driving the fear of product reformulation and what separates acquisitions that preserve a brand from those that gut it, BeautyMatter spoke with the attorneys and investors who structure these deals from the inside: Alex Davis, Esq., founder and Principal Attorney at Omni Law P.C.; Cecilia Sanchez and Laura Moreno Lucas of L’Attitude Ventures; and Jackie Dunklau of Aria Growth Partners.
The comment-section eulogy has become automatic because consumers have watched the sequence play out enough times to predict it: acquisition announcement, quiet reformulation or manufacturing shift, then backlash. Beauty consumers have also become literate. As Davis put it, “Lots of consumers in this space inspect the ingredients and formulations, so any material change will not go unnoticed.”
Davis, who negotiates these deals from the legal side, confirmed the pattern isn’t imagined. “I’ve seen scenarios where a purchaser consolidates manufacturing or reformulates ingredients, and this causes consumer backlash. Consumer backlash then generates negative press, and this causes revenue to decrease. As a result, target earnouts are missed, and post-closing projections need to be revised,” he said, meaning the fear consumers voice publicly has a direct, measurable line to deal economics.
Part of why the reflex fires so fast is precedent. Reformulation after acquisition is common across the industry, particularly among large conglomerates. KPMG tracked 2,190 consumer and retail M&A deals globally in 2024, worth $116.9 billion. Volume went up just 0.8% year over year, but value up 10%, with 1,078 of those specifically classified as consumer-sector deals.
Not every acquisition earns the reflex it gets, however. When Estée Lauder Companies bought Tom Ford outright for $2.8 billion in 2022, online reaction followed the same script. Yet, ELC had run Tom Ford Beauty under license since 2006, formulating, manufacturing, and marketing every product in the line for over 15 years before the deal closed. The acquisition changed who owned the intellectual property and collected the royalties; it changed nothing about who made the lipstick. That gap between what consumers assume an acquisition means and what it actually restructures is where some backlash is warranted, while some is simply pattern-matching to the wrong precedent.
The backlash cycle is real, but Lucas noted that it isn’t necessarily fatal if handled fast. “If there is backlash due to the formulation or consumer trust, I think the most important way to address it is to remedy the issue quickly and move forward by admitting mistakes and fixing them. Sometimes people have short memories and move on, especially in this media environment and hype cycles.” Critically, she added, sentiment isn’t a soft metric investors ignore. “Investors track both metrics, especially if they impact the bottom line.”
Reformulation gets the headlines, but the deeper anxiety is about what acquisition does to scarcity, price, and voice. Mass retail rollouts strip away the exclusivity that built a cult following in the first place; price increases signal margin extraction over brand stewardship; and in most cases, a founder’s disappearance from marketing and social channels reads as authenticity leaving with them. That instinct tracks with broader consumer research. A September 2025 Clutch survey of US consumers found that while 98% still make repeat purchases annually, 55% say their brand loyalty has shifted in the past five years, with loyalty now tied more to transparency, trust, and authenticity than to price or product quality alone. Ninety-six percent of respondents called transparency essential to earning their loyalty.
Investors underwrite this risk directly in valuation. Sanchez was explicit that community isn’t a soft asset, but the asset. “We look at how community and customer loyalty translate into revenue growth. There should be a direct correlation, and if there is IP in formulas and manufacturing, that is great,” she said, adding that a combination of all of those elements is critical and will play into the company's valuation.
Dunklau echoed this, ranking loyalty above hard assets once a brand clears baseline revenue thresholds. “We feel that some of the hard assets like contracts or formulas can be worked on to improve over time, but it is harder to create customer loyalty and community.” That imbalance of hard assets being fixable over trust is precisely why losing founder voice registers as existential risk rather than cosmetic change.
Experts agreed that the difference between a survivable acquisition and a brand-killing one comes down to structure, not intention. Davis pointed to the employment agreement as the real safeguard. “It’s important for a buyer to present the founder with a robust employment or transition agreement. This agreement should contain enough incentives and restrictive covenants to ensure the founder is locked into the long-term success of the brand,” he said, including non-compete terms and an earnout tied to performance, so the founder’s financial upside stays bound to the brand's public-facing success, not severed from it.
On operational changes, Davis’s advice is to treat supply chain or manufacturing shifts as a new product launch rather than a back-office decision, and communicate proactively rather than allow consumers to discover changes and assume the worst. Dunklau said Aria Growth Partners screens for this compatibility before a deal closes, evaluating the cultural fit of the potential acquirer, how aligned the long-term visions of the potential acquirer and the founders are, and vetting for continuity, not just capital.
Across every conversation, three negotiating priorities recurred. First, treat deal evaluation as strategic, not purely financial. Sanchez advised founders to weigh “not only the financial merit, but how that investor can help the company strategically, while preserving the integrity of the brand.” Second, negotiate consultation rights over formulation, sourcing, and creative control up front; Davis noted buyers will rarely grant approval rights, but consultation rights are appropriate, and leverage here scales with how much the acquirer is buying the founder’s audience versus their supply chain. Third, protect the people, not just the equity.
As Lucas summarized, “The most important factors in all sales or exits are employees, leadership, and how you handle your ability to control your shareholder value. Basically, protecting shareholders and the team that built the company.” The comment section will keep writing eulogies at every announcement. Whether they’re warranted is decided months earlier, in the term sheet.