Beauty, consolidation slows down but the market prepares for a new M&A season

The drive for consolidation is mainly affecting specialised retail and direct-to-consumer brands, which are increasingly seen as strategic platforms to be developed in an omnichannel perspective. At the same time, there is growing interest in brands capable of operating across different categories, in a market where the boundaries between beauty, health and wellness are becoming increasingly fluid. The scientific credibility of the product remains one of the most relevant factors in the selection of assets by buyers and could remain central in 2026.

It was mainly strategic players that supported the market in 2025. Transactions carried out by listed companies increased by 71.4% year-on-year to 12 deals, while those promoted by private strategic players decreased only marginally to 38 deals. By contrast, the contribution of private equity was weaker: PE platforms recorded a 57.1% decline, while add-on deals fell by 50%.

Tipologia di operazioni

Fonte Capstone Partners

Despite the slowdown, thebuyout market continues to show positive prospects. Indeed, the rationalisation of portfolios undertaken in recent years has created a large pool of quality targets, while the debt market continues to remain relatively favourable for leveraged financing, which could support a pick-up in activity during 2026.

On the consumption front, the sector is undergoing a major transformation. The pressure on the budgets of low- and middle-income families is favouring a return to mass market products. According to Circana data, beauty sales in the mass market grew by 5% in 2025, reaching$54.5 billion in the first nine months of the year. Weaker, however, was the prestige segment (high-end products distributed through selective channels and characterised by premium positioning in terms of price, brand and distribution), which slowed to +4% compared to +7% in the same period of 2024. However, fragrances continue to represent one of the most dynamic categories in the market: the segment grew by 17% in the mass market and 6% in prestige.

Many consumers who had progressively shifted their spending towards premium products during the years of strong wage growth are now shifting back towards masstige and mass market segments, due to increased economic pressure on households, according to the Capstone report. However, this return to more affordable products does not imply a reduction in quality expectations.

The issue of product effectiveness remains central: 56% of industry managers, according to McKinsey research, believe that the main competitive driver in the coming years will be consumers' increasing focus on value for money. At the same time, 63% of consumers do not necessarily consider premium products to be better performers than mass market products. This change in perception could profoundly alter the industry's growth strategies. According to operators, in 2026, the main driver of growth could be volume growth rather than price growth, after years in which inflation had supported revenues mainly through price increases, the report states

To adapt to the new competitive environment, many beauty companies have already initiated a revision of their portfolios through reformulations, price reductions and new packaging architectures designed to intercept consumers who are increasingly sensitive to perceived value. A dynamic that could open up further opportunities for growth through external lines and new extraordinary operations.

After years characterised by particularly high valuations, the M&A market in the beauty sector is showing a gradual slowdown in multiples, reflecting a more selective environment for both strategic investors and private equity. According to the data in the report, the average enterprise value/revenue multiple of cosmetics deals was 3.2 times in 2018-2019, rising sharply to 6.1 times between 2020 and 2021, the latter years marked by strong liquidity, low rates and growing interest in premium and digital-first beauty brands. Subsequently, the market began its correction and in the two-year period 2022-2023 the multiple fell to 4.6 times, until it reached 2.5 times in the period 2024-2025, the lowest level of the entire time frame considered by Capstone Partners analysts.

A similar dynamic emerges on the Enterprise Value/Ebitda multiples. After reaching 16 times in the two-year period 2020-2021, valuations decreased to 14.5 times in 2022-2023, and then settled at 12.6 times in 2024-2025. Despite the downsizing, EBITDA multiples still remain at historically high levels compared to other consumer segments, confirming the structural resilience of beauty and the sector's ability to attract industry interest.

The decline in valuations mainly reflects the new macroeconomic environment: higher interest rates, weaker consumption and increased focus on profitability have reduced investors' propensity to pay very high premiums for future growth. In parallel, the market has begun to favour assets with stronger fundamentals, sustainable margins and clear positioning in the wellness, dermocosmetics and mass premium segments. The cosmetics sector continues to be seen as strategic and defensive, but the market is shifting from a logic of 'any price' growth to a much more disciplined approach to asset valuation.

Multipli delle operazioni

Fonte Capstone Partners

Among the dossiers being monitored by the market is that of Lvmh c which, according to rumours reported by Reuters, is considering the sale of its 50 per cent stake in Fenty Beauty, the brand founded by Rihanna, and according to some analysts also the Make Up For Ever brand. Estée Lauder, itself, following a stand-alone structural turnaround process, could consider a review of its brand portfolio and potentially also the sale of colour cosmetics brands such as Smashbox and Too Faced. Along the same lines, Coty, which has started a strategic review of its non-premium cosmetics business in Brazil, worth an estimated USD 1.2 billion, could also move in the coming months, signalling possible sale or carve-out transactions.

Analysts and bankers point to a number of high-performing brands as potential acquisition targets in the short term, such as Aroma-Zone, the French natural beauty and "Do It Yourself" cosmetics player, which has solid financial results and is on the radar of European buyers for a possible transaction close to USD 2 billion; Parfums de Marly, buoyed by strong growth in the prestige fragrance segment, is among the luxury niche brands most followed by strategic consolidators; Westman Atelier, a prestige brand specialising in make-up complexion (basic make-up for the face), continues to gain market share at high margins; Amika and Salt & Stone, both fast-growing independent players (haircare and bodycare respectively), which represent primary targets for conglomerates seeking exposure to Gen Z and experiential segments.