Matthew Wiseman
In the second quarter of this year, 41 deals were completed in the global beauty and personal care industry, setting 2018 on track to become a record-breaking year for M&A activity.
Here, Matthew Wiseman, Partner of investment banking firm Alantra and a leading adviser to the personal care and beauty sector, talks to Cosmetics Business about the M&A landscape in the industry and why he doesn't anticipate a decline in activity any time soon.
How active has the beauty industry been in terms of M&A over the past year?
2018 looks set to be a record-breaking year for the number of transactions completed in the personal care and beauty industry.
M&A activity spiked in 2015 and has continued unabated. During this period there have been >85 transactions announced each year, which compares to 40-50 transactions per annum in the preceding years.
The personal care and beauty industry has an unusually high number of major corporates with global infrastructure, multi-brand portfolios and strong balance sheets. These companies are continually evaluating differentiated, growing brands to acquire which could strategically fit within their portfolio, and this remains the core of the M&A activity in the industry.
In addition, private equity is an increasingly important driver of M&A activity. There is an increasing community of private equity houses who have now invested and had success in growing a number of beauty brands. These houses have greater experience in identifying genuinely differentiated brands and offer a set of experiences, relationships and management contacts that offer more than just a cheque.
How does this compare to other consumer goods industries?
There are beauty industry characteristics that are quite unique from an acquisition perspective such as high brand loyalty and repeat purchase, high gross margins, increasing growth opportunity through online and social media channels and the proven ability for brands to stretch globally.
The beauty industry is also renowned as being protected during times of economic downturns – the so called “lipstick index” points to the continuing inclination for consumers to make relatively low-value but feel-good beauty purchases when their disposable income declines.
Why do you think M&A activity is so high at the moment?
The beauty industry has been revolutionised in recent years by the growth of direct to consumer channels and the use of social media to engage directly with consumers.
The global beauty corporates were previously protected by the impact of
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- Companies:
- L'Oreal
- Estée Lauder Companies
- Louis Vuitton Moet Hennessy
- Cosnova
- Procter and Gamble
- Unilever
- Deciem
- Charlotte Tilbury
- Anastasia Beverly Hills
- Equity Dynamics
