Yann Pencolé
Vice President, Beauty and Wellbeing Advisory
M&A activity in the beauty sector is heating up, with strategics and private equity firms zeroing in on the most coveted targets: founder-led disruptors, science-backed innovators, and fast-growing indie brands. At the same time, global beauty powerhouses are reshaping their portfolios, doubling down on what fuels their competitive edge. These shifts are reshaping beauty industry M&A trends and signaling where the market is headed next.
The Mega-Deal: L’Oréal and Kering Alliance
The most significant event of the year was likely the strategic alliance between L’Oréal and luxury group Kering. L’Oréal announced a €4 billion agreement to acquire Creed, the historic fragrance house, and secure 50-year exclusive beauty and fragrance licenses for Kering’s major fashion houses: Gucci, Bottega Veneta, and Balenciaga.
This deal represents a major shift in the luxury landscape, notably signaling the future loss of the Gucci license for Coty, which currently holds it until roughly 2028. Gucci Beauty is estimated to account for roughly 8–10% of Coty’s total sales and a significant share of its prestige profits. Losing this license in 2028 (when the current contract expires) creates a substantial revenue cliff.
Other L’Oréal Moves: The Acquisitions of Color Wow and Medik8
Earlier this year, L’Oréal inked a deal to acquire Color Wow, a powerhouse in professional hair care known for its innovative, problem-solution-oriented products. This acquisition is set to strengthen L’Oréal’s Professional Products Division, tapping into Color Wow’s proven efficacy and strong salon presence. As highlighted in a recent blog, the brand’s strong growth trajectory and loyal stylist following made it an attractive target as L’Oréal expands its premium hair care portfolio globally.
Further reinforcing its dermatological beauty expertise, L’Oréal Luxe also announced the acquisition of a majority stake in Medik8. The British clinical skin care brand has built a formidable reputation with its science-backed, ingredient-focused formulations and its sustainability commitments, underscored by its B Corp™ certification. With reports valuing the deal at around €1 billion, L’Oréal aims to capture a larger share of the booming high-performance skin care segment while retaining Medik8’s founder and private equity partner, Inflexion, to preserve the brand’s distinct ethos.
Also to be noted: recent reports suggest that L’Oréal is moving closer to a complete acquisition of the Giorgio Armani beauty business following the passing of its founder.
Olaplex’s First Acquisition of Purvala Bioscience
A key headline this summer was Olaplex’s first-ever acquisition: the science-led hair care brand moved to buy a biotech firm as it deepens its focus on R&D and ingredient innovation. The deal marks a shift for the brand that originally launched with a single hero product, as it now pursues M&A to gain upstream capabilities like formulation, IP, and biotech rather than simply expanding distribution.
Is this acquisition poised to become Olaplex’s next pillar of growth? While the beauty industry viewed it as a significant strategic step, the market reaction was mixed. Olaplex shares fell by 6.1% on the day the acquisition was announced.
This occurred despite the company beating revenue forecasts, with net sales up 2.3% year-over-year to $106.3 million. The company has struggled to consistently generate demand over the past three years, with sales declining at an annual rate of 16.4%.
Interestingly, Kline’s analysis shows that the gaps created by Olaplex’s sales decline have not been filled by competitors, even with the rise of K18 and the broader growth in hair bonding alternatives.
e.l.f. Beauty Acquisition of Rhode Skin
Earlier this year, e.l.f. Beauty acquired Hailey Bieber’s rapidly growing skin care brand, Rhode, for up to $1 billion as part of its strategy to diversify its portfolio.
The acquisition immediately gives e.l.f. a strong foothold in the prestige beauty segment, access to Sephora retail channels, and the ability to leverage Rhode’s massive digital engagement and $212 million in recent sales, all while keeping Hailey Bieber involved as Chief Creative Officer.
The deal is widely viewed as a strong, albeit high-priced, strategic move that positions e.l.f. to evolve into a multi-category beauty powerhouse.
Beauty Industry M&A Trends: Indie Beauty Brands Remain Hot Targets
Founder-led and digitally native companies continue to be primary growth targets, reflected by numerous acquisitions and minority investments beyond Rhode, Color Wow, and Medik8 this year. Buyers are prioritizing brands with defensible formulas, strong community engagement, and clear omnichannel strategies.
Looking ahead, beauty industry M&A trends point to a more disciplined and surgical environment focused on biotech, R&D capabilities, high-growth indies, and corporate divestitures, rather than simply pursuing scale. The ideal target brand could fall into one of the following areas:
- Science-first: A brand that owns a proprietary molecule or technology such as Augustinus Bader, DUA by AB, Ourself, Hydrinity, or Plated
- Culture-first, scaled: A brand that has effectively captured a massive new audience with a strong presence in key retail channels such as Rare Beauty, Tower 2, or DIBS Beauty
- Category-Dominant: A brand that leads a specific high-growth niche where the buyer currently lacks strength such as Nécessaire, OSEA Malibu, Vacation, Salt & Stone or Octavia Morgan.
According to Kline’s latest analysis, Beauty Indie: U.S. Analysis of Brands to Watch, these brands have seen double- to triple-digit growth rates, and some have been flagged by our industry experts as ready to be acquired based on momentum, scale, and strategic fit.
At Kline, we constantly track indie beauty brands, analyzing the strength of their positioning, messaging, and go-to-market strategies and monitor ongoing M&A activity across the industry. We also assist brands, private equity firms, strategic investors, and investment banks as they evaluate opportunities to divest or acquire their next standout asset.
To learn more, connect with an industry expert to elevate your beauty M&A strategy with Kline’s advisory services, offering expert commercial due diligence, deep analysis of brand perception, and precise measurement of brand awareness to ensure every acquisition drives maximum value.
