Acquiring a brand in 2026: a surgical approach

Against a backdrop of persistent economic and geopolitical uncertainty, acquirers are refining their strategies in a market increasingly shaped by portfolio reviews. More disciplined than ever, they are prioritising scientific credibility and highly engaged independent brands with strong expansion potential, rather than pursuing growth at any cost.

By

Mathilde Brosseau

The collapse of merger talks between industry giants Puig and Estée Lauder – a deal that would have created a group valued at $40 bn (€35.1 bn) – illustrates a profound shift in the mergers and acquisitions landscape. According to British consultancy FRP Advisory, "scale and size are no longer the priority. Buyers are instead seeking brands with a clear positioning, strong strategic fit and a more focused proposition". In other words, asset quality now outweighs quantity.

Although global uncertainty has curtailed blockbuster deals, transaction activity remains remarkably buoyant. Following a subdued 2025, during which 263 transactions were completed according to BeautyMatter's Deal Index (-11.5% year-on-year), the first quarter of 2026 recorded a strong rebound. The US media outlet reported an increase of 40.7% compared with the same period last year, with 83 transactions completed in just three months.

This trend had already been anticipated by Capstone Partners, which forecast the return of private equity investors and strategic buyers in a particularly resilient beauty market. The investment bank expected growth to be driven by masstige, dermocosmetics and science-backed brands. That outlook has since been confirmed by advisory firm Deal Ascent, which highlights a market increasingly valued around clinical efficacy and accessibility. While consumers continue to gravitate towards affordable premium products, buyers remain willing to pay exceptionally high multiples – up to 20x EBITDA – for prestige brands, particularly in fragrance.

Portfolio rationalisation continues

In 2025, major beauty groups embarked on an extensive rationalisation of their brand portfolios. Faced with challenging market conditions, private equity firms adopted a more cautious stance while reassessing their investment strategies.

Having already divested underperforming businesses the previous year – such as Unilever's separation from its ice cream division to sharpen its focus on beauty – industry leaders significantly accelerated their acquisition activity in 2026.

On 31 March, L'Oréal completed its €4 bn acquisition of Kering Beauté, including Maison Creed and the exclusive 50-year licences for Bottega Veneta, Balenciaga and Gucci fragrances and cosmetics. The Gucci licence will notably come into force in mid-2027, one year earlier than originally planned under Coty's agreement.

At the same time, L'Oréal strengthened its presence in one of the world's fastest-growing beauty markets by acquiring a majority stake in Indian e-commerce specialist Innovist in June 2026. Estée Lauder, meanwhile, acquired Forest Essentials at a steep multiple of 20.7x EV/EBITDA, reinforcing its position in premium Ayurvedic beauty.

Portfolio reviews also appear far from over, continuing to fuel a pipeline of potential acquisition targets. L'Occitane is exploring the sale of Elemis, while LVMH is reportedly considering the disposal of Make Up For Ever, skincare brand Fresh, and its 50% stake in Fenty Beauty, valued at between €1.5 and €2.5 bn and reportedly attracting interest from investment firm MarcyPen Capital Partners.

Following a leadership change at the end of 2025, Coty is likewise considering divesting parts of its mass-market cosmetics division – estimated at $1.2 bn or approximately €1 bn – including brands such as CoverGirl and Rimmel, as well as its Brazilian consumer business. The objective is clear: concentrate on profitability and higher-value segments, notably Kylie Cosmetics and its long-term fragrance licences with Burberry and Marc Jacobs.

Independent brands: acquisition criteria reassessed

Rather than diversifying indiscriminately, large groups are seeking to strengthen their portfolios around agile, high-potential brands. While enthusiasm for emerging independent brands is nothing new, acquisition criteria have evolved considerably.

These highly sought-after businesses benefit from exceptionally engaged communities and remain prime acquisition targets. Often born online and closely associated with their founders, they have cultivated remarkably loyal consumer bases for which strategic buyers are prepared to pay a premium.

e.l.f. Beauty's $1 bn (approximately €0.88 bn) acquisition of Rhode, Hailey Bieber's viral skincare and cosmetics brand, perfectly illustrates this trend. In another segment, Belle Brands, the beauty platform owned by Windsong Global, acquired clean beauty brand Versed. Meanwhile, premium yet accessible masstige brands continue to appeal strongly to private equity investors, as demonstrated by Advent International's acquisition of Salt & Stone, a favourite among Generation Z consumers at the intersection of premium body care and niche fragrance.

Four key factors now underpin the attractiveness of acquisition targets.

The first is financial discipline. Buyers no longer rely solely on cultural relevance or rapid growth. Instead, they seek robust fundamentals: strong EBITDA, international expansion potential, high repeat purchase rates, solid local market positions and direct customer relationships. Operational efficiency, particularly through supply chain resilience, together with technology-enabled scalability through AI and digital capabilities, have become essential valuation drivers. In short, buyers favour businesses capable of combining immediate profitability with sustainable long-term growth. According to Deal Ascent, owners of efficient, differentiated indie brands therefore hold a particularly strong negotiating position in 2026.

The second factor is the strength of an engaged community rather than the size of an audience. Beyond follower numbers, a brand's value increasingly depends on the commitment of its core consumer base. Often described as active fandom or cultural pioneers, these loyal consumers become genuine brand ambassadors and play a direct role in driving growth. For acquirers, this emotional connection provides one of the strongest indicators of future revenues. Consequently, the most highly valued brands combine devoted communities with operational excellence.

Thirdly, investors increasingly favour brands positioned at the intersection of beauty and wellness. Highlighted in Highsnobiety's report The Status Economy: Beauty, the blurring of these two sectors is creating a powerful value driver.

Finally, resonance with Generation Z has become a critical source of value. Highly community-oriented, socially engaged and deeply influenced by social media, this generation continues to reshape the beauty landscape. It was precisely to strengthen its appeal among younger consumers that Henkel acquired mass-market haircare brand Not Your Mother's (NYM) from private equity firm Main Post Partners earlier this year.

Scientific credibility commands premium valuations

Scientific credibility has become one of the most decisive factors in asset selection. Brands offering clinically proven efficacy, proprietary technologies or patented ingredients consistently command the highest valuations.

Premium haircare provides a compelling example through Henkel's $1.4 bn (approximately €1.2 bn) acquisition of Olaplex, valued at 15.2x EBITDA. Beyond its brand equity, it is Olaplex's patented disulphide bond repair technology that justifies such a premium valuation.

Within science-led skincare, The Founders Inc. acquired Korean brand Dr. Jart+, renowned for its sheet masks and Cicapair range. Estée Lauder also took a stake in luxury skincare brand 111Skin, founded by a cosmetic surgeon. Meanwhile, KYT Group acquired Glo Skin Beauty, a premium brand combining mineral cosmetics with dermatological expertise.

Elsewhere, dermocosmetics group Olyos acquired slimming specialist Somatoline, while German company Cosnova, owner of Essence and Catrice, purchased Spanish brand Niche Beauty Lab, which targets informed consumers seeking scientifically driven yet accessible skincare.

Ultimately, 2026 marks the end of the race for blockbuster deals in favour of highly targeted acquisitions. In a far more demanding market, buyers are focusing on science-backed brands and community-driven independent companies with genuine international expansion potential.