Steady recovery of global beauty M&A

Beauty cosmetics and skin care products have even become the "lipstick index" in 2020, becoming a new generation of consumer products to measure consumers' shopping tendency and preference during the economic downturn.

US consumer and retail investment banking expert Lindsay Carlson wrote in Women’s Daily a few days ago that M&A activity in the global beauty market is gradually recovering. In the last few weeks of the summer of 2020, she observed a steady increase in the number of beauty M&A transactions. . Lindsay Carlson is a senior member of the consumer and retail investment banking practice department of William Blair, an established American boutique investment bank.

Carlson pointed out that among all companies with a valuation of between US$150 million and US$5 billion, a total of 171 mergers and acquisitions were concluded in the global market in July, with a total transaction value of US$88 billion. However, there were only 70 M&A transactions for the industry in April. The total transaction amount is only 28 billion US dollars.

This is mainly due to the fact that some financially sound companies began to re-examine and strategically discuss and lay out their merger plans. At the same time, as the lending market began to recover and public equity funds became active again, these companies became bolder in their merger strategies than when the epidemic just broke out at the beginning of the year.

The new crown epidemic has had a huge impact on the global retail consumer industry, but with the restart of the retail industry in some countries and regions, the consumption situation has shown a slow recovery trend. Among them, the recovery of the beauty industry is more gratifying.

Carlson wrote in the report that under the "new normal" after the COVID-19 pandemic, consumers will pay more attention to health products. Therefore, in the field of beauty makeup, we can see that beauty and health care will further converge. "In the current environment, brands that provide consumers with innovative products will be the winners."

Skin care products, hairdressing, bath and body personal care products, indoor fragrances, and even vitamins and nutritional supplement products have become the product types favored by investors and buyers after the epidemic. Among them, skin care products have even become the "lipstick index" in 2020, a new generation of consumer products used to measure consumers' shopping tendency and preference during the economic downturn.

At the same time, other players in the beauty industry, such as formula companies, product development companies and manufacturer partners, are also types of companies that investors are willing to merge.

After the epidemic, buyers in the beauty and cosmetics M&A market also showed some different characteristics from the past. For example, strategic buyers with sufficient funds usually have the past experience of acquiring brands that have established a reputation. They are not inclined to incubate emerging brands or companies internally.

The epidemic has made buyers in the M&A market aware of the importance of acquiring "must-owned" assets, thereby strengthening their strength and enriching and diversifying their channel regional markets. Therefore, strategic buyers with experience in the beauty industry have an advantage in reaching M&A transactions during the epidemic.

For sellers, in the post-epidemic period, it is very important to actively explain to buyers the impact of the epidemic on their business, overall market and channels, and it is best to attach additional supporting analysis data to strengthen their selling position. At the same time, external innovations such as third-party suppliers, as well as value creation and vision planning also contribute to the conclusion of the transaction.

Carlson said that there will be a wave of mergers and acquisitions in the beauty market after Labor Day in the United States, because everyone is looking forward to completing the transaction before the US presidential election in November.