The Tamesis
Following a decline in M&A activity in 2025, the beauty industry is entering a period of construction. But who will be the big winner?
This year, investors predict that vertically integrated, clinically-backed clean beauty and wellness brands will attract investment and drive activity.
“We expect the beauty industry to be one of the most resilient and dynamic sectors within the broader consumer landscape,” said Andrew Woolston, market intelligence associate at investment firm Capstone Partners. “High-growth categories such as fragrance are likely to remain a key driver of industry performance, with additional support from products with strong perceived value and efficacy-led product innovation.”
Capstone predicts that after a slight decline in beauty industry M&A activity in 2025, it will accelerate in 2026 with mid-single-digit growth. There were 56 transactions last year, compared with 62 transactions in 2024. The most high-profile deals in 2025 include Elf Beauty’s $1 billion acquisition of Rhodes and Kering’s €4 billion sale of Kering Beauté to L’Oréal.
Woolston expects more such deals to take shape this year. “L’Oréal, The Estée Lauder Companies, Elf Beauty and Coty are likely to be active as they build portfolios to capitalize on growing demand for clean, sustainable, dermo-centric beauty products,” he added. The market is flooded with brands waiting to be sold, including Dr. Jart, Too Faced, Smashbox, Olaplex, Pat McGrath Labs and Fenty Beauty.
The reality is that large companies and their core brands have largely not grown significantly, said Ilya Seglin, managing director at investment bank Cascadia Capital. In the third quarter of 2025, L’Oreal’s sales increased 4.2% year-on-year to 10.33 billion euros; in the fiscal year ended June 30, Estee Lauder Company’s (ELC) sales fell 8% to $14.3 billion, with declines in all regions; Coty’s full-year revenue fell 2%; Elf Beauty’s net sales in the first quarter of fiscal year 2026 increased 9% year-on-year to $353.7 million.
“[Brands] Growth solutions are needed. Seglin added: “Investors are still going to be very picky and they will likely go after certain brands that have diversified distribution across multiple geographies.” Beauty companies’ bets will help secure the next phase of growth.
hair and makeup
2025 was a quiet year for hair care (except for L’Oréal’s acquisition of Color Wow) and makeup brands, with little M&A activity. Estée Lauder is said to be selling off three underperforming brands – Dr. Jart, Too Faced and Smashbox, the latter two being makeup brands – as it tightens its product portfolio. Another Estee Lauder brand causing headaches is Glamglow, whose website has been suspended.
But the future looks bright. “We’re going to see a lot of hair care brands coming into the market, and I think makeup will have a higher success rate because it’s a more interesting category,” Seglin said. According to Pinterest’s 2026 predictions report, “quirky makeup” and “edgy makeup editorial” are among the top searches.
Caroline Weintraub, vice president of True Beauty Ventures, said three brands, Westman Atelier, Merit and Saie, may have promotions in the cosmetics category this year.
Further reshuffle continues following news that Coty CEO Sue Nabi will exit the company in December. For Coty brands Rimmel and Max Factor, the future remains uncertain after reports in September that the brands would be sold.
