The beauty industry is entering a building period, after a dip in M&A activity in 2025. But who’s set to win big?
This year, investors predict that vertically integrated, clinically backed clean beauty and wellness brands will attract investment and drive activity.
“We expect the beauty sector to stand out as one of the most resilient and dynamic sectors within the broader consumer landscape,” says Ken Wasik, head of investment banking at investment firm Capstone Partners. “High‑growth categories such as fragrance are likely to remain key drivers of sector performance, with additional support from products with strong perceived value and efficacy‑led product innovation.”
Capstone forecasts that beauty M&A activity will accelerate in 2026, by the mid-single digits, after a slight drop off in 2025. Fifty-six transactions took place last year, compared to 62 deals in 2024. The most notable deals of 2025 included Elf Beauty acquiring Rhode for $1 billion and Kering selling Kering Beauté to L’Oréal for €4 billion.
Wasik sees more of these deals taking shape this year. “L’Oréal, Estée Lauder Companies, Elf Beauty and Coty may be active as they build portfolios capitalizing on rising demand for clean, sustainable, derma-focused beauty products,” he adds. The market is filling up with brands up for potential sale, including Dr. Jart, Too Faced, Smashbox, Olaplex, Pat McGrath Labs and Fenty Beauty.
Ilya Seglin, managing director of investment bank Cascadia Capital, says the reality is that large corporations and their core brands, for the most part, are not growing significantly. L’Oréal sales rose 4.2% on a like-for-like basis to €10.33 billion in the third quarter of 2025; sales at Estée Lauder Companies (ELC) dropped 8% in the year ended June 30 to $14.3 billion, with declines across all geographies; Coty revenues fell 2% for the full year; and Elf Beauty’s net sales were up 9% year-on-year to $353.7 million in the first quarter of fiscal 2026.
“[Brands] need growth solutions. Investors will remain very selective, and it’s most likely they will go after certain brands that are across more than one region with diversified distributions,” adds Seglin. Where beauty companies place their bets will help to secure their next phases of growth.
2025 was a quiet year for haircare (with the exception of L’Oréal’s acquisition of Color Wow) and color cosmetic brands, with very little M&A activity taking place. Estée Lauder is said to be selling off three underperforming brands as it tightens its portfolio — Dr. Jart, Too Faced and Smashbox, the latter two being color cosmetic players. Another Estée Lauder brand with a question mark over its head is Glamglow, whose website has taken a pause.
But the future is looking bright. “We’re going to see a lot of haircare brands come to market, and I think the success ratio is going to be better than in color cosmetics as it’s a more interesting category,” says Seglin. According to Pinterest’s 2026 Predicts report, “eccentric makeup” and “avant garde makeup editorial” were among the top searches for what’s to take off.
Westman Atelier, Merit and Saie are three brands that could explore a sale this year in the cosmetics category, says Caroline Weintraub, VP at True Beauty Ventures.
Following the news that Coty CEO Sue Nabi would be exiting the company in December, further reshuffles continue to take place. For Coty brands Rimmel and Max Factor, the future remains uncertain after reports of the two brands being up for sale surfaced in September.
These brands are currently in a state of fix-to-sell or fix-to-keep, despite retaining credibility and authority within their respective categories. “Despite their core consumer base being skewed older, there remains broad awareness of the brands’ strong product efficacy and formulation quality,” says Wasik.
Rimmel and Max Factor have gotten lost in a market dominated by independent brands. To keep momentum in a fast-moving world, brands need to be five steps ahead with a rigorous marketing strategy.
“One of the major trends we have seen is that socially native independent brands have garnered loyal fan bases and captured strong relevance, particularly among younger demographics,” Woolton says. “Digital and social platforms continue to shape discovery and brand affinity, and the ability to engage consumers through these channels has become more important than ever.”
As Coty reorganizes internally, it could do with a boost if it buys some stake in Pat McGrath Labs, which is currently under reorganization, or Rihanna’s Fenty Beauty, which LVMH is considering selling its 50% stake in, according to a Reuters report.
On the haircare front, Weintraub suspects that Dae or Gisou could be up for grabs. “[They have] strong momentum and loyal communities” she says, two important qualities that were apparent in the 2025 M&A deals.
Henkel AG, the German company that owns Schwarzkopf, Got2b and Shiseido’s professional hair business in the Asia-Pacific region, is eyeing Olaplex, according to Bloomberg reports. The cult hair brand has been stagnant in its growth: Olaplex sales dropped 3.8% to $114.6 million during the third quarter of the year ended September 30, 2025. If the deal happens, it’s likely that Olaplex will revert to being a private company, joining the rest of Henkel AG.
Weintraub expects there to be continued growth in the wellness sector as it further converges with beauty.
“Beauty is no longer just topical, it’s about what you ingest, how you sleep, how you recover, and how you track your body for all of that, which meaningfully expands the category,” she says. Weintraub adds that investors want strong fundamentals first: proven product efficacy, repeat consumer behavior and disciplined margins.
On January 5, holding company the Sexual Wellness Group (SWG) was co-founded by Mitch Orkis, who is co-founder and CMO of Hello Cake, as well as chief retail officer of SWG, along with Hunter Morris, who holds the CEO role, COO Holden Israel, Brian Thorne, and Kevin Chen. The group is concentrating on sexual wellness, with a portfolio including Hello Cake, which specializes in toys, supplements and lubricants, as well as lubrication brands Wet and Turn On.
Promoting sexual wellness products in today’s cultural climate is an increasingly complex challenge. Brands are fighting back.
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The sexual wellness market has long had a low profile, but this could be ramping up in 2026. Women’s hygiene and wellness brand Pee Safe, which also owns sub-brand Domina, secured $32 million in series C funding from private equity firm Orbimed in January. Meanwhile, Maude, a sexual wellness brand that last received series A funding in 2021 for $5.8 million, is a possible target for cash this year.
Brands with dermatological and clinical backing will remain a key trend in 2026, according to Capstone Partners. Unilever Ventures is placing its bets on two Indian beauty brands: the dermaceutical line SkinInspired catering to Indian skin, which recently closed a series A investment estimated at $2.9 million; and clean fragrance brand Secret Alchemist, which raised $3 million in a seed round with help of DSG Consumer Partners.
In December, international growth equity firm Iris Ventures announced it would be putting a $15 million investment behind medical-grade skincare brand Innerskin. Spanish pharmaceutical company Almirall is actively looking for new acquisitions to grow its dermatology arm, which holds key treatments such as Ilumetri for psoriasis, Ebglyss for atopic dermatitis and Seysara for acne.
Time and time again, the fragrance market has continued to shine bright for both mass market and prestige brands, Capstone Partners finds.
Weintraub names scented bodycare brand Salt Stone among those to look out for. “The fragrance market continues to outperform across price points and unlock entry points for acquisition. Whether its refillable formats, elevated body layering, or a functional product with a strong scent identity, these brands prove that fragrance gives consumers a reason to come back,” she says.
In 2025, there was strong activity across the board. Unilever acquired Wild, the sustainable deodorant brand for an undisclosed sum; Huda Beauty’s Huda Kattan sold her stake of Kayali to General Atlantic and her sister, Mona; and Touchland was acquired by Church Dwight in a $800 million deal.
Another standout brand from last year is Phlur, which was acquired by private equity firm TSG Consumer Partners in July 2025 and scaled its business model from direct-to-consumer to e-commerce and multi-brand retail through Sephora, Amazon and Space NK.
The fragrance market’s rapid growth could be hindered by its ability to grow its sustainability and exit potential, given its less established track record. “Cosmetics has seen newcomers scale impressively, yet investors continue to grapple with challenges around true product differentiation and limited clarity on exit opportunities due to muted M&A activity in recent years,” says Katie Johnson, Americas consumer and health industry leader at EY-Parthenon, on the fate of fragrances. But analysts agree fragrances give acquirers pricing power, loyalty and category expansion potential — making them worthy investments.
In a shaky economic and political climate, investors are getting their hands dirty and involved in businesses. They’re no longer captivated by marketing tricks, but by results.
“Consumer trust is the ultimate currency. Brands with a compelling value proposition and combination of transparency, science-backed claims and authentic engagement will outperform over the long run,” says Seb Barbero, SVP of consumer and retail M&A at EY Capital Advisors.
Customer retention is on the top of beauty brand’s wishlists. “Investors want something where they see sustainability in the brand,” says Seglin. “They want to see differentiated products and proof points that the consumer is not buying the product just because it goes viral, but because they actually like the product — and buy it again.”
Nigel Bell, head of consumer and retail M&A at EY Capital Advisors contends that the focus will shift toward product-level differentiation over brand power.
“As investors seek to understand the true longevity and staying power of companies beyond marketing narratives, a strong understanding of unit economics across channels is essential, especially in e-commerce, where rising customer acquisition cost and marketplace competition are shifting,” he says. “The ability to stay relevant and sustain customer engagement at a time where social media platforms serve as a medium for product education, discovery and loyalty is more challenging to come by.”
