Newly released market data out of the US shows the demand for beauty products remained strong in 2025 despite pressure on overall consumer spending. Beauty M&A deal volume in the US decreased slightly this year due to tariff and trade concerns, but analysts are optimistic for a busier 2026 on the dealmaking front.
M&A in the beauty industry is seeing more strategic buyers, an increasing focus on contract manufacturing and premium pricing for targets. According to Capstone Partners, while private equity involvement has slowed due to market uncertainty, the fundamentals for investment in the sector appear solid.
As we head into the holiday season and a new year ahead, here is a look at the key market and M&A drivers in what Bloomberg Businessweek recently called "the inescapable business of beauty."
What's Market in the Beauty Industry
Circana reported in mid-November that the beauty market in the US is normalizing from its exceptional year-over-year (YOY) growth phase, but consumers are still trading up in select areas. Market data shows that the beauty industry grew by 4% YOY in the first three quarters of 2025. Consumers continue to be drawn to the prestige beauty industry. Fragrance and hair are the fastest growing segments and continue to outperform in the beauty market.
Deloitte reports that globally, beauty sales remain strong in the approximately $450 billion industry despite consumer spending declining for the first time in years, and market data reporting 4% YOY increase demonstrates positive growth in the industry. Young women are now outspending older generations and beauty companies continue to expand into related categories such as nutrition, fitness and sleep.
M&A Activity and Key Trends
Capstone Partners: December 2025 Beauty M&A Update
- Beauty M&A activity continued at a slightly slower pace, with deal volume dropping 6.7% YOY to 56 transactions announced or completed year to date (YTD). The broader consumer industry saw M&A activity decline 24.2% YOY through YTD 2025.
- Transactions by strategic buyers rose 22.9% YOY to 43 deals YTD.
- Private strategics accounted for the majority (34) of total beauty sector deals in 2025, a trend that has gained momentum since 2021.Beauty brands continued to receive premium pricing due to resilient and above-market growth. M&A multiples in the sector averaged 14.9x EV/EBITDA in YTD 2025, more than five times higher than the consumer industry average.
- Private equity buyers have pulled back from the beauty M&A market as underlying macroeconomic uncertainty prevailed and exit visibility remains somewhat clouded.
DC Advisory: Global M&A in Beauty
- Strategic investors are driving activity in the sector looking to expand expertise and regional coverage.
- Private equity remains selectively active. Investors are open to opportunities but still exhibit a level of caution given uncertainty in the broader economy.
- The global beauty Contract Development and Manufacturing Organization landscape is increasingly active as brands look to bring production closer to the end market.
- The appetite for beauty assets remains strong in the US and Europe as investors seek to shape portfolios. Consolidation is driving activity in Asia.
Preqin: PE in the New Glam Economy
- Even as overall deal volume in private markets has slowed, the beauty sector remains strong and a target for private equity.
- A broader trend at play is PE's appetite for purpose-driven, celebrity-led businesses with authentic founder stories and strong wellness credentials. There are risks for investors, however, as celebrity clout can fade quickly.
- The beauty market demonstrates an upward trajectory, with emerging areas such as AI-driven personalization, biotech-infused skincare, offerings that combine beauty with healthcare and hair tech.
K-Beauty M&Ania
ION Analytics reports that the global consumer craze for South Korean culture has made its way into the M&A world, with many investors embracing "Korea mania". K-beauty related M&A hit a post-pandemic record in 2025, with 26 deals worth approximately US$1.8 billion and expanding beyond the traditional cosmetics sector.
Strategic buyers as well as private equity players are snapping up prime K-beauty brands and eyeing more deals. There have been four PE deals so far this year – the second-highest figure since 2020, according to Mergermarket data. Blackstone and KKR both made significant investments in Korean beauty companies in September 2025.
Another emerging theme in K-beauty M&A is consolidation, as Korean companies look for growth potential and global expansion possibilities into markets such as North America.
Looking Ahead
Both Capstone and DC Advisory expect beauty M&A to accelerate in 2026, as the sector remains target-rich and resilient. Analysts from Raymond James note that M&A continues to be the lifeblood of strategic organizations in the beauty industry, enabling them to maintain relevant brand portfolios, tap into emerging categories and secure innovation. Skincare and fragrance brands have become hotspots for beauty M&A and opportunities are expected to arise as beauty and healthcare continue to converge.
M&A activity in Canada rebounded in the third quarter of 2025 and dealmakers are looking to the coming year with optimism. This bodes well for a beauty industry that has proven its resilience, adaptability, vision and well-established role in the dealmaking landscape. Looking ahead to 2026, the "inescapable business of beauty" is poised to continue featuring in the dealmaking landscape.
Bennett Jones Mergers & Acquisitions Practice
Bennett Jones' Mergers & Acquisitions practice spans all industries—particularly those that drive the Canadian economy. Our lawyers account for your risk appetite and the commercial realities likely to apply after closing to guide negotiation strategy and structuring.
To discuss the developments and opportunities shaping the Canadian M&A beauty industry, please contact the authors.
Bennett Jones