The beauty and personal care industry has emerged as a prime target for mergers and acquisitions (M&A), fueled by robust consumer demand, strong brand loyalty and consistent repeat purchases. In 2025, buyers are seeking high-margin, high-growth opportunities, and the beauty sector stands out as a dynamic combination of innovation, influence and commercial success. Growing at an annual rate of 6%, the global beauty market is projected to reach $590 billion by 2028. This steady growth positions beauty as one of the most attractive sectors for investment.
At DelMorgan & Co., we view beauty and wellness not only as resilient consumer categories but also as strategically valuable segments for buyers seeking long-term returns and cultural relevance.
Digital Brands Are Driving the M&A Boom
The rise of direct-to-consumer (DTC) companies is a key driver of M&A activity in the cosmetics industry. These brands leverage platforms such as Instagram and TikTok to build loyal communities, bypassing traditional retail channels. While they may lack the scale of larger competitors, DTC brands excel in consumer engagement, agility and distinct brand identities – qualities that established companies are eager to acquire.
A prime example is e.l.f. Beauty’s acquisition of Rhode, Hailey Bieber’s skincare brand, in a deal valued at up to $1 billion. Launched in 2022, Rhode quickly gained traction among Gen Z and millennial consumers through its minimalist design, transparent product formulations and strategic influencer marketing. The brand achieved over $200 million in annual revenue in under three years, and its acquisition highlights the growing appeal of digitally native brands as top M&A targets in the beauty sector.
Shifting Consumer Preferences Fuel New Opportunities
Today’s consumers are increasingly discerning, prioritizing clean ingredients, sustainable packaging and wellness-focused formulas. Beauty products have become an extension of personal values and lifestyles, creating opportunities for smaller, mission-driven brands to thrive. Larger companies are responding by acquiring these niche players to stay competitive and culturally relevant.
A recent NielsenIQ report reveals that 64% of beauty consumers actively seek “clean” or “green” products, with over half prioritizing cruelty-free brands. These shifting values enable purpose-driven firms to gain visibility and market share. As a result, large corporations are
acquiring brands not just for scale but to align with evolving consumer expectations. At DelMorgan, we anticipate this trend will intensify as buyers increasingly target brands that resonate with modern consumer values.
Strong Fundamentals Attract Investors
Beyond cultural relevance, the beauty industry offers compelling business fundamentals that appeal to both private equity and corporate buyers. Skincare and cosmetics brands often achieve gross margins exceeding 60%, with relatively low capital expenditure requirements. Many beauty businesses, particularly those with strong online presence, operate lean supply chains and achieve profitability early.
Moreover, the beauty sector has proven resilient even during economic downturns. The “lipstick effect” – where consumers continue to purchase small indulgences like cosmetics during challenging times – has endured through multiple economic cycles. This combination of growth, resilience and capital efficiency makes the beauty industry a standout in the broader consumer landscape.
Private Equity’s Growing Influence
The beauty sector’s high-return potential and recurring revenue streams have drawn significant interest from private equity (PE) investors. In Q1 2025, the beauty industry recorded around 35 M&A deals, marking a 12.9% year-over-year increase in deal activity. These investors are not only acquiring individual brands but also building diversified portfolios, often starting with a flagship brand and expanding through smaller, complementary acquisitions.
DelMorgan expects this trend to accelerate as PE firms pursue value creation through global expansion and operational optimization. We also anticipate increased M&A activity in emerging markets, where rising disposable incomes are driving significantly increased demand for beauty and personal care products.
DelMorgan’s Perspective on the Future
As the beauty industry evolves, DelMorgan & Co. remains committed to guiding brands through growth, scaling and strategic exits. We recognize that success in beauty extends beyond the product – it is about strategic positioning. The most attractive acquisition targets today combine cultural insight, consumer trust and operational excellence.
Whether supporting a founder pursuing a sale, a corporation expanding into new categories or an investor building a portfolio, 2025 offers a favorable environment for strategic moves. With decades of experience advising companies across the consumer landscape, DelMorgan delivers the insight, execution and global reach needed to unlock maximum value.
About DelMorgan & Co.
DelMorgan & Co. is a leading global investment bank headquartered in Santa Monica, in the greater Los Angeles area of Southern California. With over $300 billion of successful transactions in over 80 countries, DelMorgan‘s Investment Banking professionals have worked on some of the most challenging, most rewarding and highest profile transactions in the U.S. and around the globe.
