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 Andrew Woolston, market intelligence associate 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.
Woolston 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.
Hair and makeup
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 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.
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