Hair is the hottest category in beauty, so it’s only fitting that the sector would be ripe for deal making.
In recent years, hair care deals have lagged behind skin care and makeup transactions. While L’Oréal and Henkel have been among go-to hair acquirers for years, new big strategic buyers and private equity investors are now entering the fray.
Investor interest is fueled by a shift in the hair category, which is now peppered with innovation and majorly impacted by the channel blurring of recent years. That channel blur has allowed hair brands to live in professional and retail environments or between prestige and mass at the same time, experts said. Investors are said to be interested in hair care brands, but also looking at color, extensions and other emerging areas of the hair business.
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“You’re going to continue to see a lot of interest in the category and there’s room for many winners,” said Lindsay Carlson, managing director at William Blair. “You’ve got brands targeting more of a mass consumer, brands winning in prestige, masstige, all of those categories. The science focus and the technology of hair care will become a bigger theme.” Carlson worked on one of the major hair care deals of 2021, and represented Mielle on its investment from Berkshire Partners, which generally invests at least $100 million per deal.
“I definitely have seen a broader interest in the hair care category,” said Coye Nokes, partner at OC&C Strategy Consultants. “Some of these bigger businesses, call it P&G, call it Unilever, have been more interested in building a prestige portfolio…thinking about, ‘How do we actively participate?’ So it’s not surprising to me that there’s increasing interest in hair within that strategy.”
There have been several notable hair care deals recently, including Olaplex’s initial public offering. The company paved the way for the solidification of the channel shift between professional and retail by thriving in both environments, and was valued at around $15 billion when it went public.
There was also Procter & Gamble’s deal for Jen Atkin’s Ouai, which industry sources have said valued the company at between $200 million and $250 million. That transaction underscores new strategic interest in hair — before that acquisition, P&G had no exposure to high-end hair care.
There was also VMG’s investment in K18, a one-product brand that aims to use proprietary technology in order to repair hair. That business has been growing quickly and is expected to reach $100 million in sales this year.
Industry sources said there are several hair brands that could be sold or receive investments soon. Briogeo is said to have more than $100 million in sales and be working with Financo Raymond James to explore options after inbound inquiries; Curlsmith and Amika are also said to be working with the firm to explore options. Then, there’s Nutrafol, the fast-growing hair growth company founded on supplements, which is said to be working with Jefferies and expecting a valuation north of $1 billion. Gisou in December said it was fundraising, and industry sources said that round has closed.
“The buyer universe is opening up. Strategics who have not historically played into the category are now looking, and sponsors with platforms in the space are continuing to look for M&A,” Carlson said. “There’s going to be a lot.”
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