Beauty’s 2026 M&A Forecast: Measured Acceleration, Bifurcation And Selectivity

Beauty M&A weathered 2025 better than most categories.

Beauty deal volume dipped roughly 6.7%, according to investment bank Capstone Partners, a far gentler slowdown than the broader consumer sector, and the year saw several headline-grabbing transactions that reset valuation benchmarks. However, the strong M&A surge many expected didn’t materialize. Private equity stayed selective, some closely watched brands never traded, and strategics drove the majority of activity.

In 2026, beauty dealmaking could be meaningfully different. Tariff uncertainty has begun to ease, interest rates have fallen following three rate cuts by the Federal Reserve last year, and beauty continues to outperform the wider consumer market. Together, these forces could strengthen buyer confidence.

With divestitures mounting as strategics prune their portfolios and capital becoming less constrained, many industry insiders believe 2026 could unlock accelerated M&A activity. Yet, there are reasons to temper enthusiasm. An AI correction could have profound consequences for the broader economy, and if consumer sentiment weakens further, even beauty’s vaunted resilience could come under pressure.

Against this backdrop of optimism mixed with caution, for the latest edition of our ongoing series posing questions relevant to indie beauty, we asked 17 investors, investment bankers and others the following: What are your top three predictions for beauty M&A in 2026? And based on where the market is heading, what should emerging beauty brands know about today’s funding environment, and how should they approach it?

ANDREW ROSS

Senior Advisor and Venture Partner, XRC Ventures

Three predictions for beauty M&A in 2026

1. Portfolio reshaping accelerates—from multiple directions.

Strategics will continue pruning. Attempts to build new platforms will continue at pace. Watch for something else, however. At least one non-beauty CPG player will make a "Hail Mary" acquisition into the category.

There are plenty of consumer goods companies struggling to grow their core, and beauty's outperformance makes it an attractive place to buy growth you can't build organically. Someone is going to dramatically overpay for something or buy a “bubble” K-Beauty business thinking it’s a brand.

Separately, private equity firms holding color-heavy platforms are approaching decision points. We're four-plus years into some of these, and the thesis is starting to look pretty threadbare. If it hasn't worked yet, you either bolt on one of the long list of assets available to create “new news” and perhaps momentum or accept a disappointing exit. Expect something to happen in 2026.

2. At least two public beauty/personal care companies restructure significantly or break up altogether.

Some of these are legacy conglomerate structures where the market and the consumer aren’t rewarding diversification without scale. Others are SPAC-era combinations where the strategic logic hasn't translated into shareholder value. When your stock is dead and no one looks at it as acceptable currency, a breakup or take-private starts looking like the least bad option.

3. Transactions happen, but at lower valuations.

The Goldilocks list for a premium exit keeps getting longer: profitable, omnichannel, clinical positioning, defensible IP, clean cap table, a famous influencer in the mix to drive EMV and MER. Most brands can't check every box.

What will actually drive deal volume is that VC and growth equity funds need DPI. They raised capital in 2019 to 2021 with promises about return timelines. That pressure forces transactions that wouldn't have happened at these prices two years ago. Founders and investors will accept the reality of "good enough" exits rather than join the expanding list of companies that have “explored strategic options through a few fireside chats” two or three times already.

What should indie founders keep in mind?

The advice is evergreen, but still relevant: build a beautiful brand and a beautiful business. By that I mean a real P&L, one with margins and (a path to) profitability, not just top-line growth funded by investor capital.

Don't try to engineer your way to a specific transaction trigger point. By all means, keep the Goldilocks checklist handy, but build around the consumer and not the capital market. Too many external factors are beyond anyone's control: CEO turnover at the acquirer, geopolitical disruption, a sudden shift in strategic priorities, interest rates. You can do everything “right” reverse engineering to an M&A checklist and still find the window closed.

Instead, build a business that's strong enough to survive if the exit doesn't come and ready enough to move quickly when a positive discontinuity appears. Puig's IPO created a moment where they needed assets and were perhaps willing to pay up. ELC needs to respond to L'Oréal’s move with Kering in luxe fragrance and color. Those windows open unpredictably. The founders who capitalize on them are the ones who were already prepared.

JOËL PALIX Founder, Palix Unlimited

1. M&A activity will grow, but in a selective way.

I expect deal volume to increase in 2026 as macro conditions stabilize, buyer confidence improves and data confirm the resilience of the beauty category. Truly differentiated assets will attract competition while “good but not essential” brands may still struggle to trade.

In 2026, the winners among founder-led brands will marry creativity with operational rigor, keeping a strong strategic path. Many brands owned by PEs are at the end of the financial cycle and will need to be divested, also fueling the market.

2. Portfolio management and platforming will drive opportunities.

Strategic groups are increasingly rationalizing portfolios, divesting non-core brands while redeploying capital into high-growth and master brands. This creates opportunities for acquisitions and carveouts in both leading categories and adjacencies such as wellness and supplements. I also expect more platform-building strategies, not just acquisitions in standalone brands.

3. Funding will favor capital efficiency and clarity of path.

The funding environment is improving, but capital will be deployed only with strong discipline. Investors want visibility on profitability, clear routes to scale and credible exit scenarios, whether strategic or otherwise. Founders should raise capital with a real purpose and a clear allocation of funds with a demonstrated pattern of accelerating value creation.

ANNA WHITEMAN Partner, Coefficient Capital

Inevitably, the flurry of M&A activity in 2025 by strategics has stirred renewed excitement for investors in emerging brands going into 2026. Notably, b​rands that won in 2025 outperformed not only on growth and profitability metrics, but on cultural relevance and nailing their lane of consumer appeal. They developed effective emotional connection through authentic marketing and tone of voice (Rhode), or delivered singularly differentiated, focused product efficacy at real scale (Medik8).

Investors will be looking in 2026 for brands that can show early dominance of areas of structural shift within the beauty landscape, predominantly in marketing and distribution. Brands that can develop healthy and cost-effective business models on creator-led platforms like TikTok Shop or ShopMy will have developed a lane of expertise that strategics have yet to feel confident in developing in-house, which will drive inordinate value when executed at scale.

Brands that are building in stronger tailwind categories of beauty, where strategics have an expressed interest and retailers are building out real estate and investing in marketing to support growth (e.g., K-Beauty) will have stronger visibility towards an ultimate exit that investors will find attractive.

Lastly, despite a more buoyant dealmaking environment in 2025, investors and strategics have grown accustomed to looking at brands through a lens of profitability/EBITDA in the post-COVID correction era and with a spectrum of scaled brands still pipelined for M&A processes in 2026, emerging brands with the benefit of time should focus on growing with discipline and focus rather than through excess SKU or channel proliferation in their earliest days.

RONALD MACKEY Managing Partner, Clinton View Capital

1. Accelerated AI adoption

The conversation around AI appears to be moving past experimentation and into implementation. Strategic buyers are actively using AI to refine formulations, forecast demand and personalize consumer interactions to enhance their profit margins and market share. As competition intensifies both online and in stores, knowing how to use AI effectively is becoming a prerequisite for maintaining visibility and relevance.

Founder takeaway:

In discussions with investors, founders should be able to clearly explain how they believe technology can make their businesses more efficient (e.g., automating supply chain decisions, improving customer retention, accelerating inventory turns, etc.). Founders should develop a perspective on third-party providers of AI-based solutions that might be helpful for their businesses. Thoughtfulness around AI will help build process trust with potential capital sources.

2. Margin discipline

Given the tepid macroeconomic environment, I believe strategic and financial buyers will continue to focus their acquisition efforts on businesses with strong operating fundamentals. Profitable brands with clear near-term revenue expansion opportunities, predictable and proven gross margin levels and disciplined operating expense and working capital management are likely to draw investor interest.

Persistent private equity fundraising challenges have reduced PE buyers’ willingness to evaluate beauty/personal care assets that have not consistently demonstrated fundamental strength.

Founder takeaway:

Founders preparing for a capital raise should be ready to confidently discuss revenue growth plans, gross margin by distribution channel, ROI on marketing spend and their companies’ EBITDA margin level or path to profitability. A firm command of these topics will help founders drive efficient and transparent conversations with potential investors.

3. Product efficacy

Buyers increasingly want to confirm the effectiveness of a brand’s product suite before investing capital into a company. Brands that can substantiate performance claims through data (e.g., third-party testing, clinical validation, ingredient IP, etc.) tend to attract interest from higher-quality investors. While brand recognition and authenticity are important for success in the beauty/personal care space, product efficacy is critical for long-term demand.

Founder takeaway:

Investors are attracted to science-backed brands. Small-scale testing or structured consumer surveys that result in objective data on product efficacy can help build investor interest. The ability to show credible proof of benefit rather than relying purely on marketing language separates brands that raise capital from those that don’t.

Wendy Nicholson Managing Director, Global Investment Banking, Baird

Baird’s top three predictions for beauty M&A in 2026

More transactions. While 2025 was marked by fewer deals than the prior year, there were still some transactions during 2025 that were of larger-than-average deal size. In 2026, we expect the actual number of deals to increase. There were many processes that were put on hold in 2025 due to macro concerns, mostly the impact of tariffs on the supply chains as well as concerns about the outlook for consumer confidence and, in turn, consumer spending, but we believe there is significant pent-up demand on the part of both buyers and sellers to see more brands transact.

Given that some of these macro concerns are now largely in the rearview mirror as companies have adjusted their supply chains or price points to account for the current tariff environment, to the extent there are no new “shoes to drop” from a macro perspective, we believe some of the stalled processes or shelved transactions will come back to life in 2026.

More interest in more categories. Skincare dominated M&A headlines for a long time, and, more recently, there has been a flurry of activity in fragrance. But we think there will be more transactions in 2026 across a wider range of product categories. We think there continues to be a lot of interest in hair. We think the successful Beauty Tech IPO in London could lead to more interest in beauty devices, and we think there is interest in pockets of the color cosmetics category, especially where innovation is driving growth.

More reasonable valuations for acquisitions. When we look at one big reason for transactions stalling (e.g. sellers not succeeding in finding a buyer), it is because the sellers came to the market with inflated expectations about what their brand is worth. Given the fact that some spectacular brands traded in 2025 for valuations that are lower than we have seen historically (e.g., Rhode traded to E.l.f. at 10X or 12X if you include the earnout), we believe that the “market has spoken” with regard to what valuations most buyers are currently willing to pay for acquisitions.

While there will always be businesses and brands that trade for higher-than-average valuations (e.g. Medik8 was an outlier in 2025), we believe a more rational level of valuation expectations on the part of sellers should help more deals be completed successfully.

Sasha Radic Managing Director, Beauty and Wellness Investment Banking, Jefferies

1. Scale and efficiency matter as much as growth.

Buyers are placing increased emphasis on brands that pair healthy top-line momentum with disciplined execution. Efficient customer acquisition, strong margins and repeat purchase behavior are core valuation drivers.

2. Category leadership in high‑priority segments is essential.

Strategics are reevaluating their portfolios and are focused on categories with strong long‑term momentum. Some of the most active segments have been — and will continue to be — clinical and science‑backed skincare (Medik8), prestige fragrance (Kering Beauté), high‑performance hair care (Color Wow) and the premiumization of body care (Touchland, Dr. Squatch).

3. Differentiation, hero products and community drive durability.

The strongest outcomes are tied to brands with clear brand differentiation, hero products that anchor their proposition and a loyal community that underpins demand. Buyers are looking for brands that are built to last.

What Founders Should Keep in Mind

• Scale with intention. Growth that is efficient, proven and repeatable carries more weight than growth driven by distribution expansion, discounting or elevated spend. A clear path to margin expansion matters.
• Be clear about what you uniquely own. Strong hero products, tight category focus, sharp positioning and a real community create meaningful value. Avoid unnecessary complexity.
• Execute strategically. The right team, clean operations, good data discipline and a thoughtful channel strategy make a huge difference.

Rich Gersten Co-Founder and Managing Partner, True Beauty Ventures

In 2026, we expect beauty M&A activity to accelerate, but in a more bifurcated and competitive way. Strategics should remain the primary drivers of deal flow, supported by portfolio rationalization, improving balance sheets and a renewed focus on filling growth and innovation gaps across skincare, hair, fragrance and wellness.

At the same time, the competitive behavior of the largest beauty players will matter. Companies like Unilever and P&G may choose to stay patient and build internally or they may increasingly compete with L’Oréal, whose aggressive dealmaking could trigger a broader sense of urgency across the category as no one wants to fall further behind.

This dynamic, combined with widening valuation dispersion and the continued emergence of non-obvious buyers, suggests that the most differentiated, high-growth, high-margin brands will continue to command premium outcomes.

For emerging beauty brands, the funding environment remains selective and fundamentals driven. Capital is available, but it is flowing to businesses that demonstrate disciplined growth, durable margins and a clear path to profitability. Investors are underwriting resilience, not just momentum.

Founders should focus on building brands that can stand on their own, with tight SKU strategies, thoughtful distribution and strong unit economics, while staying flexible on timing and capital sources. Those that balance growth with profitability will be best positioned to take advantage of improved M&A conditions as the window opens further.

Tatiana Perim Partner and Global Lead, Beauty and Personal Care, Consumer Practice, Kearney

Looking towards 2026, a few factors drive considerations:

First, funding is available. A lot of PE investors still have funds available to deploy, often referred to as “dry powder,” and even the strategic acquirers (i.e., non-financial sponsors) that have already done sizeable transactions have for the most part more funds in their “treasure chest” ready to use (e.g., L’Oréal). However, valuation discipline will matter. Investors remember the valuation peak of a few years back and will want to make sure they don’t overpay this time around.

Secondly, the market consolidation will accelerate: scale for growth and margin improvement is becoming critical, and investors will look at assets across the entire value chain, from ingredients players to manufacturers to brands, to gather those economies.

Third, the past few years have been tough on several conglomerates that used to dominate the market. Divestitures will help fuel M&A in 2026 as the larger players aim to rethink their portfolio.

Finally, focus will remain on fragrance as a category, especially in the prestige/luxe segment and dermatologist-backed skin/haircare brands. Brands that are focused on specific niches (e.g., men’s personal care) or have a cult following (e.g., Rhode) will remain appealing regardless of the category.

NICOLE FOURGOUX Operating Partner, Stride Consumer Partners

Top three predictions for beauty M&A in 2026

1. Deal volume will rise, but selectively, not broadly.
With easing tariff pressure, lower interest rates and improving financing conditions, buyer confidence should strengthen in 2026. In addition, L’Oréal’s 2025 activity will force competitors to respond more assertively, particularly in science-led categories and the luxury segment. That said, increased activity will concentrate at the top of the market. Brands with clear category leadership, sustainable profitability, a credible path to global scale and ideally a unique capability set will attract multiple bidders. Others may continue to struggle to gain meaningful traction.

2. Portfolio pruning will unlock meaningful opportunities. As strategics rationalize their portfolios, divestitures of non-core or underperforming brands are likely to accelerate. This will create a new wave of carveouts and secondary transactions, opening opportunities not only for private equity firms but also for emerging brands that can benefit from category consolidation, distribution openings or the migration of experienced talent out of larger organizations.

3. The valuation gap will widen, not narrow. The market will remain bifurcated. Exceptional brands may command premium multiples reminiscent of peak cycles, while average or undifferentiated assets will face more modest outcomes. AI-driven disruption across marketing efficiency, demand forecasting, personalization and consumer engagement will further reward brands that adapt quickly and penalize those that fail to build modern, data-driven operating models.

What emerging beauty brands should know about today’s funding environment:

Capital is available, but it is disciplined.

Investors are prioritizing capital efficiency, clarity around use of funds and realistic growth plans. The era of “growth at all costs” has largely passed.

Early signals matter more than absolute scale.

Strong retention, high consumer loyalty and credible margin expansion, even at smaller revenue bases, can unlock better funding outcomes than rapid but unsustainable top-line growth.

Choose partners, not just capital.

In an increasingly complex operating environment, brands benefit from investors who bring pattern recognition, operational expertise and long-term conviction and patience, not just a check.

Marissa Lepor Managing Director, The Sage Group

Building a successful brand takes passion, vision, patience and a resilience that defies the odds. That’s what makes this industry so magical and why M&A exists. If strategics could easily build businesses in-house, they would!

The beauty world is an active industry with new brands constantly entering the market. While the barriers to entry have lowered, the barriers to scale continue to increase, so differentiation from a brand, product, marketing and community perspective is more important than ever.

Investors are expecting more from brands at earlier stages. Not only do they require a clear product and brand vision, but they also want sales growth, profitability, channel diversification and an engaged customer base. If you’re a founder, stick to your vision and have patience. You can’t run the perfect business from day one, but the right brand, product and team can get you there.

Buyers are highly focused on brands with a routine-oriented product offering. Brands such as Medik8 and Rhode have a streamlined offering that customers use daily, driving brand loyalty, retention and long-term profitability.

This strategy also fosters operational efficiency from a working capital and R&D perspective, allowing businesses to rapidly scale sales and profit. I believe there will be continued interest in and competition for routine-oriented businesses with strong customer engagement across all beauty categories.

Beauty customers are highly focused on efficacy. They are most loyal to brands and products with positive results they can see and feel, which also leads them to quickly adopt new product launches, driving both revenue and profit. As such, businesses that demonstrate high customer loyalty and engagement will continue to generate substantial interest from investors.

The brands with the clearest vision for what they stand for today and how they will continue to be at the forefront of the industry for decades to come will ultimately be the most sought-after opportunities.

Tina Bou-Saba Founder and Managing Partner, CXT Investments

1. Beauty M&A will continue at 2025 levels and may even accelerate, especially if rates go down in 2026. That would likely draw in more financial buyers as well. I see quite a few at the various industry conferences and events. It feels like many may be waiting for the bid-ask spread to narrow. Lower rates should help with that. Strategic divestitures may unlock capital and other resources for M&A.

2. That said, I believe that strategic buyers will still be focused on sizeable brands that can have significant global scale. They want "power brands," not a bunch of promising but sub-scale brands. So, even if we see more deals, I don't think that the requirements for size, growth and profitability will change significantly.

3. I tried this one last year, and it didn't happen, but I'm not giving up on it! I still think that we will see PE-backed aggregation of mid-sized brands that don't quite meet the expectations of traditional strategic acquirers, but are nonetheless healthy businesses with attractive growth prospects. This feels like a highly compelling consolidation opportunity to me. I feel like it's got to happen at some point.

In light of all of this, I think that the funding environment for emerging beauty brands is a bit better than it was a year ago. It's not a dramatic change, but I certainly sense more appetite amongst early-stage investors. However, I think that even those early-stage investors are still focused on brands with at least a few million dollars in sales and a proven customer acquisition edge unless there is already an established audience, as with a creator or celebrity brand.

The risk-reward for investors is generally unattractive for very early brands that don't have that customer acquisition edge. By this I mean that, in a highly fragmented market in which the cost of entry is very low and the ultimate range of outcomes is pretty clearly defined, one must apply a very low probability to the chance that any one brand achieves an outlier exit.

As a brand gains traction, that probability begins to change significantly, along with the risk-reward calculation for the investor. Beauty investing is an art and a science, to be sure! But we have to be realistic about market dynamics and realistic range of outcomes.

ELIZABETH LIM Strategic Advisor, Joyance Partners

Three predictions for beauty M&A in 2026

1. Strategic-led deal activity will regain momentum as portfolios reset and confidence improves.

The outlook for 2026 is strong. Deal backlog, ongoing corporate shake-ups and the constant search for innovation are likely to bring renewed momentum back into the market. As macro visibility improves and capital becomes less constrained, strategics are poised to become more active, both through divestitures and targeted acquisitions that strengthen core categories and capabilities. This sets the stage for a more constructive M&A environment than we saw in 2025.

2. Acquisition activity will be shaped by strategic portfolio needs, not category hype.

Deal activity will continue to cluster around skincare, fragrance, hair and scalp care, and wellness-driven beauty hybrids, but success will be defined by strategic fit rather than category alone. Buyers will favor brands that clearly strengthen their portfolios, whether by reinforcing authority in a core category, modernizing a legacy position or bringing a differentiated consumer point of view. The winning brands will make it easy for acquirers to see how they enhance the broader brand portfolio and long-term growth strategy, not just perform as standalone assets.

3. Premium outcomes will favor brands that combine science, authenticity and financial discipline.

Valuations are likely to remain rational, but premium outcomes will still be achievable for brands that pair credible product efficacy and consumer trust with strong unit economics. Buyers are increasingly rewarding brands that demonstrate margin strength, capital efficiency and the operational readiness to scale profitably within larger platforms. The brands that rise in 2026 will show not just momentum, but durability.

What emerging beauty brands should know about today’s funding environment and how to approach it

1. Capital is available, but efficiency is now the defining metric.
Investors are focused on how quickly a brand can prove it deserves to exist. Clear paths to profitability, thoughtful capital deployment and the ability to operate sustainably at relatively modest scale are increasingly central to funding decisions.

2. Revenue quality and product-market fit outweigh top-line acceleration.

Strong repeat behavior, healthy margins and disciplined marketing efficiency matter more than rapid but fragile growth. Brands that demonstrate earned consumer demand and consistent performance are better positioned to raise capital on attractive terms.

3. Financial sophistication signals readiness.

Founders who understand burn, return on spend and capital efficiency and who can thoughtfully evaluate alternative financing options signal true operational maturity. Treating capital as a strategic tool rather than a safety net builds confidence with both financial and strategic investors.

MANICA BLAIN Founder, Top Knot Ventures

Prediction 1: More pruning will create more “available assets,” and PE will get more active.

As so many strategics stay focused refining their existing portfolios, there will be more brands in-market looking for buyers. That environment is tailor-made for private equity to step in, buy cash-flowing brands at rational prices and build the modern version of a beauty house via a portfolio approach.

After what seemed like a dry spell in beauty dealmaking, it seems like TSG is stepping up and doing just this, possibly creating something closer to what we’ve seen in CPG with groups like Mammoth Brands: a collection of strong, cash-flowing, culturally relevant brands that may not last forever, but matter deeply right now. Private equity is well-positioned to aggregate these assets once pricing clears.

Prediction 2: A valuation reset unlocks volume, but only the rare brands keep peak multiples.

Every asset has a price at which it clears the market. It’s simple economics. As expectations recalibrate and sellers come to terms with a new normal, more deals will get done. I expect 2026 to show increased volume, even if headline multiples remain selective and concentrated among truly differentiated brands with defensibility.

Prediction 3: Buyers will underwrite resilience over hype.

In a more uncertain macro, acquirers will ask: Can this brand perform through the next cycle? The practical implication is that “durability signals” matter more than ever: retention, repeat rate, margin discipline, working capital management and the ability to launch new heroes without constant paid support.

What to do right now as a founder:

Decide what kind of longevity you’re building (franchise versus moment) and fundraise accordingly. I believe the market is increasingly becoming comfortable with both as long as you’re honest about the asset type.

Build cash-flow credibility early. Even strategics have taken impairments on once-hyped assets. That makes real unit economics and repeat purchase more valuable than ever.

Don’t anchor on 2021 to 2022 pricing. If a sophisticated buyer can point to impairments or restructurings across the industry (from big houses to PE-backed icons), they will price this risk explicitly, and founders should plan for that reality, not fight it.

ALEXIS AMANN Founder, Playbook of Beauty

I believe three themes will define the beauty M&A landscape in 2026:

1. Portfolio rationalization should boost the market.

The big beauty groups, having aggressively acquired in prior cycles, are now entering a phase of strategic refocus. This could lead to a significant increase in divestitures of non-core or underperforming assets. Notably, Coty is widely rumored to be exploring a sale of its mass division, while LVMH is reported to be considering options for Fenty Beauty. These potential deals will provide a supply of sizable assets for both strategic and financial buyers, which could accelerate transaction tempo.

2. Korean beauty transitions from niche to target.

Korean beauty has shifted from an emerging niche trend to a leading segment of the global beauty market and increasingly so in the U.S. Official data from the Korean ministry of trade show that the U.S. is now the leading destination for Korean cosmetics exports, holding a 22.2% share valued at $1.4 billion in 2024, with brands like Medicube and Beauty of Joseon having grown exponentially in a very short time. This makes the category ripe for consolidation by global strategics seeking authentic innovation and deep consumer loyalty.

3. The convergence of beauty, wellness and tech will define new frontiers.

The boundaries of the beauty market are expanding beyond product into adjacent services and technology. I expect dealmaking to increasingly target the intersection of these fields. The rise of medical aesthetics, clinic chains and integrated wellness platforms presents a new frontier for investment, as seen in Iris Ventures’ backing of Innerskin and the recently announced well-being joint venture between L’Oréal and Kering. Acquirers are looking to build ecosystems that capture the entire consumer journey from topical products to professional treatment.

For emerging brands, discipline is the new currency

For emerging brands navigating today’s funding environment, I reckon “growth at all cost” is no longer a compelling narrative. Buyers and investors' scrutiny has intensified, shifting focus to sustainable unit economics and operational rigor. To attract capital, brands must demonstrate:

• Mastery of their unit economics: a controlled customer acquisition cost (CAC) is key, proving scalability without reliance on unsustainable marketing spend.
• Focused product portfolio: a rationalized catalog centered on hero products with clear scientific validation or intellectual property is more valuable than a very large catalog of undifferentiated products.
• Path to profitability: clear evidence of a road to profitability, backed by disciplined operational execution, will separate the viable targets from the rest.

ODILE ROUJOL Founder, Fab Co-Creation Studio Ventures

Top three predictions for beauty M&A in 2026

1. Cautious optimism amid economic volatility: Potential economic corrections like an AI-induced downturn could temper M&A enthusiasm.

2. Continued focus on strategic acquisitions: A focus on brands that can seamlessly integrate into portfolios, with strong digital presence and innovative products. They can help with scaling worldwide.

3. High-conviction acquisitions and disciplined growth: Buyers are prioritizing strong fundamentals over mere hype and scale. The spaces to watch:

• Adjacent wellness categories like ingestibles/beauty supplements: Brands with scientifically validated ingestibles that complement topical products.
• Biotech and longevity: Brands that own proprietary, science-backed ingredients or technology in the metabolic beauty and lifestyle space with defensible, patentable formulas that offer proven preventative and long-term skin health benefits.
• Fragrance/scent: Brands that leverage emotional or neuro-cosmetic benefits, enhancing mood.

CLAIRE CHANG Founding Partner, IgniteXL Ventures

In 2026, beauty deals are likely to increase, but remain sharply focused on the strongest brands, those grounded in real science, loyal repeat customers and global appeal. The environment should feel directionally similar to 2025: Big companies will keep trimming and reshaping their portfolios, rare high-performing brands will command premium prices and everyone else will face tougher, more conditional deal terms.

What this means for founders in 2026:

1. Pick a clear wedge and win it. Anchor around a hero product and build repeat before chasing a wide assortment.

2. Design for contribution profit early. Know your margin by channel and be willing to say no to growth that doesn’t pay back.

3. Diversify demand. Avoid being overexposed to any single platform, whether that’s one retailer, one marketplace or one paid channel.

SAM KAPLAN Partner, Five Seasons Ventures

1. Divestitures will sharpen strategic M&A. Portfolio rationalization by large groups will continue, illustrating clear priorities for indie founders to build against.

2. Private equity is likely to reengage selectively. Lower rates may support increased PE activity, but more frequently as the buyers of non-core corporate portfolio assets (i.e., Reckitt home division to Advent) than the top tier beauty assets.

3. Valuation dispersion will widen further. Top-tier assets should attract competitive processes, while less differentiated brands will struggle to move.

Founder takeaway: Capital remains available, but real financial results matter more than fundraising FOMO.

If you have a question you want Beauty Independent to ask investors and investment bankers, send it to editor@beautyindependent.com.