Boyne Capital Acquires Majority Stake In YZY Fragrances

Boyne Capital has acquired a majority stake in YZY Fragrances, a 40-year-old company focused on accessibly priced fragrances.

Terms of the deal weren’t disclosed, but it involves providing partial liquidity to the founding family while remaining partnered with management. Founded by Yehuda Shechter, YZY has been stewarded across three generations of the family, including current CEO Joseph Bouskila. The deal aligns with Boyne’s strategy of investing in lower-middle-market businesses generating roughly $10 million to $100 million in revenue and $3 million to $15 million in earnings before interest, taxes, depreciation and amortization (EBITDA).

“The fragrance category is having a moment,” says Patrick McKinney, VP at Boyne. “A lot of the powerful demographic trends are supporting that, which is why we think it’s an interesting place to invest.”

Not only is the fragrance category having a moment, but mass-market fragrances are having a moment, the segment YZY specializes in. According to market research firm Circana, the mass-market fragrance category generated the fastest growth in the beauty industry in the first quarter, at 16%. However, fragrance has the lowest mass-market penetration of any beauty category, at roughly 10%.

On its website, YZY lists seven fragrance brands under its umbrella. McKinney identifies the three largest brands as Territoire, Acqua di Parisis and Insurrection. Territoire and Acqua di Parisis are largely priced in the $20 to $30 range, with some Insurrection fragrances climbing closer to $100. YZY’s sales have been growing at a double-digit rate year over year, per McKinney.

YZY obtains ingredients from fragrance houses in France, but unlike many fragrance marketers, it’s vertically integrated and manufactures its products in-house. Its U.S.-based manufacturing operations may prove advantageous as tariffs and supply-chain disruptions increase beauty companies’ costs, lengthen production timelines and complicate sourcing decisions.

The company’s fragrances are sold primarily through independent perfume shops, beauty supply stores and e-tailers, and it partners with retailers and distributors in North America, Latin America and the Caribbean. It doesn’t yet have a meaningful presence in major retail chains in the United States.

In evaluating YZY, Boyne zeroed in on how consumers perceived the products in a crowded fragrance market. McKinney says the firm conducted consumer research that showed strong feedback around scent quality and longevity, particularly relative to price. Boyne is also excited about YZY’s opportunity to expand its e-commerce business and distribution footprint in the U.S.

McKinney says, “We liked the fragrance space a lot and looked around at a couple of different opportunities, and YZY was a great fit for us because it mirrored all the characteristics we look for: great heritage, scaled business, historically a family-operated business where we were backing the transition and supporting the leadership of the third generation.”

“YZY was a great fit for us because it mirrored all the characteristics we look for.”

YZY and Boyne are headquartered in Miami. Derek McDowell founded Boyne in 2006 after working at Trivest Partners and H.I.G. Capital. The firm closed its third fund last year with more than $400 million. It has about 20 companies in its portfolio and has a broad purview for its deals that extends to business services, consumer products, niche manufacturing, healthcare services, financial services, industrial infrastructure and engineering services.

McKinney says roughly half of Boyne’s approximately 30-person team consists of operating professionals, an unusual setup for a private equity firm that allows it to offer hands-on operational guidance to portfolio companies. Boyne frequently invests in companies at inflection points in their growth, where operational expertise can be especially important.

Boyne’s YZY deal comes as mergers and acquisitions have accelerated in beauty this year, with fragrance emerging as a hotspot. Recent fragrance deals include L Catterton’s minority-stake investment in Ex Nihilo, Perfumer H’s $4.5 million funding round from Elixir 1 Investment and Ilyos Capital, Unilever Ventures’ investment in Indian fragrance brand Secret Alchemist and American Pacific Group’s acquisition of a majority stake in Dossier.

“There’s been a lot of M&A activity in the space,” says McKinney. “You have larger financial sponsors making investments in both fragrance brands and production capabilities, and we would expect to continue to see that activity.”

Boyne continues to consider opportunities in consumer packaged goods categories, including beauty, wellness, food and beverage, apparel and outdoor products. Beyond YZY, the firm’s consumer portfolio contains coconut water company Blue Monkey and supplement brand Double Wood.