Lipstick effect: 6 PE-backed beauty and personal care deals

A downturn in the economy has historically been good news for the beauty and personal care, or BPC, industry – a phenomenon some call the “lipstick effect.” The idea is that “small investments in self-care are on trend because, recession or no recession, ‘look good, feel good’ holds,” as LEK Consulting put it in a recent report. But not all brands are created equal, and new generations of consumers have new demands. Changing times plus the fragmentation of the BPC sector makes it fertile ground for private equity investing.

Since the beginning of the year, PE Hub has seen a steady flow of deals on the manufacturing side as well as the logistics and retail side of BPC. Below, we round up six PE-backed BPC deals, starting with the most recent.

1. Yellow Wood completes Suave purchase from Unilever

In May, Boston-based Yellow Wood Partners completed its acquisition of Suave from Unilever.

“Twenty-five percent of American households have a Suave product on their shelves,” Yellow Wood partner Dana Schmaltz told PE Hub in an interview. “The brand awareness is among the highest of its peers in the hair care and body wash categories, the awareness to trial is extremely high and the trial to repeat usage is extremely high. Those are metrics we at Yellow Wood look for in our brands.”

Schmaltz continued: “We tend to focus on those brands that have consumer metrics that we think are strong enough to survive outside of a large consumer packaged goods (CPG) company. We then implement our operating strategy. We had to replicate a production and distributions network for over 250 million units that are sold annually,” he said.

2. Wind Point-backed Voyant Beauty acquires Jade Road

Also in May, Voyant Beauty, a portfolio company of Chicago-based Wind Point Partners, acquired Jade Road Design and Sourcing, a supply chain services provider for the fragrance packaging industry that is also headquartered in Chicago.

“Adding complementary supply chain capabilities through M&A has been a key pillar of the Voyant value creation plan,” said David Stott, Wind Point managing director. “The acquisition of Jade Road is closely aligned with this strategy, and we look forward to supporting the growth of the combined businesses.”

3. DIBS Beauty secures investment from L Catterton

Greenwich, Connecticut based-L Catterton in April made a significant investment in Austin-based DIBS Beauty, a cosmetics brand that was launched in September 2021.

“DIBS Beauty is a highly distinctive brand that has quickly established a reputation for offering approachable, multifunctional makeup essentials that resonate with its customers,” said Jon Owsley, co-managing partner of the L Catterton Growth Fund, in a statement.

4. TruArc invests in Trademark Cosmetics

TruArc Partners, a New York-based firm, invested in Trademark Cosmetics Inc (TCI), a Riverside, California-based maker of beauty and personal care products in April.

TCI was founded by David Ryngler in 1994.

“At TruArc, we are focused on investing in well-positioned platforms that are capable of transformational growth. We think TCI is a well-positioned business that is poised to scale with our planned investments,” said Gerald Sheehan, a partner at TruArc, in a statement, adding that: “Our goal is to further enhance TCI’s position as the go-to partner for high growth brands.”

5. SFEP-backed SV Labs gets a recap from Abacus

In January, San Francisco Equity Partners, a PE firm focused on growth-oriented companies in the consumer sector and headquartered in the same city as its name, announced the acquisition of SV Labs, a maker of natural beauty and personal care products.

Abacus Finance Group provided $50 million in credit facilities to back the recap of SV Labs.

6. Berkshire Partners exits haircare brand Mielle Organics

Boston based Berkshire Partners in January exited its stake in Mielle Organics, a haircare brand, to P&G Beauty. Berkshire initially invested in the company in of 2021.

Mielle, founded in 2014, is a woman-led global beauty brand that is rooted in natural ingredients. Its products are found in retailers, such as Ulta Beauty, Sally Beauty, Target, CVS, Rite Aid, Walgreens and Walmart.

“Mielle is a high-growth brand with passionate founders, a strong consumer connection, and deep community ties that go beyond their products,” said Marni Payne, Berkshire Partners’ managing director at the time of exit.

Moving forward, PE Hub expects to see many more deals in the BPC sector.