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BFD Expert Voices - Retail Deals

BFD Expert Voices

Profitability is king for beauty dealmakers, said attendees at Beauty Connect this week.

Why it matters: While the M&A floodgates slowly open, brands need to be prepared to demonstrate strong unit economics.

What they're saying: Brands need to be rigorous on their spending and be able to demonstrate that they know how to get to profitability, says L'Occitane Americas head Nicolas Geiger.

"They need to explain it," says Blackstone Growth global head of consumer Ann Chung.

They need to figure out their business model and ask, how do you get to true profitability and why are you not there?

Zoom in: Estée Lauder M&A head Dave Smith prioritizes cash flow and longevity.

The company looks for bridges to profitability and whether growth is sustainable over time, whether that's three years or 20, he says.

Estée Lauder is also looking for brands that have verifiable science, and then those that build community, he adds.

Between the lines: Geiger says he is looking for brands that people are obsessed with because "it's a bit of a magic recipe."

L'Occitane seeks brands "that answer demand from the point of view of engaging the community in a different way," Geiger says.

He adds: "Brands need to learn very quickly to be profitable because they need to learn how to make their marketing effective," which has largely shifted to social media.

Yes, but: "Beauty is a space where there is very little correlation to be honest, between marketing investment and success," says Alicia Sontag, a managing partner at Prelude Growth Partners.

If consumers still want a product despite the cost of goods, price-point and marketing, "that's the numerical version of consumers telling you they love the product," Sontag says.

Beauty dealmakers have an eye for profitable brands

At Beauty Connect, dealmakers say they want brands with buzz and profitability.

illustration of a dollar bill with george washington wearing a blue clay face mask and cucumber slices over his eyes

Mergers and acquisitions

Profitability is king for beauty dealmakers, said attendees at Beauty Connect this week.Why it matters: While the M&amp;A floodgates slowly open, brands need to be prepared to demonstrate strong unit economics.

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Beauty dealmakers have an eye for profitable brands

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