The beauty industry is gearing up for a period of growth and activity after a slight dip in mergers and acquisitions in 2025. Investors are eyeing vertically integrated, clinically backed clean beauty and wellness brands as the ones to watch for big wins in the coming year.
According to Andrew Woolston, a market intelligence associate at investment firm Capstone Partners, the beauty sector is expected to shine as one of the most resilient and dynamic sectors in the consumer landscape. High-growth categories like fragrance are expected to drive sector performance, along with products that offer strong perceived value and innovative formulations.
Capstone forecasts an acceleration in beauty M&A activity in 2026, following a small decrease in deals in 2025. Last year saw 56 transactions, down from 62 in 2024, with notable deals including Elf Beauty’s acquisition of Rhode for $1 billion and Kering selling Kering BeautĂ© to L’OrĂ©al for €4 billion.
Looking ahead, Woolston predicts that companies like L’Oréal, Estée Lauder Companies, Elf Beauty, and Coty will be active in acquiring brands that cater to the rising demand for clean, sustainable, and derma-focused beauty products. Brands like Dr. Jart, Too Faced, Smashbox, Olaplex, Pat McGrath Labs, and Fenty Beauty are all potential targets for acquisition.
Ilya Seglin, managing director of investment bank Cascadia Capital, notes that large corporations and their core brands are not experiencing significant growth. This has led to a need for growth solutions, prompting investors to be selective in their acquisitions. Brands that are diversified across regions with varied distribution channels are likely to attract interest.
In terms of specific categories, 2025 was relatively quiet for haircare and color cosmetics, with minimal M&A activity. EstĂ©e Lauder is reportedly looking to sell off underperforming brands like Dr. Jart, Too Faced, and Smashbox, while Coty’s Rimmel and Max Factor brands may also be up for sale.
Looking ahead, there is optimism for haircare brands entering the market, with color cosmetics expected to be a more vibrant category for acquisitions. Brands like Westman Atelier, Merit, and Saie are potential targets for acquisition in the cosmetics segment.
Overall, the beauty industry is poised for growth and transformation in 2026, with investors keeping a close eye on brands that offer clean, sustainable, and innovative products. As the market continues to evolve, strategic acquisitions will play a key role in shaping the future of the industry.
