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The natural personal care industry was the darling of the investment community until the financial crisis started in 2008. After a lull period of 18 months, major deals have restarted. Bare Escentuals was acquired by Shiseido in a $1.7 billion deal, and Clarins completed its purchase of Kibio in February 2010.
Organic Monitor predicts more such deals on the horizon as investors once again start pursuing natural personal care companies. Investors are attracted by high market growth rates and profitable product categories. European companies are expected to be involved in major deals in 2010 because of the lack of "investable" companies in North America. Many leading American companies have already been acquired, leaving relatively few suitable privately-owned companies. In contrast, Europe has a high concentration of sizeable private companies.
In its new Strategic Insights: Mergers, Acquisitions Investments in the Natural Personal Care Industry report, Organic Monitor analyzes investments, mergers and acquisitions in the global natural personal care industry. The report provides details of major deals, the companies involved, investment rationale and impact, as well as future projections. The research shows that most deals have been in North America where companies, such as Bare Escentuals and Burt’s Bees, have been purchased for more than three to five times their sales revenues. High prices are being paid by investors looking to emulate Estée Lauder’s success with Aveda, notes Organic Monitor.
The report finds the most successful natural personal care companies are those that receive investment and continue to operate as separate entities. Aveda and Burt’s Bees are cited as such companies that have continued to show positive growth. In comparison, those that have been acquired and integrated into larger corporations have not realized their growth potential. A major reason is that natural personal care companies are typically small enterprises with strong ethical values which do not always fit well into larger profit-driven organizations.
Mergers, acquisitions and investments will be featured topic of discussion at the upcoming Sustainable Cosmetics Summit (March 24–26, 2010). Organic Monitor will present key findings from the Strategic Insights report, giving details of the major deals and future growth projections. A leading private equity firm in the health and wellness area will give a seminar that highlights the financing options to natural personal care companies. William Rosenzweig, co-founder and managing director of Physic Ventures, will compare and contrast the various investment options available and specify the key criteria investors look for. Case studies will be given of companies that have received financing for business growth.