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BeautyMatter: Q2 2015 – Beauty Deals

This article was originally written, researched and published by Kelly Kovack and Scott Gurfein, both partners at innovative agency Brand Growth Management.

While we don’t claim to have a crystal ball, it was only 9 months ago in our 2014 Q3 M&A recap that we predicted 23 potential transactions in the beauty space. Since then, of those 23 predictions, 7 have happened: Carol’s Daughter, Dermalogica, Dollar Shave Club, Glamglow, Kate Somerville, Murad, and Too Faced Cosmetics. Of these 7 transactions, 5 occurred in 2015 Q2. Not bad! Looking at Q2’s deals and industry headlines, it’s hard not to notice the (tidal) waves Unilever is making by bolstering its prestige division or the ongoing presence of emerging platforms across the globe. So, let’s jump in while summer is here, and the water is warm: here’s BGM’s 2015 Q2 roundup.


As a skin therapist from the UK, Jane identified a lack of continuing skincare education when she first arrived in LA in 1983 and formed The International Dermal Institute in a small classroom. In 1986, Jane and Raymond Wurwand launched Dermologica to serve the needs of licensed skin care professionals and address skin problems. Today, its range of at-home and specialist products are sold in over 80 countries. Headquartered in Carson, California, Dermalogica also has operations in the U.K., Australia, Ireland, and Canada.

Dermalogica is a strategic pillar for Unilever’s growth, complimenting the acquisitions of REN Skincare and Kate Somerville Skincare. Purchased for an undisclosed amount, The acquisition of Dermalogica is expected to significantly boost the company’s profile in the high-end space. Paul Polman, CEO of Unilever, said: “We are delighted to be adding Dermalogica to the Unilever Prestige personal care portfolio. Dermalogica enjoys an outstanding reputation and incredible awareness among skin care professionals and consumers alike and has a clear positioning as a superior skin health brand that perfectly complements the rest of our Prestige offering. Importantly, it is a company founded on strong values and a common belief, shared by Unilever, in the role of business as a force for good in society.” Jane Wurwand, Dermalogica Founder and Chief Visionary, said: “This partnership will provide Dermalogica with the opportunities and resources to take the brand to even greater heights and help us continue our legacy in supporting the next generation of professional skin therapists and women entrepreneurs worldwide.”

•    Purchased for an undisclosed amount.
•    Dermalogica will be part of the Unilever Prestige Division.
•    Dermalogica will continue to manufacture, operate and work out of its Global headquarters in Los Angeles, California
•    Sales were $240 million in 2014.
•    Founders Jane and Raymond have retained an interest in the company and will continue to work with Unilever to grow the brand.
•    Cravath is representing Unilever in connection with this transaction.

KK: Rumor of a Dermalogica sale have circulated for years. Unilever’s acquisition strategy seems clear, acquire a stable of well performing, mature niche brands with premium positioning leverage synergies to grow their Prestige Division.

SG: Our list of strong growth and acquisition targets shortens with brands like Dermalogica being taken off the table. Unilever accesses so many terrific assets across distribution channels and cultures in the deal and not to mention a time proven global brand with tremendous growth potential. With Dermalogica’s deep history and roots, it stands to reason that several opportunities can be created to cross-pollinate and expand Unilever’s growing portfolio.


Founded in 2003 by Kathy Phillips, the international beauty director for Condé Nast Asia and the health and beauty director of British Vogue. The U.K.-based brand sells aromatherapeutic beauty products across serveral categories including body care, skincare, and sleep. The company is committed to providing natural solutions to address specific modern beauty needs. Products are tested and evaluated by a diverse group of 50 women who are instrumental in the product development process. This Works does not launch a product until its panel of women tells them, “this works.” This Works’ business is primarily generated from and UK-based wholesale accounts.

“We intend to invest in additional PR and marketing activities, in-store merchandising initiatives and customer acquisition efforts for our e-commerce sites in the U.K,” said Richard Gersten, a partner at Tengram. “We also plan to launch the brand in the U.S. market and are targeting prestige, specialty and home shopping channels as the distribution points. In connection with the new distribution, we will seek new distribution opportunities outside of the U.K. and the U.S.”  Founder Kathy Philips, said: “My experience in the health, wellness, and beauty industry inspired me to create natural products that are truly effective. Our innovative products use the highest quality natural ingredients and deliver sophisticated solutions for modern beauty needs. I am proud of what the Company has accomplished thus far, and our partnership with Tengram will further propel the Company to its next phase of growth.” This Works Founder CEO, Anna Persaud, added, “I am also very pleased to partner with Tengram on this opportunity. Tengram has extensive beauty industry knowledge and a network of resources that will help build our business. I look forward to working with them to build upon the brand’s strong momentum and execute on the Company’s many growth opportunities.”

•    Terms of the transaction were not disclosed.

KK: The brand uniquely occupies the intersection of prestige beauty, health and wellness and the natural product space. They are also the only beauty brand making a direct connection with sleep and beauty in products. Twelve years in with the addition of capital and Tengram’s experience at building brands they are positioned to capitalize on a the long near trend where taking care of yourself is becoming the ultimate way to stay beautiful.

SG: Under Rich Gersten’s leadership, Tengram has been assembling a truly exciting portfolio of beauty brands, each with tremendous differentiation, category carving strength, and substantial revenue growth potential. Rich’s experience nurturing great brands and teams will undoubtedly prove to be a core pillar of This Works’ success moving forward. Adding the power of social media and community-based engagement in the US market to the mix, great things should happen for this unique brand.


Founded by Mark Levine and Michael Dubin in July 2011 with a simple concept – a subscription service for buying razors. A funny but low-budget YouTube video, “Our Blades are F**** Great,” went viral and the tiny start-up, self-funded with $35k, found itself with 12,000 orders overnight and on their way to becoming a leading provider of quality razors to its two million members. Three years later, that video has over 19 million views, and the company is valued at $615 million dollars.

According to the WSJ the company is burning through “low single digit millions”. While YouTube got them started, Dollar Shave Club has moved to the more traditional and expensive medium of television ads to attract new customers. The WSJ also mentioned that on average, the company’s consumers pay a subscription fee of about $7 per month. The company has also branched out into other men’s grooming products to increase average order size. Besides additional investments in marketing, the company plans to use the capital infusion to support new hiring, according to Dubin.

•    The company is valued at $615 million which is the result of fast revenue growth.
•    Most recent funding $75m Series D on June 21, 2015, and lead by Technology Crossover Ventures.
•    Total funding received to date $147.8m in 5 rounds by 17 investors
•    $1 million seed, May 2012
•    $9.8 million/Series A, November 2012
•    $12 million/Series B, October 2013
•    $50million/Series C, September 2015
•    The company also has secured a $60 million line of credit from Comerica and Triple Point Capital that has not been drawn on.
•    Sales were $65 million in 2014; triple the prior years figure.
•    This year the company hopes to do better than $140 million in sales but is not yet profitable.

KK: Proof that success can come in the form of a simple, well-executed idea and pushing the envelope with creative. The being said they chose to be a challenger brand and their competition is formidable and has deep pockets, Gillette owned by P&G, Schick owned by Energizer Holdings and Harry’s which raised $212 million and purchased its own factory in Germany to make its razors. Dollar Shave Club is not profitable, has a burn rate in the low millions, and a low average order size so the question is how long can it be sustained or do they already have their exit planned?

SG: Lightning strikes and alas a business? I want to know what Plan B was if the YouTube video didn’t catch on. Lucky for Dollar Shave Club, it worked and there is a business but the big question is – is it sustainable and can it grow profitably over the long term?


It’s SKIN is a prestige skincare brand established in 2006 by a Korean dermatologist. The business expanded into international distribution in 2008 and recently opened a flagship store in New York City. The brand is very popular in the Chinese market.

According to Beauty Packaging Magazine, Jumei International Holding Limited is China’s leading online retailer of beauty products. Mr. Leo Ou Chen, founder and CEO of Jamie, stated, “The popularity of Korean beauty products in China has grown rapidly over the past few years. With an extensive catalog of prestige products, It’s SKIN is an ideal partner for Jumei to collaborate with as we build Jumei Global into the largest cross-border e-commerce platform in China. It’s SKIN will greatly benefit from the growing size and scale of our platform.”

•    Jumei International Holding Limited acquired a minority stake.
•    Jumei, listed on the NYSE, is Chinas leading online retailer of beauty products as measured by gross merchandise volume, with a market share of 22.1%  in 2013.
•    Its SKIN will benefit from the cross border growth Jumei is pursuing in China.

KK: Korea is a hot bed of beauty innovation and no one questions the potential business opportunities in the Chinese market. However, it’s a difficult market to navigate on many fronts and will continue to get more competitive. This transaction seems to be a win-win. Jumei gets a bit of control with a popular brand, and It’s SKIN gets home market advantage with a partner that has tremendous reach.

SG: Right time; right market. Mix high-growth brand with distribution, massive market, capital and Korean popularity and grow. Leveraging Jumei’s retailing platform in the dominant ecommerce channel is highly strategic and a smart way to build value. We will undoubtedly see more examples of these kinds of deals in Asia and other evolving markets in the coming months and years.


P2 Cosmetics, which is one of Europe’s leading beauty brands. P2 Cosmetics was founded in 2004 as a division of Palmers Textil, a leading Austrian lingerie retailer. The products are manufactured in Germany and France and are 100% paraben and fragrance-free. It has since become a mainstay in the German beauty industry and is known for its extensive product portfolio. P2 Cosmetics are sold exclusively at DM, Germany’s largest drugstore retailer.

“P2 Cosmetics has a proven track record of bringing innovation to the cosmetic category,” said Gregory Mager, Founder and CEO of Maesa Group. “This brand has piqued a strong interest for expansion in the United States and Canada through an exclusive distribution model. I am excited for one of the most successful exclusive beauty brands in the world to join Maesa Group, and I look forward to continuing to grow the partnership with DM.”

•    The acquisition was financed with debt provided by Tikehau Investment Management and a capital increase subscribed by Maesa Groups founders, along with Edmond de Rothschild whose stake in the Maesa Group will raise from 20% to 25%. The balance is held by Maesa Groups management team with co-founders, Gregory Mager and Julien Saada remaining majority shareholders.
•    Maesa Group’s  total revenues are expected to reach $185 million in 2015, post-acquisition.
•    Through this acquisition, Maesa Group is affirming a strong growth ambition for the next five years, with the goal to reach $350 million in revenue by 2020.
•    The brand will continue to operate out of Vienna, Austria under the brands current leadership team.

KK: Maesa has strategically put a new face on private label and capitalized on retailers’ need for differentiation by creating exclusive brands. P2 fits nicely with Maesa Group’s existing holdings, Flower for Wal-Mart, Circa for Walgreens and Elle for Monoprix. Through this acquisition, Maesa adds significant revenue to its books. Is Maesa planning to become a player in the competitive M&A landscape? Or was this a singular strategic transaction?

SG: This was a smart and calculated deal; adding a major building block to Maesa’s business as well as building upon its global reach. As the global personal care market evolves, I believe we will see more such deals and Maesa’s growing ambitions are to be watched.


The whimsical color cosmetic brand was founded in 1998 by Jerrod Blandino and Jeremy Johnson as an antidote to the serious makeup artist brands that were the trend in the late Nineties. “We built Too Faced with the idea that makeup is power and should be fun, not intimidating—and our brand acceptance today proves that women everywhere share our belief in the transformative power of makeup,” said Jeremy Johnson, Co-Founder and Chief Executive Officer of Too Faced.

“Too Faced is one of the largest independent cosmetic brands with phenomenal momentum led by an outstanding and deep management team,” said Andrew Crawford, Managing Director and Global Head of General Atlantic’s Retail & Consumer sector. “With such a prominent presence in specialty beauty retail, Too Faced is uniquely positioned to capitalize on this channel’s growing popularity with consumers. We look forward to working with Too Faced’s proven management team.”  Brand Co-founder Jeremy Johnson said, “To continue our growth trajectory, we were seeking a global thought leader experienced in partnering with founder-led, high growth companies, and the team at General Atlantic was a natural fit. Their experience will help us accelerate our expansion as we invite even more women around the world to ‘own their pretty.’”

•    In 2012, the private equity firm Weston Presidio purchased a majority stake.
•    The brand is estimated to generate $150 million in wholesale revenues annually with sales growing at more than 50% per year.
•    Terms of the deal were not disclosed but according to the WSJ, the deal values Too Faced Cosmetics at $500 million.
•    Too Faced’s co-founders, Jerrod Blandino, and Jeremy Johnson, will continue to hold stakes in the company and run it as chief creative officer and chief executive officer respectively, along with its president, Eric Hohl.
•    Beauty industry veteran Ken Stevens will join as Too Faced’s Chairman, bringing a wealth of experience as former Chairman of Ulta Beauty, former Chief Executive Officer of philosophy, and former President of Bath & Body Works. Andrew Crawford and Andrew Ferrer, both senior leaders on General Atlantic’s Global Retail & Consumer sector team, will also join the Board of Directors.
•    Too Faced was advised by Piper Jaffrey & Co., Intrepid Investment Bankers LLC, and Kirkland & Ellis LLP.
•    General Atlantic was advised by Financo and Paul, Weiss, Rifkind, Wharton & Garrison LLP. Financing for the transaction is being arranged by KeyBanc Capital Markets.

KK: The company was recently put up for sale by Weston Presidio Capital, which has been a majority shareholder since 2012 so this transaction comes as no surprise. The action attracted interest from bidders like Estee Lauder but with key leadership staying in place and a simple change of hands from one PE firm to another, I expect it to be business as usual for the brand.

SG: The market does not see many deals like these – a still thriving pedigree brand that carved a deep market position, killer management team, and a second set of financial owners. The roster of players involved here is a Who’s Who in deal making. In the era of the billion-dollar business, expect to see General Atlantic eyeing an exit in the next few years. As the business’s growth unfolds, the owner to be will reveal itself.


Based in the industrial Ruhr Valley city of Hagen and with roots dating back to 1821, Douglas is one of the largest perfumery chains in Europe. The chain has 1,700 stores in 19 markets, including those held under the Nocibé name in France, which was acquired last year. Its multi-channel offering is integrated across the stores, online shop and mobile. The company controls about 17 percent of the European perfume chain market.

Under new ownership, the German retailer plans to expand further internationally. “Douglas is a market leader with attractive growth prospects due to its strong management team, extensive store network, leading online presence and dedicated employees,” commented Søren Vestergaard-Poulsen, managing partner at CVC. “We are very much looking forward to working with the family and the management to grow this European Beauty champion further over the long-term.” Dr Henning Kreke, CEO of Douglas and a representative of the Kreke family, said: “Over the past two years, Douglas has become the largest specialist beauty retailer in Europe. It is renowned for its clear customer focus, innovative product portfolio and an impressive in-store and e-commerce presence. We look forward to partnering with CVC as a reliable and strong, long-term partner who will support the company with additional industry expertise and financial resources, to ensure our continued growth.”

•    Private equity company CVC Capital Partners has signed an agreement to acquire German beauty retailer Douglas for an undisclosed sum.
•    The WSJ says the deal values Douglas at around $3.1 billion.
•    Pro forma annual sales for Douglas for 2013-14 were reported to be about 2.5 billion euros, or $3.39 billion.
•    The retailers online offering, which spans 15 countries and has reached a market share of over 50% in Germany, contributed more than 8% of the Companys total consolidated sales in 2013/2014.
•    Following the deal with CVC Capital Partners, the Kreke family will remain a shareholder in Douglas, holding a 15% stake- down from 20%.
•    Henning Kreke will stay on as CEO.
•    In a statement, it was revealed that the three parties had decided not to pursue an IPO in order to accommodate the Kreke familys desire to develop the business in a private setting.
•    The deal does not include the other retailers formerly under the Douglas Group umbrella, Thalia booksellers and the AppelrathCüpper fashion chain.

KK: CVC has significant experience in the retail and beauty sector and Douglas is poised to become an international brand. This international expansion could provide significant growth not only for the retailer and but for the brands they currently stock.

SG: We don’t see deals like these very often. This retailing powerhouse is growing into an even stronger global staple in the beauty space. With substantial growth potential in its e-commerce channel and ambitions to grow profitably, I believe we will see of bolt on and core acquisitions by CVC and the Kreke family in omni-channel retail and branded businesses.


The company, founded by stylist French-born hairstylist Frederic Fekkai in 1995 as part of a joint venture with Chanel called Frédéric Fekkai Beauté. The Fekkai business is comprised of seven salons in New York, Connecticut, Florida, Texas and California along with the retail hair care range.

As part of its plans to divest parts of its beauty portfolio, the Procter & Gamble Co. has sold the business — which includes retail hair-care products and seven salons — to Fekkai Brands, a joint venture between Designer Parfums and Luxe Brands. Luxe Brands CEO Tony Bajaj said the two firms, which have experience in fragrance and more recently in skin care, were looking to enter the premium hair-care category, and that Fekkai more than fits the bill. “It resonates with a broad spectrum of consumers,” said Bajaj. That said, he added that the joint venture would work to assess Fekkai’s current distribution, which P&G had broadened to the mass market.

•    This deal marks the third time the 20-year-old brand has been sold.
•    Nearly ten years later, the brand was acquired by the private equity firm Catterton Partners.
•    P&G paid an estimated $440 million for Fekkai in 2008 and sold the brand for what sources estimated was only $50 million. The price also reflects the work needed to turn around the brand and the capital expenses required to run the salons.
•    Designer Parfums, a private family-owned business dealing in perfumes and beauty products and LUXE Brands, a prestige beauty company will form a joint venture to buy the Fekkai business.
•    Industry sources said that sales of Fekkais products have sharply fallen off from highs in the $125 million range to roughly $50 million last year.
•    Sources estimate salon revenue at roughly $22 million.
•    Under the terms of the deal, the brands founder, Frédéric Fekkai, will retain his role as an advisor.
•    All 255 Fekkai salon employees are expected to be transferred to the new company.
•    P&Gs disclosure of the sale confirms a report that appeared on (hyper link that Fekkai himself had tried to buy back his brand, but in the end could not put a deal together.

KK: Mass, prestige or both? P&G’s flawed distribution strategy resulted in the loss of key premium distribution. Given the sale price of this brand, it was clearly a huge mistake. While it lost its way under P&G’s management, Fekkai is still a strong brand with much of its DNA intact. With a well thought out strategy and the right leadership, this brand can be turned around. Given it’s primarily a North American brand, there’s plenty of opportunity for growth once it’s on the right path.

SG: Fekkai’s strong professional heritage, P&G’s flawed strategy, and a lack of branded leaders in the premium haircare space allows this brand to live on. Fekkai was an innovator; bridging the gap between mass and professional channels. Before Fekkai, prestige haircare was not readily found in specialty and prestige beauty outlets. In many ways, he created a category in these retail channels. Enter P&G to leverage a well-established and aspirational branded specialty gem in the massive global haircare market and grow it in mass, but that plan didn’t materialize – nor did a strong roster of other branded players to fill the hole Fekkai left in specialty and prestige. While some players have emerged, market conditions and a preserved and authentic position makes for another go around possible. I’m betting on this one.


Founded in 2002, The Real Shaving Company is a well-established brand in the male grooming sector. Based on quality natural and organic ingredients with heritage expertise, The Real Shaving Company products are available in the UK as well as Canada and France.

This acquisition is part of Swallowfield’s wider strategy to leverage its product development, manufacturing and distribution capabilities to commercialize innovative ranges of products under their own brand names. The Real Shaving Company brand is set to benefit from Swallowfield’s expertise in innovative technologies such as plastic aerosols. Chris How, Chief Executive at Swallowfield, commented: “We are delighted to acquire such a well-established and well-loved brand that will increase the branded element of our business, in line with our stated strategy. We look forward to bringing our industry-leading innovation, both in packaging and formulation, to the Real Shaving brand, driving profitable growth in the future.”  He added: “It also gives us a presence in trade channels that we are aiming to access with our other recently introduced brands such as ‘Bagsy’, our premium beauty brand, and ‘Tru’, our range aimed at the value retail sector.”

•    The purchase price, payable on completion of the deal, includes an initial cash consideration of £900,000 with further cash consideration of £100,000 dependent on the outcome of certain customer negotiations, plus stock at valuation, which is expected to be £170,000, to give a total cash consideration of up to £1.17m.
•    Underlying EBITDA of the Brand for the 12 months ended 31st March 2015 was £0.3m on net sales of £0.8m.
•    The Acquisition is expected to be “earnings enhancing”in the first full financial year of ownership.
•    The Acquisition will be financed with a new five-year term loan of £0.72m with the balance from existing bank facilities, all with HSBC Bank plc.
•    The acquisition is conditional upon shareholder approval.

KK: Not knowing much about this brand or the transaction it appears the goal was to acquire distribution through acquisition.

SG: The men’s grooming category continues to evolve in most markets and channels, so it’s no surprise to see continued M&A activity – no matter the motivation.


Founded by the Los Angeles-based Kate Somerville, the brand is known for its innovation and performance. Products feature Active Balance Technology, a blend of advanced active ingredients with natural botanicals. The brand is currently distributed through prestige retailers in the U.S. and is said to have a growing footprint in Asia.

“The most photographed faces in Hollywood trust Kate Somerville Skincare for its high-quality ingredients, proven results and a touch of glamour. It is a highly differentiated brand that is well placed in the dermocosmetic segment of the skin-care category,” said Vasiliki Petrou, Unilever senior vice president, prestige brands. “In recent years Kate Somerville Skincare has also made inroads into the fast-growing Asian market, with successful launches in several countries across the region. We believe it has exciting growth potential, and look forward to bringing its breakthrough products to new markets. Its premium positioning effectively complements our existing portfolio,” he added. Somerville said she is “extremely proud” of everything her team has accomplished. “Our treatments such as ExfoliKate and DermalQuench have become tried-and-true customer favorites. Unilever shares our commitment to quality, innovation and bringing consumers the best possible products…and I’m confident it will take Kate Somerville Skincare to even greater heights.”

•    The deal terms were not disclosed.
•    Founder/spokesperson Kate Somerville and CEO Michelle Taylor will continue in their current roles.
•    Financo represented Kate Somerville in the deal.
•    Leading global law firm, Baker & McKenzie, advised Unilever
•    The transaction was announced marks the third in a series of recent strategic skincare deals for Unilever.
•    Kate Somerville is distributed through prestige retailers in the United States, and has a growing footprint in Asia.

KK: Unilever’s Prestige division includes the skin-care lines Iluminage and Ioma; hair-care brand Nexxus; and Regenerate, an advanced toothpaste that aims to reverse enamel erosion. Earlier this year, the multinational giant purchased Britain’s REN Skincare.

SG: Unilever is snatching up some of the industry’s best growth brands. As a fast-growing skincare mainstay, Kate Somerville has stood the test of time and has wisely navigated the growth and financing of her business. With both domestic and international growth prospects looking strong, the brand will add strong numbers to Unilever financials.


CBBeauty was founded in 2011 by Corrado Brondi. The company distributes and markets perfume and beauty products under the One Direction brand in more than 80 countries, and provides international sales, marketing and strategic services to a number of high-end and mass brands including Rihanna, Carven and Burberry.

“As we continue to focus on our strategy of value creation to boldly grow Revlon, we are confident that this acquisition will provide us with a business and people platform for significant growth in the global fragrance business,” Revlon president and CEO, Lorenzo Delpani, said in a statement. This acquisition expands Revlon’s global footprint and gives them control of some important brands. In turn, CBBeauty will remain independent but can leverage Revlon’s significant capabilities and resources which will accelerate growth.

•    Details of the transaction were undisclosed.
•    The deal includes U.K. distributor SAS & Company.
•    CBBeauty and SAS will operate as an independently managed division within Revlon, under the continued leadership of Corrado Brondi as CEO of CBBeauty.
•    Shelley Smyth will continue as CEO of SAS.

KK: One Direction was one of the few women’s fragrances showing sales growth in all mass doors last Christmas, according to IRI data. The businesses growth was really fueled by the One Direction success; however, partnering with Revlon should accelerate growth leveraging their significant infrastructure, capabilities, and resources.

SG: This is a smart deal for Revlon, providing a growth engine in branded, service, and infrastructure offerings. With a roster of innovative brands under management, CBBbeauty may be able to help Revlon attract other unique growth opportunities, too.


Founded by CEO Lopo Champalimaud, Wahanda is a hair and beauty booking website and marketplace. The hair and beauty booking site is currently available in five countries — U.K., Germany, Lithuania, Switzerland and Austria — reaching 12,000 salons and spas, and expects to expand to an additional three countries by June.

Recruit invested in 2014 and has been a very active investors. Wahanda has sold a majority stake of the company they are a pre-existing investor, Recruit Holding. Recruit revealed they are going to put another $46MM into Wahanda on top of what they have already invested. “With its Hot Pepper Beauty business in Japan, Recruit has a wealth of experience in this space and understands how to scale our business. Our ambitions are aligned and the capital investment, expertise and knowledge that Recruit provides will enable us to continue on our growth trajectory, truly cementing our position as the leader in our field.”  Kazumasa Watanabe, from Recruit Holdings, said: “This investment will allow us to further improve our international position in the hair and beauty industry. We recognized in Wahanda a world-class team and a company that had already established itself as the market leader in Europe. We look forward to supporting them with the aim of becoming a global leader in the beauty industry.” Wahanda continues to focus on expansion within Europe and revealed it expects to be present in eight countries by the end of June.

•    Japans Recruit Holdings, which already owned 10% of the London-based startup, has acquired a further 70% share £112.5 million (~$171m).
•    Wahanda’s other backers cashed out. These include Fidelity Growth Partners, Ambient Sound Investments, 14W and Lepe Partners, along with private investors, including Brent Hoberman (founder of and Stefan Glaenzer (Partner at Passion Capital).
•    According to Techcrunch, theacquisition means that Wahanda was valued at approximately $222 million, while the startups founder and CEO, Lopo Champalimaud, and its management team retain a 20% stake.
•    Klaus Nyengaard will remain on the board as Co-Chairman.
•    CEO Lopo Champalimaud will continue to work alongside the company.

KK: While we’ve seen a lot of investment made in booking services and apps in the past year in the U.S. market. It will be interesting to see if Recruit Holding has plans to enter the U.S. market through acquisition.

SG: Beauty service marketplaces aiming to streamline booking and optimizing utilization are emerging very quickly, especially in the US market. With a strong international lead, it will be fascinating to watch how (and if) Wahanda will penetrate the US market, where the sheer volume of hair and beauty outlets is enormous.


Strawberry Cosmetics, which is online retailer, has a customer base of over three million worldwide. sells more than 700 brands and has over 30,000 stock keeping units. Brands listed on the website include: Benefit, Bourjois, Avene, Fudge, Orico London, Priori, Roger & Gallet and Yves Saint Laurent, among others.

It is hoped the transaction will expose GigaMedia to a broader business portfolio in the internet and technology sector, allowing it to tap into the lucrative beauty e-commerce market. GigaMedia aims to build its connections in various Asian countries through the transaction, namely China, Japan and South Korea.

•    GigaMedia, an online games and computing services company based in Taiwan, has acquired a 70% equity interest in beauty e-commerce company Strawberry Cosmetics for $93.1MM.
•    The completion of the Transaction is subject to the Company’s shareholders’ approval at an extraordinary general meeting of shareholders to be held on August 5, 2015 and other customary conditions.
•    The Transaction is expected to be completed in the third quarter of 2015.
•    Consolidated sales revenues of Strawberry Cosmetics and its subsidiaries in the recent four years have been over US$200 million per annum.

KK: The growth of the Asian market especially China is still largely untapped for many beauty brands. Given the challenges of entering some of these Asian markets GigaMedia has strategically positioned itself as a gatekeeper online.

SG: It’s no coincidence that this is one of two Asian e-commerce platform deals in Q2. There will undoubtedly be more deals on the horizon amongst mainstays and newcomers, as market and consumer access is predominantly found in well-established e-commerce and mobile channels.


Mallygirl a multi-cultural cosmetics brand founded in 2005 by Mally Roncal, a sought after makeup artist to the stars. The brand has 1000 skus with primary distribution in Ulta and QVC. The company distributes products from a 50,000-square-foot warehouse in White Marsh and also sells online at

TPR affiliate Beauty Visions has acquired Mallygirl after the US make-up brand filed for involuntary bankruptcy. Despite $30 million in sales in 2014, Mallygirl was having financial difficulties and missed regular loan payments to Essex Bank, according to filings in Baltimore’s U.S. Bankruptcy Court. The company owes the bank about $8.9 million in loans, interest and late charges. In April, four of the company’s creditors forced Mallygirl into a Chapter 7 bankruptcy, claiming more than $2.2 million in debts. The case was subsequently converted to a Chapter 11 bankruptcy, indicating Mallygirl could reorganize its debts without liquidation. The company was auctioned in the bankruptcy, with two companies bidding the final price up 18 times from $7 million to $10 million, according to Heritage Equity Partners, an Easton-based boutique investment banking firm specializing in “special situations.”

•    The deal was approved by the Bankruptcy Court in the District of Maryland on June 5th and completed June 11th. Mallygirl started looking for a buyer back in August last year, according to official court papers.
•    TPR affiliate Beauty Visions’ takeover came as a result of an auction process against another bidder. Over the course of 18 bids, the price grew 43% closing at $10MM.
•    Heritage Equity Partners (HEP) acted as broker for Mallygirl and conducted the marketing process to identify potential buyers.
•    HEP worked with Chief Restructuring Officer Michael Lang who provided crisis management.
•    Annual sales of Mallygirl reached over $30MM in 2014.

KK: There is a lesson to be learned in this Mallygirl transaction. Regardless of how successful you appear or the size of the revenue the numbers still need to match up. Not having a plan is planning to fail.  It appears that this brand simply did not have it’s financial and back office in order, and it finally caught up with them. TPR has a track record of success for breathing new life into distressed businesses so let’s see what they have in-store for Mallygirl.

SG: Such high-profile branded situations like Mallygirl are not the norm which is why further insight may prove to educate and inform other brand owners on the pitfalls and perils of what can go wrong when so much seems to be going or appearing to go right. With a strong level of interest as evidenced by the number of bidders, it will be exciting to see what new ownership does to capitalize on this rare branded business opportunity.


Culver City, CA-based Cosmetic Design Group (CDG) provides turnkey nail and cosmetic products, providing a one-stop design and sourcing service for national brands and retail customers. CDG boasts over 900 SKUs of in-line and promotional products across value and mid-priced segments, along with a portfolio of prestige offerings, which are sold in over 5,000 retail locations.

The transaction allowed key management to invest in the business ownership, which aligns interests and sets the company on a path for future success. The investment will accelerate CDG’s growth and allow expansion into new products and markets, while acting as a platform for future investments in the beauty and personal care industries.

•    Corbel made the investment in partnership with Five Crowns Capital, LLC – an independent sponsor located in Newport Beach, CA.
•    The investment is a non-control investment in the form of senior secured debt and common equity to support the continued growth of CDG.
•    Opus Bank partnered with Five Crowns Capital and key management of CDG to provide the working capital to support anticipated organic growth.
•    Opus Banks Corporate Finance division provided a $4,000,000.
•    Revolving Line of Credit to Five Crowns Capital and Cosmetic Design Group, LLC.

KK: We’ve seen a lot of activity on the brand side but keeping an eye on the supply side of the industry sometimes provides insight into larger transactions or the building of vertical businesses. In the right hands, there’s value in owning your supply chain.

SG: CDG is a little known player to most but clearly important to some branded and retailer players as a source of ready-made and custom solutions. This transaction provides insight into other businesses, models and growth opportunities in the personal care space, and may be a platform deal into something larger.

If the second half of 2015 is anything like the first, we’re in for a wild ride – and that’s exactly what we’re predicting. Though Lauder, L’Oreal, and Unilever will be busy integrating and focusing on their growing portfolios, the activity won’t stop. The global beauty industry is alive, growing, and more exciting than ever. With many of the classic independent brands being acquired by strategics, we predict Q3 more global activity in Q3 in digital and mobile platforms and businesses, businesses focused on new ways of reaching consumers and building brands, new categories, and smaller deals. Enjoy summer – we’ll see you soon after the close of Q3.

For more from the team at Brand Growth Management, visit

The Red Tree is the UK’s leading international beauty brand consultancy and a powerhouse of ideas, insight and inspiration. For an informal discussion on how we might help you, please contact us.

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