Despite a record-breaking year for beauty mergers and acquisitions in 2025, deal values are declining as buyers shift their attention toward smaller brands and larger, established businesses. According to Kearney’s latest report, the industry recorded 384 global deals during the year, while the median transaction value fell from $26 million to $22 million.

Beauty deal volume increased 8 percent compared with 2024, but midsize brands valued between $100 million and $1 billion continued to face challenges finding buyers. Instead, investors have shown a stronger preference for smaller businesses and major acquisitions involving established players. Notable billion-dollar transactions included L’Oréal’s acquisitions of Kering Beauté and Medik8, as well as E.l.f. Beauty’s purchase of Rhode.

Transactions valued below $100 million accounted for 77 percent of beauty M&A activity in 2025. Medium-sized deals represented 17 percent, while large transactions doubled their share from the previous year to reach 6 percent.

The shift toward smaller acquisitions has continued into 2026. Although overall beauty deal activity declined 11 percent in the first half of the year, small transactions accounted for 86 percent of disclosed deals during the period. Kearney attributed the trend to buyers’ willingness to explore opportunities with lower capital commitments while larger transactions remain limited.

Europe continues to lead beauty M&A activity in 2026. SUNGYOON – stock.adobe.com

As major beauty conglomerates restructure their businesses and reassess their portfolios, their capacity for new acquisitions is expected to remain constrained. Private equity firms, however, are increasingly stepping in to fill the gap through acquisitions and corporate carve-outs.

“For brands seeking a buyer, growth needs to be backed by profitability and a clear fit with the buyer’s business,” said Marie Droll, a principal at Kearney, in a statement.

Europe remained the leading region for beauty M&A in 2025, accounting for 47 percent of transactions. North America, which experienced two consecutive years of declining deal share in 2024 and 2025, regained ground in the first half of 2026, representing 31 percent of deals.

Looking ahead, Kearney expects further opportunities to emerge as restructuring efforts continue across the industry. Fabian Lux, a partner at the firm, said more businesses could come up for sale as companies progress with restructuring, potentially creating additional opportunities heading into 2027.

Lux added that buyers pursuing smaller acquisitions today could use the experience to strengthen their integration capabilities and develop private equity-style value creation strategies, positioning themselves for the next wave of increased M&A activity.