Who Is Going to Buy All These Makeup Brands?

Another week, another makeup line has put itself up for sale.

On Tuesday, news broke that Mario Dedivanovic’s Makeup by Mario had hired the investment bank J.P.Morgan to explore its exit options. That line, which was founded in 2020, joins a crowded group of colour cosmetics brands hoping to find buyers this year.

There’s Kosas (North Point is running that sale process), Merit (which hired Goldman Sachs as an advisor), Jane Iredale (Jefferies has been tapped), Glossier (Morgan Stanley is its financial advisor) and Rare Beauty (which has both Goldman Sachs and Raymond James). And that’s not even including lines like Westman Atelier, which is on a 2025 timeline, or skincare brands that play significantly in colour like Summer Fridays, which is also working with Raymond James.

I’ve been saying since the start of the year that buyers are considering these assets in the same pool. Even if you started a sale process in late 2023, it doesn’t appear that any one label has benefitted from a first mover’s advantage over the rest. Interest rates are still high, limiting the amount of capital available for deals, and buyers are reportedly spooked by high valuations many of these lines are seeking.

Makeup by Mario is a prime example of how even a brand that’s struck a chord with consumers might have an uphill battle with buyers. It has built a strong business in just four years, leading with its artistry-first credo and product innovation, relying much less on its celebrity clientele, i.e. Kim Kardashian. After securing a $40 million minority funding round in Jan. 2023, revenue crossed the $100 million mark the same year. Forecasted retail sales are said to reach $300 million in 2024.

But betting on the brand means betting on Dedivanovic the person. While he might be a safer bet than a celebrity founder for any buyer, it’s unclear if a strategic versus a private equity firm will take that risk first. Betting on personalities is never a guarantee; just look at Bobbi Brown Cosmetics after founder Bobbi Brown left.

My sources tell me that although Kosas, which is slated to cross $150 million in retail sales or roughly $75 million in revenue this year, is one of the most scalable lines, it will likely end up with a private equity shop. There were rumours that The Estée Lauder Companies had made a bid, but we all know that ELC is strapped for cash. L Catterton, which owns a stake of Merit (more on that in a bit) via its Growth Fund, was said to be a first-round contender.

Merit is expected to cross the $100 million annual revenue mark this year. It has a strong wholesale to e-commerce split and high average order value of $100-plus on its DTC site, but some say the business has a way to go with brand-building. Furthermore, it only started focussing on its team, hiring an outside beauty verteran, Philippe Pinatel as CEO from MAC Cosmetics, in February.

Over to Glossier, the Millennial label has made major inroads on product (bringing back its original Balm Dotcom formula, and launching lip liners and its new French Riviera-inspired summer capsule collection just this month) and expanding distribution via Space NK and Mecca. But profitability is said to be in the single digits. Also, with its strong and differentiated experiential footprint, there are only few players to consider: LVMH and Manzanita Capital can operate stores well.

Rare, the other sizeable contender, is more profitable, with adjusted earnings before interest, tax, depreciation and amortisation over 35 percent of sales. It’s the sector’s most attractive — and expensive — asset, but it continues to take its time with a potential exit. Of the lot, it has the most runway to run a traditional sale process.

With the exception of Selena Gomez’s line, none of these makeup brands automatically signal that they will end up at a big beauty conglomerate, the preferable outcome – versus ending up in a private equity owner’s hands – for most brands.

With its plethora of SKUs and reliance on trend, the colour cosmetics category is complicated, and strategics and financial sponsors can afford to be picky.

Here are my top picks from our insight and analysis on beauty and wellness this week:

1. Beauty Brands Tread Lightly With ‘Tradwives’

A collage
Cooking, cleaning and more – made glamorous. (BoF Team)

A new crop of influencers that post homemade recipes and homemaking advice in combination with beauty tips are gaining ground online. But engaging with their large audiences requires nimbly sidestepping some uncomfortable themes.

2. Inside Sephora’s Niche Fragrance Strategy

With an early eye to the niche fragrance boom, Sephora has turned its stores into a fragrance discovery destination, acting as a launchpad for trendsetting brands like Kayali and Phlur.

By betting early on indie brands, the retailer has been able to tap into trends and capitalise on a fast-growing market.

3. Why Milani Cosmetics Is Playing Sports


The cosmetics label is rolling out a campaign starring WNBA star Sabrina Ionescu, gymnast Jordan Chiles, volleyball player Chiaka Ogbogu and weightlifter Mattie Rogers, becoming the latest beauty label to bet on the cultural power and reach of athletes.

Sign up to The Business of Beauty newsletter, your complimentary, must-read source for the day’s most important beauty and wellness news and analysis.