Valuation Woes in the Beauty Industry: Analyzing Failed and Successful Acquisitions

The beauty industry has a valuation problem.

_Olaplex IPO'd in September 2021 at a peak market cap of ~$19B. Henkel bought it in March 2026 for $1.4B. That's a 93% destruction of equity value in four years.
_Pat McGrath Labs was valued at over $1B in 2018 and filed Chapter 11 in January 2026 with $50–100M in liabilities.
_Shiseido paid $845M in 2019 for Drunk Elephant only to write down more than half of it in 2025.

Three brands. Three acquirers. Three different strategies. One pattern.

Every one of these was a single-brand acquisition made at peak-cycle multiples with the assumption that the cultural moment was durable.

None of them had the category breadth, channel diversification, or IP moat to justify the price.

Now let's look at the deals that worked:

_E.L.F. BEAUTY acquired NATURIUM for $355M in 2023 as a category extension, not a category bet.
_It bought rhode skin for $1B in 2025 – a brand that had $212M in net sales, a 34% EBITDA margin, and 10 products.
_L'Oréal bought Medik8 at ~$1.1B – 13x revenue, 34% EBITDA margin, defensible clinical IP.

So the discriminator isn't price.
It's whether you're buying a trend or a business.
A trend is a moment. A business is a system.

Thoughts? Drop them below! 💭

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