South Korea’s mergers and acquisitions (M&A) market is witnessing a surge of K-beauty brands entering the fray, as mid-sized and indie cosmetic companies seek exits amid rising global demand, with the United States emerging as a key market. Investment bankers describe the current M&A climate as a buyer’s market, driven by an influx of sellers.
According to industry sources, several South Korean cosmetics brands have recently entered the M&A market, including Isntree, MeFactory, Dewytree, and Trendmaker. These brands have engaged advisors and are actively seeking potential buyers for majority stakes.
MeFactory, a subsidiary of Able C&C—the operator of the iconic Missha brand—has been put up for sale by private equity firm IMM PE, which has owned the company for seven years. Dewytree, known for its popular snail cream, and Trendmaker, which runs the vegan brand Dinto, have also hired M&A advisors to explore potential deals.
The wave of M&A activity coincides with a renaissance for K-beauty, driven by strong sales in the U.S. and Japan after a slump in Chinese demand. Once sidelined by a cooling Chinese market, K-beauty has rebounded with innovative products and strategic branding targeting Western consumers. In 2023, Korean cosmetics sales in the U.S. reached 2 trillion won ($1.5 billion), making South Korea the top foreign cosmetics supplier, surpassing France. Korea’s overall cosmetics exports also exceeded $10 billion last year for the first time.
A joint study by ChosunBiz and M&A advisory firm MMP revealed that 15 K-beauty M&A deals were completed last year, including Morgan Stanley PE’s acquisition of Skin Idea and GP Club’s purchase of Kodi. Industry experts predict this year’s M&A volume will surpass that of 2024 as many founders, primarily from the 1980s and 1990s generation, capitalize on the market’s momentum.
“This surge is driven by brands with high overseas sales and younger founders,” said an advisor at a major accounting firm specializing in K-beauty deals. “M&A opportunities are increasing. These founders are watching their peers exit and considering immediate monetization.”
Many brands entering the market are indie cosmetics companies less than a decade old, aiming for rapid exits. This aligns with the strategies of acquirers seeking to expand their portfolios and increase brand valuations through product diversification.
The brands on the market often leverage manufacturing partnerships with original equipment manufacturers (OEM) like Kolmar Korea and COSMAX, focusing on product innovation rather than in-house production. Reports indicate that most founders plan to launch new ventures post-sale.
Notable brands rumored to be potential sale targets include GOODAI GLOBAL, the operator of Beauty of Joseon, and The Founders, which runs the Heartleaf Toner brand Anua. Both companies, established in 2016 and 2017 respectively, were founded by entrepreneurs from the 1980s and 1990s cohort.
The rush to sell while the market is thriving highlights the entrepreneurial spirit driving K-beauty’s success. However, insiders caution that oversaturation risks cooling its global appeal, potentially dimming the industry’s bright future.
