Home Cosmetic Science Talk Formulating Cosmetic Industry Buy out exit strategy

  • Buy out exit strategy

    Posted by beautynerd on May 23, 2017 at 9:02 pm

    Hello all,

    I am hoping several of you with experience in the industry can weigh in on this. At what point in retail sales or social media virality or any other relevant measure of success, do the larger players start feeling tempted to acquire niche cosmetic brands?

    It seems with internet sales tearing down barriers to entry, large brands are much more anxious to make these acquisitions than ever before. Therefore the minimum level of success before this is a realistic exit strategy for small brand owners is now much easier to reach.

    However, I have no idea on ballpark figures. Anyone?


    MarkBroussard replied 7 years, 1 month ago 3 Members · 5 Replies
  • 5 Replies
  • OldPerry

    May 23, 2017 at 10:54 pm

    Most big companies don’t want a brand unless they can get $100,000,000 in annual sales. So, I would guess $20 million in sales would make someone look at you.

  • beautynerd

    May 24, 2017 at 1:01 am

    Thanks Perry.

    That seems consistent with this article (although they are saying practically no bottom to annual sales figures that will be considered, I haven’t been able to find an example that I would consider to be an exceptionally small indie company).

    “Big cosmetics companies used to turn up their noses at any acquisition with less than $100 million in annual sales, says Vennette Ho, a managing director at Financo. Now there’s practically no bottom because revenue can climb fast if a line suddenly catches digital fire.”

  • MarkBroussard

    May 24, 2017 at 1:44 am


    There’s no hard/fast rule on any of this.  The acquirer does not necessarily have to be a large cosmetics company … it could also be a small to mid-size company that sees synergies in your product line and theirs.  Essentially, they would be buying your client list … particularly if they feel there is a lot of cross-over between your client bases and you have well-established brand loyalty.  It could be a company executing a “roll-up” strategy by buying several small players that have synergies in their respective product lines.  The main reason for an acquisition is a “speed to market” issue.  Sometimes its easier to buy existing product lines with established brand loyalty than to create your own products and try to build that brand loyalty.

    If you’re an owner of a small brand and you’re thinking about selling the company as an exit strategy, be prepared to walk away from it as soon as you can.  Most large companies that buy niche players end up screwing up the niche players’ products/marketing.  Unless it’s the right acquirer, most likely you would find staying on-board an unpleasant experience.

  • beautynerd

    May 26, 2017 at 5:00 pm

    Thanks Mark. I agree as a brand owner, a loyal customer base no matter what size is key.

    We have a presentation for (essentially no strings attached) govt funding in a few weeks where we are being asked to present our end goal of launching a niche brand. I have a feeling the more moderate success we had originally envisioned will not be bold enough to excite them. They will want to hear about economic stimulation of our isolated community in a big way. 

  • MarkBroussard

    May 26, 2017 at 5:49 pm


    In that case, your pitch should focus on local economic development and jobs. You may want to consider your end goal to be to set up your own manufacturing of your products in your local community and the local jobs that will be created from the manufacture and sales of your products.

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