GCF - Our added Value in Cosmetics & Fragrances sector 0823.pdf
1. OUR ADDED VALUE & M&A TRENDS
IN THE COSMETICS & FRAGRANCES SECTOR
BUY SIDE – FUNDRAISING – SELL SIDE
AUGUST 2023
2. 2
P R I V A T E & C O N F I D E N T I A L
TABLE OF CONTENT
I. The dynamic M&A activity in the Cosmetics & Fragrances sector 03
IV. About GEREJE Corporate Finance 25
II. M&A trends valuation & recent transactions 06
III. Our expertise, added-value & methodology
in the Cosmetics & Fragrances sector 13
4. 4
P R I V A T E & C O N F I D E N T I A L
AN ATTRACTIVE MARKET FOR INVESTORS
Sources: L’Oréal, crunchbase, Capstone Partners, FEBEA, GCF analysis
Consolidation of the market from the leaders
• In order to enhance their brands’ portfolio and expand market share
• For example: L’Oréal made over 35 acquisitions
Mid-cap companies rely on M&A operations to
achieve scale economies & acquire new capabilities
The cosmetics & fragrances market is highly fragmented (i) dominated by few giant groups (Estee Lauder, L'Oréal,
LVMH & Puig represent 60% of the market) and (ii) with a majority of SMEs. According to FEBEA, 88% of its members
are SMEs.
Growing appetite from financial players
• The funds are attracted by the growth potential of the sector targeting
brands and contracts manufacturers
• Moreover, with daily new company launching, the market is favorable for
built-up operations
71,7%
60,7% 60,9%
66,7% 63,6%
55,2%
28,3%
39,3% 39,1%
33,3% 36,4%
44,8%
2017 2018 2019 2020 2021 May 2022
Strategic vs. Financial transactions
Strategic Financial
5. 5
P R I V A T E & C O N F I D E N T I A L
KEY INVESTMENT AND ACQUISITION DRIVERS
Geographic expansion
▪ Companies rely on cross-border acquisition to solidify their market share
▪ Amorepacific (UK) acquired Rudsak (IT) and Tata Harper (US) – Source
▪ Fragrances: attractiveness of the growth potential in the emerging markets
▪ In China only 2.5% of the population use fragrance vs. 52% in the US and 84% in France
Increasing demand for clean and sustainable beauty
▪ The clean beauty market is expected to grow by 12% yearly (2020 – 2027)
▪ In a context of environmental transition, consumers focus on cleaner formula and eco-
friendly brands and production processes.
Sources : Jing Daily, Mintel, Fragrances of the World, Xerfi, GCF analysis
Interest for new innovative and unique independent brands
• Consumers, especially from Gen Z, search for unique designs and/or scents of innovative and
independent brands, in particular gender non-specific products
In a context of digitalization, companies are focusing on e-commerce
development and social media exposure
▪ Interest for influencer-backed or founded brands with strong exposure on social media
According to BeautyMatter, a total of 344 deals were recorded in 2022 vs. 275 deals in 2019 (pre-covid) in the sector.
7. 7
P R I V A T E & C O N F I D E N T I A L
EV/EBITDA
2022
Company
Market
Capitalization
EUR 178,538m
(-23%)
USD 91,006m
(-21%)
JPY 2,585,747m
(+1%)
EUR 24,315m
(+19%)
KRW 8,545bn
(-19%)
USD 26,631m
(+37%)
USD 1,348m
(-29%)
Enterprise Value
EUR 178,538m
(-23%)
USD 92,461m
(-20%)
JPY 2,763,626m
(+9%)
EUR 24,315m
(+30%)
KRW 8,545bn
(-13%)
USD 26,145m
(+38%)
USD 2,429m
(-16%)
EBITDA
EUR 8,993m
(+13%)
USD 4,227m
(+14%)
JPY 122,290m
(+10%)
EUR 1,445m
(+13%)
KRW 551bn
(-22%)
USD 1,813m
(+16%)
USD 502m
(-13%)
19,9x
21,9x 22,6x
16,8x
14,7x 14,4x
4,8x
Source : Zonebourse, Capital IQ Click on the logo to access the website
MARKET PEERS MULTIPLES – COSMETICS
Average 2022 = 16.4x (vs. 18.4x in 2021)
Median 2022 = 16.8x (vs. 14.6x in 2021)
Data from 20/01/2023
8. 8
P R I V A T E & C O N F I D E N T I A L
EV/EBITDA
2022
Company
Market
Capitalization
CHF 26,140m
(-41%)
USD 26,730m
(-30%)
EUR 13,371m
(-30%)
USD 6,722m
(-6%)
EUR 1,862m
(-17%)
Enterprise Value
CHF 30,670m
(-37%)
USD 26,730m
(-46%)
EUR 15,048m
(-27%)
USD 10,890m
(-11%)
EUR 1,879m
(-13%)
EBITDA
CHF 1,476m
(-0,4%)
USD 2,455m
(+1%)
EUR 925m
(+14%)
USD 925m
(+24%)
EUR 127m
(+7,6%)
20,8x
10,9x
16,3x
11,8x
14,8x
Source : Zonebourse, Capital IQ Click on the logo to access the website
MARKET PEERS MULTIPLES – FRAGRANCES
Data from 20/01/2023
Average 2022 = 14.9x (vs. 22,6x in 2021)
Median 2022 = 14,8x (vs. 20,2x in 2021)
9. 9
P R I V A T E & C O N F I D E N T I A L
M&A TRENDS – VALUATION METRICS
Company Size
▪ The largest the company, the higher the multiple with key thresholds
(10M revenue; 50M revenue; 100M revenue…)
Profitability
▪ EBITDA margin compared to peers may be the most important
comparison criteria when the companies’ sizes are similar
Market position
▪ A leading position within a local market improves a valuation multiple,
on the other hand, a mid-tier position will drive a lower valuation
Within the same sector, valuation multiples vary according to the size, profitability, and market positioning of the
company
10. 10
P R I V A T E & C O N F I D E N T I A L
TEV/EBITDA
Target
Solent Group (UK): a health
and beauty products group
Parfex (FR): perfumes
manufacturer
Kosmolet (DK): owner of
makeup brand Nilens Jord
Earthoil (UK): supplier of
organic oils
Healthpoint (UK): a health &
beauty products supplier
Brand Architekts (UK): a
portfolio of mid-premium
beauty & cosmetics brands
Buyer
Humble group (SE): a leading
FMCG group
Iberchem (ES): a leading
flavors and fragrances group
Matas (DK): a retail drug
stores operator
Univar (UK): supplier of
chemical products Maven (UK): PE firm
Swallofield (UK): a
manufacturer of personal
care & beauty products
Transaction
Value
€136m €42m $25.5m $13m £6.5m €14m
Date May 2021 April 2021 June 2019 May 2019 February 2017 June 2016
Learn more here here here here here here
9,8x 12,5x 7,9x 7,9x 5,3x 5,5x
Source : Mergermarket, Fusacq, GCF Research Click on the logo to access the website
TRANSACTIONS MULTIPLES
11. 11
P R I V A T E & C O N F I D E N T I A L
Year Investors Target Information
Transaction
Value
Learn
More
Sep.
2022
Skinbetter Science (US): a innovative
physician-dispensed cosmetics brand
- here
Sep.
2022
Gallinée (UK): a microbiome focused,
sustainable cosmetic brand
- here
May
2022
Nutrafol (US): a leading provider of haircare
products
- here
Apr.
2022
The Crème Shop (US): a K-beauty brand
based in the US
$120m here
Jan.
2021
SKKN (US): beauty brand of Kim
Kardashian (formerly KKW Beauty)
$200m here
Source : Mergermarket, Fusacq, GCF Research Click on the logo to access the website
RECENT TRANSACTIONS BY LEADING GROUPS
12. 12
P R I V A T E & C O N F I D E N T I A L
Year Investors Target Information
Transaction
Value
Learn
More
Mar.
2023
IEVA Group (FR): a cosmetics group
specialized in tailor-made segment (L’Atelier
du Sourcil, ELENATURE)
€9m here
Dec.
2022
Lush (UK): a beauty and personal care
products retailer
£217m here
Feb.
2022
Courtin - Clarins
family
Ilia (US): a clean make-up brand - here
Jul.
2021
Les eaux primordiales (FR): luxury perfumes
house
€3m here
May
2021
Sociella (Indonesia): the national leading
beauty & personal care marketplace
$56m here
Source : Mergermarket, Fusacq, GCF Research Click on the logo to access the website
RECENT TRANSACTIONS BY FINANCIAL INVESTORS
14. 14
P R I V A T E & C O N F I D E N T I A L
OUR EXPERTISE & ADDED VALUE [1/2]
We have a solid track record in the Cosmetics & Fragrances industry. We have a direct
access to > 450 companies in this specific sector in Europe, Asia, and internationally
1. Our Expertise & Experience in the Cosmetics & Fragrances sector
Our multicultural teams with our own offices in Europe (Paris, Geneva, Lyon, Nantes,
Vienna, Lisbon, Munich), in Asia (Singapore, Hong Kong) and our partners in the
Middle East, Africa and the US
2. Our International presence
Entrepreneurs close to Entrepreneurs = reactivity & adaptability
3. Our “entrepreneurial” culture
Privileged access to >150 investors (Cap development funds, VC, debt funds, Family
Offices), with a specific interest in the Cosmetic and Beauty industry
4. Our Privileged access to Financial Investors
15. 15
P R I V A T E & C O N F I D E N T I A L
OUR EXPERTISE & ADDED VALUE [2/2]
We prefer to act over the long term as partners alongside business leaders
5. Advisor & Partner
With over 80 closings between 2016 & 2022, GEREJE is No. 1 & No. 2 between 2016 & 2021 in
the Advisory Fusacq ranking – Corporate banking fundraising rankings in France
6. Our Track-Record
Our expertise in structuring complex operations : Earn-Out, Management Buy-Out, Owner
Buy-Out, Joint Venture…
7. Our Expertise in complex structuring
We work with no conflict of interests and ensure confidentiality & discretion
8. Our independence
16. 16
P R I V A T E & C O N F I D E N T I A L Click on the logo to access the website
Being active in the M&A industry since 2007, we have a direct access to +300 brands, +150 manufacturers and
distributors in Europe, Asia and Worldwide - listed in our proprietary data base
Fragrance brands
Manufacturers & Distributors
Cosmetic brands
● ● ●
● ● ●
OUR DIRECT ACCESS TO POTENTIAL TARGETS
17. 17
P R I V A T E & C O N F I D E N T I A L Click on the logo to access the website.
Strategic investors
~100 strategic investors in Europe,
Asia and Worldwide - listed in our
proprietary data base
Financial investors
~150 financial investors (PE, VC,
Family Offices) in Europe, Asia and
Worldwide - listed in our proprietary
data base
● ● ●
OUR DIRECT ACCESS TO POTENTIAL INVESTORS
18. 18
P R I V A T E & C O N F I D E N T I A L 18
François LAURENT
Senior Advisor at GEREJE Corporate Finance, Asia (Hong-Kong)
Expertise in Asia, specialized in Luxury, Cosmetics and Perfumes
Education:
International Business diploma, EDC & INSEAD YMP
Key Points:
● + 35 years of experience in the cosmetics industry
● Founder & President of TALIKA APAC (1999-2017)
EXPERIENCE & EXPERTISE
➢ + 25 years of development in Asia-Pacific with
TALIKA
➢ Support in the creation of SMEs (Asia, US)
➢ Business Development
➢ Fundraising
➢ Marketing & Retail Strategy
➢ Product Development
➢ Specific expertise in Cosmetics & Fragrances
▪ Previously International Director Asia Pacific, Middle
East, Africa at Parfums Christian Dior
▪ Previously Director & COO at TALIKA Asia Pacific
OUR EXPERTISE IN THE C&F SECTOR [1/2]
19. 19
P R I V A T E & C O N F I D E N T I A L 19
Fabrice LOMBARDO
Founder & CEO of GEREJE Corporate Finance
Expertise at the international level, in Europe, Asia (especially ASEAN), Middle East & Africa, in
GEREJE’s 8 key sectors
Education:
BBA at Oxford Brookes Université, Grenoble Business School, Executive MBA at ESSEC, SFAF
Certified
Key Points:
● + 12 years in Business Dev. (multinationals) ● Creation of GEREJE: 2008 ● +100 deals closed
OUR EXPERTISE IN THE C&F SECTOR [2/2]
EXPERIENCE & EXPERTISE
➢ + 15 years in M&A consulting for SMID & Large Caps
➢ Buy-Side Mandate & Sell-Side Mandate
➢ Fundraisings (Equity / Debt)
➢ Valuation & Structuring
➢ Speaker & Lecturer at ESSEC Paris, EGE, EDC Paris BS
➢ Specific expertise in Cosmetics & Fragrances
▪ Veld’s, Sasa, Detaille, Lubin, Korres, Blaise Mautin,
Navis, Parfumist, etc.
20. 20
P R I V A T E & C O N F I D E N T I A L
OUR BUY-SIDE METHODOLOGY
Option: Preparation of a "Long-List" of
potential targets in the targeted sector
and geographical area and ranking them
in order of interest and according to M&A
criteria (sales, EBITDA, etc.)
Initiate contact between GEREJE and the
target(s) (without giving the name of the
client) to validate their actionability
Meeting between GEREJE and the client
to select a short list of targets to be
approached in phase 2
Assist our client in the final Due
Diligence
Optimize the discussions between all
involved parties: legal, audit,
accounting…
Advise on the best strategy and tactic
for final negotiations with the target(s)
until closing.
Assist in the drafting & proof-reading of
final contracts.
Drafting & negotiation of a Letter of
Intent (LOI)
Management of client’s questions &
requests (Q&A)
Optimize the negotiations with the
target
Advise on the best structuring (equity /
debt / mix) in the interest of the
shareholders
Option : Preparation of a strategic and
financial note (detailed profile of the
target) for the client
Signing of the Letter of Intent (LOI)
Signing of a Reciprocal Confidentiality
Agreement (RCA).
Meeting between the target and the client
to confirm the strategic fit and the mutual
willingness to enter negotiations
Phase 1 – 1 to 3 months
Market Screening & Preliminary
Approach
Phase 2 – 4 to 9 months
Maximization of Negotiations –
Signing of LOI
Phase 3 – 2 to 4 months
Final DD – Offer – Optimization of the
Closing
21. 21
P R I V A T E & C O N F I D E N T I A L
BUY-SIDE BEST PRACTICES [1/2]
DEFINE clear & ambitious strategies for yourself & the
potential target
1
2
BE PROACTIVE: approach actionable and specific targets
→ value creation
3
TIME is the essence: giving rhythm by respecting a
structured process
4
COMMUNICATION: take the time to explain every step
until the closing
1
2
3
4
22. 22
P R I V A T E & C O N F I D E N T I A L
OPTIMIZE the structuring to align the interests regarding
valuation
5
THINK about the forward value by working on a joint business
model
6
ANTICIPATE tax and legal issues (shareholders' agreement)
7
ANTICIPATE the cultural differences (cross border)
8
BUY-SIDE BEST PRACTICES [2/2]
23. 23
P R I V A T E & C O N F I D E N T I A L
OUR TAILOR-MADE FUNDRAISING & SELL-SIDE PROCESS
Phase 1 – 1 to 2 months
Preparation phase
Financial analysis (past results and
business plan)
Analysis of possible structuring schemes
(equity/debt/mix)
Set-up of an electronic dataroom
Blind Teaser online on our web
platform
In order to optimize the process, it is essential to prepare the project seriously, explain the use of the
funds and demonstrate the positive impact on turnover and margins
Phase 2 – 2 to 6 months
Selection, teasing and approach of
investors - Maximization of
negotiations
Identification of candidates (”long list”)
Checking of candidates’ seriousness, e-
NDA signing, transmission of
documents
Management and optimization of
negotiations with a ”short list” of
qualified candidates
Phase 3 – 1 to 2 months
Closing optimization
Optimize the discussions between all
involved parties, in particular, legal &
audit advisors of both parties
Supervision of financial audits (option)
Advise on strategy and tactics for final
negotiations
Prepare a Strategic & Financial Note for
investors
Negotiation and signature of the Letter
of Intent (LOI), including all the key
terms of the deal
Transition to phase 2 after mutual consent
Valuation report for business owner(s)
Approach of candidates with a 100%
digitalized process
Set-up of a calendar & deadlines
Advise on the different structuring
schemes (earn out) and final review of
the documents in a M&A point of view
Prepare the executive managers for the
negotiations with the investors in Phase 2
24. 24
P R I V A T E & C O N F I D E N T I A L
Strategic and financial investors have different investment criteria and objectives involving different sales
strategies and structuring scenarios themselves
• Strategic investors are often competitors, suppliers or customers of the target.
• Their objective is to identify companies whose products or services can be integrated in synergy with their
existing portfolio or gain market share, in order to create long-term value for their shareholders.
• The main driver of the acquisition is strategic (vs. rapid return on investment). These buyers may also be
unconnected to the target and seek to expand in its market to diversify their revenue sources.
Strategic
investors
• Financial investors/buyers include private equity firms, hedge funds, family offices ...
• These players make investments in companies and achieve a return on investment within 5-7 years with a
sale or IPO.
• Some Family Offices have an unlimited time horizon and can invest large sums of money to support the
growth of the business at all stages of its development.
Financial
investors
These buyers have fundamentally different objectives, so the way they will approach
the activities of the targets in an M&A process will differ considerably.
DIFFERENT TYPE OF INVESTORS
26. 26
P R I V A T E & C O N F I D E N T I A L
THE “GEREJE” PHILOSOPHY
In the 13th century, the Emperor Kublai Khan awarded
Marco Polo a gold tablet in the form of a long piece of
currency named « GEREGE » along with a password,
which ensured numerous privileges to the beholder.
With this golden passport, Marco Polo obtained all
necessary protections, supplies and assistance which
included horses, food and equipment for his safe return to
Venice accompanied by his immense fortune.
The GEREJE, first diplomatic passport,
ensuring safe and secure cross border
transactions, is a powerful symbol
matching perfectly our mission and goals
GEREJE team members share a common
passion in dealing with cross border
transactions and are united around the
GEREJE symbol reflecting our mind set as well
as our working philosophy.
27. 27
P R I V A T E & C O N F I D E N T I A L
OUR WORLDWIDE REACH
We are an independent M&A firm with an “entrepreneurial” culture, providing both strategic and financial advisory services,
composed of a multidisciplinary team based between Europe & Asia
Our Corporate Film
EUROPE
▪ Paris
▪ Lyon
▪ Geneva
▪ Nantes
▪ Vienna
▪ Lisbon
▪ Munich
ASIA
▪ Singapore
▪ Hong-Kong
EUROPE
ASIE
28. 28
P R I V A T E & C O N F I D E N T I A L
EXECUTION TEAM ENSURING THE QUALITY OF THE DOCUMENTS
Fabrice LOMBARDO
Founder & CEO
Antoine ALEMANY
Partner, Lisbon
Clarisse SUN
M&A Associate, Paris
Laurent GOBINET
Partner, Nantes
Hugo MONNET
M&A Vice President, Lyon
Servais MICOLOT
Partner, Geneva
Jeff CZELUSTA
M&A Director, Munich
Hannah DERENBACH
M&A Analyst, Paris
29. 29
P R I V A T E & C O N F I D E N T I A L
SENIORS BRINGING SECTOR & GEOGRAPHIC EXPERTISES
François LAURENT
Senior Advisor, Hong-Kong
Olivier JOB
Senior Advisor, Lyon
Jean de MORAS
Senior Advisor, Paris
Arnaud BEASSE
Senior Advisor, Vienna
Maurice LAM
Executive Director, Singapore
Gregory LAM
M&A Vice President, Singapore
Bertrand LAM
Partner, Singapore
30. 30
P R I V A T E & C O N F I D E N T I A L
Partial or Total Sell mandate
Managing and Optimizing a sell process, leveraging on
our structuring experience, valuation expertise &
international network to maximize the transaction price.
Using every financial tool to align the interests of all
parties.
OUR SERVICES
The quality of our services relies
in our 100% in-house team
enabling us to manage the
entire transaction process,
thereby ensuring efficiency,
confidentiality and tangible
results
Buy mandate / Acquisition / Joint Ventures
Optimizing external cross-borders expansion strategies.
Global Knowhow, Local Approach
Strategic Advisory – Business Consultancy
The experience and operational know-how of the senior
team allows us to optimize the development strategies of
companies and thus facilitate the management of
corporate finance issues (Fundraising or acquisition)
Fund raising mandate & IPO – Capital development
Structure a solid & realistic business plan in order to
maximize the valuation forward and raise the capital
needed (Equity, Debt, Convertible Shares).
Local Markets Approach and Implementation Assistance
for IPO to maximize forward value & optimize
Transaction Structuring
31. 31
P R I V A T E & C O N F I D E N T I A L
OUR PROVEN METHODOLOGY
GEREJE is recognized for the quality of its documents (strategic & financial analysis) based on personalized execution, enhanced
by a multidisciplinary team acting under one hat !
Execution
Excellence
Each assignment is managed by
one Team leader to optimize the process
We rely on our own proprietary
research
Our mandates are on an exclusivity basis
only, including fixed and success fee
Our mandates are tailor-made
We manage 100% of the Transaction
coordinating the process
We deliver regular reports to optimize
the momentum
Our digital platform allows us to have constant
access to all the necessary information
32. 32
P R I V A T E & C O N F I D E N T I A L
OUR REFERENCES– SMID & LARGE CAP
Click on the logo to access the website.
33. 33
P R I V A T E & C O N F I D E N T I A L
OUR STRONG NETWORK OF PARTNERS
Our solid network of partners in Europe and Asia enable us to get qualified, updated information in order to
accompany our clients and create value.
EUROPE
Access to +1,100 Family Offices
+150 banks & private bankers
+100 law firms
ASIA
Access to +700 Family Offices
+200 banks & private bankers
+150 law firms
Partnership signed with Business France (website) in 2021
Coverage of 110 countries, offering a direct access to
international investors
34. 34
P R I V A T E & C O N F I D E N T I A L
TESTIMONIES
In this complicated economic
environment, the support and
involvement of the GEREJE teams
were key to the success of the
project.
Mr. François-
Denis POITRINAL
Founder & CEO
Thank you for the excellent work
done by the GEREJE team.
Mr. Kaci KÉBAÏLI
Founder & Chairman
GEREJE supported us successfully &
diligently in structuring our
fundraising process so we can keep
control of our company, They did a
great job at finding the right
investors for our projects!
Mr. Francois
CHABANIAN
Founder & CEO
In this complicated economic context,
the support and involvement of the
GEREJE teams were key elements in
the success of the operation
Mr. Guillaume
RAGUET
CEO
*click on a logo to access the website
35. 35
P R I V A T E & C O N F I D E N T I A L
Articles
Surveys
BeautyPackaging - The biggest beauty industry deals acquisitions of 2022
Fortune Business Insights - Perfume Market
Fortune Business Insights - Cosmetics Market
Glossy - Beauty & Wellness Briefing: 5 beauty trends that attracted investment and M&A deals in 2022
WholeFoods Magazine - Where the Beauty Industry is Headed in 2023 & Beyond
NPD - The evolution of PerfumeTok
NPD - Higher income consumer increased spending on beauty products by 14% in 2022
RFXCEL - Global Cosmetics market
Capital Mind - Beauty sector
Capstone Partners - Beauty Wellness M&A Coverege - June 2022
FEBEA - Annual Report 2022
Gitnux - Fragrance Industry 2023: A Look at the Latest Statistics
BIBLIOGRAPHY
