Leadership Is the Key Ingredient in Beauty Merger & Acquisition Success Stories

The beauty industry has found its dynamism resurging with a steady flow of transactions, from major carve-outs to acquisitions of high-growth brands. The wave of mergers and acquisitions (M&A) has come back in full force.  

While the strategic rationale and financial models behind these deals may be sound, the success of these transactions ultimately hinges on leadership. Ownership transitions are pivotal inflection points that can either unlock long-term value or stall a brand's momentum entirely. One study of nearly 40,000 M&A transactions found that post-merger success can be significantly predicted by leadership skills in acquiring companies, as well as middle management skills in target companies.

While investors and buyers often spare no expense on traditional processes across financial, legal, and operational due diligence that enable a deal, there tends to be significant underspend in leadership investment. For beauty brands, the sustainable premium that a brand can command is often deeply connected to the leadership at the helm.  

When we support clients in this capacity, it may look like pre-deal diligence on the current talent to deeply understand their own strengths, motivations, and potential for the new chapter. Identifying the potential bench of leaders for the new chapter and calibrating how they compare with potential leaders in the market can be illuminating to ensure a winning team for moving forward. 

Beyond assessing balance sheets and brand metrics, acquirers should evaluate leadership readiness, tackling key questions such as: 

• Is the executive team today equipped to manage new ownership dynamics? 
• How do they demonstrate creativity and agility in solving complex problems?  
• Will the leader be energized for this new level of scale? 

Within beauty companies, the sector nuances are deep and pervasive. Diligence should also cover the nuances of the beauty industry that can make or break the chance to scale, from innovation roadmap and claims & regulatory compliance, to supply chain agility across ingredients, manufacturing, and packaging.  

Inclusion and introduction of subject-matter or sector experts for pre-deal diligence to pressure test modeled assumptions as objective third-party advisors can be critical for success. We often bring seasoned operators into these conversations, as they are eager to share their insights and wisdom. Those who dare to ask the challenging questions and deeply believe in the potential for growth are often retained for value creation in a governance capacity later on. These introductions may evolve into continued board or advisory roles that bring expertise and accountability early to the conversation and can ensure sustainable results post-acquisition.

The leadership skills and strengths needed can vary at different points in a company’s lifecycle. Founders, investors, and boards should be explicit and honest about the kind of leadership needed at each stage and honest about where they personally add value. These, in turn, should be validated with assessments based on evidence beyond anecdotes. 

In general, this looks like: 

• Early Stage: Founders and early executives need to be driven by creativity, commercial grit, and speed to market. This phase demands leaders who are comfortable making fast decisions with limited data and who can drive brand buzz while managing resource constraints. “Scrappy” and “entrepreneurial” are the must have qualities.  
• Growth Stage: As the business scales, the focus should shift to structure and discipline. Leaders must navigate omnichannel complexity, manage retail relationships, and protect margins, all while maintaining the brand’s authenticity and differentiation. “Agile” and “results oriented” become key themes.  
• Post-Acquisition: Once a beauty company is acquired, governance structures and investor oversight increase. The leadership challenge becomes balancing creative agility with operational rigor. CEOs must know when to delegate and when to hold decision-making authority to avoid bottlenecks. An executive who is a “systems thinker” and “can inspire leaders of leaders” is critical. 

In the beauty sector, culture is key. It is defined both internally in building a differentiated way of working and collaboration and externally as being part of the zeitgeist. Look no further than Rhode Beauty’s $1 billion acquisition by ELF, achieved in part by Rhode’s brand heat and cultural relevance to its Gen Z customer base and by ELF’s unique internal culture of being a disruptive challenger that dares to think of growth differently. 

Unfortunately, culture is also the easiest element to erode post-transaction. Leadership must treat the company culture that underpins brand creativity as an asset, requiring explicit protection and management during any mergers and acquisitions. 

Uniquely within the beauty sector, many early-stage founders or leaders have stronger spikes in creativity, storytelling, or industry expertise beyond business (influencer- and dermatologist-led brands come to mind). These leaders may be able to grow the business, but intentional development and organizational design to support their own individual growth is also key.  

To proactively support this, companies can invest in leadership development, from individual executive coaching and building an individualized board of advisors to implementing team workshops that enhance group performance outcomes. These efforts reinforce the superpowers that made the business special while also creating more sustainable infrastructure, so the spark remains post-acquisition.

Once an M&A deal closes, the leadership mandate shifts toward building scalable systems and capabilities that align with the brand’s next growth chapter. The ability of a leadership team to reset intent, clarify roles, and establish operating rhythms determines how quickly post-acquisition value appears in the numbers. 

Key capability areas for beauty companies include: 

• Avoiding costly stockouts or overproduction while managing diverse channel needs. 
• Building analytical capabilities to evaluate ROI, trade marketing and media investments. 
• Ensuring formulations and claims align with local expansion standards 
• Structuring distribution to scale globally with a reliable and flexible supply chain 

Joining a strategic parent company requires clarity around autonomy, such as defining which functions should remain brand owned versus those that move to shared services. Defining these boundaries early prevents friction and preserves speed. These capabilities are often as grounded in soft skills as they are intangible. Leaders can seize the opportunity of a new chapter and new governance to build a different board of advisors for themselves. This may look like seasoned corporate stewards of the new company paired with early-stage leaders post-acquisition to reverse mentor and share best practices from agility to scale.  

Team Acceleration work, especially in high-growth contexts, can leapfrog the time typically required to build trust, make the implicit more explicit, and heighten the impact of communication. Even if the same team remains and only the ownership change is on paper, a new chapter for the team merits a new agenda and set of commitments to each other as the leaders tackle a new milestone together.  

Defining new values, goals, ways of working, and identifying potential pitfalls or misalignments are key topics that surface repeated among teams that we work with around the globe. Creating the context, safety, and confidence for leadership teams to have these conversations with each other is the critical muscle we aim to build with Team Acceleration work. 

Mergers and acquisitions in the beauty industry are not only about financial opportunity; they are tests of leadership maturity, resilience, and creativity. The leaders who succeed are those who intentionally align strategy, talent, and culture to preserve brand equity while enabling scale. 

In this new environment, leadership alignment at beauty companies is more important than ever. If it doesn’t exist among executives or between founders and investors, it can derail value creation faster than any market headwind.  

The beauty merger and acquisition winners will be those who view leadership not as a static asset but as a living capability—one that must evolve with every new ownership chapter. 

At Egon Zehnder, we partner with founders, investors, and conglomerates across the full scale in the beauty sector to identify and develop leaders equipped to thrive through change. By focusing on leadership due diligence, cultural preservation, and capability building, companies can turn M&A from a risk event into a powerful growth accelerator.

Learn more about our ​leadership development and planning services and how we’ve advised beauty companies through founder transitions.