What makes a beauty brand acquisition ready?
Why investors are prioritising conviction, credibility and customer loyalty over growth alone.
Growth alone is no longer enough to attract investor interest in the beauty sector.
Victoria Kisseleva explores how beauty M&A is evolving, why buyers are becoming more selective, and the factors that are driving value in today’s market, from customer loyalty and clinical credibility to international scalability and operational strength.
Peter Aspinall in Corporate Finance reviews the latest developments in the M&A market.
| Despite ongoing geopolitical headwinds, the recovery in UK M&A activity – first evident among larger transactions in Q1 – is now reaching the mid-market. Improved sentiment, pent-up private equity demand and sustained overseas interest are creating a more favourable environment for business owners considering their strategic options. Businesses with a distinctive offer and a clear growth plan continue to attract strong interest, although buyers remain selective. This is particularly relevant when it comes to AI and wider technological capabilities, with buyers and investors increasingly looking beyond the headline claims to assess whether investment in innovation is delivering tangible results. Even so, buyer appetite remains strong for businesses that can demonstrate clear strategic value, giving well-prepared owners cause for cautious confidence as they consider their options. International and domestic demand Private equity remains a critical part of the M&A ecosystem, with funds having substantial capital available that needs to be deployed – UK dry powder is reported being at record levels at c.£190 billion according to UK Private Capital¹. We expect the growing trend in the type of deal undertaken by private equity to continue, with many investments being driven by existing portfolio companies alongside investment in new platforms. Such bolt-on acquisitions allow those businesses to enter adjacent markets or bolster existing propositions, making them an important source of mid-market demand. Overseas investment continues to be an important source of activity, with US buyers particularly interested in investing in the UK. Combined with established international customer relationships, these capabilities can help overseas acquirers establish a presence in new markets or strengthen their existing offer, making them attractive propositions. As a result, cross-border acquisition activity targeting UK listed companies increased significantly in H1 2026, valued at $231 billion² during this period, with US acquirers continuing to account for a significant proportion of inbound activity. Demand for UK businesses is further enhanced by UK company valuations remaining attractive, particularly when compared with equivalent businesses in the US, even after the strengthening of sterling. Technology remains active Technology and technology-enabled services remain among the most active parts of the economy. Businesses across every sector in the economy are acting on the need to modernise their operations, which is supporting significant demand for companies able to deliver that change, particularly regarding AI. Accordingly, at a macro level we expect deal activity to remain strong, as buyers look for businesses that can help customers respond to changing markets and make effective use of new technology. However, we also expect the market to become more divided as buyers’ understanding of AI grows. Plans to invest are no longer enough. Buyers now want evidence that innovation and AI integration is producing tangible results that can withstand the diligence process. This scrutiny will impact businesses differently depending on their business models, product or service strategies and routes to market, with SaaS businesses facing different challenges compared to project-based consultancies or managed service providers. Within technology services, buyers continue to prioritise businesses with recurring and repeatable revenues, proven growth profile, sector specialisation and demonstrable customer outcomes. Demand remains particularly strong for companies supporting digital and AI transformation, cyber security and data-driven decision making. Valuation outcomes remain closely correlated with these areas of focus. Decision-making AI is also beginning to reshape how transactions are executed. It can help dealmakers identify targets, review information during due diligence and plan for integration, making parts of the process more efficient. This is a welcome development, particularly given that our recent Decision Economy research found 73% of mid-market leaders experience frequent delays when making major decisions. While AI can accelerate research and analysis, it cannot determine how different buyers will view a business or which aspects of its offer will drive value. As similar tools become more widely used, there is a risk that the same assumptions are repeated across a transaction. That matters because different assessments of the same business create competitive tension and help the market establish value. This is where the experience and independent judgement of an adviser become particularly important. Advisers can challenge technology-led assumptions against commercial evidence, identify the buyers most likely to recognise a company’s value and shape an equity story that responds to their priorities. Engaging an adviser early also gives owners time to address potential issues before due diligence and prepare for the questions buyers are likely to ask. Policy certainty remains important Confidence to undertake M&A also depends on the wider economic and political environment in which businesses are making these decisions. Recent political change has prompted investors and owners to seek greater clarity on tax policy and incentives for investment. Speculation about possible changes to Capital Gains Tax is already influencing sentiment. Where a business is genuinely ready for sale, this may affect the timing of a transaction but it will not compensate for a lack of preparation. Buyers will continue to expect evidence of resilient earnings and a credible plan for growth, regardless of tax policy. The more immediate effect may be on transaction structures, with owners considering the timing of completion and the balance between upfront and deferred consideration earlier in the process. Looking ahead The outlook for the remainder of 2026 is cautiously positive. Overseas buyers are expected to remain active, while private equity-backed groups should continue to pursue bolt-on acquisitions through their existing portfolios. This provides a firm foundation for further mid-market activity, with uncertainty ahead of the Autumn Budget potentially bringing forward transactions that are well prepared or have already started. Quality will remain central to buyer appetite. Businesses able to demonstrate a distinctive position, resilient performance and a clear route to future growth should continue to attract competitive interest. Owners considering a sale should therefore begin assessing their options before a formal process starts. Early preparation, supported by experienced advice, can help them understand what buyers will value and address potential concerns before due diligence. Our Corporate Finance team helps owners assess their options, prepare their business for scrutiny and manage the transaction through to completion. As market activity strengthens and technology becomes more embedded in dealmaking, combining timely decisions with independent judgement will remain the most reliable route to a successful outcome. |
The changing face of asset-based lending in debt advisory
Scott Ellis (Director – Debt Advisory Cardiff)
There has been some welcome good news for retailers.
So far in 2026, the debt market has been characterised by strong liquidity and lender competition, as well as a growing selectivity as refinancing pressures and economic uncertainty shape funding decisions.
Today, even while the market continues to evolve, many of those dynamics remain. Competition is encouraging lenders to explore more flexible structures, while businesses are reassessing funding arrangements against a backdrop of geopolitical uncertainty, ongoing cost pressures and an upcoming Budget.
One of the most important developments is the changing role of asset-based lending (“ABL”). Once associated primarily with working capital and more challenged situations, it is increasingly being used as a strategic funding option, widening the choices available to businesses.
A broader application for ABL
Historically, ABL has been primarily concentrated in sectors such as manufacturing and distribution, where funding could be advanced against a clear trail of receivables.
This remains an important part of those markets, although the appeal of ABL has also widened considerably. Lenders are increasingly willing to fund across assets including property, plant and machinery, inventory and intellectual property, with ABL also becoming more established in fast-growth and service-led sectors.
Competition has been central to that evolution. Rather than taking a binary approach to asset or cash-flow lending, more tailored structures are emerging that draw on the unique characteristics of a business.
For example, hybrid facilities can combine lending against underlying assets with additional leverage based on profitability and trading performance. Other approaches include seasonal over-advances and structures that allow certain assets to be regularly revalued, helping businesses to preserve liquidity, in favour of making regular capital repayments.
This flexibility is broadening the role ABL can play. For corporates and private equity investors, it can increasingly support strategic events including growth, acquisitions, carve-outs and management buyouts, rather than simply addressing short-term working capital requirements.
Now is the time to review funding arrangements
This widening range of debt funding options comes as more businesses are reconsidering their existing facilities.
Much of the COVID-related debt accumulated by UK businesses has now either been repaid or reduced substantially. This is giving management teams an opportunity to reassess whether their existing funding structures remain appropriate.
The trigger will differ from firm to firm. Some facilities will simply be approaching renewal, while some companies may have outgrown their existing arrangements or find that a lender’s credit appetite no longer aligns with their plans.
Rethinking financial resilience in the AI era – LATEST RESEARCH
We’re pleased to share FRP’s latest report, Rethinking financial resilience in the AI era has officially launched. AI is changing how organisations operate, compete and create value. While it presents significant opportunities to improve productivity, decision making and innovation, it is also creating new pressures around workforce expectations, governance and investment.
Navigating this balance has become a critical leadership challenge across every sector.
Drawing on insights from over 500 business leaders, lenders and investors, the report looks beyond the headlines to examine the financial and operational realities of AI adoption.
Five takeaways from the report include:
1. AI investment is outpacing measurable returns
2. Rising customer expectations are putting margins under pressure
3. Many businesses are struggling to turn AI adoption into commercial value
4. Lenders are demanding stronger evidence of AI’s financial impact
5. Cash flow is the immediate pressure point
TMA UK Annual Conference 2026
12th November 2026
Do you have an idea for something else you would like us to include in future editions, please get in touch lincoln.coutts@frpadvisory.com
