This article was published on May 14, 2025, at 10:14 a.m. on the ChosunBiz MoneyMove site.
Private equity fund (PEF) managers have started to put K-beauty corporations up for sale. With the popularity of K-beauty expanding globally beyond the United States and Japan, they believe it is now possible to sell at a high price. Their performance is supporting this outlook. Some have even recorded their highest earnings ever.
However, there are observations that concluding transactions will not be easy. The market is flooded with small to medium-sized cosmetic company listings, and the PEF's portfolio companies are relatively large with high price expectations.
According to investment banking (IB) industry sources on the 14th, PEF managers have recently entered the K-beauty M&A market en masse as sellers. A notable example is VIG Partners’ sale of the management rights of P&C Labs, a manufacturer of sheet masks and cosmetic pads. They have put it up for sale for the first time in eight years since acquiring it in 2017.
Hwasung Cosmetics (Affirma Capital) and GDK Cosmetics (JKL Partners) are also looking for new owners. Including Serin Company of Calyps Capital and Able C&C, which is noted as a potential listing, five K-beauty corporations have already been or are expected to be on the market.
The global popularity of K-beauty has driven the sale of cosmetic portfolio companies by PEF managers. Most notably, their performance has turned around. For example, while P&C Labs faced deterioration and fell into losses after being acquired by VIG Partners, its performance improved from 2023, recording a profit of 6.1 billion won last year.
Domestic cosmetics, which primarily grew centered around China, experienced a downturn due to the THAAD incident and the Korean Wave sanctions. However, they have expanded their business into the U.S. and Japan, marking a so-called second boom. Affirma Capital's Hwasung Cosmetics recorded its highest earnings ever last year.
The interest of general investors in K-beauty corporations has spurred the selling movements of PEF managers. As stocks of companies like APR and VT have risen, there are expectations for high valuations. Earlier this year, MA:NYO was acquired by KLN Partners for more than 60 billion won above its market capitalization.
However, the market is exhibiting views that concluding transactions will not be easy. The K-beauty M&A market is flowing differently than PEF managers’ expectations. As of this year, the conclusion of the management rights sale transaction for MA:NYO has left no traces of concluded transactions among K-beauty corporations.
The gap in price expectations between sellers and buyers has widened. PEF managers pushing for the sale of K-beauty corporations leverage performance improvements, while buyers cite growth across the market. They analyze the growth as reliant on market booms rather than special growth of individual corporations, leading to lower multiples.
An IB industry source noted, “Last year, there were transactions in the K-beauty M&A market that exceeded a multiple of 10 times earnings before interest, taxes, depreciation, and amortization (EBITDA), but recently there have been no buyers willing to pay more than five times,” adding, “It can be said that all highly valued companies with strong branding have already been sold.”
The high expectations of PEF managers acting as sellers are also cited as a factor lowering the likelihood of concluding transactions. Calyps Capital reportedly hoped for an initial valuation of over 1 trillion won for the sale of Serin Company. Ultimately, the sale process has stagnated for over a year.
Amid this, factors contributing to price declines are increasing. There is a flood of cosmetic company listings on the market, in addition to the portfolio companies of PEF managers. Representative examples include Dr. Vita, known for its snail cream, and Marcsique, known for its wrinkle improvement patches.
A source from a consulting firm that mainly handles cosmetic company sales stated, “PEF managers have to proceed with sales eventually due to fund maturities, but the key is how low their expectations will drop.” They added, “This year is likely to be the year of price adjustments for K-beauty corporations.”