вЂњYou go into your committee with actual real-time comps, and your real-time comps are not looking cute,вЂќ he said. Private equity firms are currently being вЂњmore selectiveвЂќ because of the economic environment, Pelaez said, but companies with good cash flow, profitability, growth and marketplace differentiation will still be able to garner a high multiple.Д«ut, when private equity firms go to underwrite a deal as having the potential for a strategic exit, and the strategic buyers are trading lower because of market conditions, it may present a problem, said Threadstone LP managing director Ilya Seglin.

And in light of this uncertain economic environment, people are just being a little bit hesitant to deploy capital,вЂќ Pelaez said. A lot of it is that uncertain economic environment, because right now financing markets are challenging, those deals that got done last year or carried over to the beginning of this year, the valuations have been inflated. вЂњEven though it was busy, that doesnвЂ™t necessarily mean the next quarter canвЂ™t be busy. Part of the reason itвЂ™s slower now was the uptick in fourth-quarter deals, with transactions including LвЂ™OccitaneвЂ™s acquisition of Sol de Janeiro, EdgewellвЂ™s purchase of Billie and LвЂ™OrГ©alвЂ™s purchase of Youth to the People. Since the beginning of this year, many of the deals out are companies looking for growth equity investments, or evaluating valuation potential, she noted. вЂњThereвЂ™s only a handful of assets in the market right now that are sizable, certainly not the level of activity we saw last year.вЂќ The pipeline is light,вЂќ said Nadia Pelaez, director at RBC Capital Markets Consumer & Retail Group, comparing it to previous years that were jam-packed. While the beauty M&A market is by no means closed - as of press time, Nest and Hero Cosmetics had been said to be in the market, and Byredo and Nutrafol had just inked major strategic deals with Puig and Unilever, respectively - it is slower than itвЂ™s been in the past several years, sources said. вЂњItвЂ™s M&A as a whole that tends to pull back when the macro environment is challenging.вЂќ вЂњAnytime there is uncertainty in the economy or the public equity markets, that has spillover effects into the private market,вЂќ Horvat added. He added that even against that backdrop, M&A continues to be a strategic focus for beautyвЂ™s big players. вЂњThe market is a little bit more challenging now than it was a year ago or six months ago, and that has to do with the general economic environment, the uncertainty being driven by inflation, interest rates, geopolitical stuff going on in Eastern Europe,вЂќ said Marko Horvat, director at Raymond James.

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