The oboe is said to be one of the most versatile instruments in an orchestra — so it seems only natural that Jeannette Smits van Oyen, the global head of global consumer & retail investment banking at JP Morgan who has overseen some of the year’s biggest deals inside (and outside) of beauty — is a classically trained oboist.
Though she forwent a career in music in favor of investment banking, van Oyen has demonstrated an acuity for working on a wide variety of projects — from IPOs to privatizations to two of the biggest deals beauty has seen this year: E.l.f. Beauty’s acquisition of Rhode and L’Oréal’s majority stake in Medik8, both said to be in the billion-dollar range. “What I love about investment banking is that every day is different,” said van Oyen, a Sydney native who currently divides her time between New York and London (where she serves on the advisory council of the Royal Philharmonic Orchestra.) “I love the variety.”
Here, van Oyen analyzes the current M&A landscape, what the prospects look like for the year ahead and why — like her favorite Albinoni concertos — it’s expected to be quite lively indeed.
After a very quiet 2024, we’ve seen a significant uptick in M&A activity, despite the uncertainty of the macro environment. What do you attribute that to?
Jeannette Smits van Oyen: Generally speaking, across all industries, M&A activities are up about 25 percent year-on-year. Consumer retail activity is up slightly ahead of that, about 35 percent. It’s interesting, we started the year, particularly in North America, but also globally, with a very strong, very bullish outlook on deal-making activity. That has obviously seen periods of volatility, but throughout that, strategics in the consumer retail space and more broadly, have remained very focused on identifying opportunities where there is strong industrial logic and fit and niches that they need to fill. We look more broadly at deals also happening in the beverages space, Pepsi buying Poppy, Celsius buying Alani, you can see that the broader trend of large consumer companies buying up niche capability or customer access has continued to hold.
I would also say that the capital markets have remained incredibly supportive, notwithstanding the macro volatility around us, and then through open private capital markets, where we’ve seen very strong activity. We advised on the take private of Walgreens earlier in the year and Skechers.
The debt markets have also remained constructive in facilitating those deals.
What’s your assessment of why we saw a slowdown?
J.S.v.O.: What’s been different about this year is the types of deals that have come to market. People have demonstrated this year, both strategics and financial investors, that they are prepared to lean in for businesses that are complementary and have sound industrial logic that they’re able to explain to their investors.
For a lot of the deals that we’ve done this year, across sectors, investor support for the deals at the multiples they’ve been done at, has been essential. As we think about the pipeline in the beauty industry, some of the deals that we’re seeing get done now have had longer lead times. And the deal environment the first half of this year has been conducive to buyers and sellers
You were involved both in the Medik8 and Rhode deals, two of this year’s biggest in beauty thus far. What was the unlock to getting those deals done now?
J.S.v.O.: Yes — so quite different businesses, different owners, different deal structures, but what they had in common is they both had a very strong brand identity that had been proven with a degree of global resonance, which I think is important.
Both brands had established a proven capability in their markets, outside their home market, and they had importantly demonstrated customer loyalty. In both cases, there was very clear data to underpin that customer loyalty. The other interesting point for both of those two was it was a very sensible window from a timing perspective, relative to their growth trajectory.
Because coming back to buyer appetite, it’s important for a buyer to both get comfortable with historic growth trajectories, but also to be able to underpin the future growth prospects. Sometimes we can see brands that aren’t necessarily at that perfect inflection point between both size and growth, and it becomes more difficult.
Has that perfect point changed recently?
J.S.v.O.: I think so. What we have seen is that the public valuation multiples across the listed peer group have come down over the last several years, and the appetite for strategics and for financial investors to invest has remained strong. However, there is much more focus now on establishing a view on what the sustainable growth rate is relative to a sustainable margin. Particularly within the beauty industry, the margin profile and the margin outlook is very much a function of channel and the channel mix is a key determinant of understanding the future profitability of a brand.
Do you think we’ll see an uptick in dealmaking for the rest of the year? Has the dam finally broken?
J.S.v.O.: I do think there is still incredible appetite from both strategic and financial investors to do deals. As we look more broadly at the personal care space, we’ve seen Unilever and Church & Dwight also transact. I think that there will hopefully be more deals to come through the second half of the year. The common theme between the deals that are getting done is they are high quality businesses that can articulate their historic and future growth and margin potential in a way that is underpinned by data.
I look at Medik8, specifically. In that case, we have a financial investor in inflection who had cultivated the business in a relatively short period of time. They had a long-standing and talented, creative, visionary founder and a recently incentivized management team. What that meant was each of the different buyers who thought about the business was able to bring their own vision to what the future for that brand could look like. So they had grown it to demonstrate capability and loyalty and efficacy, but it was still malleable for buyers to be able to put their own stamp on what they might do with it in the future. We saw a mix of strategic investors across the globe as well as financial investors, looking and thinking very hard about that.
How are you seeing the role of the founder evolve? Is their continued involvement with a brand becoming more important, less important or it hasn’t really changed?
J.S.v.O.: The role of the founder underpins the efficacy and the perception of the longevity of the brand. What’s interesting, if you look at how deals have been done this year, certainly both in the case of Medik8 and Rhode, those deals were structured such that both the founders, who are keen and will remain involved, are aligned with the buyers in the way that they carry on the brand and the brand strategies.
Are sellers more realistic about outcomes?
J.S.v.O.: I think so. We’re seeing high-quality, motivated buyers, and sellers who are grounded in where they are as a business and what their prospects look like, rather than necessarily where they were in terms of a historic lens.
Meaning the froth is less bubbly?
J.S.v.O.: No, I think if you’re a brand and you have investors that have entered at different stages in your development at different valuations, those valuations may not inform your current or future value.
Are there any dynamics that you’re seeing that are unique to beauty versus other segments?
J.S.v.O.: What makes beauty so unique and so interesting is that it has probably one of the most innovative new product development capabilities of any of the consumer verticals. That’s coupled with fast-moving channel dynamics and the ongoing evolution of online prospects relative to traditional retail. There’s also a very broad global strategic buyer universe that we don’t necessarily see in many other verticals and sectors, which are often weighted in one region or another. I would also highlight that it is the category that is inherently global with regional adaptation. If you think more broadly outside of beauty, in categories like foods and beverages, there are fewer examples of brands and products that have been adapted globally.
Last year we saw numerous brands that came to market that didn’t transact. What’s your advice to them?
J.S.v.O.: The thing I’d say is they haven’t transacted yet. But a lot of these are on the simmer, and that doesn’t mean they won’t. There are a lot of fabulous brands out there that we could still see transact this year. The key point — and this applies more broadly — is that there isn’t a single approach that fits all. In this dynamic macro environment, it’s incredibly important to tailor the way you think about a process or a solution. It goes back to understanding the brand and its evolution, and the way that historic valuation may or may not inform the future of a brand, and understanding investor dynamics based on those characteristics, and balancing all of that with the macro environment. There has been good activity this year, which does provide data points for brands to think about what is valuable and what is transactable for investors.
How are you seeing the buy side evolve? Are we seeing more non-traditional players interested in beauty?
J.S.v.O.: Definitely. The beauty landscape is increasingly intertwined within a sort of broader traditional personal care and wellness landscape. Beauty has evolved beyond a face value proposition, to one that really encompasses more broadly wellness and longevity. People are thinking of beauty as a way of feeling good about themselves.
Multiples. Are they coming down? Historically, we talk so much about profitability versus sales. What matters most now?
J.S.v.O.: I think they both matter. At its crux, you need to be growing in a way that is sustainable. In other words, you need to be investing in driving profitable growth. And you need to be investing to drive growth that demonstrates an ongoing enlargement of your brand, so expanding geographically, by channel and in product. It sounds very straightforward, but it’s incredibly difficult to do at the same time, and especially to do it profitably. It is thinking about deployment of capital in a way that unlocks both top line, as well as sustainable profitable growth in the future.
So as a founder it’s really important to think about the right operator for your brand.
J.S.v.O.: Yes, you need to think about investing to maintain optionality, so that there can be more than one [option]. But you need to do it in a way that is authentic to your brand.
At what stage do you like to come in to a brand? Based on what you’re saying, it sounds like rather than coming in when a brand is fully baked, you’d like your team to have the opportunity to advise on direction so that you can best position them to what you’re seeing happening in the market?
J.S.v.O.: One of the key things we do as JP Morgan that is differentiating is we bank through Chase. We work with a large number of small businesses, particularly in North America. We build relationships, often lending relationships, with these small businesses who then grow to become medium-sized businesses, and we provide commercial banking services, etc. It allows us to think in a patient way around what the right answer is. Sometimes it’s a sale, but other times it’s going to be to raise some more equity to invest, to get to the right point in the right profile to find the right counterpart. We can pivot and be quite unbiased in the advice we give, because we can do the debt, we can do the equity and we can do the M&A, and so we don’t think success necessarily is measured when a transaction happens. It’s measured in all the steps along the way that build to a transaction that ultimately then culminates at the right time for the founder.
You’ve been at JP Morgan for over 20 years. What was it like as a woman when you first started and how has it changed?
J.S.v.O.: I’ve been very lucky that there is a great network of senior women here overall, but also in my team and peers who work very closely together. That is true both in Europe and in Asia and in North America. Our culture is one of transparency and pragmatism, and that that has lent itself well to me as I’ve navigated my career. Finally, inherently, the financial markets can be volatile, and fundamentally, the ability to adapt to a changing environment and to be nimble in adjusting to different work environments and financial cycles has been differentiating. In a lot of ways, women are better at doing that than men.
Did you know that you always wanted to work in finance? Was your career more thought out or evolutionary?
J.S.v.O.: It’s a funny story. I was a classical musician, an oboe player, and my father was a CFO of a consumer company, so I knew I would go one way or the other. I’ve been in investment banking since the early 2000s and I’ve come to terms with the fact that I will not be a professional musician!
Are there any similarities between finance and classical music?
J.S.v.O.: I think the discipline of training in anything, if it’s sports or dance or music, sets you up to be disciplined and thoughtful, but also, ultimately to be able to connect with people of all different types and cultures.
How would you describe your leadership style and how has it evolved?
J.S.v.O.: I’m curious and somebody who fundamentally really enjoys the sector that I operate in. I’m collaborative. I like to work with lots of different people, and I really enjoy the opportunity to do that globally. And I think I’m calm. That’s why I really enjoy the beauty space, because the richness of the client types and personalities is multifaceted in a way that you don’t necessarily find in other sectors.
You’re chair of the DOI [diversity, opportunity, inclusivity] council for EMEA at JP Morgan. How are you thinking about creating an equitable environment, both in in the internal culture, but also in broader terms such as access to capital?
J.S.v.O.: Going back to my comment around the JP Morgan culture being one of transparency, of decency, of humility — all of that is very much encompassed in the way we think about creating an employee experience that is equitable for everybody. In terms of the way we think about our client proposition, it is very much around helping small founders set up businesses and investing with them at the beginning. That can be financial, but that can also be advice, helping with payment systems, making connections with people in organizations, suppliers or governments, depending on what is needed. It’s very much an extension of the culture of JP Morgan.
Is there a certain kind of deal that you love to do?
J.S.v.O.: I love the variety. What I love about investment banking is that every day is different. It’s small deals, it’s large deals, it’s public boards, it’s meeting different people. I really like the variety, simply put, of all of the different things and managing to do them all at the same time.
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