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Recently Closed Transactions

Beauty Care M&A Ends Year in a Flurry

M&A activity in the beauty care sector ended the year on a high note. After taking a breather in the summer, the beauty care M&A markets witnessed 20 deals in the fourth quarter, pushing the total number of M&A transactions in 2014 over 2013 levels by 1.6%. Based on attractive market dynamics and our own new mandate pipeline, Intrepid is anticipating a strong year for beauty care M&A in 2015. Q4’14 beauty care M&A highlights include:

• Deal volume in Q4’14 rose over 200% from Q3'14 and 33% from Q4'13.• Estée Lauder delivered on its promise to put acquisitions back on the priority list by announcing four transactions. • L'Oréal finished its aggressive year of M&A with two more acquisitions in Q4’14, bringing its total to nine for 2014.• Other familiar names re-emerged on the acquisition front, including Coty, LG Household & Healthcare, LVMH, Alliance Boots and

Unilever. • Strategic buyers dominated the M&A landscape with only two material private equity transactions.• Intrepid continued its success in the beauty care sector announcing its advisory role in the acquisition of Product Club by Burmax

Company (see details below). 

Steve Davis, Managing Director, Head of Beauty & Personal Care, SDavis@IntrepidIB.com

Burmax Acquires Product Club – Burmax Acquires Product Club – Founded in 1991, Product Club is a leading provider of color accessories to the professional beauty industry and is known for its cutting edge, high-quality products and top notch education. Burmax Company is a leading provider of sundries to beauty schools and beauty supply stores since 1948. Under Burmax ownership, Product Club will continue to expand its brand, product portfolio and educational offerings to its customer base and will gain direct access to the future stylists and colorists of tomorrow through Burmax’s school network. Intrepid acted as the exclusive investment banking advisor to Product Club on the transaction. Read more here.

L’Oréal Expands Multi-Cultural Presence with Acquisition of Carol’s Daughter – Founded in 1993, Carol’s Daughter is a multi-cultural beauty brand specializing in hair and skin care products for women of color. The company’s products are sold primarily through specialty and mass retailers, HSN, e-commerce and Carol’s Daughter branded stores. The deal follows the bankruptcy of the retail division of Carol’s Daughter. According to L’Oréal, the acquisition will enable L’Oréal to “build a new dedicated multi-cultural beauty division” as part of its Consumer Products business. Carol’s Daughter generated net sales of $27 million for the 12 months ended September 2014.

Coty to Acquire Bourjois Cosmetics from Chanel – Coty announced the acquisition of Chanel’s color cosmetic brand Bourjois in exchange for $239 million of Coty stock. Bourjois is sold primarily through supermarkets and specialty shops across 23,000 points of sale in Western Europe, the Middle East and Asia. The acquisition increases Coty’s market share in color cosmetics, particularly in Western Europe where Bourjois generates 55% of its sales, and strengthens Coty’s presence in the lip and eye categories. Coty plans to complete the transaction by the second quarter of 2015. LG Household and Healthcare Acquires CNP Cosmetics – LG Household and Healthcare signed an agreement to acquire an 85% stake in South Korea based CNP Cosmetics for approximately $50 million, representing an implied revenue multiple of 2.6x and EBIT multiple of over 13x. The acquisition gives LG Household and Healthcare access to the fast growing cosmoceuticals market.

Estée Lauder Delivers on its Promise to Return to Acquisitions – Estée Lauder announced the acquisition of GLAMGLOW, a prestige skin care brand specializing in facial mask treatments. Founded in 2010, GLAMGLOW products are sold primarily through specialty retailers (such as Sephora and Douglas), specialty channels and select high-end department stores. The deal is expected to close in January 2015. In the fourth quarter, Estée Lauder also announced the acquisitions of two prestige fragrance brands (Le Labo and Editions de Parfums Frédéric Malle) and luxury skin care brand L Rodin.

Q4 2014

Unilever to Acquire Camay and Zest from Procter & Gamble – Consistent with its strategy of focusing on core brands, P&G announced it would sell soap brands Camay and Zest to Unilever. The two brands generated revenue of approximately $225 million last year. P&G had already sold the rights to the Zest brand in the U.S., Canada and Caribbean to High Ridge Brands, a portfolio company of Brynwood Partners, in 2011. The transaction is expected to close during the first half of 2015.

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Procter & Gamble Exploring Sale of Wella – According to industry sources, P&G is exploring strategic options for Wella, one of the leading professional hair care companies in the world. Industry sources believe Wella could be worth as much as $7 billion. P&G acquired Wella in 2003 for approximately $7 billion. P&G previously announced plans to divest over 100 brands (see the Q3 2014 Intrepid Beauty Care M&A Report for more details).

TPG Growth Invests in Beautycounter – TPG Growth acquired a minority interest in Beautycounter, a provider of safe, effective skin care, cosmetics and hair care products known for using only non-toxic beauty ingredients. Beautycounter sells its products through independent consultants, e-commerce and select specialty retail partners. Earlier in 2014, TPG Growth acquired a majority stake in mass market color cosmetics brand e.l.f Cosmetics.

Kendo Acquires Bite Beauty – Kendo Brands, a subsidiary of LVMH, acquired Bite Beauty, a natural lip care company with a mission to create lipstick that is high performance and “healthy enough to eat.” Bite Beauty joins other Kendo brands including Ole Henriksen (acquired in 2011), Kat Von D Beauty, Formula X, Marc Jacobs Beauty and Elizabeth and James fragrance.

Alliance Boots Acquires Remaining Interest in Soap & Glory – Soap & Glory markets bath, body and skin care products and is known for its retro-style packaging and tongue-in-cheek product names such as “Sexy Mother Pucker” and “Drama Clean”. Alliance Boots began carrying the brand in 2006 and acquired a minority stake in 2011 with a call option for the remaining interest. The founder of Soap & Glory previously created the spa brand Bliss, which she sold to LVMH in 1999. Following the acquisition, Soap & Glory will operate as a stand-alone brand within Alliance Boots’ new Global Brands division.

Shiseido Signals Shift in M&A Strategy – Shiseido Chief Executive Officer Masahiko Uotani outlined the strategic plan for Shiseido targeting revenue of 1 trillion yen, or $8.4 billion, by fiscal 2020 (Shisedio reported 762 billion yen, or $6.4 billion, for fiscal 2014). In stage one, Shiseido will focus on minor brand consolidation, streamlining of personnel resources, increasing marketing expenditures and driving growth in core segments such as ecommerce and travel retail. The second stage of the plan will focus on new product introductions, entry into new markets and re-engagement in M&A activities. Shiseido’s last acquisition was the $1.9 billion purchase of Bare Escentuals in 2010.

La Lumiere Raises Capital – The developer of the illuMask, a light therapy mask sold to consumers, raised $20 million from Johnson & Johnson Development Corporation (the venture capital arm of Johnson & Johnson) and SWaN & Legend Venture Partners. The illuMask was introduced in February 2014 and can be found at major mass market retailers including Walmart, Target and Ulta. La Lumiere plans to use the capital to fund increased marketing and distribution as well as upcoming R&D innovations.

MiniLuxe Raises Capital – MiniLuxe offers nail, eyebrow and waxing services through eight locations in Boston. The company raised $23 million in Series C financing led by Horowitz Group and Cue Ball Capital to add more locations in the New England area. MiniLuxe has raised $35 million in capital since inception.

Catterton Invests in Intercos – After reporting in October it would pull its announced IPO due to deteriorating market conditions in Europe, Italy-based Intercos announced a minority sale to Catterton Partners. Intercos operates seven research centers and 12 production plants for the manufacture of beauty care products, specializing in color cosmetics, pencils, nail polish and skin care. The investment from Catterton will be used to help Intercos expand globally. According to IPO documents, Intercos reported 2013 revenue of approximately $400 million and EBITDA of approximately $60 million.

Drybar Sells Stake – Drybar Holdings, a Los Angeles-based operator of blowdry-only salons, sold an $18.5 million stake to investors led by Pine River Capital Management. The deal valued Drybar between $160 million and $200 million, representing a revenue multiple of approximately 3x to 4x expected 2015 revenue according to industry sources. The investment comes only months after Drybar raised $20 million in funding from SPK Capital and existing owner Castanea Partners.

Industry News

Recently Closed Transactions (Cont.)

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Last Twelve Months Revenue Growth Enterprise Value / LTM

Company Enterprise Value Market Cap Revenue Gross Profit EBITDA 1-year 3-year Revenue EBITDA

$5,864 $4,081 $9,178 61.8% 7.9% (10.4%) (7.0%) 0.6x 8.1x

$16,327 $18,493 $7,436 62.6% 15.4% 0.6% 3.2% 2.2x 14.3x

$9,685 $7,349 $4,556 59.3% 15.2% (1.3%) 3.8% 2.1x 14.0x

$1,145 $638 $1,091 43.9% 2.4% (18.8%) (3.0%) 1.0x NA

$28,878 $28,927 $10,925 80.3% 19.4% 6.0% 5.9% 2.6x 13.6x

$723 $849 $480 50.0% 10.1% (24.5%) (3.8%) 1.5x NA

$91,657 $92,757 $27,429 71.3% 20.5% 1.0% 4.5% 3.3x 16.3x

$3,484 $1,789 $1,931 65.2% 15.8% 41.4% 11.6% 1.8x 11.4x

$5,814 $5,623 $6,391 75.5% 10.2% 8.9% 4.5% 0.9x 8.9x

Mean 63.3% 13.0% 0.3% 2.2% 1.8x 12.4x

Median 62.6% 15.2% 0.6% 3.8% 1.8x 13.6x

Note: Indices calculated using a median equally-weighted basis; All data sourced from S&P Capital IQ as of 12/31/2014.

TEV / EBITDA Multiples TEV / Revenue Multiples

# of Announced Beauty Care Transactions by QuarterPast Three-Month Equity Price Performance

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5-Year Historical Trading Multiples

Global Beauty Care M&A TransactionsGlobal Beauty Care Equity Price Performance

Publicly Traded Companies (USD Millions)

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About INTREPID

Intrepid Investment Bankers is a specialty investment bank that provides M&A, capital raising and strategic advisory services to middle-market companies across various industry sectors.  We have a unique culture rooted in our founders’ successful 30-year history of advising entrepreneur and family-owned businesses, financial sponsors and major corporations. We believe that every company has an entrepreneurial passion that drives it and a story that defines it.  We deliver unconventional results through our unique ability to tell each client’s story, and drive relentless execution through senior banker immersion in each process. We augment our international capabilities through our membership and active participation in M&A International Inc., an exclusive global alliance of select independent middle-market M&A advisory firms. Follow Intrepid IB

Beauty & Personal Care Team

Steve DavisManaging Director

SDavis@IntrepidIB.com

Shahriar AttaieVice President

SAttaie@IntrepidIB.com

Blake MorellAnalyst

BMorell@IntrepidIB.com

*Executed by principals of Intrepid while at previous firms.

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