Capstone Headwaters Personal Care Products & Services M&A Coverage

PERSONAL CARE PRODUCTS & SERVICES PRIVATE EQUITY REMAINS ACTIVE AMID PANDEMIC

CONTACTS KEY HIGHLIGHTS

Kenneth Wasik • This has been a tough year relative to 2019 for cosmetics Managing Director, • Women are maintaining their skincare regimes at home Head of Consumer & Retail • E-Commerce has boomed • PE M&A still strong in skincare, while strategic buyers are largely waiting it out Tracy Patch • Increased demand for contract manufacturing, as brands Director continue to outsource • Favorable industry outlook for the remainder of the year & into 2021 • Buyers looking for sustainable growth prospects post- COVID uncertainty

November 2020

3 Personal Care Products & Services Private Equity Remains Active Amid Pandemic

TABLE OF CONTENTS INDUSTRY OUTLOOK

 Industry Outlook Despite significant headwinds introduced by COVID-19 in the Personal Care  M&A Overview industry, demand has persisted for brands with favorable product mixes and robust e-commerce capabilities. Notably, public players including COTY  Segment Highlight (NYSE:COTY) and KOSÉ (TSE:4922) encountered severe revenue declines due  COVID-19 Impacts to being heavily concentrated in declining segments (see page five). At the  Deal and Public Company Trends same time, Unilever (NYSE:UL) experienced a modest 0.1% overall sales decline, offset by a 27% growth in its skin cleansing business, according to its  Select Transactions earnings call.1 While 71% of women have reported wearing makeup less often  Public Company Data this year (NPD2), skincare and skin hygiene solutions have remained high  Key Takeaways priorities for consumers, as online searches for niacinamide and vitamin C serums have experienced increases of 193% and 37% respectively, through  Report Contributors June, according to Spate.3  Firm Track Record The pandemic has accelerated the adoption of digital capabilities as consumers increasingly search for personal care products through online channels. Through the first half of 2020, L’Oréal (ENXTPA:OR) experienced a 65% increase in its e-commerce sales, growing 82% in June alone, according to its earnings call.4 In addition, consumer preferences for clean and natural personal care products have proliferated through the pandemic. Notably, Shiseido’s (TSE:4911) subsidiary Drunk Elephant, which offers biocompatible skincare products, experienced a 120% increase in Americas online sales, CONTACTS according to Shiseido’s earnings release.5

Kenneth Wasik While deal-making has slowed through year-to-date (YTD) 2020 compared to Managing Director, the prior year, personal care brands and manufacturers have continued to Head of Consumer & Retail draw sustained buyer interest, with the Skincare/Bodycare segment 917-434-6124 comprising the highest percentage of transactions. Public companies have [email protected] been less acquisitive through Q3, however private equity buyers have demonstrated a strong appetite for personal care contract manufacturing Tracy Patch organizations (CMOs). Director 949-220-0540 Year-to-Date M&A Breakdown by Segment [email protected]

Christopher Cardinale Skincare/Bodycare 26 CMO & Reseach 9 Vice President Other 7 949-220-0537 Dermatology 6 [email protected] Dental 4 Haircare 4 Cosmetics 3

0 5 10 15 20 25 30 Number of Transactions Note: Year-to-date (YTD) ended October 5 Source: Capital IQ, PitchBook, FactSet, and Capstone Research 2 Personal Care Products & Services | November 2020

M&A OVERVIEW

While merger and acquisition (M&A) activity has fallen nearly 38% year-over-year (YOY) in YTD 2020, volume has demonstrated a modest recovery in Q3, supporting a Tracy Patch, Director favorable outlook for the remainder of the year and into “The Beauty Buyer Remains Faithful: 2021. Deal activity in Q1 2020 slightly trailed Q1 2019, 2020 proved that certain beauty while the bulk of the overall decline occurred in Q2 with categories, like healthy skin, are volume falling 59% YOY. However, as strategic buyers evergreen in nature. Privately-held, regain financial footing and private equity continues to flexible skincare brand manufacturers deploy capital to the sector, transaction volume has with a focus on natural/organic (& rebounded, with 19 deals announced or completed in Q3, the contract manufacturers trailing 2019 levels by five transactions. Entering Q4, buyers are assessing the sustainability of growth post- supporting them) are seeing a sales COVID among potential target companies that have boost from both DTC and other online benefited from comprehensive e-commerce capabilities sales channels, garnering interest providing insulation from severe challenges experienced from both larger strategic players, by brick-and-mortar retail. and private equity.”

Public companies in the industry have slowed their pursuit of acquisitions through COVID-19, with many focusing on existing product lines and maintaining healthy balance sheets. Through YTD 2020, public companies have Monthly Transactions comprised 16.9% of total transactions, compared to 21.3% 2019 2020 in 2019 which represented the highest composition in the last five years. However, the Men’s Grooming industry has 30 continued to attract M&A interest from Edgewell Personal 25 Care (NYSE:EPC), evidenced by its August acquisition of 20 CREMO for an enterprise value of $235 million. The 14 14 14 15 12 11 acquisition highlights Edgewell’s persistence in bolstering 10 9 9 product lines through inorganic growth, following its 10 6 6 6 7 7 6 6 5 4

failed acquisition of online shaving products provider 5 2 2 2 Number of Transactions of Number Harry’s, a transaction valued at $1.37 billion. 0

Private equity, which has amassed historic levels of dry powder amounting to nearly $1.2 trillion in 2019 (PitchBook6), has demonstrated robust interest in the Personal Care industry, accounting for nearly 34% of total Note: Year-to-date (YTD) ended October 5 transaction volume. Through Q3 2020, contract Source: Capital IQ, PitchBook, FactSet, and Capstone Research manufacturing organizations (CMOs) have drawn steady equitybuyer interest from private equity, attracted to recurring revenue profiles and a broad customer base. Sponsors have utilized add-on acquisitions to expand manufacturing capacity of platform investments, evidenced by Pritzker Capital-backed PLZ Aeroscience’s acquisition of Mansfield-King (see next page). In addition, as skincare products have drawn heightened demand amid COVID-19, private equity has utilized M&A to penetrate the resilient sector. This has been evidenced by Blackstone’s (NYSE:BX) majority stake acquisition of leading physician-dispensed skincare brand Zo Skin Health (October, undisclosed) through its Tactical Opportunities investment platform. Zo Skin Health is expected to record approximately $140 million in sales in 2020, according to a press release.7

Special Purpose Acquisition Companies (SPAC) have emerged as an increasingly popular means towards public listing in 2020, which has extended to the Personal Care and Wellness industries. Notably, through Q3 2020 SPAC initial public offerings (IPOs) have raised $39.7 billion in capital across 117 offerings. This compares to 51 SPAC IPOs on $10.1 billion of capital in all of 2019, according to PitchBook.8 In October, Hims announced a reverse merger with Oaktree Acquisition, scheduled to close in Q4 2020, bringing the company to the New York Stock Exchange. Hims is a leading online personal care and wellness brand offering hair loss, skincare, sexual and mental health products. The combined entity is valued at approximately $1.6 billion, according to a press release.9 3 Personal Care Products & Services | November 2020

SEGMENT HIGHLIGHT: CONTRACT MANUFACTURING ORGANIZATIONS

Private equity has remained attracted to contract manufacturers servicing personal care products providers, evidenced by sustained M&A activity through the pandemic. As private equity firms return to more traditional buyouts following a focus on credit opportunities, minority investments, and distressed and PIPE deals, and personal care providers look to ramp up production, CMOs are positioned to garner heightened buyer interest. Recent notable contract manufacturing transactions are listed below.

PLZ Aeroscience acquires Mansfield-King (September, Undisclosed) – Pritzker Capital-backed PLZ Aeroscience has acquired leading contract manufacturer of specialty personal care products, Mansfield-King, for an undisclosed sum. Mansfield-King provides contract manufacturing services for mid-sized brands across the Professional, Multicultural/Textured, and Men’s Grooming markets. It offers a comprehensive suite of services including product development and formulation, blending, filling, and packaging. The acquisition expands PLZ’s personal care manufacturing footprint and complements its 2019 acquisition of Liquid Technologies (undisclosed), a premier contract formulator and manufacturer of high-end professional hair and skin care products.

Traub Capital acquires Mana Products (September, Undisclosed) – Traub Capital has acquired MANA Products, a premier beauty contract manufacturer, for an undisclosed amount. New York-based MANA Products provides brands with research and development, product development, packaging and sourcing, supply chain management and manufacturing, and regulatory assistance. It offers contract manufacturing for color cosmetics and skincare products, leveraging advanced technologies and innovative powder production capabilities. Traub Capital is a private equity firm with an investment focus in industries including Health, Beauty & Wellness, Consumer Products, and Enthusiastic & Active Lifestyle, focusing on lower middle market companies with $10 million to $25 million in EBITDA.

Clearview Capital Shares Attractive Investment Traits

Capstone recently spoke with private equity firm Clearview Capital, owner of leading beauty products contract manufacturer, Elevation Labs. Clearview shared their perspective on attractive investment traits below. Clearview Capital is a private investment firm specializing in control and non-control investments of North American companies with operating profits of $3-$20 million. Clearview’s sectors of interest include Business Services, Consumer, Healthcare Services, Manufacturing,Healthcareand Specialized Distribution. Since its founding in 1999, it has completed more than 100 transactions. Elevation Labs is a custom formulator and contract manufacturer of premium traditional and natural beauty products, including skincare, haircare, color cosmetics, OTC and other products, for a broad range of internationally- recognized and boutique brands. Clearview Capital has completed multiple add-on acquisitions during its investment period that complement the offerings in terms of different capabilities, including the fast growing Natural and Organic space.

In terms of additional growth, Clearview seeks Larry Simon is a Partner with Clearview Capital and has over “ the following: 20 years of Private Equity experience, having joined • Formulators catering to the prestige segments Clearview in 2005. Larry received that include boutique and high-end brands his MBA from Columbia University Graduate School of • OTC and FDA-regulated products that utilize Business and hisBusinessBachelor’s Degree from The our R&D and product development and Wharton School of the University of Pennsylvania. formulation expertise Contact Mr. Simon at [email protected] • Geographic diversification • Incremental product capabilities ” 4 Personal Care Products & Services | November 2020

COVID-19 IMPACTS

Public companies in the Personal Care industry encountered severe headwinds as pandemic protocols forced retail store closures, with widespread mask usage Using an average of five products daily, and remote work lessening demand for makeup and “ consumers are committed to their baseline cosmetic products. Industry players with robust e- facial skincare routine, which includes a commerce capabilities and favorable category mixes were combination of basic care and targeted able to mitigate COVID-induced revenue challenges more treatments. The effects of COVID-19, including effectively than their peers with heavy retail store spending more time at home, have brought a exposure and product concentration in makeup and greater focus on self-care, and skincare has fragrances. Notably, COTY experienced a 62.8% YOY reaped the benefits. revenue decline in Q2, largely attributed to a category mix skewed towards adversely effected segments including color cosmetics and fragrances, according to its earnings - Larissa” Jensen, NPD’s Beauty Advisor, 10 call. In addition, KOSÉ, which attributes approximately in a press release 40% of its sales to makeup products (UBS11), reported a 26.5% YOY revenue decline in Q2, according to its earnings release.12

While makeup and lipstick sales have suffered, skincare has emerged as a resilient product category, with 40% of facial skincare consumers using their products more during the pandemic, according to NPD.13 In addition, 22% of women have altered their skincare routine due to COVID-19, employing moisturizing products more frequentlyfrequently,risingwhich has been reflected in heightened sales, rising 20% YOY in September, according to Women’s Wear Daily.14 Notably, Estée Lauder (NYSE:EL) reported that while net sales fell 31% in its most recent quarter, with makeup experiencing a 61% decline, skincare has demonstrated resilience with net sales rising 3%, according to its earnings release.15 Public players have recognized long term positive trends in the skincare category, especially as mask usage remains for the foreseeable future, and consumers have placed greater emphasis on skin health and wellness. Leading Japanese beauty products provider Shiseido (TSE:4911) has even launched an initiative to increase its concentration in the Skin Beauty segment, targeting a composition of 80% of consolidated sales, according to its most recent earnings call.

Tracy Patch, Director “Public companies in the Personal Care industry encountered severe headwinds as pandemic protocols forced retail store closures and widespread mask usage has lessened demand for color makeup.

However, despite wholesale changes to consumer lifestyles, purchases of beauty products linked to healthy skin and hair have been maintained and for several brands have actually accelerated, like e.l.f. Beauty, Inc. whose revenue and profitability are both up from mid-March. The offset to that growth is fashion-oriented makeup and accessories have leveled off. Beauty giants like Revlon, L’Oreal, and Coty have all see revenue and profitability decrease in the same period.

Industry players with robust e-commerce capabilities and favorable category mixes were able to mitigate COVID-induced revenue challenges more effectively than their peers with heavy retail store exposure and product concentration in makeup and fragrances.“

5 Personal Care Products & Services | November 2020

DEAL & PUBLIC COMPANY TRENDS

MERGER & ACQUISTION 300 ACTIVITY 250

200 Transaction volume in year-to-date 2020 has 150 123 116 106 trailed the prior year but 94 101 93 100 M&A activity has 59 displayed signs of a 50

rebound in recent months Number of Transactions as strategic suitors regain 0 financial standing 2015 2016 2017 2018 2019 YTD 2019 YTD 2020

Note: Year-to-date (YTD) ended October 5 Source: Capital IQ, FactSet, Pitchbook, and Capstone Research

STRATEGIC & Private Public PE Platform PE Add-On FINANCIAL BUYER 100% 20.3% BREAKDOWN 23.3% 23.3% 29.7% 23.6% 80% 32.1% 13.6% 12.6% 15.5% 14.6% While public companies 10.4% 14.9% 60% 9.7% 16.9% have been less acquisitive 15.5% 11.9% 22.0% in 2020, private equity (PE) 17.9% 40% has continued to be drawn to the sector, with a strong 54.4% 49.2% interest in CMOs providing 20% 45.7% 39.6% 43.6% 39.8%

full-service capabilities to Percentage of Transactions personal care brands 0% 2015 2016 2017 2018 2019 YTD 2020 Note: Year-to-date (YTD) ended October 5 Source: Capital IQ, FactSet, Pitchbook, and Capstone Research

PUBLIC COMPANY 2019 2020 YEAR-OVER-YEAR 5,000 LTM EBITDA 4,000 $3,280 $2,712 Top public companies have 3,000 experienced challenges from an earnings 2,000 $1,348 $1,426 perspective as pandemic $981 1,000 $548 $179 headwinds softened Millions in U.S.Dollars $351 $215 $39$40 $119 demand for certain 0 categories and complicated supply chains Coty Inc. e.l.f. Beauty Estée Lauder KOSÉ Revlon, Inc. Shiseido Corporation Company

Source: Capital IQ and Capstone Research

6 Personal Care Products & Services | November 2020

SELECT TRANSACTIONS

Enterprise EV / LTM Date Target Acquirer Target Business Description Value (mm) Revenue EBITDA Zo Skin Blackstone Develops skincare solutions for various skin conditions 10/05/20 - - - Health (NYSE:BX) including acne, aging, and inflammation.

Oaktree Acquisition Offers skincare, sexual health, and hair loss products 10/01/20 Hims $2,157.8 - - (NYSE:OAC) through its e-commerce platform.

The Hut Group 09/30/20 NV Perricone Manufacturers and sells anti-aging skincare products. $60.0 - - (LON:THG)

Distributes beauty products specializing in hairdressing 09/29/20 La Maison Beauty Systems solutions for professionals. - - -

TrendSight 09/10/20 Smash Labs Manufactures and sells teeth whitening products. - - - Oral Care

PLZ Provides contract manufacturing services for 09/02/20 Mansfield-King - - - Aeroscience personal care products.

MANA Manufactures contract and private label 09/01/20 Traub Capital - - - Products cosmetics and skincare products.

Offers hair care products including shampoo, 08/21/20 Playa Forma Brands conditioner, and hair oil. - - -

08/18/20 Clementine Fields The Detox Market Provides natural beauty and personal care products. - - -

Edgewell Manufactures and sells shaving and personal 08/04/20 Cremo $235.0 - - (NYSE:EPC) care products.

CURE Manufactures cannabidiol products including 07/28/20 Sera Labs $44.0 - - (OTCPK:CURR) facial oil, booster serum, and cleansers.

Voyant Comprises the personal care products manufacturing 07/01/20 KIK Custom - - - Beauty business of KIK Custom Products.

Bayou City Manufactures and distributes hemp-derived skincare, 06/18/20 Leaf Life - - - Hemp cosmetics, and other wellness products.

Thayers Natural L’Oreal 06/18/20 Provides natural skin products. - - - Remedies (ENXTPA:OR)

06/18/20 Sundaily Grove Collaborative Manufactures skincare gummies. - - -

ColorProof Supplies haircare products including shampoo, 06/18/20 Cosway - - - Haircare conditioner, hairs pray, and masques.

Heartland Ozark 06/16/20 Manufactures and sells bath products. - - - Fragrance Brands

Coty Beauty & Retail KKR & Co. Comprises professional beauty and retail hair products 05/11/20 $4,300.0 - 12.3x Hair Businesses (NYSE:KKR) manufacturing business.

Manufactures and markets skincare and anti- 04/30/20 Skinscience Labs Cannaworx aging products. - - -

Pressure BioSciences Develops hemp-derived formulations for skincare, pain 04/29/20 Cannaworx - - - (OTCPK:PBIO) relief, and nutraceuticals.

Provides hemp-formulated wellness and beauty 04/28/20 CMLM Hempyre - - - products including topicals and capsules.

Formulae Offers research and development of personal care 04/16/20 Omya - - - Development products including skincare and haircare.

Oral Care Assets of Comprises oral care products including toothbrushes, 04/02/20 Ranir $113.0 - - High Ridge Brands travel kits, and floss items.

Source: Capital IQ, PitchBook, FactSet, and Capstone Research 7 Personal Care Products & Services | November 2020

PUBLIC COMPANY TRADING & OPERATING DATA

Price % 52 Wk Market Enterprise LTM EV / LTM Company 10/26/20 High Cap Value Revenue EBITDA Margin Revenue EBITDA Coty Inc. $3.16 23.5% $2,417.8 $11,714.2 $4,717.8 $214.5 4.5% 2.5x NM

e.l.f. Beauty, Inc. $21.50 97.1% $1,090.5 $1,186.8 $287.6 $39.9 13.9% 4.1x 29.7x

The Estée Lauder Companies Inc. $232.17 98.4% $83,861.4 $87,640.4 $14,294.0 $2,712.0 19.0% NM NM

KOSÉ Corporation $139.60 74.8% $7,963.3 $7,411.6 $2,839.1 $351.1 12.4% 2.6x 21.1x

L'Oréal S.A. $337.15 96.0% $188,604.4 $186,053.6 $31,666.2 $6,872.5 21.7% NM 27.1x

Revlon, Inc. $4.91 18.2% $261.8 $3,655.6 $2,096.8 $118.5 5.7% 1.7x NM

Shiseido Company, Limited $63.67 72.8% $25,433.2 $27,741.1 $9,134.4 $981.2 10.7% 3.0x 28.3x

Mean 12.6% 2.8x 26.5x

EV = enterprise value; LTM = last twelve months Median 12.4% 2.6x 27.7x $ in millions, except per share data NM = Not Meaningful Harmonic Mean 9.4% 2.6x 26.1x

Last Twelve Month Margin Performance

Gross Margin EBITDA Margin

150%

100% 75.2% 72.6% 73.0% 75.6% 65.1% 58.1% 55.6% 50% 19.0% 21.7% 13.9% 12.4% 4.5% 5.7% 10.7% 0% Coty e.l.f. Beauty Estée Lauder KOSÉ L'Oréal Revlon Shiseido

Last Twelve Month Revenue Growth

20.0%

10.0% 7.2%

0.0% -0.8% -10.0% -3.8% -8.4% -12.6% -20.0% -16.8% -30.0% -25.0%

-40.0% Coty e.l.f. Beauty Estée Lauder KOSÉ L'Oréal Revlon Shiseido

Source: Capital IQ as of October 26, 2020

8 Personal Care Products & Services | November 2020

KEY TAKEAWAYS

Tracy Patch, Director

• Sales volumes from Internet sites should remain high for the foreseeable future. Manufacturers that are able to effectively utilize digital marketing to promote online sales should prosper.

• Contract manufacturers remain in high demand, from both branded manufacturers wishing to remain flexible, and investors seeking to enter or expand into the Personal Care market.

• Although color is expected to make a comeback next year, 2020 was the year of healthy living and skincare improvements.

• Demand for men’s products continues to rise.

• While the demand for soap or sanitizers may eventually dwindle, Capstone believes nimble players offering multiple product lines will continue to see sales growth, and sustainability of profits desired by investors.

• EBITDA multiples offered for privately held businesses have been mixed in the last 9 months, often due to the COVID doubt-effect. Companies that had a negative impact from COVID relating purchasing will need to prove that 2021 will return them to normalcy to obtain higher multiples; those that had a positive impact will need to prove that it is sustainable into the future.

9 Personal Care Products & Services | November 2020

PERSONAL CARE PRODUCTS & SERVICES REPORT CONTRIBUTORS

Kenneth Wasik Managing Director [email protected] | 917-434-6124

Ken joined Capstone Headwaters to lead the Consumer & Retail practice. He brings nearly 25 years of investment banking experience including domestic and international mergers & acquisitions, initial and secondary offerings of public companies, debt raises and private placements for his clients. He has helped raise over $10 billion in capital for clients during his career. Over the last 10 years, he has pursued his passion for advising high growth, middle market consumer product companies and retailers of which a large percentage are family and entrepreneurial owned. Ken regularly presents at consumer industry conferences and has testified twice as an expert witness on consumer brands. He joins Capstone Headwaters from Stephens Investment Bank, where he started and led the Consumer Products Group. Prior to Stephens, Ken was with Jefferies and Co. as Managing Director of Consumer Products. Before Jefferies and Co., he was Head of the Consumer, Food and Retail Group at Houlihan, Lokey, Howard, and Zukin, and was responsible for building out Houlihan’s consumer and retail coverage universe, as well. Kenneth began his career in Investment Banking at UBS in New York, NY, where he supported execution of large packaged goods companies. Ken is a Series 79 Registered Investment Banking Representative and holds an MBA in Finance from Columbia University and a BS in Accounting from St. Joseph’s University.

Tracy Patch Director [email protected] | 949-220-0540

Tracy is a Director in the Orange County office, supporting the management of the Western Region. Prior to Capstone, Tracy worked as a senior banking professional in Morgan Stanley Smith Barney’s Capital Strategies Group and its predecessor, Citi Capital Strategies. She possesses over 17 years of experience in middle market investment banking, working on both domestic and cross-border transactions. Her previous finance experience includes working in the hedge fund industry with Collins/Bay Island Securities LLC and Talisman Capital. Prior to that, Mrs. Patch worked with institutional fixed income sales at Vining Sparks IBG, LP and Robert Thomas Securities, Inc. She also was a manager at The Disney Company. Mrs. Patch holds an MBA from Pepperdine University and a BS in Finance from Miami University of Ohio. She is a Series 7 and 63 Registered Securities Representative.

2020 2020 2019 2019 2019

MIDDLE MARKET US MIDDLE MARKET INVESTMENT BANKING FIRM INVESTMENT BANKING FIRM INVESTMENT BANKING FIRM INVESTMENT BANK INVESTMENT BANK OF THE YEAR OF THE YEAR OF THE YEAR OF THE YEAR OF THE YEAR

INTERNATIONAL AWARDS TURNAROUND AWARDS

10 Personal Care Products & Services | November 2020

PERSONAL CARE PRODUCTS & SERVICES REPORT CONTRIBUTORS (CONTINUED)

Christopher Cardinale Vice President [email protected] | 949-220-0537

Christopher has been engaged in the execution and advisory of mergers, acquisitions and strategic capital raises for over 7 years. Prior to joining Capstone, he was an associate with a boutique M&A firm focused on valuation, M&A advisory, corporate finance, acquisition target research and exit-planning strategy. His industry experience includes manufacturing, healthcare, TMT and consumer. Christopher was also a research analyst in the M&A department at United Capital Financial Advisors. He earned a BA from the University of San Diego. Christopher is a Registered Securities Representative with a FINRA Series 79 and 63.

Connor McLeod Research Associate [email protected] | 617-619-3319

Connor is a Research Associate at Capstone Headwaters primarily specializing in Consumer & Retail, Building Products & Construction Services, Healthcare, and Cybersecurity.

Prior to joining Capstone Headwaters, Connor was a specialist with the Investor Services team at BlackRock where he worked with mutual funds, closed end funds, and exchange traded funds and communicated fund performance, relevant market dynamics, and facilitated trades for shareholders, financial advisors, and institutional clients. Connor holds a BA in Economics from Bates College and is a Series 7 Registered Securities Representative.

2020 2020 2019 2019 2019

MIDDLE MARKET US MIDDLE MARKET INVESTMENT BANKING FIRM INVESTMENT BANKING FIRM INVESTMENT BANKING FIRM INVESTMENT BANK INVESTMENT BANK OF THE YEAR OF THE YEAR OF THE YEAR OF THE YEAR OF THE YEAR

INTERNATIONAL AWARDS TURNAROUND AWARDS

11 Personal Care Products & Services | November 2020

FIRM TRACK RECORD

Capstone Headwaters professionals have represented clients across the Consumer Products & Services industry. This focus allows Capstone Headwaters to provide Personal Care Products & Services clients with real-time transaction feedback and immediate access to key decision makers among the industry’s most active acquirers and investors. A sampling of Capstone Headwaters' closed transactions is shown below:

CONFIDENTIAL CONFIDENTIAL

corporate sale corporate sale corporate sale (IN PROCESS) (IN PROCESS) (IN PROCESS) has acquired

MANUFACTURER OF PREMIER HAIR STYLING BRANDED AROMA PREMIUM ESSENTIAL OILS TOOLS PROVIDER THERAPY PRODUCTS

has been recapitalized by has been acquired by has been acquired by has been acquired by

UNDISCLOSED FAMILY OFFICE

has been acquired by has been acquired by has been acquired by has been acquired by

12 Personal Care Products & Services | November 2020

CITATIONS

1. The Motley Fool, “Unilever PLC (UL) Q2 2020 Earnings Call Transcript,” https://www.fool.com/earnings/call- transcripts/2020/07/23/unilever-plc-ul-q2-2020-earnings-call-transcript.aspx, accessed October 11, 2020. 2. NPD, “Creating Normalcy,” https://www.npd.com/wps/portal/npd/us/blog/2020/creating-normalcy/, accessed October 9, 2020. 3. Vogue Business, “The beauty trends customers are buying during Covid-19,” https://www.voguebusiness.com/beauty/the-beauty-trends-customers-are-buying-during-covid-19, accessed October 12, 2020. 4. L’Oréal, “2020 Half-year Results,” https://channel.royalcast.com/loreal/#!/loreal/20200731_1, accessed October 11, 2020. 5. Shiseido, “2020 Q2 and First Half results (January – June) and Full-Year,” https://www.irwebcasting.com/20200806/6/654b028185/mov/main/index.html, accessed October 11, 2020. 6. PitchBook, “2019 Annual Private Fund Strategies Report,” https://pitchbook.com, accessed October 9, 2020. 7. WWD, “Blackstone Invests in ZO Skin Health,” https://wwd.com/beauty-industry-news/skin-care/blackstone-invests-in- zoskin-health-1234625069/, accessed October 9, 2020. 8. PitchBook, “US PE Breakdown Q3 2020,” https://pitchbook.com, accessed October 9, 2020. 9. Hims, “Hims & Hers, a Multi-Specialty Telehealth Platform, to Become Publicly-Traded via Merger with Oaktree Acquisition Corp.,” https://www.forhims.com/investors, accessed October 12, 2020. 10. Coty, “Coty Inc. Reports Fiscal 2020 Fourth Quarter and Full Year Results,” https://s23.q4cdn.com/980953510/files/doc_financials/2020/q4/Earnings-Release-Q4FY20-FINAL.pdf, accessed October 12, 2020. 11. UBS, “KOSÉ (4922) Will sales to Japanese consumers recover?” https://www.ubs.com/global/en/our-firm/what-we- do/research.html, accessed October 12, 2020. 12. KOSÉ, “Results of Operations Three Months Ended June 30, 2020,” https://ssl4.eir- parts.net/doc/4922/ir_material_for_fiscal_ym7/84148/00.pdf, accessed October 12, 2020. 13. NPD, “22% Report Changing their Skincare Routine due to COVID-19,” https://www.npd.com/wps/portal/npd/us/news/press-releases/2020/more-u-s--women-are-using-facial-skincare- products-today--reports-the-npd-group/, accessed October 9, 2020. 14. WWD, “By the Numbers: Softening Declines in the Mass Market,” https://wwd.com/beauty-industry-news/beauty- features/by-the-numbers-softening-declines-in-the-mass-market-1234611831/, accessed October 9, 2020. 15. Estée Lauder, “Q4 2020 Earnings Call,” https://media.elcompanies.com/files/e/estee-lauder- companies/universal/investors/earnings-and-financials/quarterly-earnings/2020/q4/q4-fiscal-2020-earnings- conference-call-transcript.pdf, accessed October 11, 2020.

Disclosure: This report is a periodic compilation of certain economic and corporate information, as well as completed and announced merger and acquisition activity. Information contained in this report should not be construed as a recommendation to sell or buy any security. Any reference to or omission of any reference to any company in this report should not be construed as a recommendation to buy, sell or take any other action with respect to any security of any such company. We are not soliciting any action with respect to any security or company based on this report. The report is published solely for the general information of clients and friends of Capstone Headwaters. It does not take into account the particular investment objectives, financial situation or needs of individual recipients. Certain transactions, including those involving early-stage companies, give rise to substantial risk and are not suitable for all investors. This report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Prediction of future events is inherently subject to both known and unknown risks and other factors that may cause actual results to vary materially. We are under no obligation to update the information contained in this report. Opinions expressed are our present opinions only and are subject to change without notice. Additional information is available upon request. The companies mentioned in this report may be clients of Capstone Headwaters. The decisions to include any company in this report is unrelated in all respects to any service that Capstone Headwaters may provide to such company. This report may not be copied or reproduced in any form, or redistributed without the prior written consent of Capstone Headwaters. The information contained herein should not be construed as legal advice.

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Mergers & Acquisitions Financial Advisory Capital Access

We can assist opportunist We specialize in performance We help manage through new or acquisitions, execute sales, and improvement and value creation existing lenders or investors and navigate distressed transactions. in difficult situations. secure an optimal solution.

Strategic Acquisitions Board Advisory Debt Financing • Target Identification • Strategic Blueprinting • Bridge / Interim Financing • Valuation & Structure • Evaluate Capital Adequacy • ABL and Cash Flow Revolvers • Buy-Side Due Diligence • Performance Tracking • 1st and 2nd Lien Term Loans • Quality of Earnings • Management Accountability • Subordinated Debt • Buy-Side M&A Execution • Communication • Sale-Leasebacks

Sales & Divestitures Operational Effectiveness Equity Financing • Corporate Valuation • Cost Structure Management • Growth Equity • Market Assessment • Operational Assessment • Secondary Equity Recaps • Transaction Readiness • Management Assessment • Structured Equity • Sell-Side M&A Execution • Sales Augmentation • Acquisition Financing • Asset Divestiture • Organizational Optimization • Investor Management

Distressed Transactions Crises Management Alternatives • Business Unit Divestiture • Turnaround / Interim Mgmt. • Creditor Mediation • Distressed M&A • Corporate Restructuring • DIP and Exit Financing • §363 Sale • Bankruptcy Protection • Government Support Programs

WE ARE ENGINEERED TO MEET THE FULL LIFECYCLE DEMANDS OF PRIVATE COMPANIES BUILD GROW REALIZE SUPPORT

TO LEARN MORE ABOUT OUR SERVICES AND SPEAK TO A MEMBER OF OUR TEAM CONTACT US. 12 BUILT FOR THE MIDDLE MARKET

Capstone Headwaters is one of the largest and most active independent investment banking firms in the United States. The firm has a rich 18+ year history of achieving extraordinary results for middle market entrepreneurs, business owners, investors, and creditors. The firm offers a fully integrated suite of corporate finance services, including merger & acquisition, debt & equity placement, ESOP advisory, corporate restructuring, valuation & fairness opinion, and financial advisory services.

Headquartered in Boston, Capstone Headwaters has over 170 professionals across 16 offices in the U.S. with 16 dedicated industry groups. Capstone has been recognized consistently as one of the top investment banks to work for and “U.S. Middle Market Firm of the Year.”

UNITED STATES

170+ professionals 16 offices INTERNATIONAL Boston  Burlington  Chicago Dallas  Denver  Houston  Los Angeles 450+ professionals New York  Orange County  Philadelphia 60+ offices in 40 countries Richmond  San Diego  San Francisco St Louis  Tampa  Washington DC Asia: China  India  Japan Latin America: Argentina  Brazil  Chile  Colombia  Mexico  Peru Africa: Congo  Egypt  Ghana  Ivory Coast  Mauritius  Morocco  Senegal  South Africa Europe: Belgium  Bosnia  Croatia  Czech Republic  Finland  France  Germany  Herzegovina Hungary  Ireland  Italy  London  Netherlands  Norway  Poland  Russia  Serbia  Slovenia Spain  Sweden  Switzerland  Turkey  United Kingdom