In Licensing Journal, Private Equity Attorneys Examine Opportunities and Risk in Consumer Health and Beauty Sector

In a Licensing Journal article, private equity partners Elizabeth Todd and Shona Ha and private equity associate Hayley Stokes-White examined the opportunities and risk in the consumer health and beauty sector.

The authors note that one of the attractions of many new health and beauty brands is that they are digitally native and have been built online with direct-to-consumer sales. This creates a scalable, high-growth, and potentially high-margin platform that can be expanded. However, success increasingly depends on more than just having an online store. Brands are expected to offer seamless e-commerce experiences, often powered by shoppable content.

These growing health and beauty businesses often use digital marketing, frequently involving influencers and celebrities with wide national or international followings. The authors explain that while this can unlock large potential markets, it can also open up brands to issues around the use of endorsements and name, image and likeness (NILs). For founder or celebrity-led brands, acquirers need to approach the use of identity sensitively during negotiations and understand how valuable those endorsements are to the brand. It is also essential to set clear expectations for the businesses’ future, while ensuring that companies, rather than individuals, own trademarks and have consent to register more.

The authors mention that artificial intelligence presents another challenge and that brands must ensure that any AI generated images or personas do not infringe on the rights of real individuals and that any statements they make are true.