Tapping into the Beauty Business Boom
Another key moment in Ho’s journey was in 2012 when John Berg, the head of Raymond James’s consumer group, took over the reins of Financo and became its CEO (Financo was acquired by Raymond James in 2021). With Berg’s leadership came a laser focus on beauty dealmaking for Ho. “John came in with a totally new energy to our company―he believed we could win. And he had a very clear strategy. He said, ‘We’re going to make all of you specialists. Vennette, you’ve done more beauty than anyone else, now all you’re going to do is do beauty.’ I remember at the time feeling like all of my other opportunities were being cut off, but he was very prescient and a super smart guy. He said, ‘The only way you win is if you actually focus on one thing and do it really well,’” she comments.
Despite her initial trepidation, the specialization turned out to be a blessing in disguise. “I drew the long straw because beauty is, for me, by far the most interesting industry in consumer,” she exclaims. “It’s an industry where an amazing founder with a great vision can seemingly come from nowhere and make a huge splash. It’s an industry that’s always moving forward in terms of how it reflects and drives what’s going on in society. Founder-backed independent companies in particular are driving systematic change in things like sustainability, formulation, and inclusivity.”
Ho also praises the incredible margins and recurring cash flows of the beauty businesses, which enable some of the tremendous valuations that Raymond James has been able to deliver for its clients. But beyond the numbers, there are other humanistic elements of the industry she also values. “The best thing about the beauty industry is what it really stands for: helping people feel happy and good about themselves. The beauty industry has this incredible combination of being one of the most attractive financial profiles of any industry, but it’s also a joyful industry that offers incredible opportunities for entrepreneurship and, distinctively, wealth creation for women. And when we work with our founder clients, we are always fighting to ensure their efforts are appropriately recognized,” she enthuses.
Reflecting on her path from buying into investment banking, Ho sees her time at Bloomingdale’s as a key piece in the puzzle of understanding the M&A landscape. “I’ve been on the other side and that perspective is super critical to my job. Overall, what I’ve always been interested in is passion for the consumer as a whole. When you understand how the entire business works, you have an appreciation for the importance of execution across the entire stream—no matter how good a brand is, it doesn’t matter unless the execution is flawless,” she explains.
A prominent example comes to mind from her days of fashion accessories buying. “We’d bought these great necklaces, and I was so excited for the PO to hit the DC. Then I watched the numbers and asked: why isn’t it selling? I went up to Bloomingdale’s on 59th Street and found them stuck in the back stockroom all tangled. I spent half a day untangling necklaces, and when I put them back on the floor, they sold out almost immediately,” she remembers. “A great business is about excellence every step of the way. You can have a great product, but if it never makes it to the shelf, then it never really has a chance.”
An appreciation for excellence is also a key factor in determining which projects she and her team at Raymond James greenlight or decline. “When we take on projects, we are always thinking about what’s the broader story and how does this fit into the ecosystem of the industry—why does this company or this brand matter, and is it positioned to succeed in the long term,” Ho adds.
Despite the flashy numbers and attention-grabbing headlines, she admits that “deals are hard [work]. The industry, to some extent, has glamorized the idea of doing a deal. Deals may look like they happen all the time, but they’re actually really challenging. Sometimes it feels like you need the moon, the sun, and the stars to align. And even after that, there’s so much work that goes behind making a deal happen that people don’t see,” she explains.
What are those metaphorical astronomical bodies that need to align? Ho cites a great company, metrics, numbers, and momentum—an easy-to-identify runway for an upward growth trajectory. A positive economic backdrop, buyers ready to commit to and financially ready to execute a deal, an experienced and skilled advisory team are further benefactors. “We have to be thoughtful, smart, and strategic about how we bring a company to market, communicate the story, drive valuation, and navigate the entire process successfully from beginning to end. Inevitably there will be twists and turns throughout a deal. It can go off the rails at any time,” she notes. Trust is a paramount element for all those unexpected obstacles, as is a long-term perspective for navigating a volatile market and economic climate.
Another aspect of that extended viewpoint is about learning when to say no just as much as it is about learning when to say yes. “There’s a lot of focus these days on growing fast or getting to an exit fast. The reality is the best M&A outcomes come when you build something sustainable with longevity. Oftentimes that’s about taking steps to consciously manage your business for the long term and not jump at every opportunity that hits your plate,” Ho explains. “That takes a lot of discipline, especially when you’re a brand that’s doing well. It takes a lot of thoughtfulness; making sure your IP is protected, you are investing properly behind your team, and your financials are in order. All of the legwork behind the scenes are critical to driving ultimate valuation and interest.”
Recalculating for a Post-Digital World
In today’s beauty market, those resource investments and calculations are becoming more challenging to make. “Pre everything digital, it was challenging to gain scale because everything was slower. Now with digital you can catch fire really fast. But how do you channel that energy into long-term sustainable growth and repeat purchases? How do you utilize that for the long term versus a moment of virality?” she questions. “People used to say when you hit $100 million in revenues, you’d made it; it was a mark of permanence. Now companies can get to $100 million and you don’t know if they’re going to be around for a long time. It’s not that easy for acquirers to also parse through what quality growth and sustainability looks like.” Determining that grade of growth and sustainability comes down to core tenets like profitability, identifying any flags in P&L statements, having solid gross margins rather than solely focusing on sales growth, and repeat purchases.
While numbers are certainly an important component of dealmaking, Ho emphasizes the highly interdisciplinary nature of her job. “Finance is definitely a part of the story, but on any given day, we are also doing sales, branding, marketing, negotiation, psychology. Sometimes a big part of my job feels like it’s playing therapist to everybody,” she notes. “Deals are emotional. It’s peoples’ livelihoods at stake. How do you keep everyone feeling calm throughout and keeping the big picture in mind? You need to make sure there are no rash decisions on either side of the equation, buyers or sellers. So much of a successful deal is how people feel and their excitement and enthusiasm for a partnership.” Feelings like believing in the brand or company, the team, and an alignment in values and cultures are part of that transaction.
For brand founders looking to raise capital or make a successful exit, Ho advises finding a specific intent and purpose behind doing so. “Honestly, raising capital is not always the best thing to do. It sounds funny because my job is to raise money, but if a company or owner doesn’t need it, bootstrap for a bit longer. That’s oftentimes better than just going out and raising money,” she says. “There’s a discipline that comes in with not raising money. There’s a huge case to be made of not raising money just for the sake of raising money.”
She also believes that building a great business will allow for the M&A opportunities to present themselves organically. “The best clients that we have worked with did not start a business with the intention of selling it. If you are only focused on selling your company from the outset, you start getting distracted, taking inputs from a lot of different places, and chasing something elusive,” she remarks. “But if you stay true to your core purpose as a brand and business and are able to prove it out, people will notice and ultimately want to buy the business.” There is certainly no shortage of new business opportunities arising for the Raymond James team on a daily basis, and Ho thrives off of this energetic pulse. “Beauty M&A is such an incredible place to work in because this entire industry is anchored in M&A. As long as the consumer is changing, independent brands will rise,” she notes. “The large players oftentimes can’t respond fast enough, so there’s always a reason to do a deal and always innovation, creativity, and sparks of energy coming from independents and founders who are changing the face of the entire industry.”
That face is increasingly blurring due to the influx of digital platforms, online virality, and a merging of categories. “The old structures of what beauty is, how we buy it, and how the consumer engages are collapsing as we speak. It’s going to force a lot of people to think differently in terms of their strategy of both how they are structured and also what ‘counts’ as beauty,” she says. Recent examples include skincare-infused color cosmetics, premium bodycare that doubles as a fragrance, and pimple patches as part acne solution, part facial accessory. “Some of the best deals that we have done in the last few years involved companies that didn’t fit a mold, that weren’t traditional. Everyone is being forced to broaden their views a bit as to what matters to the consumer,” she remarks. “You’ve also got a generational shift. We are now talking about Sephora preteens; we’re talking about cologne boys. These are not just trends, they’re inherent transformations with the consumer. On the other end of the spectrum, the older customer is also different today. People are embracing aging and talking more openly about topics like the impact of menopause on how you look and feel. There is this incredible movement of people of all ages, genders, and economic positions seeking joy, wellness, and self-care. How does the industry respond to that?”
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