Decoding The Acquisition Of Minimalist By Hindustan Unilever Limited (HUL)

As a chartered accountant, I analyse financial statement balance sheets, look for profit and loss statements, and analyse corporate strategies in considerable detail. Occasionally, however, a mergers and acquisitions (M&A) transaction occurs that stands out as a perfect illustration of a shift in how consumers behave and how corporations are strategising.

The acquisition of digital-first homegrown skincare brand Minimalist (formally known as Uprising Science Private Limited) by Hindustan Unilever Limited (HUL) is one such example.

The deal was officially announced in January 2025, with rapid clearance assessments conducted by regulatory bodies such as the Competition Commission of India (CCI) soon after work commenced. This is one of those deals in which a traditional major company successfully pivots into the digital space through the use of M&A machinery. Other than the glitzy headline and eye-watering value of 2,955 crore, what does this acquisition mean in real terms?

Let's leave behind the marketing hats and instead focus on the accounting and financial perspective, so let us break this acquisition down into some very basic and understandable elements.

1. The Target: The Meteoric Rise of Minimalist
We should first assess the buyer before assessing the assets that are purchased. A serial entrepreneur co-founded Minimalist with Rahul Yadav and Mohit Yadav in 2020. Minimalist is an example of how fast a brand can extend its client base/annual revenue run rate (ARR) in just a few short years; Minimalist's ARR for 2020 exceeds 500 crore (US$65 million).

Minimalists have a distinct niche, and that niche is called ‘activity-driven science,’ as opposed to selling ‘glowing skin creams’ via sales psychology. Minimalists were able to offer a product based on the chemical compounds found in their product (such as salicylic acid or vitamin C) and provide a transparent packaging solution that can be verified by customers.

Looking at their financials from the Office of Companies and Business Registration (RoCBR), we see that the numbers/financial data illustrate an incredible growth trend.

·       FY23 Revenue: 184 crore

·       FY24 Revenue: 347 crore

·       FY25 Revenue: 515 crore (A massive 48% year-on-year spike)

Although they spent a large amount of money on marketing and advertising (over 30% of their total operating costs) in fiscal year 2025, they had an operational EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of 18 crores that year, meaning that the core of their business was generating cash (even though substantial one-off exceptional costs resulted in them showing a net loss on paper). 

A single D2C business can spend huge amounts on acquiring customers, but a brand of 500+ crore with strong unit economics is unusual. HUL noticed this.

2. The Deal Mechanics: Breaking Down the 2,955 Crore Tag
When the news broke, the headline number was that HUL valued Minimalist at a pre-money enterprise valuation of 2,955 crore (roughly $350 million). HUL agreed to acquire a 90.5% stake in the company for a cash consideration of approximately 2,706 crore.

But how was this cash structured? In M&A, the structure of the payout is just as important as the amount. The deal involved two distinct parts:

1.    Secondary Buyout (2,670 crore): This is money paid to the existing shareholders (the founders and early investors like Peak XV) to buy their shares.
Small Example: Imagine a residential building. A secondary transaction is when you buy an existing flat from a current owner. The money goes directly to the owner, not to the building’s maintenance fund.

2.    Primary Infusion (45 crore): This is fresh cash injected directly into Minimalist’s bank account.
Small Example: Using the same analogy, a primary infusion is like paying the building society directly to construct a new clubhouse. The money stays inside the entity to fuel its future growth and operations.

Why not buy 100% upfront?
It may seem odd to hold back 9.5% from the founders when HUL has invested substantially in the transaction. However, in many acquisitions, this can be viewed as a common technique used to mitigate the risk associated with the acquisition and make for a more successful business transition period. The final 9.5% will be paid to the founders approximately two years after the date of closing.

This strategy can be viewed as an "earn-out" or a form of "golden handcuff," which increases the likelihood that the founders, Mohit & Rahul Yadav, who possess a great deal of the institutional knowledge and the creative vision for the business, will stay to build the business during the important transition period to the acquiring company. In turn, if the business achieves a level of performance and grows significantly over the next two years, the final 9.5% of the business will have increased in value and provided a win-win result.

3. The Valuation Lens: Is the Price Justified?
As a CA, I have been obsessed with "valuation multiples." We ask: How many times is the buyer willing to pay?

At a valuation of 2,955 crore, against FY24 revenues of  347 crore, HUL was paying a revenue multiple of about 8.5x. If we look at the FY25 revenue of 515 crore, that multiple drops to a more reasonable 5.7x.

To a layman, paying 6 to 8 times the total sales of a company (not even profit, but sales) might sound outrageously expensive. However, in the FMCG and premium beauty sector, this is par for the course for a high-growth asset.

Why such a premium?
Products in the fast-moving consumer goods (FMCG) category tend to be consumables that a customer will use on a recurring basis; if an individual were to discover a serum made by the Minimalist company that helped them cure their acne, they are likely to purchase this item on a monthly basis for five years. This means that an incredibly stable and predictable source of revenue will be created from these sales. Therefore, HUL purchased not only current revenue from today's sales, but they also purchased the future/long-term value of a loyal customer that is extremely attached to digital channels and will purchase from them again over the next 10 years.

4. The Strategic Rationale: The "Premiumisation" Play
Hindustan Unilever, the parent company for an absolute giant of a brand and household staples like Dove, Pears, Lakmé, and Pond’s, bought a four-year-old start-up for one big reason: premiumisation.

As an Indian consumer continues to change rapidly, where generic cold creams sufficed a few years ago, now, through worldwide trends, YouTube dermatologists' opinions, and an increase in disposable income, they are looking for solutions that target very specific needs (e.g., types of hydration, like hyper moisturisation from hyaluronic acid; hyperpigmentation from niacinamide). 

The shift to "Premium Beauty & Wellbeing" represents a much larger margin opportunity for Hindustan Unilever compared to their co-products of soap/toiletries (i.e., regular basic products such as soap/detergents).

·     The Math of Premiumisation: It is much easier and more profitable to sell one bottle of a premium skin serum for 600 than it is to sell twenty bars of soap for 30 each. The distribution, packaging, and logistical costs are significantly lower for the single premium item relative to its profit margin.

HUL realised that building a science-backed, transparent brand from scratch (the "Build" approach) would take years of trial and error, and they might still miss the cultural mark with Gen Z. Buying a proven winner (the "Buy" approach) like Minimalist gives them an immediate leadership position in this high-growth space.

5. Synergies: The "1 + 1 = 3" Principle
In M&A, a deal only makes sense if the combined entity is worth more than the two companies standing alone. This concept is called "Synergy."

Here is how HUL and Minimalist complement each other:

What HUL brings to Minimalist:

·     The Power of Offline Distribution:
Minimalist is a digital-first brand. They excel on Amazon, Nykaa, and their own website. However, India is still a predominantly offline market. HUL has arguably the most powerful distribution network in the country, reaching millions of Kirana stores and premium retail pharmacies. HUL can take Minimalist from the smartphone screen to physical shelves across Tier-1 and Tier-2 cities overnight.

·     Supply Chain Economies of Scale:
Because HUL buys raw materials in unimaginable quantities, they command the best prices in the world. By plugging Minimalist into HUL's supply chain, the cost of manufacturing each serum will likely go down, expanding profit margins.

What Minimalist brings to HUL:

·     A Direct Line to Gen Z and Millennials:
Legacy brands sometimes struggle to speak the language of younger, hyper-informed consumers. Minimalist brings a built-in community that trusts its scientific, no-nonsense approach.

·     D2C Capabilities:
HUL gets access to Minimalist’s agile product development cycle. D2C brands can ideate, manufacture, and launch a product in months. Legacy companies often take years.

6. The D2C Dilemma: Why Did the Founders Sell?
If Minimalist was growing at 48% year-on-year, why did the founders decide to sell a 90.5% stake instead of staying independent?

This brings us to a fundamental reality of the D2C business model: The ceiling of Customer Acquisition Cost (CAC).

Small Example:
Imagine you open a new bakery. Giving out free samples in your immediate neighbourhood is cheap and gets you your first 100 customers easily. But once everyone in your neighbourhood knows you, getting the next 100 customers requires buying billboard space across the city, which is astronomically more expensive.

In the digital world, your neighbourhood is your core target audience on Instagram and Facebook. Finding the first million customers online is manageable. But eventually, the digital ad space gets crowded, and the cost to acquire a new customer (CAC) skyrockets.

To grow beyond the 500 crore mark and hit 1,000 crore or 2,000 crore, a brand must go offline. Building physical distribution networks, hiring sales teams, and fighting for shelf space in supermarkets requires immense capital and decades of relationship-building. By selling to HUL, the founders bypassed this gruelling decade-long battle and instantly unlocked the ultimate distribution cheat code.

7. The Accounting Viewpoint: Understanding "Goodwill"
As a CA, I cannot write an article on M&A without mentioning how this looks on the balance sheet.

When HUL paid 2,955 crore for Minimalist, they were not paying for the physical assets. The minimalist's tangible assets, like office computers, warehouse inventory, and factory equipment, were likely worth only a tiny fraction of that amount.

In accounting, when a buyer pays more than the fair value of the net physical assets of a company, the difference is recorded on the balance sheet as an intangible asset called goodwill.

What exactly is this Goodwill?
It is the value associated with the Minimalist company brand name, the loyalty of customers, 'trade secrets' relating to their proprietary product formulas, and optimised digital advertising algorithms as an asset. HUL will have its auditors independently review goodwill before determining its long-term value and potential growth opportunities over time. The continued success and dominance of the Minimalist brand will preserve the existing goodwill associated with this retail business.

Additionally, the transaction required approval from the Competition Commission of India (CCI), which was granted in March 2025. As part of its review process, the CCI determines whether the proposed merger or acquisition would create an unfair monopoly in the marketplace. The premium skincare market is extremely fragmented, with numerous competitors, including L'Oréal, Nykaa, and Honasa (Mamaearth), resulting in the CCI's determination that the premium skincare industry will remain competitive for the foreseeable future.

 

8. Conclusion: A Blueprint for the Future
The HUL × Minimalist deal of 2025 is more than just a massive financial transaction; it is a blueprint for the future of Indian retail. It acknowledges that the days of mass-market, one-size-fits-all beauty are slowing down. The future is personalised, premium, and scientifically backed.

 

For Hindustan Unilever, allocating nearly 3,000 crore is a bold declaration that they intend to dominate the premium aisles just as thoroughly as they dominate the everyday grocery store. For Minimalist, it is the ultimate validation of a brand built on transparency and efficacy.

As we watch this integration unfold through 2026 and beyond, the real test will be whether HUL can preserve the agile, authentic startup culture of Minimalist while injecting it with the steroids of its massive supply chain. If they manage to strike that balance, Minimalist won't just be a 500 crore brand; it has all the makings of HUL's next billion-dollar global export.