A store chain can own its signs, its leases, its customer list and its sales ledger, and still not own its margin. That is the structural question behind Borletti Group’s acquisition of Pinalli, the Italian beauty and fragrance retailer sold by H.I.G. Capital and its founding family in September 2026. When the party that generates the revenue and the party that sets the margin are different, what exactly is a buyer paying for?
Pinalli grew from 63 stores to 108 in three and a half years, and its reported revenue has compounded at double digits. Customers queue at its doors. Yet which stores qualify to carry a prestige brand, at what supply price, and who receives new launches first are decisions taken by the brand houses that fill its shelves. When the retailer performs, those houses may pay contributions on top; when the contributions shrink, the retailer’s profit moves with them.
In the language of capital, this is a question of who owns the profit pool. A buyer of such a business is not acquiring an asset so much as acquiring permission. Once a double-digit multiple and acquisition debt are placed on top of that permission, the transaction stops being a growth investment and becomes the underwriting of contract risk.
The Deal
What is confirmed is limited. On September 30, 2026, Borletti Group, an Italian investment firm, acquired 100% of Pinalli, a specialist beauty and fragrance chain. The sellers were H.I.G. Capital, the US private equity firm that entered in February 2023, and the founding family. The Pinalli Borletti acquisition makes Borletti the company’s third owner and its second financial sponsor.
- Buyer: an investment vehicle formed and led by Borletti Group, with J. Safra Sarasin Asset Management as anchor investor and further co-investors reported behind it.
- Rollover: the founding family reinvested in the new vehicle as a minority shareholder. Terms are not disclosed.
- Price and leverage: not disclosed. Italian financial press reported a price of more than 10x 2025 EBITDA of EUR 25 million.
- 2025 performance: revenue of EUR 197 million, up 16% year on year, with an 18% four-year CAGR (compound annual growth rate). The company said it reached its five-year plan one year early.
- People: the CEO who has led the company since 2018 stays; a founding partner of Borletti becomes chair.
The new owner’s stated plan is more stores, a stronger online channel, private label and a broader assortment. That is the same list H.I.G. executed over the previous three and a half years. A buyer pulling levers the previous owner has already pulled rarely gets the same force out of them.
Structure Breakdown
Growth by count, not by store
The headline reads as a growth story. Change the denominator and it reads differently. Pinalli opened 22 stores in 2025, taking the estate from roughly 80 to roughly 100, an increase of about 25%, while revenue rose 16%. Divided by the average store count in each year, revenue per store including online was an estimated EUR 2.2 million in both 2024 and 2025. The growth appears to have come from adding stores, not from each store selling more.
Growth built by count lasts only as long as the count keeps rising. In the first nine months of 2026, net new stores totalled eight. From outside it is impossible to tell whether prime locations are running out or capex was held back ahead of the sale. Either reading is uncomfortable for a new owner: with flat per-store sales and slower openings, double-digit growth becomes hard to sustain.
The 10% that is not retail
The deeper issue sits inside the income statement. Third-party data compiled from Italian filings put Pinalli’s 2024 net sales at about EUR 153.7 million and its value of production at about EUR 170.5 million. The EUR 170 million revenue figure the company communicated for 2024 matches the second number, not the first, and the same pattern appears in 2023. The gap of roughly EUR 17 million, about 10% of the total, is other income rather than merchandise sales.
Without the notes to the original accounts, its composition cannot be confirmed. In this trade, however, other income of that size is commonly made up of promotional contributions and incentives paid by brands. If the same ratio held in 2025, other income would be an estimated EUR 19 million, roughly three quarters of the EUR 25 million EBITDA. On the reported multiple, the buyer paid more than 10x an EBITDA figure that may lean substantially on money brand houses choose to hand over each year.
Selective distribution sets the range
Prestige fragrance and cosmetics in Europe are sold through selective distribution (a system in which brands choose which retailers may carry their products). Brands are prohibited by law from fixing retail prices. They do decide which stores qualify, what supply price applies, and who receives new launches and volume first. Under that regime a retailer’s margin is less something it creates than something it defends within a range it has been given.
The Olive Young mirror
Set a familiar name beside it. Olive Young, Korea’s dominant health and beauty chain, reported 2025 standalone revenue of about KRW 5.83 trillion (approx. USD 4.2 billion at the house reference rate of KRW 1,400/USD, October 2026) and operating profit of about KRW 740 billion across 1,381 stores, with roughly 20% of the Korean beauty market. Pinalli’s EBITDA margin is about 12.7%; Olive Young’s operating margin sits in the high-12% range. The figures look alike, but one is struck before depreciation and the other after.
On the desk’s assumptions for exchange rates and online share, revenue per store is not dramatically different between the two. The depth of what each keeps is. Scale alone does not explain the gap; the direction of power does. Olive Young’s shelves carry a much higher share of small and mid-sized brands, and for them a listing is market entry itself: the brand waits for the retailer’s permission. Pinalli’s core assortment comes from global fragrance and cosmetics houses, for whom Pinalli is one of several Italian channels: the retailer waits for the brand’s permission. Under the same banner, one behaves like a landlord and the other like a tenant.
What the buyer may have seen
Two arguments for the price deserve credit. Management says penetration of new independent brands at Pinalli has reached 20%, and in that segment Pinalli stands on the granting side. Trade media also report that Borletti already invests in an Italian pharmacy chain; if so, cross-selling dermocosmetics and joint purchasing are levers the previous owner did not have. Both remain possibilities, while the price is already fixed. In the same year, Douglas, Europe’s largest listed specialist beauty retailer, cut its revenue growth outlook to 0–1% and lowered its margin outlook twice.
The centre of gravity is therefore not the 108 stores. Stores are the visible asset; the cash flow rests on a bundle of contracts with brand houses. Whether those contracts allow renegotiation on a change of control, and whether contributions are committed or discretionary, determines what the EUR 25 million actually means. Identical reported profit deserves a different price depending on whether it is earned or granted.
The Governing Logic
On public information, this structure is organised less around how to sell the asset than around how to defend principal. The return arithmetic explains why. Price and debt are undisclosed, so every figure in this section is a desk assumption: entry at 10.4x EBITDA, an enterprise value of EUR 260 million, funded with EUR 100 million of debt and EUR 160 million of equity, and an exit at 9x after five years.
Under those assumptions, the entire return comes from EBITDA growth and the multiple subtracts from it. If EBITDA stays at EUR 25 million, a 9x exit barely returns the equity. The break-even EBITDA in the model is about EUR 25.6 million, almost exactly today’s figure. The upside runs through a single road, new stores; the downside has several. A disciplined buyer of such an asset closes the floor before pricing the ceiling.
Downside Protection: Four Layers
Other people’s capital. The deal ran through a vehicle Borletti formed and leads, with a Swiss asset manager as anchor and co-investors behind it. How much of its own money Borletti committed is not disclosed. The general property of the format is clear: the organiser can hold the chair and operating control while funding part of the cheque, collect performance-linked economics if the deal works, and cap its own loss at what it put in if it does not. The asymmetry exists before a single clause is drafted.
The family stays in the boat. Read from the buyer’s chair, the founding family’s minority reinvestment narrows the information gap. Those who know best how firm the brand contracts are, and which stores actually make money, now lose alongside the buyer if a hidden problem surfaces. The rollover terms are undisclosed, so intent cannot be asserted. Insider capital left at risk is still cheaper than any representation and warranty.
The same person answers the phone. The CEO in place since 2018 remains, with a Borletti founding partner as chair. Brand relationships tend to attach to people more than to legal entities. In a company whose controlling shareholder has changed twice in five years, a new negotiating counterpart would hand brands a reason to revisit terms. Management continuity is a defence against permission being withdrawn before it is a growth decision; the chair is the control that watches it.
An exit kept open. If Borletti does hold an Italian pharmacy chain, a combined pharmacy-and-beauty platform offers a repackaging route should no outside buyer appear in five years. This is the desk’s interpretation, not an announced plan. The need for it shows in the numbers: Douglas has raised its net debt outlook to between 3.0x and 3.5x EBITDA, which leaves limited room for a large acquisition. If strategic buyers thin out, the remaining counterparty is another financial sponsor, one who knows that stores, online and private label have already been pulled.
Whose downside the layers protect
Every layer above protects the organiser’s downside, not necessarily the co-investors’. Performance economics accrue to the organiser. If a pharmacy combination is pursued, it benefits the organiser’s other holding, and the organiser sits at the table that sets the exchange ratio. Co-investors who entered alongside in ordinary equity may be the material of the structure rather than its beneficiaries. The actual documents may address this; from outside it cannot be seen.
Had the desk sat on the investment committee, it would have asked for four things. First, preferred rather than ordinary equity, with a 1x liquidation preference and an 8% cumulative dividend; in the desk’s bear case of EUR 30 million EBITDA at 7x, an EV of EUR 210 million, ordinary equity recovers about 72% of principal, and the preferred stands in front of it. Second, a separate capex facility for new stores, with each draw unlocked only when the previous cohort has paid back within the promised period.
Third, a price adjustment tied to brand contributions: a share-count reset if contributions fall more than a set margin below the diligence baseline, plus an escrow against major brands terminating on a change of control, a risk insurers are unlikely to cover. Fourth, a put to the organiser if no sale occurs within five years, and independent-director approval for any transaction with the sponsor’s other portfolio companies.
The principle behind all four is the same: find the variables that cannot be controlled, and dig in advance the channel through which losses travel when they move. Brand permission cannot be controlled, so the price falls when it shrinks. Store quality cannot be known in advance, so money moves only once quality is proven. A buyer at exit cannot be guaranteed, so the last buyer is written into the contract. The desk’s base case puts the return at roughly 14% a year. In a deal like that, skill shows less in raising the return than in deciding in advance whose share the 0.72x becomes.
What Must Be True
1. Granted income survives the change of control. The price only holds if brand-funded income, whatever share of EBITDA it represents, is stable through a third change of ownership. The timeline invites the question: the company announced early achievement of its five-year plan in February 2026, the appointment of a sale adviser was reported in March, and the deal closed in September. Selling straight after the best report card is not a fault; every seller does it. How many adjustments were added to the pre-sale year’s EBITDA is the first question a careful sceptic asks. Falsifier: the filed notes show the roughly 10% gap is supplier contributions without multi-year commitment, or major houses reopen terms after closing.
2. The store engine outruns a slowing channel. Italy’s cosmetics industry association recorded 9.5% growth in the perfumery channel in 2024, with the 2025 forecast cut to 5.8%, and the channel was carried by a single category, alcohol-based fragrance. Growth slowed by more than a third in a year. Every store is directly operated, so rent and staff stay when sales stall, and brands that see a retailer weakening tend to trim contributions and launch allocations. On the desk’s assumed EUR 100 million of debt, flat sales and a two-point margin decline take EBITDA to about EUR 21 million and net leverage to roughly 4.8x, a level at which lenders could plausibly ask openings to stop. Falsifier: net additions stay near the 2026 pace into 2027, or new-store cohorts miss payback.
3. Pinalli can move to the granting side before the gateway closes. One credible way for a regional European retailer to reverse the power balance is to become the entry point for Korean beauty brands that have not yet chosen a local partner. In August 2026, Olive Young placed 19 Korean brands it selected into roughly 580 Sephora stores in the United States, and said it would extend to Canada, Australia, the UK and the Middle East by 2027. The announced plan does not include Italy or continental Europe, but Sephora operates in Italy. Falsifier: the curated-zone model reaches Italy, leaving Pinalli to find the brands Olive Young did not pick, a much harder path.
The long-run scar matters more than any single miss. One shortfall is an event; once brands cool and exclusive assortment starts to slip, it becomes structure. Customers can buy the same fragrance in another store or online at almost no switching cost, and the next buyer will discount every lever the previous owners have already used.
The Architect’s Takeaway
If you were building your own deal room, the Pinalli lesson compresses into four instructions. Find out whose permission your profit depends on. Move from the side that asks for permission to the side that grants it. When you lend out a shelf, take a performance-linked share, not just a fee. And for every variable you cannot control, dig the channel through which a loss will travel before you need it.
Map the permission. Turn the Pinalli estimate on yourself. Much of what a professional calls their track record was permitted by the employer’s name on the door. A developer’s users are permitted by an app store, a creator’s subscribers by a recommendation algorithm, a marketplace seller’s revenue by the platform. Write down every income stream and, next to it, the name of whoever could cut it off overnight. If one name accounts for more than half, you are a tenant, and the greater danger is pricing yourself at a landlord’s value.
Reverse the queue, and change the price of the shelf. Pinalli and Olive Young run the same format; the difference is who they put on the shelf. Build a shelf for those no large advisor will take: small succession businesses, regional manufacturers without investor access, brands that do not know their export route. It need not be a store. A fortnightly one-page deal memo or a closed room of thirty vetted members will do, provided the screening criteria are public and actually used to reject. A record of selection is the shelf’s rent. When you lend that shelf, ask for a slice of the success fee, a small equity stake or a revenue-linked right instead of a flat introduction fee. Ten fees are ten paydays; ten minority stakes are a portfolio.
Export curation, then borrow Borletti’s sequence. Olive Young opened only a handful of its own US stores; it placed its selection inside someone else’s 580. The selection record came first, the space second. For the capital structure, copy the organiser: a deal-by-deal club vehicle, with the first commitment sought from the one name that lends credibility rather than the largest cheque. Pooling outside money brings securities regulation into play, so have the structure checked by counsel before it is built. Ask the seller to reinvest part of the proceeds; a refusal is the most honest diligence report available. Release capital in stages, each unlocked only when the previous stage is proven in numbers, and write the exit into the first contract: who buys back, at what price, if nothing sells in three years.
In Korea the store layer is closed. Olive Young has effectively completed consolidation, and the 22.6% stake a private equity investor acquired in 2021 for about KRW 410 billion (approx. USD 290 million at KRW 1,400/USD) never passed to another fund: after the IPO was halted, the company and a special purpose vehicle formed by financial institutions took it in 2024, and the company later reportedly bought the remainder back as treasury shares. The pharmacy route is shut too, since only individual pharmacists may own a pharmacy in Korea, while Italy permits corporate ownership. The desk expects Korean capital to flow instead into brands, contract manufacturing, export distribution and channels that do not depend on Olive Young. The opening sits between the two markets’ weak sides: Korean brands that cannot reach a European regional chain, and Italian chains that must find brands on their own.
Syndicate’s Note
The Pinalli deal should not be read as 108 stores bought at more than ten times EBITDA. It is a cash flow resting on permission held by brand houses, bought by an organiser who split the risk across a club vehicle, a founding family that stayed in, and a management team that did not change. As Olive Young shows from the opposite side of the same format, value is set not by the number of stores but by the direction in which permission flows. A shelf is priced by direction, not size.
The desk proposes a name for the mechanism, The Permissioned Margin: an asset in which the party that generates revenue and the party that sets the margin are separate, so a buyer is pricing granted income at an earned-income multiple. With a single documented case, it enters the declassification queue of the Structure Pattern Library rather than receiving its own entry. It is the inverse of The Tenant’s Buyout: there, the dependent operator removes the dependency by buying the platform it pays; here, the dependency is spread across many brand houses, cannot be bought out, and can only be priced and hedged.
House Verdict: TRACK. Italian filings will show, year by year, whether the reading holds. Falsifier: if Pinalli’s filed accounts show that the roughly 10% gap between net sales and reported revenue is not supplier-funded contributions, or that per-store sales rise meaningfully as openings slow, the permissioned-margin reading is wrong. The verdict classifies structural learning value; it is not an investment judgment.
FAQ
Who bought Pinalli, and who sold it?
Borletti Group, an Italian investment firm, acquired 100% of Pinalli on September 30, 2026, through a vehicle it leads with J. Safra Sarasin Asset Management as anchor investor. The sellers were H.I.G. Capital, which entered in February 2023, and the founding family, which reinvested as a minority shareholder. The price was not disclosed but was reported at more than 10x 2025 EBITDA of EUR 25 million.
What is selective distribution in European beauty retail?
Selective distribution is a system in which prestige fragrance and cosmetics brands choose which retailers may sell their products. Brands cannot legally fix retail prices, but they control store eligibility, supply prices and the allocation of new launches. As a result, a retailer’s margin is largely defended within a range the brands set rather than created by the retailer.
Why does Olive Young keep more margin than Pinalli on a similar store base?
The two post similar headline margins, but Pinalli’s is measured before depreciation and Olive Young’s after, so Olive Young keeps materially more. The difference is the direction of power: Olive Young’s shelves lean towards smaller brands that need its listing to reach the market, while Pinalli’s lean on global houses for which it is one channel among several. One grants permission; the other waits for it.
This article is for informational purposes only and does not constitute investment advice, an offer, or a solicitation. Figures are based on public reports and may be estimates.
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