If you own an aesthetic or medspa practice and are thinking about selling, you likely have questions about who the potential buyers could be. As the demand for cosmetic procedures continues to grow, buying an aesthetics business can be an attractive investment for some. Here are a few types of buyers that may be interested in acquiring the business you’ve built.
One obvious option is selling your practice to another small business owner or group of physicians. Once the dominant form of practice transition, financing rates and a more challenging business management environment have often relegated this a secondary option. In addition, provider to provider transactions often depress the value of the asset you’ve spent your life building and shortchange the upside opportunities that other means of transition may offer. Still, it can’t be discounted too much as a transaction with another provider can be reasonably seamless with minimal downside risk attached.
Private Equity Firms
In recent years, private equity firms and other investment companies have been aggressive buyers in the healthcare sector. For them, healthcare services represent a profitable investment opportunity. A medical aesthetics practice with consistent revenue, patient membership programs and growth potential makes for an attractive acquisition target. These buyers may be willing to pay a premium purchase price. However, they will also want to see a return on their investment. In general, your commitment to the practice post close will range from 3-5 years and you’ll be partially responsible for helping to drive practice profitability and maintain your business through the entirety of your employment agreement. This is likely the largest return on investment you could attain for your business and you’ll have numerous buyers to choose from. The key in this scenario is to understand who the available buyers are, what their investment thesis looks like, how they intend to grow, whether they’ve handled provider driven office-based healthcare investments previously and what their level of success has been. Pedigree is incredibly indicative of future performance and the waters are murky when defining what that performance will look like. You need to be partnered with a firm that can help you navigate those waters and navigate the numerous opportunities in front of you.
Large Group Practices
Pre-private equity groups are often looking to add to their numbers either as a hedge against larger PE backed entities, or in preparation for an eventual exit as a private equity platform. In many cases, this is the riskiest of options on the board as it puts you in the position of making a significant life decision about your largest asset, with the least amount of information specific to future ownership. While the upside can be substantial, ultimately the outcome will be up to whomever is running the large group practice. Understanding the long-term goals and funding needs of the organization are key in a transaction of this kind, as is the decision making protocols surrounding future decisions.
As consolidation continues, we are beginning to see a significant graying of the lines between Plastics, Aesthetics and Dermatology. More and more plastic surgeons are incorporating medspa services into their offering, trying to capture some of that revenue within their four walls. Dermatologists have long included medspa services, many of which are becoming more pronounced than many of the core dermatological services traditionally offered. Medspa’s are looking to incorporate more and more laser-driven services traditionally found in a plastics or derm practice. With these graying of traditional lines, we are seeing a larger and larger presence of multi-specialty businesses looking to bolster profitability and increase their referral network. PE or debt backed, these organizations are always looking at adding to their numbers and extending the boundaries of their service offerings. At best, this provides a cohesive environment for collaboration, referral, centralized service offerings (back office) and market dominance. At worst they can lack clear direction and vision, poorly cannibalize their own provider networks, and lack the efficiencies gained by a concise mission, vision and values belief system.
There is growing interest from international buyers in acquiring U.S. based aesthetics practices, which may include large hospital chains or investment companies. Global demand for cosmetic procedures continues to surge and, for international buyers, purchasing an American practice can represent an entry point into the lucrative U.S. healthcare market. While the checks will cash, this is likely the most disruptive option on the board. Dealing with international management and funding structures will stress your management team/office manager and methods of communication, patient interaction, marketing and business management are all unique to the culture in which they originate. This complicates an already complex environment and can lead to poorly communicated expectations and missed goals. Understanding all of those variables is paramount when considering an international buyer. Selling your aesthetics practice is a big decision that can be complex and emotional. This is your life’s work and ensuring that you receive maximum value, while setting yourself up for long-term success is a critical component of the transaction. There are well over 150 active buyers within the medical aesthetics space and sorting through them is no small task. Walking into a transaction with a clear understanding of what your financial needs, quality of life goals and vision for your future are, will help narrow down the options available in the market. Rarely do we have clients who accept the highest value offer. Our goal is to identify the BEST fit available
and successfully negotiate a seller friendly transaction that will satisfy all of the above considerations. You owe it to yourself to ensure you’re properly represented in the most important process of your career.
If you’d like to learn the value of your aesthetics practice, get your no-obligation Practice Valuation from TUSK Practice Sales. We’d love to learn more about you and your business and educate you on what your business could be worth in today’s marketplace.