Selling Your Med Spa

Dallas Branding Photos --Morgan Wirth Photo-45

Whether you’re thinking about selling in the near future or maybe a few years out, the more time you have to prepare your business, the better when it comes to getting the price tag that you want. Planning is everything. 

The med spa industry is hot right now and we don’t see it slowing down any time soon. According to Polaris Market Research, the industry is anticipated to grow 242% by 2032.

In addition to market growth, we’ve seen an increase in business expansion by way of acquisition and a growing interest in Private Equity firms looking to invest or purchase medical spas.

Consider What You Want: Price and Buyers

In addition to considering your sale options, you’ll also want to identify a range of what you would like to get for your practice. Having a good idea of what you want payout to look like, early on, can help you prepare your business for a higher sales price. Does this sale mark the beginning of your retirement? If so, how does the current value of your practice match-up to what you will need to retire the way you want? 

When it comes to selling your medspa, there’s a lot of forethought that needs to be taken to ensure you’re getting exactly what you want out of the sale. With private equity interest, there are multiple options available to medspa owners that either want to sell the entire practice or maybe just want to remove themselves from the business side of owning a medspa. Partnering with private equity may give owners the option to still retain some equity in the business while offloading management and operational functions that may be less exciting for the owner that is more passionate about the patient care vs. entrepreneurial aspects. 

Consider the buyer: When looking to sell your practice, you’re likely to have two options: the Financial Buyer or the Strategic Buyer. Financial buyers, often private equity firms, have a hands-off approach to managing the practices they acquire. They want to create a portfolio of practices that can meet their investment return goals, and ultimately sell those practices within a period of 3-7 years. Conversely, strategic buyers are existing companies looking to acquire your practice to fulfill specific strategic goals, such as expanding market presence, diversifying their offerings, or realizing operational synergies. They often have a longer-term perspective, aiming to fully integrate the acquired practice to realize synergies, and generate a greater profit in perpetuity. Because of these differences, it is often the case that a Strategic Buyer will be willing to pay a higher price for your practice, because they can take advantage of synergies and invest for the long term, while the Financial Buyer cannot. 


Ensure Your Financials are in Order

If selling is even a thought at all, you’ll want to make sure your financials are accurate, updated regularly, and reflective of the value you’re seeking in a sales price. The first step in selling comes down to a thorough evaluation of your business based on financial metrics. Buyers will want to know how profitable you are and will likely use an adjusted EBITDA (Earnings Before Interest Depreciation and Amortization) to value your company. 

When working with our clients considering a sale, we help analyze opportunities in the business to grow the bottom line by assessing items like revenue, what you’re spending on supplies and payroll, as well as all fixed costs like rent, utilities, and marketing. Oftentimes there are areas that can be improved if you know what they are and give yourself time to course correct and grow. 

Partners You’ll Need

Before selling, it’s critical that you have a good bookkeeper and CPA or accountant that is keeping your finances up to date and clean. It’s also a good idea to partner with a financial professional that can further assess your business and pinpoint opportunities to grow. Once you have your finances in order, you’ll want to partner with a broker to help you take your business to market and negotiate a sale. Skipping these steps can cost you a lot of money in the end if you don’t know what you don’t know. Partnering with a credible and capable broker allows you more options in potential buyers and helps you negotiate a price that you’ll be happy with. 

If you’re considering selling, click here to receive a complimentary financial assessment of your business and we can get started on the right foot!