Med Spa M&A: What are buyers looking for in a med spa or aesthetics practice?

If you own a med spa or wellness practice and have started getting unsolicited calls or emails from buyers, you're not alone. The medical aesthetics space is consolidating fast, and the groups circling your inbox have navigated transactions dozens of times before. But chances are, you probably haven't.

We sat down with Chris Hubble, founder and CEO of LuxMed Transition Strategies, on a recent episode of Office Hours with Marti Law Group to dig into exactly this. Chris has been on both sides of the table, having built and sold his own DSO before moving into M&A advisory in the aesthetics space. Here's what buyers are actually looking at, and what it means for your practice.

Watch the full conversation here: 

https://www.youtube.com/watch?v=q81eZY5pnB4

1. Structure: The Foundation That Makes or Breaks a Deal

It’s true that potential buyers will look at your finances. But, they're also going to look at how your business is built. Is your ownership structure legally sound for your state? Is your MSO set up correctly, and in a way that a buyer can actually step into?

Chris shares: "Having the right structure in place I think is the number one thing that somebody needs to look at if they're looking to go for an exit. The last thing you want to do is get to an exit and you have a wrong structure that can't be supported."

The aesthetics and wellness space is a patchwork of state rules around medical director supervision, ownership, and scope of practice. If your structure can't support a transaction, the deal can stall (or worse). Getting the structure right before you go to market is one of the highest-leverage things you can do.

Need more background? Our breakdown of the M&A process for medspas is a good place to start.

2. Personnel Expenses and Commission Structures

Buyers look at both sides of your P&L. If your commission plans are eating into your margins, buyers will price that in, since it compresses the EBITDA they're willing to pay a multiple on.

"Making sure those commission plans don't just completely crush your bottom line," Chris explained. "There needs to be an equal share of profits for everybody. You still have to make money as an owner at the end of the day instead of giving it all to the injectors, which we see often."

Need more information on managing finances and personnel? Listen to our episode from Aesthera MedSpa’s founders here for tips on growth and sustainable scaling.  

3. Key-Person Risk

If your practice depends on you in order to function, buyers are going to worry about what happens after you leave. Instead, they want to see documented systems, a trained team, and ideally associate providers who can carry revenue independent of the founder.

"Nobody's buying a business where the main producer is exiting," Chris noted.

Reducing this key-person risk before you go to market, even by bringing on one associate or mid-level provider, can meaningfully increase your valuation and give you more leverage in negotiations.

4. The Buyer Landscape: Not All Offers Are Created Equal

Because medical aesthetics, compared to many healthcare verticals, is still relatively new, sellers in this space often don't fully understand who is making them an offer or what that buyer's financial incentives actually are. For example, a family office is spending its own money and tends to be more relationship-driven. A PE firm has “limited partners” expecting a return within three to seven years, and that timeline shapes everything post-acquisition.

"Unless you're looking at the landscape on a daily basis, that buyer pool is constantly evolving," Chris said. "Most people only sell one to two businesses in their lifetime. There's so much that you don't know.”

Our post on what owners wish they'd known before selling walks through more of these hard-learned lessons. 

Building the right team before you go to market can help level the playing field in your favor and give you the best possible outcome as a seller. We write about it here. 

Work with Marti Law Group to Sell Your Med Spa

The practices that get the best outcomes start preparing two or three years before they're ready to sell. As Chris said: "If you aren't familiar with what all those nuances are, the buyer is always going to have the advantage."

Marti Law Group works with med spa and wellness practice owners on M&A transactions across the country. Reach out to our team to start the conversation before the buyers do.