Physician assistants and nurse practitioners weigh in on how they are thinking about Private Equity interest in MedSpa.
If you’re considering selling your MedSpa, you need a “why”…Why are you selling your MedSpa?
(Because if you don’t name your why, the money is never going to be enough).
And the more clear you’re willing to get – on what you want post-sale, and why you want it – the more successful you’ll be in your partnership.
BUT … it’s not as easy as it sounds. We often have multiple calls with our clients before we (and they) get clear on exactly what they are looking to achieve with the transaction.
Here are the top reasons almost all of our clients say they are interested in considering a sale:
- Take some chips off the table
- Invest in another business venture
- Spend more time with family
- Get out of management – no more hiring and firing
- I didn’t want to have to do when I have to do it / end on a high note
- Make a life change
- They want to move
- Strictly focus on injections – don’t want to be an owner anymore
- Adding a partner who brings more than just money to the table
- Expansion – selling or partnering to grow
- Death and/or disability
- Sophistication – of private equity (PE) buyer – takes their practice to the next level. Owners who want to expand can retain up to 49% ownership and expand with a cheaper cost of capital and share the risk.
Read on to explore the 13 different answers our clients give when we ask, “What is your why?”
1. Take some chips off the table
Starting up a MedSpa requires a lot of capital – between the equipment and the luxury level finish out that clients expect, the endeavor presents a huge financial risk. Selling or partnering with a group allows NPs to recoup some of that investment while also remaining a part owner in the practice.
TL;DR – Recoup your investment while remaining an owner.
While our average client age continues to decrease, we do have clients who love practice ownership and lead a MedSpa until their (near) retirement. By selling at retirement, they intend to fully cash out by selling to another PA-C or NP or stay on for less than five years when selling to a group. These entrepreneurs are winding down, and looking forward to a lighter schedule. The transition process can feel most emotional for this group because they are often the people who trailblazed the industry.
TL; DR – You’re ready to take a permanent vacation.
3. Invest in another business venture
We built Practice Transitions Group explicitly for the entrepreneur so it’s no surprise when a client tells us they want to try something else. Sometimes it’s a different type of healthcare endeavor, consulting, or real estate investing. Regardless, they are looking for a strategic transition to allow them to start the next thing. So they call us.
TL;DR Distraction isn’t always a bad thing.
4. Spend more time with family
And no, this isn’t just for the moms! We hear from both mothers and fathers, often with kids in late elementary through early high school, that the years are just passing too quickly. They want to step back from Medspa ownership – the late nights, bookkeeping accountability, and HR – to make it to football games and dance recitals.
TL;DR The days are long but the years are short.
5. Get Out Of Human Resources (HR)
People management can feel exhausting, especially on top of other business ownership duties. Whether it’s the anticipation of having to hire a new esthetician after another one quits, or interpersonal conflicts between staff, you are depleted after dealing with human resources issues. By partnering with a group, you’re hoping to get someone to take the HR off of you, but remain in your MedSpa as the lead provider.
TL;DR Ready to take the weight off your shoulders.
6. I Didn’t Want To Have To Do When I Have To Do It
It’s been said that if you fail to plan, you plan to fail. And that couldn’t be more true for a MedSpa sale. Some of our clients don’t need to sell, and they aren’t eager to “get out of” ownership. They are simply planning. These sellers know they will exit within the next ten years, but don’t want economic uncertainty or health issues to force them out. By selling at a time that some may consider early, they hold a lot of leverage and get to the “end” on a high note. Note that a partnership doesn’t have to be an end unless you want it to be. Many owners that partner retain equity in their practices or invest in the new parent company and can earn another stream of income while remaining in leadership at their MedSpa.
TL;DR End On A High Note.
7. The market is heating up
One of our clients started doing lashes in a small studio twenty years ago. Now, she’s a MedSpa owner and very proud of everything she’s accomplished in the medical aesthetics market. Nothing has gone wrong – in fact, she’s more profitable than she’s ever been. But she is hearing that private equity groups are willing to pay more than ever for MedSpas and she wants to cherry-pick her buyer. So reached out to PTG, a MedSpa broker, to list her MedSpa and is in negotiations for a deal she could have never imagined.
TL;DR Strike while the iron is hot.
8. They want to move
One of our clients is a couple well-established in a booming Montana town. But they’re tired of winter. They reached out to us to sell their MedSpa and find a deal in which they can cash out completely. Without the ability to stay on through the transition to a new owner, there will be a greater challenge with finding a deal with a group, but with interest in MedSpa acquisition peaking, it’s possible.
TL; DR There’s a reason they call it the Sunshine State.
9. Desire To Focus Strictly on Patient Care
Some of our clients miss patient interaction. In their experience, ownership in the medical spa industry has removed them from patient care and they’re ready to return to the work they’re passionate about. By selling to a group, these owners will return to employee status, something they look forward to while being able to increase their income through an investment in either their MedSpa or the new group.
TL;DR Go back to the basics.
10. Adding a partner who brings more than just money to the table
If owning a Medical Spa was easy, everyone would do it. While some owners don’t mind MedSpa financials, hiring new nurses, and keeping track of membership plans, some are overwhelmed. By selling their practice to a group, they can gain a business partner, completely dedicated to helping them draft contracts, submit payments, order products, and other admin.
TL;DR Better together.
11. Expansion – selling or partnering to grow
Not all MedSpa owners are satisfied with just one location – they have had a taste of success and want more. They’ve seen significant medical aesthetics industry growth. But they may not be in the cash position, or have the space to plan their next location. Selling to a group allows them to remain invested (literally) in the MedSpa, without having to finance, plan, and grow alone. Owners who want to expand can retain up to 49% ownership and expand with a cheaper cost of capital and share the risk.
TL;DR Sometimes bigger is better.
12. Death and disability
The final reason, which can be difficult to address, is that the work of ownership and patient care is physical and emotional. We have had clients reach out after life-changing accidents, or after their work has taken too hard of a toll. We have also had to sell on behalf of a provider’s family when they have passed suddenly. We share these cases to encourage you to define your why.
TL;DR Planning is always worth it.
If you’re thinking about a partnership with private equity, use our MedSpa Calculator, a complimentary valuation tool, to get familiar with the questions you will be asked and which financials you need to have on hand. The more you know, the better prepared you will be.
And regardless of whether you sell now to strike while the iron is hot or continue building towards your MedSpa growth solo, we hope this list has given you insight into how our clients are thinking about their market, their businesses, and their future.