In this week's episode of For The Record, we're continuing our deep dive into the world of medical aesthetics mergers and acquisitions with Josh Swearingen from Tusk Practice Sales. If you've ever wondered about the nuts and bolts of buying or selling a med spa, this episode is your golden ticket to understanding the process. If you haven’t listened to Part I with Josh’s colleague, Elizabeth Macready, head on over to Episode 97!

Meet Our Expert

Josh brings a unique perspective to the table - he's not just another M&A guy- he’s been on the sell side, too! With 20 years of healthcare experience under his belt, including owning his own med spa and managing multiple DSOs, he's been in the trenches and knows firsthand what it takes to make a successful exit. Currently serving as the Director of M&A at Tusk Practice Sales, Josh shares insights that only come from having experienced an M&A transaction from every angle.

The State of the Market: It's Getting Hot in Here

Josh takes us through the numbers, and it’s no surprise to any of us, the med spa industry is on fire right now. Think opening multiple locations is your ticket to a bigger exit? Think again. Josh dropped some truth bombs about the reality of scaling:

• Multiple locations don't automatically mean higher EBITDA

• Every headache in your first location gets multiplied in your second

• You need a whole new layer of management

• Your original location's profits might need to float the new one for a while

Josh’s tip: If you're planning to exit in 3-5 years, opening new locations might actually hurt your valuation. Focus on maximizing what you've got inside your current four walls instead.

What Buyers Really Want (Hint: It's Not Just About Revenue)

The magic number? $500,000 EBITDA. That's your ticket to attracting serious buyers. But here's what's fascinating - it's not just about the numbers. Buyers are looking at:

• How dependent the practice is on you (key-person risk is a real deal-breaker)

• Your operational systems and SOPs (or lack thereof)

• Revenue diversification (not just living off Botox and filler)

• Compliance and risk management (those wild west days are numbered)

The Timeline Nobody Tells You About

As Elizabeth mentioned and Josh echoed, selling your practice isn’t an event, and it’s typical not very fast. According to Josh, the typical timeline looks more like:

• 3 months for valuation and market materials

• 3 months in the market

• 3 months for closing

That's 9-12 months total, and that’s after you've spent years preparing your practice for sale. If you're thinking about exiting in five years, you should have started planning yesterday, or at least start today!

The Future of Med Spas: What's Coming Down the Pike

Josh shared some fascinating predictions about where the industry is headed:

• Expect accelerated consolidation over the next 10-15 years

• Regulatory changes are coming (especially as private equity groups cross state lines)

• The gap between large groups and private practices will widen

• Being a solo practitioner is going to get harder

The Franchise Factor

One of the most interesting discussions centered around the rise of med spa franchises. While they offer an easier entry point for new owners, there are some serious considerations:

• Brand dilution risks

• Exit limitations

• Potential for corporate takeovers

• The impact on the broader industry

Key Takeaways for Practice Owners

1. Start planning your exit strategy NOW, even if it's years away

2. Document everything - those SOPs are worth their weight in gold

3. Focus on building a business that can run without you

4. Get professional help - this isn't the time to DIY

5. Think twice before expanding just for the sake of growth

Want to Learn More?

Learn more about Tusk at www.TuskPracticeSales.com

Follow Josh on LinkedIn at https://www.linkedin.com/in/joshuaswearingen/