State of the Med Spa M&A Investor Market in 2022
In preparation for The Medical Spa Show 2022, we’re sharing a preview of what medical spa professionals will learn about med spa M&A and the state of the investor market in 2022.
Timeline of the Med Spa M&A Market
Several years ago, Skytale Group observed the med spa space as fragmented and not consolidated. We predicted that it would follow other healthcare industries, like dental, and begin to consolidate. Buyers caught an eye for the med spa M&A market for the following reasons:
First, services are usually covered with cash payments, which removes the cost and management of insurance. The model is replicable. And the market offers very high margins. Even in the introductory chapter of medical spas, our team recognized how the book would end.
As the years progressed, Skytale fielded more frequent questions like, What is an MSO? Is it a legitimate way to profit? Buyers and sellers wanted to understand MSOs as a way to centralize services and eventually transact. Now, we get private equity calls multiple times per week inquiring about med spas. There is a lot of buyer and private equity interest in the space. Buyers are looking for anything of size and scale that they can build out. The feedback is that they haven’t been able to find the ideal size and scalability, so buyers are now investing in smaller organizations than usual. Med spa owners are also interested in selling to private equity.
The med spa M&A market is waking up. Conditions have created frothiness, where med spas offer a very high asset price. It is time for med spa owners to begin considering a selling strategy.
What Are Buyers/Private Equity Looking for in 2022?
When buyers and private equity call Skytale Group, they’re asking two questions:
- Do you have any assets (clients) that we can buy? They’ve heard that Skytale helps med spas go through with M&A, and they want to be added to our buyer list. An important part of Skytale’s job is having enough buyers that we can call for a sale.
- What is the general state of the market? Buyers want to know about metrics and demographic trends in med spas. In fact, med spas have shifted in terms of demographics they serve, which is proof of growth.
Read more about how to prepare the information that buyers are looking for here.
Future Growth of the Med Spa M&A Market
The growth rate of the wellness space in general, and specifically aesthetics, in the United States is at a CAGR (compound annual growth rate) of 15%+ per year. Some estimates predicate 15%+ per year to continue over the next decade. That growth is very attractive to buyers. Plus, EBITDA (earnings before interest, taxes, depreciation, and amortization) margins are 20-25%, which is a tremendous cash flow. The model is replicable because consolidated business owners can manage each branch. The services involve little to no insurance. And there is a growth of interest in wellness, with a demographic shift now showing both men and women in younger age groups receiving services as well.
To learn even more about medical spa mergers & acquisitions, medical aesthetic professionals can attend our full-day workshop on Thursday, January 27, 2022, 9 am-4 pm at The Medical Spa Show 2022. See other workshop topics and register here.