Who’s Buying? Analyzing the Most Common Aesthetics and Wellness Practice Buyers

When you’re considering selling your aesthetics or wellness practice, one of the most important decisions is determining who will be the right buyer. The type of buyer can have a significant impact on the sale process, the valuation of your practice, and the future of your business. Whether you’re selling a medspa, dermatology clinic, plastic surgery practice or any other type of wellness business, understanding the different types of buyers can help you make an informed decision and ensure a smooth transition.

In this blog post, we’ll explore the various types of buyers for aesthetics and wellness practices, how they differ, and what each type of buyer might be looking for in an acquisition.

1. Individual Buyers

Individual buyers are often healthcare practitioners or business owners looking to enter the aesthetics or wellness industry or expand their existing operations. This group of buyers is typically the most common for smaller practices or niche businesses that may not fit the acquisition strategy of larger organizations.

Characteristics of Individual Buyers

• Motivations: Individual buyers are typically motivated by a desire to own and operate their own business. They may be seeking a career transition, starting their practice after completing school or looking to grow their current practice by adding new services or entering a new location
• Financial Resources: Compared to larger organizations, individual buyers often rely on bank financing for loans to make competitive offers and complete the purchase
• Involvement: These buyers often want to be hands-on in the daily operations of the practice. They are typically interested in turnkey businesses with established patient bases, reliable staff and efficient operations

What Individual Buyers Look For

When selling to an individual buyer, the practice’s current financial performance and operational stability are key selling points. Buyers in this category are likely to be focused on practices that are already successful and have strong potential for continued growth. They often look for:

• Steady revenue streams
• Loyal patient base
• Well-trained staff
• Efficient administrative systems

Selling to an individual buyer can provide flexibility in the deal structure and give you more control over the negotiation process. However, you may receive lower offers due to their reliance on bank financing or provide more comprehensive training during the transition.

2. Medical Support Organizations (MSOs)

Medical Support Organizations (MSOs) are often clinically agnostic entities that provide non-clinical administrative support to healthcare practices. MSOs typically acquire practices to manage their operational and administrative functions, allowing the clinical staff to focus on patient care. In recent years, MSOs have become a popular option for selling aesthetics practices and wellness practices as they offer growth opportunities and operational support.

Characteristics of MSOs

• Motivations: MSOs are focused on growing their footprint of practices by acquiring businesses that fit into their strategic vision. They look for practices that align with their existing service offerings or help them expand into new markets
• Financial Resources: MSOs tend to have more significant financial resources than individual buyers, as they’re often backed by private equity groups, and can present higher offers and more dynamic deal structures, especially for larger practices with strong revenue streams and growth potential
• Involvement: Once an acquisition is completed, MSOs typically handle administrative duties, allowing the clinical team to continue providing care without the burden of managing the business side of the practice

What MSOs Look For

MSOs are particularly interested in practices with strong financials, efficient operations, and potential for scalability. They look for opportunities to grow their existing networks and may prioritize practices that offer niche services or have a robust patient base. When selling to an MSO, your practice may be evaluated based on:

• Financial performance (revenue and EBITDA, or earnings before interest, taxes, depreciation and amortization)
• Operational efficiency
• Potential for growth or expansion
• Strategic alignment with the MSO’s goals

Selling to an MSO often means you can secure a higher offer than with individual buyers. However, the process may involve a longer due diligence period, and MSOs typically have specific criteria that your practice will need to meet to ensure a successful sale.

3. Private Equity Firms

For some larger, more established practices, sellers can skip MSOs or individual buyers and sell directly to a PE firm.

Private equity firms are investment companies that focus on acquiring businesses to increase their value and generate profits. In recent years, private equity has become a significant player in the healthcare space, including the aesthetics and wellness sectors. These firms typically look for profitable practices that they can scale or consolidate with other similar businesses to create value.

Characteristics of Private Equity Firms

Motivations: Private equity firms are primarily motivated by financial returns. They are often looking for practices with strong revenue streams that already have a large footprint and can be scaled quickly through growth initiatives, such as adding new services or locations

Financial Resources: Private equity firms have substantial financial resources and are usually able to offer competitive valuations, especially for larger or high-performing practices

Involvement: Private equity firms often take a hands-on approach to the business side of the practice, implementing strategies to improve profitability, expand services, and drive growth. However, they typically leave the clinical operations to the healthcare professionals.

What Private Equity Firms Look For

When selling directly to a private equity firm, they will look for practices that demonstrate strong profitability and potential for growth. The ability to scale is key, so private equity buyers are often attracted to practices that offer specialized services or have a large patient base. Key factors that private equity firms consider include:

• Strong EBITDA margins
• Established market presence
• Opportunities for growth (e.g., adding new services, expanding locations)
• Efficient operations and minimal operational risks

While private equity buyers can offer substantial payouts, they typically expect a high level of profitability and may have more stringent requirements during the due diligence phase. It’s also common for private equity firms to ask the seller to stay involved for a period after the sale to help manage the transition and growth of the business.

Selling to a group practice can offer more flexibility in terms of deal structure and transition arrangements, but the financial offer may not be as high as what a private equity firm or MSO might provide.

Bottom Line

Understanding the different types of buyers for your aesthetics or wellness practice is critical to making an informed decision about who to sell to. Each type of buyer — whether an individual, MSO, private equity firm — brings different motivations, financial resources and expectations to the table.

To ensure you find the right buyer for your business, working with an experienced aesthetics practice broker or wellness practice broker can be invaluable. Brokers have the expertise and network to connect you with the right buyer, negotiate favorable terms, and guide you through the sale process.

If you’re ready to explore your options and find the right buyer for your practice, contact us today to learn more about how we can assist you in the sale of your business. Whether you’re looking to sell an aesthetics practice, sell a wellness practice or explore selling to an MSO or private equity firm, we’re here to help.