By Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)
When a medical spa opens, its owners are probably not immediately thinking about selling it. However, medical spa owners and operators should always consider the value of their practices, so that when the time comes that they do want to sell, they can get more out of it than they put into it.
“When you’re looking at anywhere between a $250,000 and a $1 million investment to start up a med spa, I think it’s important before you go into that type of investment—whether you’re borrowing the money or financing the money or taking it out of savings or whatever—you really need to look at a return on investment and you really need to look at what your exit strategy is going to be,” says Louis Frisina, a medical spa industry pioneer who currently works as an investor, entrepreneur and business advisor, and who will be presenting “Closing the Loop: Valuing and Selling Your Medical Spa” at AmSpa’s Hawaii Next! Level Leadership event in Maui, Hawaii, on June 13 - 15, 2018. (Editor’s note: See the whole agenda and register here: http://www.americanmedspa.org/general/custom.asp?page=HINextLevel2018) “The whole concept behind [the presentation] can be summed up in one line: What am I doing today to position my company for sale tomorrow?”
Frisina has worked in the world of business finance for more than 30 years, and has been on the cutting-edge of aesthetics industry entrepreneurship for almost as long as the industry has existed. “Closing the Loop” will help medical aesthetics industry professionals consider how what they do with their practices make them more or less attractive to prospective buyers.
“I’ve visited close to 2,000 aesthetic medical practices around the world in the past 20 years, and I have been—and continue to be—involved with what I call the best practices out there; the top one or two percent in the country in terms of medical spas and also aesthetic medical practices, which could be a med spa that’s bolted onto a plastic surgeon or a dermatologist,” Frisina says. “With all of the experience that I’ve had, I’ve been able to figure out what best practices do to earn top dollar some years later when they’re ready to sell.”
The first part of the presentation will cover the characteristics of attractive medical spas.
“If you want to position your practice today to optimize the most that you can get in the future, you’ve got to be looking at what best practices did,” Frisina says. “Those marketing, operational, and human resource activities and things that they’ve done in their med spas that have led them to get the best price they possibly can.”
The second section of “Closing the Loop” will help medical aesthetics professionals determine what their businesses are worth. If a medical spa invests in the things discussed in part of the presentation, they can command a higher sale price than those that do not.
“They’re running it like a business and they’re optimizing their business for success today,” Frisina says. “When they’ve done those things, they’ve basically created a scenario where they will get the best price when and if they’re ready to sell.”
The third and final section of the presentation looks at a medical spa’s value from a prospective buyer’s point of view. What you see as your practice’s value might be very different from what a buyer sees.
“Because I’m on the side of both buying and selling companies, from the point of view of a buyer like me, acquiring on behalf of a client, what am I looking at?” Frisina explains. “This involves a bunch of financial information that I require—I look at three years of historical tax returns, I look at a number of financially related issues relative to their income statement, relative to their balance sheet. Because, ultimately, if I’m going to pay them a price for their practice, I have to get that money back at some point, hopefully over a five-year period of time.”
AmSpa’s Next! Level Leadership event will take place at the The Grand Wailea, a Waldorf Astoria Resort in Maui from June 13 to 15, 2018. Click here to learn more and register today.