Many owners feel flattered—and even a little surprised—when private equity backed MSOs
express interest in investing in their business. But before you act, it’s crucial to examine the
situation through an experienced lens. For instance, do you fully understand how the
valuation is determined? Are you clear on key operating risks that could harm your
valuation? Do you have a team of trusted advisors to support a long and demanding sale
process? These are key questions that can make all the difference in achieving a successful
and satisfying sale.

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Understanding Practice Valuation

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One of the first questions practice owners ask is, “What is my business worth?” The value of
a medical aesthetics practice depends on several factors, including revenue, profitability,
patient demographics, and growth potential. While the traditional approach to valuing
practices might have relied on a percentage of collections, today’s strategic buyers often
look at profitability metrics such as EBITDA (Earnings Before Interest, Taxes, Depreciation,
and Amortization). This metric provides a clearer picture of your practice’s operational
efficiency growth potential.

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It’s essential to approach a valuation with realistic expectations. While private equity-
backed MSOs may promise attractive financial offers, these are structured in ways that
protect the investor’s interests over the seller’s, and come with significant strings attached.
A trusted advisor will help set market-based Enterprise Value on the business, while
negotiating the deal structure to ensure you’re committing to a partnership that will benefit
you financially and professionally for years to come.

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Key Risks to Consider

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# 1. Provider Dependency
Many medical aesthetics practices are heavily reliant on the owner’s productivity and
patient relationships. Buyers may view this dependency as a risk, especially if you plan to
leave the practice less than 4 years after the sale. Ask yourself:

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 Have you built a skilled and productive team to maintain patient trust and deliver
consistent results after the sale of your practice?
 Have you created replicable standard operating procedures (SOP’s) for how daily
tasks are done? Are there other systems and processes that can be implemented to
ensure your business operates smoothly without your day-to-day involvement?
 Have you built a recognized and trusted brand name and experience that will thrive
long after your direct involvement in the business has stopped?

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# 2. Revenue Composition

Practices that rely heavily on one or two services, such as injectables or weight loss
medications may be seen as riskier than those with a diverse revenue stream.
Diversification not only boosts your valuation but also reduces vulnerability to regulatory
shifts and industry changes.

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# 3. Geographic and Market Trends

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Location can be a double-edged sword. For instance, one practice owner in a bustling city
might notice how rising demand for non-invasive procedures aligns with the area’s
population growth and affluence. Additionally, recruiting and hiring in more populated and
growing geographies eases concerns related to staff retention. On the other hand, operating
costs are typically higher and more subject to regulatory scrutiny and tax increases. The key
is to be intentional with selecting a location considering these current and potential future
factors and work with your advisory team to highlight the advantages of your local
geography.

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# 4. Financial Documentation and Transparency

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Incomplete or disorganized documentation can raise red flags and even cause deals to stall
during the quality of earnings phase. Many deals falter at this stage because practice
accounting isn’t reconciled or readily available, leading to delays, frustration, and credibility
concerns.

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To avoid these pitfalls, you should keep your financial records updated as often as possible.
Furthermore, you will need to be prepared to explain any anomalies or trends in your
financial history promptly to keep the process moving smoothly.

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Partnering with Experts

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Selling your medical aesthetics practice isn’t a journey you should attempt to tackle alone.
Private Equity-backed MSOs have higher-skilled financial negotiators whose primary goal is
to acquire your business for as little financial investment and risk as possible. Like in most
other endeavors, assembling a highly skilled and competent team of trusted advisors is key
to your success. This includes an industry-experienced sell-side intermediary or “broker”, a
seasoned accountant, and a skilled lawyer who is experienced in medical practice sales and
understands the intricacies of the process. Each plays a crucial role in ensuring your
interests are protected and you are in the driver’s seat throughout the entire sale process.
If you’re ready to take the first step toward maximizing the value of your practice, reach out
to the team at TUSK Practice Sales. Our experts bring firsthand experience in owning,
operating, and selling medical aesthetics practices, offering the insight and support you
need to navigate this critical process with confidence.

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Written By: Elizabeth Macready of TUSK Practice Sales

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Elizabeth has over 15 years of sales and leadership experience in the healthcare industry, notably as a Sr. Sales Manager at Align Technology. Elizabeth has consulted and represented hundreds of healthcare practice owners across the US to maximize the value of their practice in a sale. Mrs. Macready earned her BA in Organizational Development from La Salle University, graduating Magna Cum Laude.