The medical aesthetics market is one of the hottest sectors in healthcare mergers and acquisitions, fueled by growing private equity (PEG) and management services organization (MSO) interest. For practice owners, this thriving landscape offers immense opportunities—but also requires strategic planning to maximize value and avoid pitfalls. Here's what you need to know about the current market and its implications for your practice.Private Equity’s Growing Focus on Medical AestheticsPrivate equity firms continue to see medical aesthetics as a lucrative investment opportunity, driven by increasing consumer demand and the sector’s high-growth potential. In 2024 alone, numerous new MSO platforms entered the market, each vying to consolidate practices and capitalize on operational efficiencies.For practice owners, this influx means that unsolicited offers from these groups may become more frequent. While tempting, it’s crucial not to take these offers at face value. A professional valuation by an expert ensures you’re not underselling your practice and can help you understand your practice’s true worth to negotiate terms that are aligned with your financial goals. And beyond that, it’s critically important that you find the right partner for you, your patients and your team. There are subtle and not so subtle nuances to every group and seeing the broader landscape of prospective buyers allows you to identify the right fit, at the right price for your future goals. A Business-Friendly Political LandscapeThe recent election has brought a new president-elect and a pro-business supermajority in Congress, setting the stage for policies that favor mergers, acquisitions, and business growth. We are already beginning to talk to private equity groups, family funds, and numerous MSOs about the M&A goals for 2025 and have begun to see the wheels of that machine begin turning in earnest over the last few weeks. Nearly everyone is bullish on the next couple of years of M&A activity and many are expected to ramp up their acquisition activity in the medical aesthetics space.As competition among buyers intensifies, practice owners are in a strong position to secure premium valuations—provided they approach the process strategically. What Buyers Are Looking ForTo attract high-quality offers, it’s essential to understand what buyers prioritize. Today’s MSOs and PEGs are particularly interested in:

1. Growing Practices: Buyers want practices with a proven track record of revenue growth and scalability. If your practice demonstrates consistent patient volume increases and revenue diversification, you’ll likely stand out.

1. Multi-Provider Practices: Solo practices are less appealing in today’s market. Buyers prefer businesses with multiple providers, as they indicate operational stability and the ability to serve more patients. Buyers will still certainly approach solo practices, but the valuations can be affected if there are not active plans for when the lead provider steps down.

1. Comprehensive Service Offerings: Practices that combine medical aesthetics with plastic surgery services have become especially attractive. The synergy between these services enhances patient retention and increases revenue potential, making them a desirable asset.

1. Owner/Operators with a longer runway: Buyers are looking for partnerships to help grow businesses. There’s no better person to do that than the legacy practice owner, with the help of a well-oiled business machine behind them. If you’re trying to maximize the exit value of your business, start looking at opportunities 5-7 years away from your retirement. That gives the buyer plenty of time to find your eventual replacement and will defray risk in the transaction for them, thus increasing the value they will pay you.

Lessons from 2024: A Year of TransitionThe deals completed in 2024 provide valuable insights into where the industry is heading. Notable trends include:

• Increased Consolidation: The year saw a rise in multi-location practices being acquired, reflecting a shift toward scalability and operational efficiencies.

• Valuation Benchmarks: Practices with $1.5 million or more in annual revenue often commanded higher multiples, particularly if they had strong EBITDA margins.

• Specialized Services: Practices offering unique or advanced treatments saw increased interest, highlighting the importance of differentiation in a competitive market.

• Multi-Specialty: We are beginning to see crossover between medspa, plastics and derm as buyers get comfortable with sellers who house two or more of those services within their walls. This is an interesting trend to keep track of as we believe that crosspollination will continue for many years to come.

These trends underscore the importance of positioning your practice as a standout opportunity for buyers.How to Navigate the Current MarketAs the market continues to heat up, you may receive unsolicited calls or mail from potential buyers. While these offers can be flattering, accepting them without due diligence could result in leaving significant value on the table. Here’s how to protect your interests:

1. Get a Professional Valuation: Understanding your practice’s financial health and growth potential is key to negotiating effectively. An expert valuation ensures you’re aware of all the factors that contribute to your practice’s worth.

1. Evaluate Your Practice’s Appeal: Assess how your practice aligns with buyer priorities. If needed, consider strategic investments to make your practice more attractive, such as expanding your provider base or offering additional services.

1. Work with an Advisor: Navigating the complexities of the M&A process requires expertise. A seasoned advisor can help you identify the best buyers, negotiate favorable terms, and ensure a smooth transaction.