Medical Aesthetics M&A Market Update: What Practice Owners Need to Know
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 Aesthetics
Private 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. The right advisor can help you understand your practice’s true worth and negotiate terms that align with your long-term goals.
A Business-Friendly Political Landscape
The 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. As early as Q1 2025, many MSOs and private equity groups are expected to ramp up their acquisition activity in the medical aesthetics space.
This favorable environment has already sparked significant investments, with buyers focusing on expanding their portfolios to include top-performing practices. 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 For
To attract high-quality offers, it’s essential to understand what buyers prioritize. Today’s MSOs and PEGs are particularly interested in:
- Growing Practices: Buyers want aesthetic 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.
- 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.
- 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.
Lessons from 2024: A Year of Transition
The deals completed in 2024 provide valuable insights into where the aesthetics 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.
These trends underscore the importance of positioning your practice as a standout opportunity for buyers.
How to Navigate the Current Market
As 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:
- Get a Professional Valuation: Understanding your aesthetic 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.
- 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.
- 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.