M&A Industry Report: The Business of Beauty: Is the Medical Spa Industry a Smart Investment?
Introduction
The demand for self-care and aesthetics is booming, and at the intersection of beauty and medicine lies one of the fastest-growing sectors—medical spas. 💆♀️💉
From Botox and laser treatments to body contouring and skin rejuvenation, medical spas offer high-margin, in-demand services that cater to a clientele willing to invest in looking and feeling their best. With advancements in technology and a growing focus on non-invasive procedures, the med spa industry has become an attractive opportunity for business buyers and investors.
But is it all smooth skin and big profits, or are there challenges beneath the surface? Let’s dive into the trends, numbers, and key factors shaping this lucrative industry. ✨🏥
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Industry Breakdown
Are Medical Spas a Hidden Goldmine? 🤑
Medical Spas (or ‘Medi Spas’) are a hidden gem in the world of small businesses - but what makes them so special?
In this breakdown, we’ll share what makes them so interesting + a few live deals you can analyze yourself!
Industry Trends
If you owned a business during the heat of COVID-19 - we feel your pain 😅. Medical spas were no exception, with spa visits falling off a cliff in 2020 - down 35% from the year before.
But like the movie Rocky - spas have made a big comeback. Bouncing back off the mat in 2023 to previous highs of $23.2 billion of revenue.
The Finances
Turns out there’s a price tag on beauty - with your local medical spa owner ready to take your money. One of the things that stands out with health & wellness spas is their strong margins. On average, most spa’s bottom line exceeds 10%.
Even better, many spas operate with low overhead as their clinicians will often work on commission, earning up to 30% of the service cost. This allows owners to manage their cash flow better, protecting the business if bookings were to dry up.
Buy or Bust?
A well-priced spa can make a great acquisition due to its low overhead, high margins, and ability to charge a premium.
Buyers need to be aware that many spas are owner-operated, meaning you may need to roll up your sleeves and grow it to a scale where you no longer have to complete treatments yourself.