with State of the art med spa with real estate · State of the art med spa with real estate
LenderHawk analysis. Not affiliated with or endorsed by Acquisitions Anonymous.
Med spa valuation depends far more on the mix of services than on the headline category label.
Facial injectables such as Botox are the core recurring-revenue engine because customers return roughly every three months and tend to stay sticky once they start.
A med spa with significant real estate can become a bad acquisition even if the operating business looks reasonable, because the property debt can wipe out the cash flow.
Non-physicians can own and operate med spas, but they usually need a medical service organization and a licensed medical director to satisfy state rules.
Injectors function like revenue-owning salespeople, so turnover at that layer can immediately destroy a large share of customer retention.
Private equity is interested when EBITDA gets above about $1 million and the operator can add de novo clinics cheaply instead of buying competitors.
Some wellness-adjacent services like IV hydration were treated as fad-like compared with injectables, which the hosts viewed as the more durable revenue base.
Underwrite a med spa by separating recurring injectable revenue from lower-retention wellness or aesthetic add-ons, then value the business based on how much of the mix is truly sticky.
When to use: Use this when evaluating med spas or other consumer health businesses with multiple service lines.
If the buyer is not a licensed provider, the operating business is typically run through a medical service organization with a licensed medical director handling compliance and billing requirements.
When to use: Use this when a healthcare-adjacent business requires licensed supervision but the buyer is a non-clinician.
The listing asked $3.8 million and included about $3 million of real estate plus a med spa business the hosts estimated at roughly $800,000.
Bill and Heather split the listing into the property component and the operating business component.
The business was said to produce about $269,000 of cash flow, while the teaser also referenced EBITDA around $1.656 million, which the hosts treated skeptically because the listing numbers were inconsistent.
The hosts discussed the teaser metrics before debating whether the valuation made sense.
Heather said facial injectable customers typically return about every three months.
She used that cadence to explain why injectables behave more like recurring revenue than one-off aesthetic services.
She said med spa de novo locations can break even in about a year.
This supported the idea that PE-backed rollups can grow quickly through new locations.
Heather said injectors can take about 50% of their customers with them if they leave.
This was raised as a key staffing and retention risk in injectable-heavy med spas.
She said seller notes in current SBA deals are often 10% to 15%, with some deals still closing at 5% equity and a few unusual cases at 2.5%.
The hosts used this to benchmark what a realistic buyer down payment looks like.
The episode noted that SBA zero-down structures are technically possible under the SOP if a seller note stands behind the buyer for at least 24 months and equals at least 10% of the project.
Heather explained why that rule is real but rarely usable in practice.
Separate the operating business from the real estate before deciding whether the deal is attractive.
Why: The property can consume so much cash flow that an otherwise workable med spa becomes unfinanceable.
Underwrite the injectable mix first and treat non-recurring services as secondary.
Why: Injectables drive repeat visits and customer stickiness, while many add-on services do not.
Check injector turnover before buying an injectable-heavy med spa.
Why: The departing injector can take a large share of customers with them.
If you are not a licensed provider, budget for an MSO and medical director from the start.
Why: Non-clinicians need that structure to own and bill correctly in many states.
Do not assume a 0% down SBA structure will be available just because the SOP allows it.
Why: Heather said lenders almost never approve it except in narrow insider or collateral-heavy situations.
Use market rents when testing the deal, not the seller’s historical rent expense if it is below market.
Why: An under-market P&L can make the business look stronger than it will be after closing.
Heather said she financed a med spa right before COVID and was surprised how quickly patients returned, especially for facial injectables. That experience shaped her view that injectables can behave like an essential service rather than a pure luxury category.
Lesson: Real-world customer behavior can matter more than the category label when judging resilience.
Heather mentioned that a male lender admitted he also gets Botox, which reinforced her view that the customer base is broader and younger than many buyers assume. She used that to argue the market is still expanding.
Lesson: Buyer assumptions about who uses a service can be badly outdated.