Episode Transcript
[00:00:00] Angela Baldasare - guest: There is a lot of expense that I don't think people like take into consideration like Botox, right? I mean, it's not just the medication, it's the syringes, it's the alcohol wipes, it's the electricity, it's the person who books the call. It's the medical malpractice, it's the training, it's the, you know, there's so much more than just the cost of the medication that goes into it.
[00:00:21] Angela Baldasare - guest: Welcome to Skin Deep.
[00:00:22] Dr. Anna Chacon - host: I'm Dr. Anna Chacon, and today we have a very special guest joining us. Get ready for some expert insights you won't wanna miss. So, Angela Valda, I met you on Facebook. You know you posted Yes. And you said, you know what a great idea it would be if. Is anyone interested in learning about selling a med spa and about having one?
[00:00:47] Dr. Anna Chacon - host: And I'm a dermatologist and of course I, I actually share a space with a med spa. They rent for me. And, um, I, it's been a thought that I've had, I, I. I'm limited by capital right now. Right. But I'm sure there's a lot of people thinking should you start a med spa? But just kind of introduce yourself and how you got into that space.
[00:01:08] Angela Baldasare - guest: Sure. Absolutely. Yeah. So my husband and I opened holistic regenerative medicine practice about 25 years ago. We kind of did it backwards from how everybody. Doing it this stage, you know, they're starting an aesthetics and, and adding that and it, it just kind of grew holistically. I was, um, my background is really in nutrition and I was seeing patients who had zinc deficiencies and acne or estrogen dominance and melasma, you know, that kind of thing.
[00:01:36] Angela Baldasare - guest: And talking to my aesthetician in another, you know, place that I was seeing her and she was kind of frustrated about treating people topically when they had underlying issues. So it really started. You know, 18, 19 years ago was a holistic skincare, and then as you know, our market grew, our need grew.
[00:01:54] Angela Baldasare - guest: There was nobody, you know, within like 27 miles of us who was offering aesthetic services. So we, we, you know, brought on more and more aesthetic services and, you know, just kind of grew organically. That way wasn't anything like we set out to open an aesthetic center, open a med spa. It just kind of grew into that over the years.
[00:02:15] Angela Baldasare - guest: And then, yeah, we had two private equity exits. Over the last eight years, and our last one was about eight months ago. So yeah, I get, I get asked a lot. Um, I'm doing some coaching and consulting and I get asked a lot, like, you know, how do I go about starting a med spa? Should I start a med spa? And I think people are really surprised, you know, by my answer, because what I tell them is like, the short answer is no.
[00:02:39] Angela Baldasare - guest: Like if you're doing it because you think there's. A gazillion dollars to be made in it. You know, it's just not about the money, but if you have a real passion for business and entrepreneurship and this is your outlet for that, then I'd say yes. I, you know, people call me because they have a real passion for aesthetics and for injecting and for, you know, making people look and feel their best.
[00:03:02] Angela Baldasare - guest: And unfortunately there's just, as a business owner, there's just very little of that that you get to do. I mean, like we were talking about earlier, you, I mean there's the social media, there's the medical malpractice, there's the legal compliance, there's the ongoing marketing, there's the hiring and firing and training and HR and things like that.
[00:03:20] Angela Baldasare - guest: There's so, it's so much more. Ended heavy weighted. In that end of it, you, you think it's gonna be you? I would just say that like if you have a passion for that, then yeah, go for it. Your passion. Find an amazing clinic to work for. You know, patients used to say all the time, like, oh, you're so lucky. You own a med spy, you get free lasers.
[00:03:44] Angela Baldasare - guest: I'm like, yeah, so that laser that costs you 1400 cost me half a million dollars. Like, yeah, this is not, this is not
[00:03:51] Dr. Anna Chacon - host: really is. Is that really how much they cost? Because I'm outraged. I actually did a whole year of laser fellowship.
[00:03:57] Angela Baldasare - guest: Yeah. At
[00:03:58] Dr. Anna Chacon - host: University of Miami and I don't, I cannot afford a laser and I don't, I don't really, I guess one of the things with the med spa that I've noticed is a lot of people are comfortable taking on debt.
[00:04:08] Dr. Anna Chacon - host: And I'm not.
[00:04:10] Angela Baldasare - guest: Yeah, I mean, it gets, it gets, it gets a lot of startup companies, you know in trouble when you realize like how much it costs to buy these devices and then look, so you bought this great device, you bought a halo or whatever else. Then it's $175 every time you have to add a tip. Then once you're out your warranty phase, then it's 16 a month for the warranty to keep up with it.
[00:04:33] Angela Baldasare - guest: I mean, it's just. There is a lot of expense that I don't think people like take into consideration like Botox, right? I mean, it's not just the medication, it's the syringes, it's the alcohol wipes, it's the electricity, it's the person who books the call. It's the medical malpractice, it's the training, it's the, you know, there's so much more than just the cost of the medication that goes into it.
[00:04:55] Angela Baldasare - guest: So, yeah, if that's something you really wanna do, like just be really clear that you're gonna need really deep pockets, you know, and a lot of, a lot of business sense. And you've got a way like, am I gonna take loans? Am I gonna lease these lasers? It's expensive. It's an expensive business to run, and the aesthetics industry changes all the time.
[00:05:15] Angela Baldasare - guest: So, you know, you'll make this investment in this great laser and 18 months later there's something. Better, faster, less invasive, less downtime, less whatever else. And it's just, it's just a turn.
[00:05:28] Dr. Anna Chacon - host: And how much would you say? I, I mean that's why I haven't opened one myself. I'm a very plain bread and butter dermatologist, so I do treat people with as affordably as I can.
[00:05:40] Dr. Anna Chacon - host: I use the best items, but I try not to buy, um, things that are, and, and we actually don't have the space. But I mean, the other day I was talking to someone opening med spa and they had four lasers. Like these lasers are hundreds of thousands of dollars. Correct. And I'm like. You're just opening.
[00:05:58] Angela Baldasare - guest: Yes.
[00:05:59] Dr. Anna Chacon - host: I mean, that sounds insane to me.
[00:06:01] Angela Baldasare - guest: It's insanes insane without a
[00:06:03] Dr. Anna Chacon - host: patient base, without a patient. So I thought, you know, as a dermatologist, let me make sure I have a good patient base and then I'll compliment things later. But we're talking like this is gonna be much, much later, like not anytime soon. Yeah. But, um, how much does it cost to open a med spa?
[00:06:23] Angela Baldasare - guest: So. You know, we were, we were in a little bit of a different situation because we had an existing practice and we just did an expansion for our med spa. But, you know, I would think, you know, two to two and a half million dollars is what you need for, yeah, for build out, for equipment, for establishing your accounts, for hiring your employees, for the software, for your marketing budget, or.
[00:06:47] Angela Baldasare - guest: You know, there's just a, there's a lot involved. That's why I said make sure your passion is business and not aesthetics before you do it. Like an md, like a, you know, a dermatologist or cardiologist, anybody else you, you know, can get a beautiful space. I mean, it's not like it was. You know, 40 years ago where you hung a shingle, you still have to do the marketing and you still have to do Yeah.
[00:07:08] Angela Baldasare - guest: Everything else. But you know, the different, the difference is you, you have a service that people need, right? Mm-hmm. And med Spa is the service people want. Nobody needs med spa service, right? Right. So you have to be really aggressive in, you know, your marketing approach and getting out there and having top of the line.
[00:07:29] Angela Baldasare - guest: And laser, you know, either being or hiring a social media expert. Nobody needs Botox. Nobody needs filler. Nobody needs a laser. They want it. Um, but it's, but it's not a need. So
[00:07:42] Dr. Anna Chacon - host: I know, and that's that exactly what you said. You know, most of my patients, it's, it's, they need something. They're literally walking through the door.
[00:07:49] Dr. Anna Chacon - host: Uh, we were open Super Bowl Sunday and they are dying in pain of something. Oh yeah. And they hurting
[00:07:56] Angela Baldasare - guest: or itching or, or, yes.
[00:07:59] Dr. Anna Chacon - host: Yeah. And if they, you know, if they need something Correct. You know, that, that's kind of my market. So just to clarify, you didn't start your med from scratch.
[00:08:10] Angela Baldasare - guest: We know we had a patient base and we, we thought that there would be more crossover than there was.
[00:08:19] Angela Baldasare - guest: We thought, oh, these patients have known us for years, they trust us, they, whatever else. That didn't really happen as much as we thought it was. The people you know who had come had been coming to see us for food sensitivity testing or hormone testing or things like that did not really cross over into the aesthetic space.
[00:08:38] Angela Baldasare - guest: It was really two separate groups of patients. So even though we had. You know, we had a base, we didn't have a lot of crossover, but we had been established in the community for many years and people knew who we were and knew where we were located, you know, so when somebody would say, you know, I heard Affinity is now offering Botox, then that person, even though they hadn't come to us for aesthetic services, would say, I really like them over there.
[00:09:03] Angela Baldasare - guest: I respect them. They operate with integrity, and you know, so our reputation in the community definitely helped. You know, otherwise, yeah, it was, it was starting from scratch. It was the, you know, the tables and the setting up accounts and buying the lasers and buying the HydraFacial machine and buying the bus facial scanner, and it was bottom up.
[00:09:24] Dr. Anna Chacon - host: And then tell me a little bit, your, is your background and business? Are you a, a practitioner? I'm
[00:09:31] Angela Baldasare - guest: not, and that's another thing that I would say my background is in, is in nutrition. So I did the nutritional testing and weight loss, you know, for original, um, practice actually, where I went to school for commun study communications, you know, the nutrition stuff did not transfer to the med spa part of it.
[00:09:48] Angela Baldasare - guest: Um, had kind of had to leave that behind. When we started doing all those things, my husband got to run with it. I mean, yeah, the business background is something that, you know, you learn school of hard knocks. You just kind of have to dive in there and just start digging and attending seminars and researching comp, medical compliance, and learn in the fire kind of thing.
[00:10:13] Dr. Anna Chacon - host: Yeah, I understand. How many years were you open? 25. 25 years? Yes. Wow. Okay. And then, um, a little bit about the sale as well, because you said you twice. How do you do that?
[00:10:28] Angela Baldasare - guest: So we did, so when we moved to, I think it's been about eight or nine years ago now, when we moved to our, our larger building, when we did the expansion and we had decided to add the aesthetics.
[00:10:40] Angela Baldasare - guest: Um, my husband kind of said, you know, I think I wanna take a step back. I think I wanna go back to school. Um, we've had this offer, you know, just for this holistic side of our practice, it was a colleague that he went to undergrad school with. So it was like selling, it was super easy. It was like selling a house.
[00:10:57] Angela Baldasare - guest: That is not how it usually is. I mean, the papers were signed, the money was deposited, like everything was super smooth. We kind of shared our space with them and then they did not re return post COVID. So they just told my husband, like, you can take it back over if you wanna, again, who was this? Who,
[00:11:14] Dr. Anna Chacon - host: who
[00:11:15] Angela Baldasare - guest: was this?
[00:11:15] Angela Baldasare - guest: Our first, our first sale? Oh, the buyers who bought in the first sale. Okay. Now that doesn't, that doesn't happen. They're, they're not that easy. They don't just give it back if they're not coming back. Like none of those things happen normally happen in these sales. Um, so when, you know, we went into the sale, I think I was, I think I was a little naive because of the way that everything went the first time.
[00:11:38] Angela Baldasare - guest: We started getting calls like six years ago with people just calling saying, would you be interested in selling your med spa? And I would just laugh like, no. Like why would I do this? Like this is my whole life. What else would I do? You know, you're gonna change my branding, you're gonna whatever. And then, I mean, I'm 57 this year, so as time went on and I got older and I got more tired of doing all the day-to-day stuff, my husband and I would have discussions like, what would we do if we did sell?
[00:12:07] Angela Baldasare - guest: Then it became something that we, you know, were interested in and, and we wanted to do not for the faint of heart. You know, it's kind of gut wrenching decision. It's my fourth child, um, patients we had been seeing for 25 years, but we just felt like it was the right time.
[00:12:25] Dr. Anna Chacon - host: Did you have one location or multiple locations?
[00:12:27] Dr. Anna Chacon - host: We just had
[00:12:27] Angela Baldasare - guest: one location. Yeah.
[00:12:29] Dr. Anna Chacon - host: Okay. What part of the country was it in?
[00:12:31] Angela Baldasare - guest: We were in central Florida.
[00:12:33] Dr. Anna Chacon - host: Oh, where
[00:12:34] Angela Baldasare - guest: in Orlando?
[00:12:35] Dr. Anna Chacon - host: I'm in Florida too.
[00:12:36] Angela Baldasare - guest: You are? Where are you in Florida? Miami. Okay. Yeah, we were in Orlando right near UCF. Oh, and there
[00:12:43] Dr. Anna Chacon - host: aren't a lot of med spas there.
[00:12:45] Angela Baldasare - guest: There are now. Okay. But back then, there definitely are now.
[00:12:48] Angela Baldasare - guest: Yeah. But like nine, 10 years ago, you know, I was driving 27, 30 miles to get my Botox done. You know? Now there's one, there's one in our shopping center. You know, this happened in the last couple of months. There's one across the street. There's one on the corner, there's one behind us. Yeah. Now they're, you know, now they're kind of everywhere.
[00:13:05] Angela Baldasare - guest: And that's what I would say to people too, like look at your, look at your competition, the Med Spa competition. Everywhere. I mean, there's, you know, there's chains now, there's franchises. Um, lots of nps are doing, you know, salon loft rentals and kind of concierge aesthetics. Private equity groups have, you know, bought up a bunch of med spa, so they're buying powers better.
[00:13:28] Angela Baldasare - guest: They're getting, you know, lower cost of goods sold. So, I mean, yeah, they're, again, not like it was 10 years ago. They're everywhere now.
[00:13:37] Dr. Anna Chacon - host: So the second private equity group that you sold to was someone that just contacted you, or you specifically looked for a seller?
[00:13:46] Angela Baldasare - guest: The first group that we were with contacted us and made us an offer and we went under LOI, which means letter of intent, their intent to purchase us, but it, it drug out for a lot longer than, you know, we're 18 months.
[00:14:00] Angela Baldasare - guest: Normally when you're under LOI, you can't talk to other buyers. It's called No Shop. But fortunately we were, you know, with a good company, we had established relationships with us and they let us shop the, during the last term of our LOI. So we found a, you know, kind of smaller, independent. And that's who we ended up going with.
[00:14:21] Angela Baldasare - guest: You know, by that time it, we had been three years into this kind of emotional, physical, and mental turmoil, and we were tired. Um, and our hearts were set on moving back home to Georgia where we are now. So
[00:14:35] Dr. Anna Chacon - host: how do you know how much to sell for, like what kind of financial advice did you have running this and selling it, and even starting up.
[00:14:45] Angela Baldasare - guest: So it's. You know, it's ebitda, it's your earnings to debt ratio. You don't get to decide what you're selling for. Numbers don't lie. It's your, it's your valuation. You go through a financial due diligence. Ours is about three months long, you know, where they dig into every single thing. And then there's, you know, valuation on that.
[00:15:06] Angela Baldasare - guest: It's, you know, I think industry standard is somewhere between four to six times multiple on what your EBIT is, something. One of the things that I was naive about is like, we have 17,000 followers on Facebook or what, they're not buying your followers. Like they're not buying your Google reviews, they're not buying your reputation.
[00:15:27] Angela Baldasare - guest: They're not buying anything more than the amount of cash, you know, that you have left after, you know, all the debt is balanced out. So it's not like you get to decide, or, you know, like when you price a home, you look at your comps and you price it, you know, comparable with other, you know, it's just, it's just numbers.
[00:15:45] Angela Baldasare - guest: It's just math. Okay.
[00:15:46] Dr. Anna Chacon - host: And did you have an accountant helping you or, um, like a CFO helping you? So
[00:15:52] Angela Baldasare - guest: we had, I mean, our accountant, you know, who we had had for many years, obviously had our records. But no, the companies normally do their own due diligence. So you just return, you just turn over. Your bank statements, you know, your QuickBooks, your tax returns, your everything to, you know, whichever equity group is doing your financial due diligence.
[00:16:16] Dr. Anna Chacon - host: How long does the process take? And did it include like employees and did you own the location or was it like in a No,
[00:16:24] Angela Baldasare - guest: it was a, it was a lease and you know, private equity groups that are looking to buy are really not. Interested your land real estate, you know, um, and it, what it really is, is it's an asset purchase.
[00:16:36] Angela Baldasare - guest: So they're purchasing your assets, you know, your lasers, your book of customers, your revenue. Things like that. Lots of times it's not even, in our case, it wasn't, they did not purchase the tax id. They didn't purchase the llc. It was an asset purchase for us.
[00:16:55] Dr. Anna Chacon - host: Okay. Did the same employees work there?
[00:16:58] Angela Baldasare - guest: They did in the beginning.
[00:17:00] Angela Baldasare - guest: You know, and that's kind of that, that depends on. You know, the relationship that your group has with your employees, it depends on, you know, the offers that they make them. There's some really great private equity groups that offer, like, stay bonuses for employees. Um, they're able to give them benefits that, you know, as a small business owner, 401k or you know, health insurance or paid time off or, you know, that some small business owners are not able to offer.
[00:17:27] Angela Baldasare - guest: But, you know, just like everything else, it's gonna depend on the relationship moving forward. You know, after you leave, what kind of relationship do they make with these team members? You know, are they appreciated? Are they well paid? Are they, you know, it's up to them whether they stay or go.
[00:17:43] Dr. Anna Chacon - host: Just owning a practice myself.
[00:17:45] Dr. Anna Chacon - host: What kind of issues did you have with employees? I'm assuming that you had some issues from time to time 'cause they could be very difficult to deal with.
[00:17:54] Angela Baldasare - guest: I mean, absolutely. I think, you know, over 25 years we've had them, we've had them all, you know, lots of our past employees. We have really great.
[00:18:01] Angela Baldasare - guest: Relationships. Some of them think I'm the wicked witch of the west. And you know, I guess that's okay. I mean, you know, you lose employees for all kinds of reasons. You have them, you know, two of our best employees relocated out of state during their time with us, and that was just, you know, kind of heartbreaking.
[00:18:19] Angela Baldasare - guest: 'cause you spend all this, you know, time, money, you know, training them, marketing them, um, things like that. You have employees poached in the med spa industry where, you know, you're posting how wonderful they are on social media and another practice sees them and slips into their dms and steals. Oh, wow.
[00:18:37] Angela Baldasare - guest: Way. No way. Um, oh yeah, absolute. I never thought that that would happen. Absolutely. It's. It's unfortunate and it's really big in the industry, so that that's definitely happened to us. You know, you have employees that just can't keep up with the growth. Of your practice, when your practice starts growing, employees, you know who will start out at the front desk and decide they wanna go to NP school and leave, or decide they wanna go into healthcare administration and leave.
[00:19:07] Angela Baldasare - guest: So you have employees that grow with you and leave that way. You have employees who see the amount of money you are bringing in, but don't see your backend bills. Yeah, they don't see, yeah. Yeah. They don't see how much is going out. Um, and think that they bring a higher value to your clinic and, you know, demand pay that is just not realistic.
[00:19:29] Angela Baldasare - guest: So, I mean, it's always about, you know, finding and keeping. Good people.
[00:19:34] Dr. Anna Chacon - host: What things would you say are essential to someone who's starting and thinking about growing a med spa or uh, or selling med spa?
[00:19:45] Angela Baldasare - guest: So I would say no matter what, begin with the end in mind. Even if you think, you know, like we did, like we would never sell this, what would we do?
[00:19:52] Angela Baldasare - guest: Whatever else. You never know what life is gonna bring and how things are gonna change, right? So from the very start. Keep lists of your furnishings and equipment, like write down all the serial numbers, what you paid for it the year you purchased it. Keep really good records of everything. Keep everything in an Excel spreadsheet.
[00:20:13] Angela Baldasare - guest: Have an attorney. Working with you, working with the whole time. Have a great accountant. Don't oversend, don't get yourself into a bunch of debt because if you get yourself into a bunch of debt, you know what happens is like with these laser companies, if you lease five lasers, whatever else, they file what's called a UCC lie.
[00:20:35] Angela Baldasare - guest: For the money that's owed on the lasers. So they file a lien against your business, which means if you sell your business, they get their money before you get your money. So know what your UCC liens are, know what's owed, because that's all gonna come off of that sale price that's gonna go into your bank account.
[00:20:54] Angela Baldasare - guest: So, you know, know those numbers, you know, keep track of your growth, keep your, you know, expenses as low. I know that groups when you're selling, like they understand that you pay your cell phone and maybe your kids' cell phones outta you know, your accounts. That's, they understand that, you know, that can be taken out and credited towards income if you do any services in your practice that are cashed, you know, it's tempting to.
[00:21:22] Angela Baldasare - guest: Take that cash and go to Target or go to, you know, whatever else with your cash, but know that if you take of cash for yourself or your family or whatever to use, it's not thousand. It's either or account. So you're losing that multiple on the back end of your sale. By not depositing it in the bank instead of, you know, taking it or bonusing employees with it or, you know, whatever you're doing with it, deposit everything, keep good records, and just keep an open mind of like, what, what are you gonna do afterwards?
[00:22:00] Angela Baldasare - guest: We have a 75 mile, um, non-compete radius, but that also means that I cannot coach or consult. Within 75 miles of our practice. So it's a, so it's a big radius. And you know, we lived in that area for 32 years. So, you know, you're networking, your connections, your whatever else kind of disappear. So are you gonna have a non-compete?
[00:22:24] Angela Baldasare - guest: What is that gonna look like on the back end? What does that, what does that mean, you know, to you for work, if you're going to work? You know, I, I know lots of people think, well, I'm just gonna, I'm gonna sell this practice and I'm gonna open the next town over. I probably not, you know, so just know, like, be prepared.
[00:22:43] Angela Baldasare - guest: Like what does this next part of, you know, my journey look like? And, you know, make sure you, you know, in your contract what's gonna be asked of you. Now, lots of groups will ask you to stay, um, you know, they wanna keep owners on as employees. Um, and, you know, that's, that's great for, you know, a lot of people if that's what they wanna do.
[00:23:01] Angela Baldasare - guest: And just kind of share that burden of owning a business with a partner. So if you find the right person to partner with, and that's an option as well.
[00:23:10] Dr. Anna Chacon - host: Well thank you so much Angela. You are
[00:23:12] Angela Baldasare - guest: so welcome coming on
[00:23:14] Dr. Anna Chacon - host: and, um, and for connecting with me and Sure.
[00:23:18] Angela Baldasare - guest: Thank you so day.
