Episode Transcript
[00:00:00] Speaker A: The short answer is no. Like, if you're doing it because you think there's a gazillion dollars to be made, 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.
[00:00:15] Speaker B: Welcome to skin deep. I'm Dr. Anna Chacon, and today we have a very special guest joining us. Get ready for some expert insights you won't want to miss.
So, Angela Baldessare, I met you on Facebook. You know, you posted 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? And I'm a dermatologist, and of course, I actually share a space with a med spa. They rent for me. And it's been a thought that I've had. I. I'm limited by capital right now.
[00:00:54] Speaker A: Right.
[00:00:55] Speaker B: 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?
[00:01:03] Speaker A: 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's doing at this stage. You know, they're starting in aesthetics and adding that, and it just kind of grew holistically. I was. My background is really in nutrition, and I was seeing patients who had zinc deficiencies in acne or estrogen dominance and melasma, you know, that kind of thing. And talking to my esthetician at another 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 as a holistic skin care. And then as, you know, our market grew, our need grew. 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. It 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. 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. 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. Like, if you're doing it because you think there's a gazillion dollars to be made, 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. You know, people call me because they have a real passion for esthetics and for injecting and for, you know, making people look and feel their best.
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. There's so. It's so much more business ended heavy weighted in that end of it that you. Then you think it's going to be, you know, I would just say that, like, if you have a passion for that, then, yeah, go for it. If your passion is esthetics, 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. I'm like, yeah. So that laser that cost you fourteen hundred dollars cost me half a million dollars. Like, yeah. This is not.
[00:03:46] Speaker B: Is that really how much they cost? Because I'm outraged. I actually did a whole year of laser fellowship.
[00:03:52] Speaker A: Yeah.
[00:03:52] Speaker B: Miami. And I don't. I cannot afford a laser.
[00:03:55] Speaker A: And I don't.
[00:03:56] Speaker B: 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, and I'm not.
[00:04:04] Speaker A: 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 Saiton Halo or whatever else, then it's $175 every time you have to add a tip. Then once you're out of your warranty phase, then it's $1,600 a month for the warranty to keep up with it. 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. So, yeah, if that's something you really want to do, like, just be really clear that you're going to need really deep pockets, you know, and a lot of, a lot of business sense. And you've got a way like, am I going to take loans? Am I going to lease these lasers? It's expensive. It's an expensive business to run. And the esthetics industry changes all the time. 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 churn.
[00:05:22] Speaker B: And how much would you say? I mean, that's why I haven't opened myself. I'm a very plain bread and butter dermatologist, so I do treat people with. As affordably as I can. I use the best items, but I try not to buy things that are. 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.
And I'm like, you're just opening?
I mean, that sounds insane to me.
[00:05:55] Speaker A: It is.
[00:05:56] Speaker B: Without a 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 going to be much, much later. Like, not anytime soon.
But how much does it cost to open a med spa?
[00:06:17] Speaker A: 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, for, you know, there's just, 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, you know, a dermatologist, a 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 everything else. But you know, the different. The difference is you, you have a service that people need. Right. A med spot is the service people want. Nobody needs med sponsors.
[00:07:13] Speaker B: Right, right.
[00:07:14] Speaker A: So you have to be really aggressive in, you know, your marketing approach in getting out there and having top of the line lasers and, you know, either being or hiring a social media expert. Nobody needs Botox, nobody needs filler, Nobody needs a laser. They want it, but it's, but it's not a need, so.
[00:07:36] Speaker B: I know. And that's. That exactly what you said. You know, most of my patients, it's. They need something. They're literally walking through the door. We were open Super Bowl Sunday and they are dying in pain of something.
[00:07:48] Speaker A: Yeah.
And they have hurting or itching or burning or.
[00:07:52] Speaker B: Yes, 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 spa from scratch or you did?
[00:08:05] Speaker A: We did. You know, we had a holistic patient base and we, we thought that there would be more crossover than there was. 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, had, had been coming to see us for food sensitivity testing or hormone testing or things like that did not really cross over into the esthetic space. 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, 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. I respect them. They operate with integrity. And, you know, so our reputation in the community definitely helped with that. But, 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 busy facial scanner and it was bottom up.
[00:09:18] Speaker B: And then tell me a little bit, your, is your background in business? Are you a practitioner?
[00:09:24] Speaker A: I am 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 for original practice. Actually, I went to school for community communications. You know, the nutrition stuff did not transfer to the med spa part of it. I kind of had to leave that behind when we started doing all those things.
My husband got to run with it. But 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 medical compliance and learning the fire kind of thing.
[00:10:07] Speaker B: Yeah, I understand.
How many years were you open?
[00:10:10] Speaker A: 25.
[00:10:11] Speaker B: 25.
[00:10:12] Speaker A: 25 years, yes.
[00:10:14] Speaker B: Oh, okay. And then a little bit about the sale as well, because you said twice. How do you do that?
[00:10:23] Speaker A: 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, my husband kind of said, you know, I think I want to take a step back. I think I want to go back to school.
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. 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 return post Covid. So they just told my husband, like, you can take it back over if you want to. Again, who is our first, our first sale? The buyers who bought in the first sale. Now that doesn't, that doesn't happen.
They're not that easy. They don't just give it back if they're not coming back. Like, none of those things normally happen in these sales.
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. You know, 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 going to change my branding, you're going to 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, I would have discussions like, what would we do if we did? So then it became something that we, you know, were interested in 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.
Patients we had been seeing for 25 years, but we just Felt like it was the right time.
[00:12:19] Speaker B: Did you have one location or multiple locations?
[00:12:21] Speaker A: We just had one location. Yeah.
[00:12:23] Speaker B: Okay. What part of the country was it in?
[00:12:25] Speaker A: We were in central Florida. Oh, where? In Orlando.
[00:12:29] Speaker B: I'm in Florida too.
[00:12:30] Speaker A: You are? Where are you in Florida?
[00:12:32] Speaker B: Miami.
[00:12:33] Speaker A: Okay. Yeah, we were in Orlando, right near ucf.
[00:12:36] Speaker B: Oh, and there aren't a lot of med spots there.
[00:12:39] Speaker A: There are now.
[00:12:41] Speaker B: Okay, but back then.
[00:12:42] Speaker A: Definitely are now. 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, that's 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. And that's what I would say to people, too. Like, look at your. Look at your competition. The med spot competition is everywhere. I mean, there's, you know, there's chains now, there's franchises.
Lots of employees are doing, you know, salon loft rentals and kind of concierge aesthetics.
Private equity groups have, you know, bought up a bunch of med spots. So their buying power is better. 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.
[00:13:31] Speaker B: So the second private equity group that you sold to was someone that just contacted you or you specifically look for a seller.
[00:13:40] Speaker A: 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 drug out for a lot longer than, you know, we're 18 months. And 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 that, you know, kind of smaller independent buyer, and that's who we ended up going with. You know, by that time, we had been three years into this kind of emotional, physical and mental turmoil, and we were tired and our hearts were set on moving back home to Georgia, where we are now.
[00:14:29] Speaker B: So 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?
[00:14:39] Speaker A: 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 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, evaluation on that. It's, you know, I think industry standard is somewhere between four to six times multiple on what your EBITDA is. But it's not something that you get to say like, you know, 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. 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. It's just math.
[00:15:40] Speaker B: And did you have an accountant helping you or like a CFO helping.
[00:15:46] Speaker A: You know, 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.
[00:16:10] Speaker B: How long does the process take? And did it include, like, employees and did you own the location or was it like in a.
[00:16:18] Speaker A: No, it was a, it was a lease. And, you know, private equity groups that are looking to buy are really not interested in your land.
You know, and it's. What it really is, is it's an asset purchase. 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.
[00:16:49] Speaker B: Okay. Did the same employees work there?
[00:16:52] Speaker A: They did in the beginning. 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.
They're able to give them benefits that, you know, as a small business owner, 401k or health insurance or paid time off or, you know, that some Small business owners are not able to offer.
But you know, just like everything else, it's of kind to 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.
[00:17:37] Speaker B: Just owning a practice myself. What kind of issues did you have with employees? I'm assuming that you had some issues from time to time because they could be very difficult to deal with.
[00:17:48] Speaker A: 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 relationships with and 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 for us because you spend all this, you know, time, money, you know, training them, marketing them, 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 oh, wow, no way. Oh yeah, 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 want to go to NP school and leave or decide they want to go into healthcare administration and leave. So you have employees that grow with you and leave that way. You have employees who see the amount of money you're bringing in but don't see your back end bills.
They don't see how much is going out and think that they bring a higher, higher value to your clinic and, you know, demand pay that is just not realistic. So I mean, it's always about, you know, finding and keeping good people.
[00:19:28] Speaker B: What things would you say are essential to someone who's starting and thinking about growing a med spa or, or selling med spa.
[00:19:39] Speaker A: 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? Whatever else, you never know what life is going to bring and how things are going to 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. Have an attorney, you know, working with you the whole time. Have a great accountant.
And don't overspend. 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 lien or 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 going to come off of that sale price that's going to go into your bank account. So you know, know those numbers, you know, keep track of your growth, keep your, you know, expenses as low as possible.
Know that groups, when you're selling like, they understand that you pay your cell phone and maybe your kids cell phones out of, 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 cash, you know, it's tempting to, you know, take that cash and go to Target or go to, you know, whatever else with your cash. But know that if you take a thousand dollars out of cash for yourself or your family or whatever to use, that's not a thousand dollars, it's either 4,000 or $6,000 because it's not going into the bank 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 going to do afterwards? We have a 75 mile non compete radius, but that also means that I cannot coach or consult with anyone within 75 miles.
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 disappears. So are you going to have a non compete, what is that going to 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 know lots of people think, well, I'm just gonna, I'm going to sell this practice and I'm going to open the next town over. I. Probably not, you know, so just know, like, be prepared. 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 going to be asked of you. Now, lots of groups will ask you to stay. You know, they want to keep owners on as employees.
And you know, that's, that's great for, you know, a lot of people if that's what they want to do and just kind of share that burden of owning a business with a partner. So if you find the right person to partner with, then that's an option as well. Cool.
[00:23:04] Speaker B: Well, thank you so much, Angela.
[00:23:06] Speaker A: You are so welcome.
[00:23:07] Speaker B: Coming on and, and for connecting with.
[00:23:10] Speaker A: Me and thank you so much. All right, thank you so much. Have a great rest of your day.
[00:23:15] Speaker B: By.
[00:23:23] Speaker A: Sam.
