The med spa and aesthetic medicine segment of the overall general wellness industry has experienced significant growth over the past decade. Increasing demand for non-invasive aesthetic treatments, such as Botox, laser skin treatments, and body contouring, have propelled the sector, leading to an uptick in M&A. With the increasing popularity of GLP-1s, many med spas have diversified their services to include weight-loss management, another fast-growing market segment, while others include broader wellness offerings such as nutrition counseling, fitness programs, and holistic therapies. The fragmented and fast-growing industry generally remains ripe for consolidation, although the vast number of very small providers with a wide variety of service offerings, operating models, and technological resources presents a significant challenge to investors. Currently, only 3% of med spas are owned by private equity firms or private equity-backed organizations.
Med Spa Market Growth (Very High)
According to the American Med Spa Association, the industry grew from 8,899 locations in 2022 to 10,488 in 2023, representing a location growth rate of 17.9%. One (probably optimistic) source projects the global med spa market to grow at a 15.7% CAGR for 10 years from 2024 to 2033, reaching $83.9 billion of worldwide revenue by 2033, while it projects the U.S. med spa market to grow at a lower but still impressive CAGR of 14.7%, reaching $27.7 billion by 2033.
Growth Drivers
Below are a few of the key trends driving this growth:
Increasing demand for non-invasive aesthetic treatments
Growing focus on personalized treatments based on individual patient needs and preferences
Expansion of holistic wellness offerings, combining traditional spa treatments with medical procedures
Rise in medical tourism, particularly in countries with accredited healthcare facilities
Increasing adoption of advanced technologies for treatments and business management
Growing male clientele, with the number of males seeking aesthetic treatments tripling since 2000
Med Spa M&A Activity
The expectation of continued industry growth combined with a massively fragmented market has lead to an M&A boom, even if industry insiders are surprised there isn't more M&A activity. The number of publicly announced deals has exploded, increasing from a small handful in 2019 and 2020 to over 50 in each of the past two years. Deal announcements are dominated by private equity firms and platform companies as smaller owner / operator buyer acquisitions typically do not get announced publicly.
Med Spa and Aesthetics EBITDA Multiples
Small Med Spas (typically revenue under $5M):
These companies usually sell for lower multiples, ranging from 3x to 6x EBITDA. The lower multiple is often due to higher operational risk, lower revenue diversification, and limited geographic reach, as well as a heavy reliance on the owner / operator, which can lead to patient retention and business continuity concerns. Our database of active and recently listed med spas for sale, supports this range.
Mid-Sized Med Spa (typically revenue $5-20M):
Med spas with a little more scale fetch higher multiples, ranging from 5x to 8x EBITDA.
Large, Established Regional Med Spa Chains (revenue over $20M):
Larger, more established companies with proven profitability, strong brand equity, and a broader customer base may command higher multiples. These can range from 7x to 12x EBITDA, depending on local market conditions, service mix, growth rate, and the stability of the cash flow.
High-Growth, Tech-Driven Med Spa Brands / National Platforms:
Companies offering cutting-edge technologies, like advanced laser treatments or exclusive proprietary skincare products, with strong, continuing management teams can command multiples in the 10x to 20x EBITDAÂ range, especially if they are in a high-growth phase with a demonstrated ability to expand through de novos or by acquisition. While publicly-disclosed financial information is sparse for this portion of the market, our databases include a handful of precedent deals, including reported EBITDA multiples of up to 20x, a figure which likely implies significant purchase consideration for recently opened / under development de novos and full-year impact of recent acquisition and possibly the M&A pipeline.
Factors Impacting the Appropriate EBITDA Multiple for Med Spas
Strong Brand and Customer Loyalty:Â Companies with established brands and loyal customer bases, particularly those that offer a comprehensive suite of services or proprietary treatments, tend to command higher multiples.
Geographic Reach:Â Med spas with a national or international presence, or those operating in attractive and growing markets (e.g., urban centers, affluent regions), are often valued higher.
Technology and Innovation:Â Firms that invest in new technologies (e.g., non-invasive body contouring or advanced skincare treatments) are more attractive to investors, especially if they have a competitive edge in offering state-of-the-art procedures.
Recurrent Revenue and Scalability:Â Med spa businesses with a high proportion of repeat customers (e.g., Botox injectables, skincare services) generate stable cash flow, making them more attractive to acquirers looking for predictable returns.
Profitability and Operational Efficiency:Â Well-run companies with high operating margins and effective cost controls tend to fetch higher multiples due to their ability to generate profits even in competitive environments and in the absence of a highly dedicated owner / operator.
Actively Listed Med Spa Service Providers for Sale
The following is a summary of a few actively listed med spa opportunities from our active listings database:
(links will break over time)
Fast-Growing Oregon Medical Spa: Listed for sale at $5m, this large med spa facility is marketed based on estimated 2024 revenue and adjusted EBITDA of $3.5m and $850k, respectively, implying multiples of 1.4x revenue and 5.9x EBITDA. According to the listing, the business was established by a husband-wife duo consisting of a highly specialized aesthetic nurse and a board-certified surgeon, and is seeking a financial sponsor (read: PE) rather than owner/operator buyout.
Park Ave NY High-End Med Spa: Listed for sale at $4.2m, this purported "luxury" med spa is marketed based on estimated revenue and cash flow of $2.9m and $1.5m, respectively, implying multiples of 0.4x revenue and 2.8x cash flow. Based on the outrageous margins and the fact that it is "perfect for a licensed practitioner," we think there is likely significant owner / operator effort that has yet to be backed out of the reported cash flow figure... although there apparently is a licensed nurse practitioner on-site willing to stay and an MSO model could be explored.
Package of Three NJ Med Spas: Listed for sale at $2.95m, this portfolio of three locations is marketed based on estimated revenue and cash flow of $3m and $700k, respectively, implying multiples of 1.0x revenue and 4.2x cash flow. According to the listing, the business focuses on botox injections, weight loss, dermal fillers, peels, and laser hair removal and is "renowned" by celebrities, models, and television personalities alike.
Profitable Med Spa in ID: Listed for sale at $2.2m, this med spa is marketed based on estimated revenue and cash flow of $2.1m and $467k, respectively, implying multiples of 1.0x revenue and 4.7x cash flow. According to the listing, they offer a wide array of services, including coolsculpting, botox, hydrafacials, massage, and pedicures, along with many devices used in anti aging. Owner is retiring.
Med Spa M&A Challenges
Acquiring med spas is not without its challenges, as acquiring a med spa in a highly competitive market may not always yield the expected growth unless there is a clear differentiation strategy in place.
Regulatory and Legal Risks:
The med spa sector is heavily regulated, with varying laws concerning the administration of medical procedures, insurance, and health standards. M&A deals in this industry often involve navigating complex regulatory requirements, including compliance with state and federal laws.
Acquisition targets may have to undergo extensive due diligence to ensure they meet the necessary compliance standards, which can delay deals or create legal hurdles.
Corporate practice of medicine (CPOM) laws in many states restrict non- healthcare providers from owning med spas directly, necessitating the use of a management services organization (MSO) model.
Integration Issues:
Integration after an acquisition can be challenging, especially when it comes to aligning corporate cultures, operational systems, and customer service standards for a previously owner / operator run business. Disruptions in day-to-day operations can affect customer satisfaction and result in employee turnover.
Additionally, the integration of new technologies and services can be cumbersome, requiring careful planning and training.
Competition and Market Saturation:
As more players enter the med spa space, the level of competition intensifies. Companies must carefully assess whether an acquisition will provide a significant competitive advantage or if it could lead to increased market saturation and diminishing returns.
Don't hesitate to reach out to Will Hamilton at will@scoperesearch.co with questions about our med spa valuation services or healthcare M&A databases.