The video discusses a detailed presentation and evaluation of a medspa acquisition opportunity. The business, established in 2008, generates $2.1 million in gross revenue and $1.1 million in net profit annually, with significant growth potential. Its offerings include innovative cosmetic, anti-aging, and hormone replacement treatments, supported by a proprietary product line and a database of 17,600 patients. The retiring doctor is willing to provide training for the transition, making it a lucrative prospect with a competitive edge.

Key concerns highlighted include the need for rigorous due diligence on financial “add backs” to ensure tax compliance, as the retiring doctor has been maximizing tax deductions. The transition of ownership and maintaining the practice’s operational standards post-sale are critical, particularly as the current doctor is integral to the practice’s success. Suggestions include hiring and training a new medical team during an extended handover period.

The medspa’s location in an affluent area with no advertising but steady patient growth was discussed. Attendees noted its significant potential for scaling through enhanced marketing, telehealth services, and geographical expansion. Suggestions included analyzing the market, capturing more value from the existing customer database, and hiring additional staff to meet demand.

Multiple participants expressed excitement about the deal’s potential, offering creative financing ideas and partnerships. Recommendations included using SBA loans or structuring long-term payments to the seller, as well as exploring hub-and-spoke models for future growth. The group also emphasized assessing local market competition to optimize expansion strategies.

Overall, the presentation was praised for its delivery and clarity. Experts provided actionable advice on operational scaling, financial structuring, and market analysis, emphasizing the deal’s growth prospects while urging caution on compliance and licensing issues.

Full Transcript:

Thorough analysis. So, Oya, MedSpa business, great sector. Right. Great sector. So I’m I’m already excited.

So you are you are off. I can see your screen. It’s light shared. So if you hit the green button at the top of your slideshow to make it full screen, then we’ll be able to see it in in glorious full color.

I’m not sure if I’m doing this right or my Go go top go top left.

You’ll see three colors. Hit the green one. Okay. There we go.

What’s this going on? Do you see this on the bottom?

No. I can just see your slide deck. So there you go. We’re off we’re off and running. Okay.

So, this is a a Maxpa business that I’m working, on right now.

And, oh, I’m sorry. I’m having some issues here. Okay. Yeah.

Don’t worry.

Is It’s just something on the way, so I’m just like I can’t read my own screen because of this, control panel, but I think I just managed that.

Okay.

Minimize this. Okay. So it’s established since two thousand eight. This this practice has several sources of income covering a wide array of services to provide patients with the unique combination of conventional antiaging and cosmetic medicine.

Currently, it employs one full time doctor, one full time physician assistant, and one full time APRN, which is a nurse. The doctor had developed set of of proprietary treatments, giving them a competitive advantage in the community.

It’s a growing, it’s a growing affluent community with an average household income of ninety seven thousand a year. The practice sees an average of twenty new patients per week without advertising, mainly due to the, revolutionary, weight loss, cosmetic, and hormone replacement treatments.

Doctor just introduced another innovative hair restoration treatment that will make an exponential income growth for the practice. Doctor is retiring but willing to train and pass all of his intellectual and proprietary advanced treatments for the buyer. Gross revenue is two point one million with the net profit of one point one million over a year. We expect an increase of a hundred thousand yearly with the additional of new treatments modalities, advertisement, and new merchant service charge cash discount application.

Add more providers to meet the demand, increase wellness service offerings, and or grow the membership program. And, you will be able to add more revenue and and success to an already lucrative business.

Doctor is asking two point five million, includes all laser and cosmetic equipment plus the real estate.

He also offer, to purchase the business only without the real estate for one point seven five zero. One one million seven five zero.

Okay.

Let me try to go to the next slide, and it’s not going. I’m sorry.

I’m this isn’t, like, my first time doing this, so I No worries. You’re doing this out.

Doing great. You’re doing great. And so far, this is an absolutely baller deal. Right? So, let’s keep going.

Okay.

Wow.

The practice has database of seventeen thousand six hundred patients of which seventy percent are in the age group between thirty five to sixty five year old, sixty percent are female patients, and average of twenty new patients per week without advertisement.

Thirty percent of revenue comes from the insurance and the rest from the cosmetic cash patients.

We have seven large cosmetic equipment, all fully paid, which is sopranizer, hair removal, sharp sharp light laser, Omnimax platform, E matrix for Sablim and Sablimative RF, HydraFacial machine, Vivace r f, NORDLIS IPL, IMSLIMU, Bodiesculpting Contouring Platform.

We also own, well, they also own a private label line of, the skin cosmetics products and another line of nutraceuticals.

We also perform several skin dermatological procedures such as skin biopsies, tags, boards, and cyst removal, acne medication extractions, treatments, medical facial, dermaplenian rosacea, and dark spot treatment, PRP, and IPI, IPL for the facial.

We expect an increase of a hundred k yearly with an addition of new treatments modalities advertisement and the new merchant service charge cash discount application, add more providers to meet the demand, increase increase wellness service offerings, and or grow the VIP membership program.

And you’ll be able to add more revenue and success to an already lucrative business. We have four exam rooms, two two aesthetics rooms, one X-ray room, one laboratory room, one kitchen, lunch break room, large front desk station, and lobby.

Real estate office is, one thousand nine hundred thirty seven square feet and available for rent, twenty five per square foot if purchased business only without the real estate.

Okay.

So this is, I I put, the the the doctor’s the latest tax return. If you look first at this business, it doesn’t really look that lucrative on the paper on his tax return because doctor is just trying not to pay taxes. If you look right here on the bottom, there is ordinary business income is negative a hundred and twenty three thousand this year.

And then if you look, I I put the previous the twenty twenty one and twenty twenty tax return next to each other just to give you the picture that, that he is trying not to pay taxes.

He writes everything off, and, so his, business income is only eighteen thousand in twenty twenty one. In twenty twenty twenty, it was a hundred and two. So the older he get, the more he’s getting himself to the, retirement.

He start putting huge contributions into his pension fund and four zero one k, which is like I I looked up from from his, financials. It’s about, like, two hundred thousand in one month. You know, he was putting all of his, you know, pension contributions. And, he he was buying, he was buying cars, like, a a brand new Acura. He just purchased cash.

She put everything on the business.

He was paying himself and his wife a salary of six hundred and five thousand a year. So these, huge ad bags that I kinda consolidated on this next page, and I put this down here, which, here’s my ad bags. I put the owner salary of, six zero nine back. I put Acura cars.

Actually, it was fifty six thousand. I don’t know why I put thirty six.

Yeah.

Pension fund, three hundred and eighteen.

That was of, well, the twenty twenty two. There’s a even more larger contribution to pension fund I discovered through his p and l, especially in the month of September, which is right now. And, meals and entertainment, travel.

Then I also am accounted for general manager salary when the doctor is goes gonna go back out of the business. I, I, I’m planning to hire a GM and one nurse, aesthetician who will be doing, the doctor’s work.

And, so I put about three hundred thousand here.

Okay.

And I think this is end of this, and I wanna show you my RGL list, but I’m trying to exit the screen now.

Yeah. Let yeah. Let’s have a look at the one sheet, and then I’ll give you my thoughts and then pass to my team. Again, hit the red hit the green button, the top of that spreadsheet.

Yeah.

There we go.

Okay.

Okay.

Right. Is there anything you wanna touch on on that sheet, or, are you happy for me to give you some feedback?

I’m happy for you to give me some feedback.

Right. Okay. Great. Okay. So on the surface, I I really like this deal. I love the med spa industry.

I love the fact that it’s got, you know, a very affluent customer base. They’ve got a seventeen thousand database list. They do know marketing.

I’d need to understand a bit more at what capacity they’re at in the current facility, but you can always move facilities and and hire additional, both admin and and and clerical people.

So this is a very, very big growth opportunity. And and Chris Moore, my business partner, if you’ve not met him, he used to own a marketing agency that used to market for these guys. So there’s a ton of value that we could bring to help you, scale this business if you buy it. So I really like the deal.

Two things that I would touch on, and then I’m gonna turn it over to Jeremy.

Number one is so so the positives are, you know, this is a massive growth opportunity. Right? And, the the the two things I think you need to look at, number one is when you’re buying a practice like this and the the the the person that is really the business is retiring, then you you really need to kinda work hard on that transition.

So he’s gonna need you know, you’re gonna need an extended handover period with this person until you can then hire and train, somebody to kinda come in. So I think that’s one of the biggest issues, that you need to focus on, although that’s all fixable. And then the second thing is, in terms of the add backs, you know, you’d wanna make sure that your CPA, you know, does some pretty rigorous due diligence around those add backs and just make sure that they’re all tax, compliant. Right?

So and you see this all the time in in these types of industries where, the owners just basically taking all the cash out of the business. Some of it is in salary and distributions. Four zero one k contributions is fine. But when people buy cars and and all these other things, you know, eight thousand dollars a year on meals.

Right?

And, you know, I do it. You know, when I go out for dinner, like like, even last night, I’m in Florida with my wife who went out for dinner.

I I paid for the dinner using one of my companies, you know, not not deal maker. I I use one of my companies that I own, you know, to pay for the meal. Right? So, so you wanna make sure when when deals have got really big add backs that they are kind of like tax compliant.

Because what happens is, unfortunately, if you end up doing a stock deal for this, that all that IRS stuff in the future is now your liability. And, yeah, we can have the seller provide you with warrants and reps and all those different things, but it’s just something to be to be kinda mindful of, you know, when you do this. When you did your opening slide, you talked about it it was a two point five million dollar deal including the real estate, one point seven five million dollar deal with with no real estate, and you had a one point one million dollar net income, which let’s call that EBITDA for now because you’ve probably not got a lot of depreciation and amortization.

And and we know you’re in the business from a tax efficiency perspective. But when we look at those EBITDA numbers for last year and the year before, you know, they’re like half of what those original numbers were. So what I’m looking at the deal and I’m thinking, you know, the business alone is doing one point one million of EBITDA, and the only one point seven five for the business. That was a red flag for me because that’s that multiple is way too low. So it looks like the true profitability, you know, forget two years ago when it was COVID and no one could go to these places, and I get that. It looks like, you know, a true normalized average profits around the kind of five twenty five mark.

So five twenty five, a a a three and a three point two times multiple for this type of businesses, you know, it it it is pretty good. And I would buy the real estate with it, and then I’d work with David Marcantonio to see how he can, kind of fudge the five zero four loan structure into this. You probably won’t get the full twenty five years because the real estate’s only worth about a third of a deal, but you might get it on a fifteen, sixteen year total amortization, which would be, you know, pretty inexpensive debt. So I I think, this probably looks like it’s gonna be an SBA deal unless, you could offer him a lot more money by the business, leave the real estate behind potentially, you know, and offer him, say, you know, three million dollars, over ten years on an annuity top line, and then you’re still cash flowing very, very nicely without you having to go down the financing route. But knowing these doctors, they’re pretty savvy.

This is probably looking like an SBA deal for me. But all in all, subject to you figuring out, the transfer of ownership with the guy and subject to the all the ad backs going through due diligence and being fully tax compliant, then, you know, I really like this deal. So, that’s me. Jeremy, what do you think, Vince?

Yeah.

Pending a few, you know, a few other things I would wanna learn about the the business.

I love these types of businesses, and I’m I’m actually looking at other health care businesses, you know, like this. The the valuation, yeah, I would probably just use the last two years, you know, around five hundred and twenty five thousand.

Put a three multiple on that. I think you’re probably around one point five, one point six million. So I think that valuation without the real estate is is very reasonable.

One thing I would wanna look at, though, is the the working capital. I know you’ve got an adjustment in there. Just the the the pension makes sense.

That’s Nick Roy. He’s probably just gonna pay that once, once he files his tax return.

So that’s all owner related, but credit cards and loans, are about looks like two hundred and twenty five thousand.

So current liabilities are more than the current assets, which you never wanna see in a business. So I’d really wanna understand that, but he’s probably stripping all the cash out, it looks like, in terms of salaries and and pensions. But, you know, maybe not for this deal, but just kind of a a teaching point for for other people when they are looking at deals. You always want the the current assets to be greater than the the current liabilities.

Otherwise, basically, you don’t have enough cash to to pay all your debts, in in that scenario. So, in terms of the business, again, I love the business. You know, what I would look to do is in in these types of, you know, medical businesses, and I’d wanna learn more about the license, but I’m assuming with the the the medical license that they need to have this, that they’d be able to provide services all over the the state of California. So with the expansion of telehealth and everybody wanting, you know, people to bring services to you, whether it’s, you know, Grubhub or Amazon or whatnot, I would go out and probably hire a bunch of RNs in, like, Miami, Tampa, Orlando, all over the state, and then, you know, have them go out and basically deliver these services, like, in home services, and then set the doctor up so they’re providing telehealth.

You could scale the heck out of this business real fast, by by doing that. And I’m actually working with another group that, finances businesses like this creatively.

Proving the model out before I offer it up to everybody because I wanna make sure I understand it inside and out, but that’s kinda what they do. So, again, I love the business. I’d be all over this.

Yeah. Jeremy, your your your funky funding model, that I knew everything about, I think would be a perfect, model for this type of deal.

But, but, yeah, agree with everything you said. Steven Holland, what do you think, man?

You’re on mute?

Okay. We’ll go back to Steven in a minute. So is David Martin on the call? This is the this is bang in his wheelhouse. I don’t see him on the list. I know he’s still traveling from the event.

David, I don’t see you. So we’ll wait for Steven to unmute. Hey.

Hey.

This is this is Kyle. I have a I have a question.

So Hi, Kyle.

I don’t on the list, man.

All good. I’m I’m in Austin. I’m traveling. So I’m I’m on my phone. Otherwise, the service would be crap.

But, yeah, but touching on what Carl said. It was a great event this, this weekend. It was all it was my first dealmaker event ever. It was awesome.

I’ve done a few med spa m and a type transactions. One of the big things, I’d like to know about this is is generally people only go if it’s within five miles of their house. It’s it tends to be competitive. So I was wondering what do you have any idea what the market looks like around physical location?

No. I have no idea about the market situation then.

Yeah. I would say just look closely, honestly, around the market and do some market research if you’re gonna move to, you know, LOI and figure out how many other locations are around, because that tends to be one of the toughest things in that space.

Mhmm. Thank you.

Okay. So that that’s a good, like, next step for you, Olia, to, you know, just go on Google Maps, look at where this place is physically located, and see how many competitors you’ve got, locally. And and that could be an opportunity. Right? I I love Jeremy’s idea of scaling this up through telehealth.

You could do that within this business or even create a JV.

But, you know, potentially, you could do a little roll up with this. You could buy other businesses, and create like a hub and spoke kind of footprint for this.

But, That’s what I do.

That’s that’s my plan. But I get it.

Perfect. Alrighty. Great. Okay. So get your votes in, guys.

Anybody got any questions for Ollie on this?

Just raise your hand. Let me type in the chat. So let me look in the chat.

So loads of, yeah, loads of green lights. David Evans has asked, is this in your lane? Do you need to partner with somebody?

I may need to partner with somebody because I’m not a nurse or a doctor. I’ve I own a business. I’m a business operator, but not in the MedSpa sector.

Okay. Yeah. So you definitely might want to might wanna look at a partner. Is this a, Yasmin’s asked, is this a franchise?

No. No.

Good.

What else?

Who else? That’s the question. Then we’ll go to Jolene.

Deep in the heart of Texas. We’ll go to Jolene in a minute. But any more questions in the chat?

Yeah. Carter Baker sent you a DM. He’s looking at some med spas. This is bang in his lane.

This is his buy box. So you got a partner right there inside of this family. So definitely check your d DMs and definitely reach out and brainstorm with with Carter on this, which is really cool. I can’t see any other oh, yeah.

David Gerault. David Gerault. I’m gonna unmute you so you can, you can ask your question live. Great question.

Which one was it? The the TAM Samsung question?

TAM the TAM Samsung.

Yeah. So so is this I I since I’m new back to the group, Carl, is that something we’ve talked about in the group, or is that you do I need to do a little explaining?

Yeah. Give a little explanation.

Okay. So it it on the marketing side of the world, we look at breaking down the market for a business. And this was actually I thought I had in one of the presentations, in Atlanta as well.

They did a great job talking about the TAM, the total addressable market. That’s the total market for this product, you know, everywhere in the world, or everywhere in the country, everywhere in the state. And a lot of people just kinda stop there and go, oh, this is a billion dollar market. Well, that’s great, but you have a med spa in Melbourne, Florida. You’re not gonna, you know, you’re not gonna service people in Washington from that location.

So you break that down into the SAM, which is the serviceable available market. That’s the part portion of the market that you can reasonably address from your location.

And then the serviceable obtainable market, the SOM, is the percentage of the SAM that you think you can actually capture because you’re never gonna capture a hundred percent of the market. So when you’re doing these breakdowns, it will be great to see, you know, not only this is a billion dollar industry and where the trends are, but then for this particular unit, this particular business in the industry, how big is the serviceable market, that you can address with this business? And then what do you think you with your projections, what do you think you’re gonna obtain?

1. Thank you for that.

I’ll I’ll Yeah.

So I think that’s a nice a little graphic into the chat for that.

That’s a nice little piece of work, Olia, that you can do, and I’m sure David would would take a super quick call with you to walk you through that in a bit more detail. So so, basically, you you know you’ve got a seven seventeen thousand customer database. Like, that’s the first thing I would do if I bought that business. I’d look at my capacity utilization, and and I would put out a marketing, communication, you know, to that list and give them an offer, you know, to come back.

Because what’s interesting is, the you know, they they probably deal with, you know, five to six hundred patients a year. Yeah, they’ve got seventeen thousand on their list. Like, what would have to be true to get one or two thousand more of that seventeen thousand, back engaging with this business? Like, you know, you you you could double or triple the business just by doing that.

Right? Because it looks like these guys don’t do that. And then you’d look at your you know, you can go online, look at the location, take Kyle’s five mile or whatever radius, look at the population of the people in that radius, do the demographical analysis, as per the customer avatar that he’s given you, and that will tell you how many people, that would be the Sam. And then the other one would be, well, hey.

If we can capture ten percent of that, you know, this is what our business, you know, could look like. You know? That that’s that’s an exercise that you can do in, like, thirty minutes.

And I’m sure I’m sure David will will will guide you through that or even Carter as well if you connect with it. I just wanna go to the two questions, then I wanna move on conscious of time. Let’s go to Jolie. Hey, Jolie.

Good to see you last weekend. Yeah. It was it was great. And Louise.

Wonder wonderful event.

Just a quick question. I might have missed it all yet. Where how did you find the deal? I’m always curious on how you guys are finding these great deals.

It was posted by the seller on, one of the broker type listings, but it was without the broker. He just did it. Okay.

Great. Thank you.

Okay. And then Patrick Alvarez. Good morning, sir. Hey. Good morning.

I I think I missed it, but, what is, who’s holding the license on, and do you even need a license for MedSpa?

Is the owner currently holding it, or are you gonna have another, medical professional on staff? How how have you, worked that out?

I was planning to hire another doctor when he goes, but not even the doctor, one of the nurses. That’s that’s and, in a in a state of Florida, anybody can inject. You don’t need it in the medical director, and you don’t need to set up an, MOS, I think it’s called, or, SOM, to have that. So, I cannot create this business without the doctor as long as I have medical trained, a personnel doing all of the treatments.

That is very helpful.

Thank you.

Mhmm.

Okay. Perfect. Alright, guys. We’ll get your votes in.

All year, great presentation, for your first time. Really, really good. Very, very good deal. Just check check those ad backs, check the working capital, check the licensing and the transfer of ownership.

But, yeah, very, very good deal. And, again, a really good presentation. That’s what this call is all about. Yeah.

It’s it’s good when the deals are great like this, but it it it’s more the confidence and the delivery and and the kind of the articulation of the pitch, and I think you did that perfectly. So great great job with that.

Hey, guys. I’m Carl Allen. I’m the founder of DealMaker World Society. I’ve done tens of billions of dollars of deals over the last thirty plus years.

If you’re new to my channel, definitely hit like and subscribe so that you can get all of my amazing DealMaker content in real time. You’re not gonna miss any of the outstanding information that I’m gonna share with you. And if there’s a question that you’ve got, if there’s something that you want to know the answer for, you want me to speak to it, definitely hit me up in the comment section, and I will record those videos for you, and I will get them on this channel as soon as possible. So love having you part of this YouTube community, and I can’t wait to serve you.

Until then, bye bye for now.