Transcript

This is medical millionaire the podcast, helping your Med Spa increase in status, visibility and profitability. Join your host as he dispels myths, shares trends and gives you actionable steps today that will take your medical practice to the next level. Here’s your host, expert marketer and founder of growth 99 Cameron Hemphill, Hey,
what’s up, everybody? Cameron Hemphill, here, I’m your host for medical millionaire. Hey, first off, you guys, thank you so much for taking the time to tune into the podcast. Our goal is to give incredible value and insight to practice owners. So if you own a med spa, you own a practice, maybe you’re looking to get into becoming a practice owner, right? We want to help you guys take your practice or your journey to the next level. So wherever you’re at within the steps, if you want to go to multi location, if you’re thinking about selling your practice, if you’re thinking about maybe just getting into the industry and trying to get your feet wet, we want to help you take your practice to the next level. So guys, today I have Bill Walker with us. He’s the founder and CEO of esthetic brokers, and Bill and I had a great conversation yesterday. I said, You know what, Bill, we need to have you on the show, because this, there’s always a, there’s a word right now about private equity. I think it’s just like this, this hot, you know, conversation that is taking place in the med spa market and in the esthetics market. And bill comes from a amazing background when it comes to mergers and acquisitions like large private equity backed healthcare service organizations. And he’s done a tremendous amount of deals in this space. I think hundreds of millions of dollars in generated wealth in this space. And so I met Bill through a client and through a great friend, and I said, Bill, you got you got to come on, and we have to tell the listener, you know, have to give them insight and what to prepare for if they want to sell, if they don’t want to sell, like, what does all this look like? And just rake it, break it down. It’s super easy. So Bill, thank you so much for joining. Man, I appreciate it. Cameron,
thanks for having me on your show. You guys are esthetic famous, so it’s a privilege to be on on the podcast. Absolutely. Thank
you so much. No, man, it’s, it’s, it’s a pleasure to have you. I know you’re super busy, and so like, let’s, let’s just jump right in. Like, what is so appealing about the esthetic space, from a private equity standpoint, or from private investors? Because I can tell you, I’ve been in this space a long time, and these this term was not common, like, even, like, three years ago, and now I feel like every conference I go to, like webinars I’m on, and podcasts I’m on, it’s being talked a lot. And I want, like, We are the listener, the complete breakdown of what is so appealing about this space. Obviously, it’s growing. It’s attractive, it’s great. But from your perspective, bill will help us out. Sure,
happy to participate in that topic. So it’s a great question that you bring up. It is a, it is a theme that is re reoccurring in the space of building awareness and knowledge for people. It’s something that is is not new. It’s not new to financiers. The concept of of injecting capital and executing an operational game plan of support for for health care service organizations. It is newer to the esthetic industry, though, and I think you know to answer that question, it’s probably pertinent to go back in time to think about it took, you know, roughly what, 20 years plus of pioneering efforts, of of the you know, the forefathers and foremothers of the esthetic space to build a reputable, credible industry that provides an incredible service to their their patients. We’re at a stage now where, depending on who you talk to, plus or minus a billion of, let’s say, $18 billion right as an industry with upward trajectory of impressive year over year, growth that hits double digits for the industry as a whole. When you get into those kind of numbers, that’s when you start to attract professional financiers that sit up and take notes say, Wait, hold on. Like what’s going on here? This is a, this is a great space to be in, maybe to amplify that in context. Think of, think of how established let’s, let’s use dentistry as an example, right? Dentistry? A. 170 $7 billion industry, right? Almost 10 times the magnitude of of esthetics it’s been around for, you know, the better half of the you know, go back a great, great, great grandparent for dentistry, right, right? So you, you’ll see very common you’ll see three generations of dentists in a family that are running the same practice we’re still in that you know, first generation of owners that that are are about to see the fruits of their labor come to fruition and and it’s sparking a whole, a whole buzz around others that see what they’ve done and been able to create and they want to replicate that. As a result, what I’ve seen is you end up with a situation where, hey, we had a pandemic. People realized that video was here to stay. It became, it became the norm for people to want to look good and feel good about themselves, and in in return, it created all kinds of positive, positive benefits for individuals. And the sciences continue to get better and better behind esthetics. And so when you culminate all that into a simple phrase of, who do you want to go see your primary care provider for a checkup during a pandemic? Or do you want to see your your your Med, spa, dermatologist, cosmetic dermatologist, plastic surgeon. Who do you want to go see? The choice was pretty pronounced. It’s incredibly attractive as well, from a fee for service perspective, right? These, these are people who are very well educated consumers that are willing to pay out of pocket, which is incredibly powerful. And so that loyalty and stickiness to their provider, they trust them to make them look and feel confident. So that stickiness of the client base in the industry, the fee for service, aspect of not having to worry about multiple payer companies that are going to put downward pressure on on what you’re trying to to capture for your collections from what you’re producing. Actually, all of these things are very powerful, and it creates a situation where it attracts the eye of of private investors, whether it be private equity or there’s a lot of different options out there. Actually, you’ve got, yeah, you got family offices that are starting to participate. You’ve got all kinds of, all kinds of ventures out there, so it’s a very exciting time to be a part of it.
Yeah, no, you bring up some really good points and perspective.
You made a comment, how big is the dental industry? You said 177
billion plus or minus, right? Plus or minus, and the esthetic,
and that’s about 10 times larger than the esthetic space, which, if I reverse engineer that, I’d say, yeah, that’s, that’s, that’s right, right around the data that I see too. So, and when you talk about generations, like, even from my own experience going to dentists that have worked on me a lot of times, like, yeah, their dad used to clean my teeth, and now the sun cleans the cleans the teeth too. So the generational impact is, is so true, and esthetics is, like you said, is in the first generation of really growth. I mean, there’s been some people that have, of course, been around longer than others, and some people may be more pioneers in this space. But you bring up a really good point of how early this space is and then applying the dopamine hit, right? So I love going to med spas like I enjoy the scenery, I enjoy the conversation, I enjoy the before and after, and ultimately, I enjoy confidence in the other component that I think is going to even have this run even further is the wellness side. Is just taking off right now. Absolutely, absolutely, yeah, so now you have the Med, spa space, the esthetic space, and you have wellness combined. So not not only, like, Look confidence, buying confidence. That’s what they’re buying, and that’s why they continue to go back, because they want to maintain that confidence level, you know, as we age, right? And then also the feeling good inside,
yeah. I mean, you’re talking, you’re talking to, I love going into our clients med spas, like, yeah. It feels, it feels great. The environment is special. And look, I mean, you’re talking to a former Marine, you know, I am a direct benefit of, you know, getting peptide therapy in the shoulder to ease ailments. So across the gamut, like you, if you know, if, if, if my wife enjoys esthetic wellness space, and her marine husband enjoys wellness esthetic space, the sky’s the limit for this, for this industry,
absolutely, 100% I mean, I’m married as well. My wife, like, you know, she, she’s the ideal client of any provider, ever since she, when I first was dating her, which was like, 11 years ago, she’s, she’s, she’s always gone, and she’s educated me a lot about the space too, you know? And so, like, in fact, she made a comment to me at one point early on. I’m like, hey, you know? Like, we’re going through some crazy time, this whole pandemic and the recession and all the crazy stuff going on the world. She’s like, I’ll tell you right now, most of the women out there, once they’ve had the drip, they will find a way to continue to get the drip, because, you know, they’re that loyal. They’re really are that loyal. And so it’s obvious to me, because I really look at it through the lens of from a business standpoint, of why an investor might be so attractive to the space, patient, loyalty, ability to scale early on, and a lot of consolidation. Like, there’s a lot of tech around it. Maybe there’s overlap tech, a lot of things to learn about the space deal. But like, let’s, let’s circle back just a hair, because I want to talk about, I want to go through the journey of, Hey, I am thinking about getting into this industry. And you and I were talking a little bit offline a minute ago. But as people look to get into this industry, they need to realize that they are going to become a business owner. They’re a practice that’s running a business. And if you’re serious about investing your own money and time and effort into becoming a practice owner, it’s going to cost you, I mean, you’re going to be away from your family. It’s going to cost you time, money, effort, energy. There’s three outcomes, as you continue to grow, right? We were talking about that, and you know those three outcomes is, hey, you’re either going to sell this business, you’re going to sell your practice at one point. May not be today tomorrow, you may not even be thinking about that. You’re going to maybe pass it down to someone in your family and inherit it, or you’re going to close your doors. So how? Like, how early on as they’re preparing to just open the doors and scale and grow, like, should they be thinking about their path when it comes to their succession planning.
It’s a good question. Cameron, I tell our clients from the moment that we’re talking to them, back into your finale, right back into that finale. What does your Opus look like? And you’ve got to consider, what do you want that? What do you want that encore to be? You know, the Encore is a standing ovation for your kids or a loved family member that you wanted to go to because that’s what you had in mind. The Encore is coming out to take a bow and a victory lap by doing a partnership with an investment firm, a professional investment firm that wants to support what you’ve built, and they’re ultimately going to look to continue to grow it and foster it and nurture it. Because anything else than than those type of scenarios is is an incomplete sentence, right? You work to your point. You work really hard as a business owner to get your idea up and running and to make it a viable, living, breathing business. And then you don’t always, you know, start out the gate thinking like, Oh, I’m going to finish at this stage, and this is going to be my end point. But it has to be in mind of looking at what are the exit ramps along the highway. And when does that looks like a pretty good exit? I want to go explore that.
Yeah. And, I mean, there’s going to be life changes that happen along the way. And there’s definitely not like, there’s not a true, you know, timeline or formula, but you know, it needs to be in the back of their their mind. They need to be thinking, especially when they start to get mature. And, you know, I speak a lot about what is the, you know, startup phase look like, what is the growth phase, the mature phase and the exit phase. And I kind of gear that talk around, you know, the marketing activities that that go along with that. But, you know, succession planning along that journey is, is, you know, should be in. Chris. Days of years or revenue, I would argue. I mean,
yeah, well, I was gonna say, like, you hit on something. A lot of people, when they’re getting into the growth phase of their company, is like, Okay, I’m paying the bills, right? And now you’re thinking, like, how do I how do I make this a success? I’m paying the bills. How do I grow this thing like I think that is one thing that is severely under, under appreciated and overlooked, is if I’m telling somebody who’s a client of mine, I’m I’m saying three things right off the bat, as far as financials, one know your numbers, like, if you if you can’t tell me what you did last month, and if you can’t tell me what your previous 12 months were, of top line revenue, you, you got to know your numbers. If you can’t inside of that, if you can’t tell me what your cost of goods are. Know your cost of goods, right? So know your numbers. I would say two. I tell people when you’re okay, you’re paying the bills now you’re thinking about growth. What are you dedicating as far as time and resources to marketing, because if you’re not putting yourself out there, and you’re not putting yourself out there in a professional way, a smart way, it doesn’t have to be working hard, it has to be working smart, or having somebody on your team, or you’re partnering with an outside agency, like What you guys do, you’re not going to grow as fast as you will without doing any kind of promotions and advertising and marketing, right? And and you need to measure that. You’ve got to inspect what you expect, right? You got to inspect out of yourself, what you’re expecting out of yourself. And so it’s not just about like, throwing dollars in the air. You need to put metrics behind it and understand, like, what am I investing in? What am I investing in my cost of goods? What am I investing in my marketing? And then the third thing is a very long term, tangential thing. And I think about is, you took the time to be really, really calculated, probably in choosing your location. So right? Make sure that the parameters around, around your facility, your your lease in your rent are are on market, and they’re competitive in your favor, because you’re going to be a good tenant, right? Good businesses don’t go anywhere and and it’s a sticky part of the community, and that’s good for that’s good for the landlords, and so I always advise them on that as they’re looking at starting out, think about your succession planning. In mind. One of the most valuable pieces of free advice I would give somebody is, does your landlord allow you to do a transfer of your practice to a family member or to an investor, and if they can hold up that aspect of your practice, that’s something that you’ve got to look at very closely before you before you get into that circumstance. It’s not something that you figure out once you get to 10 meters short of the 100 meter dash finish line.
Yeah. Very true. Yeah, no, that’s that you say a lot of great things that resonate with me well. And so have some questions for you on that. Yeah, so you talked about top line revenue for, for the listener tuning in, that’s, that’s your total sales, right? That that is before your cost, right cost of goods would be below that.
And then Bill, when you look at a
when you analyze a medical esthetics practice that is thinking of selling, preparing to go to market, maybe they’re just want to learn about the space, and you analyze the financials. I think you know, because I’ve been through this path before, on not being a med spa owner, but talking about brokers and private equity. And you know, they have a list of they have a punch list. They go through some of your P, L, some of your balance sheet, you know, certain things like that. Now when you what is a good percentage of revenue that our practice should be spending on marketing from your perspective.
Well, I mean, I will caveat it by saying it all depends, right? It depends on how big you are, as far as your your revenue numbers, it depends on how many locations you are. It depends on your geography, I would say if you’re in a true growth phase, you probably should be looking at your your your spend for that growth phase of four, four and a half to five and a half percent. That’s what I see. Um. Different areas, like, are you going to come out the gate for marketing, month over month and spend 10, 12% No, no, you’re not like, you’re you’re using word of mouth, and you’re trying to, like, build a very close, insulated core, but as you develop it into a fully matured organization, you’re going to spend more, because otherwise, if marketing wasn’t effective, then people wouldn’t spend any money on it. That’s why I say, like, inspect what you expect out of out of your budget.
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Yeah, no. And I, I really appreciate you saying that it’s actually a figure that that aligns with with my expectation as well. And I think what happens is, in the space there’s there’s some practice owners that start to take off, and they start to collect market share, and they’re spending, and they feel like they can spend the same amount and continue to grow at the pace that they were growing in the early, like startup, pre growth phase, you know. And as you continue to scale and grow like your numbers should go up, as your numbers go up, that percentage can live where it is because the numbers are higher, the natural the spend is going to go higher. Yeah, right. But I think where they get in this, this non growth mindset is, hey, last month I spent, you know, 5000 the month before it was 5000 the month before it was 5000 and pretty soon you’ve you spent the same amount, from like a net dollar perspective, when you’ve grown, when really at a six month growth pattern, You know, you should probably be spending, you know, let’s, let’s call it eight to 10,000 as you continue to grow, because it’s that percentage of growth. And so I think a lot of times that the, you know, and this is just for the listener guys, pure education based upon a percentage, is percentage of revenue. If you guys aren’t really looking at that on growing your marketing spend, through lead generation, through SEO, through websites, through word of mouth, referral, maybe billboards, maybe, you know, print, mail, like whatever it is, social media, hiring a social media person, increasing your social you guys know where you’re you guys have to hang out. Where your people hang out. It’s critical. And, and I think, like a lot of times, we expect to spend the same and get the get a bigger outcome, you know, right? And so you make a great point there. And I appreciate that. Now, let’s, can
I, can I say one more thing about that, too, is, um, be adaptable. Like, like, adaptability is such a, such a treasure to be able to do that. And there’s certain functional areas about practices that I really like having an outside, ancillary, professional support partner when you’re at like, a small core, 123, shop level, because it gets really expensive to bring in like, okay, let’s use like, marketing, right? It gets really expensive to bring in an internal marketing team, whereas a lot of times, if you partner with an outside agency that is, that is there, that’s their bread and butter, day in and day out, they’re going to be in tune with latest trends, and don’t be the, don’t be the owner that is, you know, I’ve and I’ve seen this, don’t be the owner that’s spending money on television advertisement. And 80, 83% of your population is from social media,
right? Very true. Yeah. Oh, yeah. Well, you have to understand your audience hangs out, yeah, and you have to invest there. And I think a lot of times, like, you know, as the practice owners grow, instead of growing, like, gonna go hire a marketing team internally, they’ll start bringing marketing in house, which I think at some point is great. I think when you’re in the very mature phase is wonderful, yeah, when you’re the growth phase is a lot of. Times it’s very premature, because human bodies are expensive, right? And so if you invest in tools or outside resources that have a path that can keep an eye on things and help with that growth pattern and give advice, I mean, I’m obviously going to agree with you there, for obvious reasons, but, like, I know that you did a lot of work in the dentistry space on it was on the buy side. Yeah, right. How many, how many deals did you do in the dental space? Oh, gosh,
I don’t have to, like, go back and think about it, but I mean, when you’re in those positions on the buy side, you’ll see, you see hundreds of practices, right? And
I think, you know, that’s one of the things that,
I think, is a value add for when we give our clients advice on what they think about a transaction or not and how they should think about it like I think one of the value adds is, we come. I try to always take a approach from a lens of what is a buyer going to look for, and knowing what that looks like, I think adds value to to people
totally. I mean, you, you did. I know, like when we talked to yesterday, it was over 100 deals in the in the dental space. And I don’t know what enterprise value that was, but being on the buy side, and you probably looked at 1000s of deals and turned down most of them, right, I would assume so. But there’s, there’s certain you could probably look at, I could probably give you 10 practices right now, and if you have the punch list of all 10, you could probably quickly identify just based on your experience, because you, I’m assuming, you could apply the same principles to dentistry, to esthetics, at least the same underlying core principles, you could probably pretty quickly say, this is a win. This is a win. These guys need help. This is a no. These guys need to do this to get to here, like which, I think is absolutely fascinating. I don’t think there’s too many people on this planet in this verticalization of private equity or broker, whatever it is. Can, can look at something like that, which, no, I was
just gonna say that, you know, there’s a handful of firms out there that are, are credible, and can the voice of assistance, I think one of the things is you just have to go through those, through those sets and reps, to be able to be a good coach. You know, that’s ultimately, like I always say, bringing that skill set, bringing that exposure to to a client, to any Med Spa owner, they’re the Chief Executive Officer, right? I’m the Chief Information Officer. So, right? You know, if you’re a cardinal in the wings, providing counsel, my job is to give I always look at it as a risk assessment, right? Hey, this isn’t a good deal. This isn’t a bad deal. This is the risk exposure for you. And I think when you frame it in terms of what is the risk exposure, then I think it’s an eyes wide open education decision that is very informed and gets to the right place.
No, I like that. And just like for the for the listener, like, what are some of the things that when you analyze a deal? I mean, obviously it, it goes very, very deep, but at a high level, let’s just go 30,000 foot view, you know, like, maybe in the weeds, a little bit in the finances, like, what are some of the the key drivers that they could take away from tuning in today’s podcast that are attractive to a deal that that can, you know, potentially get picked up by a sophisticated buyer. Yeah.
Okay, so you know the point, Blake answer is, you can have a really good deal for different phases of of where you’re going to be in your in your career, okay, and what do I mean by that? And then I want to drill down exactly what you asked Cameron, what do I mean by that? Look, you may be at the point where you’re like, I want to retire like my spouse, my significant other is ready to retire. We’ve done well. We want to retire. And I want to do a one year handoff for this beautiful baby that I’ve created of a practice. There are good deals out there to do when you’re like, hey, I want to do a one year hand off with somebody right? That good deal looks very different from another really good deal of somebody who’s saying, I want to continue to see this on a growth trajectory like I’ve put it on. As a practice and stay for another five years, right? That person, their good deal, looks very different from from the one who is immediately retiring, and the reason for that is, let’s use private equity as an example. Their their thesis is that they see a good practice, that they can help optimize, lift some of the back office, support pains and aches from from the primary owner and as a team, as a team, they want to grow a group of practices to a successful exit where a, let’s call it a bigger fish in the private equity ocean comes in and says, We want to invest in that group that you guys have built together as a functional, operational team of professional spas. And so there’s a lot of upside that, because in a lot of those deals, you can get Class A shares of of of equity, right? And that’s is very valuable. Um, there’s a whole lot of financial capital support for capital expenditure of equipment, for new equipment that you may want to purchase. That’s going to increase in some of those joint venture models, where you’re going to get a distribution of of earnings, it’s going to increase your earnings. And they’re willing to invest in that because they see the roadmap that you’re laying for success on a game plan to how to utilize it. There’s the de novo strategy, like you talked about, where you know a new office as it is a de novo and you say, hey, I really like this area, 15 or 20 minutes away from me, it’s underserved, and Let’s replicate our success in a similar demographic, in an area that’s not really competing with our patient base, but is going to be complimentary, and we can use overlapping resources. If somebody calls in sick and they need somebody to go cover down, there’s all these things that they can help fund and support and provide professional advice, because they’re really good at it. They’re very good at it. So those are some of the things I think about, your longevity in your practice, managing your costs smartly so that it’s a sustained success. It’s not a I’m going to slash and burn to get the best deal possible, right? I want to build up my EBITDA so I can get the best multiple on my deal. I want to build up my my earnings before, interest, tax, depreciation, amortization, EBITDA after you pay everybody, and you pay yourself, if you’re an injector or a care provider in the practice, after all, that’s paid what’s left over for EBITDA, they want to put a multiple premium on that and then do some sort of a deal structure that makes sense for everybody.
And does that? Does that EBITDA on the multiple change depending on the path. So let’s say, get the one year hand off. Hey, I’ve been at this a while, or I’m burnout, or whatever that, whatever life thing happens, I don’t want to do a five year path and journey and partner with other practices and eventually sell like, do those, does that valuation of the EBITDA multiplier change?
Um, it can, you know, there’s a lot of things that affect how an investment firm is looking at a practice as a potential investment opportunity. They love the partnerships. They love somebody that is just a plain speaker, that is going to be very candid that these are, these are upstanding business people that that want to invest in good quality practices, right? And if somebody says, Hey, I’m a two year person, right? I’m a three year person of commitment, they love, they love to hear that that is their upfront going in. Hey, If this goes well, I would like to have the opportunity to maybe stay longer. Those candid conversations are valuable. The size of that EBITDA, how well the operations are run, the reputation of the care providers in the local area. All of those things are going to factor into some sort of a window of a multiple, right? So at this EBITDA in this window is what probably, you know, a going rate is going to be at a larger practice of revenue in EBITDA, a well run practice, is going to be in this window. And then there’s all kinds of variances and twists and turns, because no two deals that somebody offers are going to be the exact same true.
So, okay, so just to kind of reiterate that guys, basically, there’s a couple paths you can say, okay, like there’s one persona, if you will, that, hey, I’m going to do a one year hand. Off, or maybe it’s even a little lesser than that. Typically, I’d assume they want you on it for at least a year, because the base you know how to run things and and that’s like an entire bite, right? They just buy the practice, and maybe they plug in you to their to their ecosystem. The other play is you sell a little bit of the portion, so you get a you get a first bite, and then you roll your equity right into the into the group of other, of other practices within, maybe in a specific region, whatever, and building that enterprise value up higher to eventually selling to another private equity. So you get two bites. Is that? Is that fair to say, yes. So
Cameron’s hidden on bites of the apple, right? So advice, he knows, he knows what he’s talking about here. So advice of the apple, right? Yes, you’ll see, because we’re in the early stages, right? You. So let’s, let’s talk about, like, what a lot of financiers, what, what their opinion is, generically, on where the space is, as far as the consolidation of practices. Med spas are highly fragmented. The overwhelming majority of med spas are owned by independent owners, and single location independent owners at that. And so when something is highly fragmented and is a fee for service model that has very sticky patient retention into the industry. Those are all good ingredients that go into baking this, this consolidation space cake, and we’re in the early stages. People will say it’s the baba the first inning and a nine inning game at the top of the second. It’s, you know, it’s early stages. And why that’s attractive is, if you do get Class A shares, let’s say in a in a platform that’s going to back you and support you with back office support that has the financing from a successful private equity firm, let’s say that has had previous successful events where they’ve sold a platform successfully for a great multiple of returns for their investors in dentistry or pharmacy or physician practices in the track record. Those types of organizations know how to provide operational support in the healthcare space to individual practices that come together under one umbrella. And when they do that, it adds value in that, value of your partnership and expertise in the chair with their partnership and expertise of supporting from the background leads to an outsized return on that sum of the parts is greater than the individual pieces. When that happens, you end up in an outsized position for bites of the apple where the next fish up wants to invest. The next fish up wants to invest. And you can end up, because the space is so early, you could end up in your career with multiple liquidity events where you’re seeing realized returns of cash on cash multiples. And it’s, it’s pretty it’s pretty impressive, actually,
yeah, it is. I mean, it’s, it’s, I know a lot of people in the space have gone through it, and, you know, it’s life changing, life changing events. I have a good friend that is a practice owner that’s been through it twice, and it’s, you know, it’s, it’s always fun to go out to dinner with him and have conversations about the journey, the path, and everything in that. But so with, with esthetic brokers, specifically, Bill is, you’re the CEO, you’re the founder of this space,
and this brand
practice owners will come to you and in like, what does esthetic brokers provide? My version of it is you help them get the most value for their their practice, and help them go to market, maybe help them get their finances in order and and prepare for them to exit so they actually get the most value, or most multiple of their EBITDA. Is that? Like talk to us about that, because I have been through this process personally, obviously, not being immense by owner, as I mentioned, but understanding like what your true valuation is, and going through some some events prior to maybe going to what we call as market is very important To to making sure that you have a deal that also doesn’t like fall apart in the final hour.
It is, it is such a it’s like a tango. I feel like it’s like a tango for for med spa owners and the private financiers, because you’re sitting on. Sides of the table, right? And then day one after the closing day you guys are partners, so that’s a really complex emotion to go through, right? Because they want to get the best deal possible for all of the previous Med Spa partners that are owners of shares. They want the best returns possible on their deals, and you want the best deal for you up front, and then you want them fighting for you for the best deal possible on the backside, right, look, you are never going to negotiate for yourself, better than having that third party expert to come in and do the negotiation process with you and help like that is, that is the truth.
Additionally, I would say,
knowing what right looks like in deal structure, it’s it’s really valuable, I think, to have somebody be able to sit down and talk through with you and say, Okay, this is you have five offers on the table right now. This is what this offer really means, right? And I go back to risk exposure, like, do you want to go with somebody who’s going to give you half cash, half equity, and they’ve never backed a med spa platform, a healthcare services platform in their past, and it’s one investor maybe, maybe they’re really compelling because they’re really, really smart, and This is like a great idea. Do you want to do an all cash deal? Right? Do you want to have, you know, a majority in cash and then a decent chunk rolled forward in equity? Because, whoa, this is a firm that has had a track record of results for outsized returns for for healthcare provider owners in the company, and so it again, all of those deals could be the best deal. It’s just like understanding the risk exposure and having somebody in your corner who was in your corner. And that’s, I think that’s one of the things that was important to me when we started. This is, look, we are a sell side representative, right? Yeah, that’s our that’s our client, our our interest is the only interest of us is, is our client’s best interests. That’s it, yeah?
So, yeah, no. And you bring up a good point, like, because I always like analyze it from somebody that wants to sell their home, right? Most of the listeners that have tuned in and maybe sold a home bought a home. Maybe it’s happened, you know, more times, but it’s kind of the same process, right? There’s if I’m going to sell my house, let’s say I can go put it on the market. I think that I could put on Zillow or something, I don’t know. I think that the real estate space is a little further from a tech standpoint, and I may get an offer or two, or maybe I could put a stick in the yard, and all my neighbors will see the stick in the yard, you know, but, but if you have somebody on your side that has the network, that has the relationships that can help you get the most value. Like, and I’m not here to say, you know, if you guys are going to sell your practice, like, hire a broker, what I when I break it down, it’s like, if you want the highest maximum value of return, you need to have somebody on your side that has the network and can expose your practice to multiple buyers versus like the first one that comes to come to the table, because you have nothing to compare it to.
Well, I think to amplify that comment. Another way of of adding to that conversation when you use the sale of a house is, to your point, you can go to any, any local area Med Spa owner that you think of and say, like, Oh, I bet they would want to buy my practice, right? You’re not going to know because, because of the industry that we’re in, you’re not going to know if that’s a good deal or not, right? They’re going to tell you is a great deal. Like, here I’ll give you, I’ll give you a million dollars for your practice. And you might think, I don’t know, is that a great deal or not? Yeah, what I think think about the luxury real estate industry, like the luxury real estate industry, is a much more opaque sector of that space, where where you really see rubber meet the road is not everybody’s got a 10 or $12 million buyer in luxury real estate, right you want, you want somebody who’s a professional who knows how to value, how do you value an un an unprice pointable property? Is it 20 million? Is. 16 million? Is it 31 million? You won’t know, and you’re probably not going to have access to the three or four dozen, five dozen buyers that the some of the best brokerage firms in the country, like the few that really have these rapport are are going to go out and create the competitive event landscape for you that says this is a winner like you guys want to be investing in this.
That’s a great point and, and that’s what I want to, you know, you guys to take away from this is, is, you know, if you guys are getting into the space, if you’re in the growth phase, the mature phase you’re thinking about, man, I have built something really cool here. I don’t even know what my plan is, because that’s probably most of you, you know, I encourage you to, you know, do a quarterly success succession plan. I, you know, again, I’m not in this space, but if it was me and kind of talking back to what Bill said, Know, your numbers, you know, look at, I think a lot of us, we just get in this cadence of doing what we do. We wake up, drop the kids off, or whatever it is, go to the gym, I go to the practice. I got, you know, eight appointments, and you’re just running and running and running. You know, a lot of times it’s important. Zoom out. Analyze the business, analyze your life. Look at the numbers, and then see, you know, look at a projection of path of like, where do you want to be, where do you want to go, and what’s the plan to get there? Because I think a lot of times what happens is, all of a sudden someone wants to sell, right? They’re like, man, I’ve been running at 1000 RPMs, or 10,000 RPMs or whatever, for for a long period of time. And I’m just, I got it, I’m out, and they haven’t taken the time to really think about what that process looks like. How long is it the process of Q and E, the diligence process, you know? And so there’s, there’s some, there’s some major issues there that, and you could be leaving millions of dollars on the table by doing that. And so to Bill’s point, guys, I would just, I would just really, you know, make sure to take the time to do that. I think one
of the hardest things about that whole aspect you just mentioned is like, how many times a day do you think about, man, I really need to sit down and look at my will and update my trust with my my trust attorney, you’re not doing that. You’re not doing that. You’re like, you’re like, I gotta sneak in 45 minutes at the gym today somehow. Or you’re like, I gotta stop. I’m gonna run out of gas. I gotta stop and get gas before I run out. I gotta I forgot. Like, a week becomes three months from when you entertain the idea in the in the conversation your head is, I should probably like talk to somebody about succession planning, like I’m guilty of it too. In my own personal life, I’m guilty of it all I would, all I would do on what, what you just said, Cameron, is you have to be conscious and mindful of it and make it a priority for yourself. And it doesn’t have to dominate your conversation, but you need to make it an item on the list of I need to talk to somebody about what does my succession plan look like, because if you’re not going to narrate the script, I guarantee you, the person who’s wanting to buy your practice eventually is going to narrate it for you.
Yep, very, very true, very true. Well, Bill, I’ve really enjoyed having you on. Thank you so much. You give incredible value insight the space. So if somebody wants to find you, if somebody wants to learn more, if they want to connect with you. Where is the best place for them to be able to do
that? I’ll meet you guys at
the whaling bar in LA valency in La Jolla, San Diego. We’ll grab we’ll grab a club sandwich. No look, you can go to our website at esthetic brokers. My cell, you can hit me up on my cell. I’m a pretty easy guy, like, on the weekends, the only time that’s it’s hard to get a hold of me is when I’m I’m shuttling two little girls back and forth to lacrosse games all over Southern California. So but yeah, it’s been a pleasure. Man like, thanks for what you do. You really do a great service for for independent med spa owners out there. It’s incredible value creation. So thanks for having me on, of course.
Bill, thank you guys so much. Thank you. Bill, there you guys have it go to esthetic brokers. Is a Senate broker. Esthetic brokers.com Yep, we coined it. Awesome, cool. I love it. Bill, thank you so much for joining you guys. Tune in and if you found this content valuable, if you found yourself in this situation, or know a colleague or a friend, I mean, we all go to these events together. We just came home from am spa. I know I saw a ton of clients there. If you are in this. If this is going through your mind, or you haven’t done succession planning, or if you know somebody that could use this, please, let’s just share the content. That’s all I ask for you guys to do. Share the content. We’re here to give value. I appreciate you guys. Have a wonderful day, wonderful weekend. Happy injecting you.