The Art of the Deal: A Step-by-Step Guide to Aesthetic Practice Transactions

The medical aesthetics industry is experiencing unprecedented growth, with private equity firms actively seeking partnerships with successful practices. For practice owners who are considering selling their aesthetic business, understanding the deal process is crucial for achieving optimal outcomes. This comprehensive guide breaks down the step-by-step journey from initial conversations to closing day, providing valuable insights for aesthetic entrepreneurs navigating these waters.

The Exploratory Phase: First Conversations and NDAs

The journey begins with an exploratory call—essentially a “first date” with no strings attached. This initial conversation allows both parties to determine if there’s potential for a beneficial partnership.

“How I like to see our process run is to have an exploratory call,” explains Bill from Aesthetic Brokers. “Usually we jump on a video call shortly after that if we think that there are some things that we could fulfill and fill in the gaps that they might want or need for their growth of their practice or their own personal financial goals.”

During this phase, understanding the practice owner’s goals is paramount. As Bill emphasizes, “I always like to ask the question, what’s your goal? Because people who are goal-driven and know what their goals are and able to articulate them in a punchy short way, that is extremely valuable.”

The Value of Face-to-Face Meetings

While technology enables convenient virtual meetings, nothing replaces in-person interactions. These meetings allow advisors to better appreciate the nuances of what’s truly important to practice owners.

“You just can’t replicate getting eyeball to eyeball with someone in person,” Bill notes. “It lets you appreciate a little more of the indicators of what is important to them and what’s not, versus just what’s being said on a phone call or even on a video call.”

Establishing Confidentiality

Before proceeding further, a non-disclosure agreement (NDA) provides mutual protection for sensitive information.

“A nondisclosure agreement… that purpose is for is to protect people in kind of a boilerplate template and those types of things that you’ll see in the market is just saying, ‘Hey listen, we’re going to protect your data. We’re going to protect your information, just like you would protect any advice that I would give you.'”

This two-way confidentiality agreement creates the foundation of trust necessary for the relationship to progress.

Formalizing the Relationship: The Engagement Letter

Once both parties determine there’s value in moving forward, an engagement letter formalizes the relationship. This industry-standard document establishes the terms of representation.

Before signing an engagement letter, Aesthetic Brokers prioritizes visiting the practice in person. “It’s so important to get out there and get boots on ground, see what they’ve created, understand what you’ve put into building up this practice,” Bill explains. “We pride ourselves on really understanding the firsthand knowledge. It’s not just a widget in and a widget out with us, because there is so much more to the operational and the culture that I can put a value on that other people can’t.”

The engagement letter typically outlines a commission-based structure that only pays if a deal is completed. This approach demonstrates the advisor’s commitment to the process and builds trust with the client.

“I like doing it that way because there’s so much of a hesitance already for people not knowing if they’re getting quality representation or not, that I’ve seen in the past, that I just think it’s the right way to do business.”

The Data Collection and Analysis Phase

With the engagement letter signed, the process moves into the critical data collection and analysis phase—where “success and failure gets created in the lab.”

“We are extremely thorough in our analysis of the practices that we represent, and we do that as an added value for our client, the seller, and to attract the best buyers on the market because they appreciate that level of rigor and detail that we put into the analysis and the valuation,” Bill emphasizes.

This meticulous approach ensures the practice is properly prepared for market and that its value is accurately represented. The timeline varies based on practice size and complexity:

• Individual practices: Typically 3-4 weeks
• Multi-practice, multi-state operations: 1-2 months or longer

Since practice owners are busy running their businesses, advisory firms like Aesthetic Brokers often provide on-site support to facilitate data collection and minimize stress.

Taking the Practice to Market

Before introducing a practice to potential buyers, thorough preparation is essential. This includes strategy sessions to identify the practice’s true strengths and position it effectively in the marketplace.

“Until you can look at clean numbers and really know the operational footprint of a practice or a group of practices, you can’t really start about strategy valuation of how much are you worth,” Bill explains. “And so it’s right at that critical juncture that we take uncommon measures that other organizations will not to sit down and do very thorough strategy sessions, coaching sessions, educating our clients.”

Creating a Competitive Process

When approaching the market, the goal is to identify partners with strong track records and clear visions that align with the seller’s practice. Creating a competitive bidding process among multiple potential buyers helps secure optimal terms.

“We’ll create that competitive bid process through reaching out to multiple suitors to get the best dowry basically for our seller,” Bill notes.

Indications of Interest (IOIs)

As buyers review the practice information, they submit indications of interest—preliminary proposals that outline potential valuation ranges based on the provided data.

“Indications of interest is like, ‘Okay, yeah, so we got your information, we got your numbers, we’d like to have a more meaningful conversation,'” Bill explains. “And so they’ll throw a number range out there. We think if your numbers are what you say they are, we think if your operational footprint, if your processes, if your staffing, and your production mix of which procedures you provide as a service to your clients, are what you say they are, we think you’re in this range for us to make an offer on.”

The timeline for this phase varies:

• Multi-site, multi-state groups: 1.5-2 months
• Single practices in high-demand areas: 2-4 weeks

The Value of Expert Representation

Having knowledgeable representation throughout the process is invaluable. Advisors provide insights into potential buyers’ motivations, financial backing, and track records.

“If you’re on the buy side of a deal, you’ve got specific goals for your organization that you’re trying to achieve in order to have successful exits, successful growth both organically and inorganically,” Bill explains. “If you’re on the sell side, understanding where those companies are in their life cycle and what kind of hidden value you can add for them, that’s one of the places where we like to coach our clients.”

Experienced advisors offer:

• Executive overviews of potential buyers
• Assessments of financial backing and private equity sponsors
• Verification of funding resources
• Analysis of each potential deal

As Bill notes, “Some people will have the extra 20 hours a week that it takes to put into a deal for six to eight months. Others do not. So we add value there.”

The Letter of Intent: Choosing Your Partner

After narrowing down potential buyers to the top contenders, the next step is the Letter of Intent (LOI)—”a big shiny engagement ring” that signifies commitment without final obligation.

“The letter of intent is that equivalent with the buyer, and you’re making good on that good faith by signing a piece of paper,” Bill explains. “You’re picking one. You’re like, this is the horse I’m going with.”

While not legally binding in all aspects, the LOI initiates the due diligence phase—a critical juncture requiring quality representation. “You only get one opportunity to sell your practice. Buyers look at 50, 70, 100 deals. And so that’s why it’s so valuable, I think, to have us on your team.”

The Due Diligence Phase: Moving Toward Closing

Once the LOI is signed, the due diligence process begins—typically lasting 45-90 days, with 60-75 days being most common. During this phase, buyers thoroughly examine all aspects of the practice to verify the information provided.

Proper legal representation is essential during this stage. Advisory firms like Aesthetic Brokers can help connect sellers with experienced healthcare M&A attorneys if needed.

“If you have an attorney that’s great at being a tax attorney, maybe they don’t have the depth and breadth that they would like to represent you in a healthcare M&A transaction,” Bill notes. “And so that’s where we can come in and add value as well.”

Throughout due diligence, the advisor serves as a “chief information officer,” collecting data, answering questions, and ensuring the buyer adheres to the terms outlined in the LOI.

Closing Day and Beyond

When the due diligence process concludes successfully, the transaction moves to closing—when paperwork is signed and funds are transferred. The advisor’s role continues by ensuring a smooth transition to the new partnership.

“We work very hard to make sure that the buying company is providing all of the resources and the points of contact for day one of the partnership for our clients,” Bill explains.

Quality advisors maintain relationships with clients long after the transaction closes. “If you’re a client of Aesthetic Brokers, you’re a client for life,” Bill emphasizes. “I have people that will reach back to us and just ask a random question on a side venture that they’re looking into, and we’re here for you for life.”

The Complete Timeline: What to Expect

The entire deal process typically spans 4-8 months for well-positioned practices. This timeline includes:

• Initial conversations and evaluation: 1 month
• Market preparation and analysis: 1 month
• Marketing the practice: 1 month
• Due diligence and closing: 2-3 months

However, timing varies based on individual circumstances. Some practices may benefit from delaying their market entry to maximize value. “We have clients that are clients of ours that won’t even go to market for four or five months, six months,” Bill notes. “So that process in and of itself, begats a 9, 10, 11, 12 month process.”

Finding Opportunity in the Aesthetic Space

The current market presents unprecedented opportunities for aesthetic practice owners to realize the value they’ve created.

“It’s an incredible time in the aesthetic space for people who have, by and large created from scratch their own business out of nothing,” Bill reflects. “And it’s just such a cool era to be in the aesthetic space where you can see people be able to unlock the value of what they built.”

Even for those not immediately considering a transaction, an exploratory conversation with experienced advisors can provide valuable insights. “There’s no harm in that. There’s no strings attached,” Christine emphasizes. “Given the newness of private equity entering this space, there’s a lot of questions out there.”

Frequently Asked Questions