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Four Questions For Business Leaders Interested In The Medispa Market

Managing Partner at Holden Legal Group.

Covid-19 had an immense impact on the medical industry, and we have seen a transformation in the way consumers view health and wellness. This renewed focus on self-care has led to the exceptional growth of the global medical spa (medispa) industry—a unique opportunity for business leaders that operate in the health and wellness spaces. But it’s important to enter into this market equipped with the right questions.

What are medispas?

As a niche hybrid of cosmetic surgery and medicine, medispas specialize in providing cutting-edge medical treatments in traditional spa-like settings. Examples of treatments that might be offered at a medispa include botox and other injectables, hair and tattoo removal, wrinkle reduction, body sculpting, cryotherapy and facials. The aim of these businesses is to be noninvasive, and while they can be expensive, the rise in popularity is leading to a unique opportunity in the marketplace for those business leaders interested in expanding their reach.

How is this niche industry growing?

As noted in a 2022 market study by Global Industry Analysts, the global medical spa market is projected to reach $25.9 billion by 2026—with the medispa market growing at a CAGR (compound annual growth rate) of 13.5%. This is an incredible growth rate and signals that this niche industry is gaining greater business traction.

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Four Questions For Business Leaders Thinking About Entering The Space

From my experience as an attorney in this space advising buyers and sellers, I can tell you that this industry is filled with buyers and sellers that are busy with mergers and acquisitions. Here are some questions that I recommend asking before purchasing a medispa to ensure that you are making the right choices for the future of your business and your clientele.

1. Does the current medispa owner lease or own the business’ real estate?

If the medispa owner leases the real estate in which the medispa is located, the buyer and seller will need to negotiate an assignment of the lease with the landlord and possibly a lease extension of the current lease.

If the current owner owns the real estate, then the buyer may need to purchase the real estate in which the medispa is located. This will require a second closing and possibly a separate negotiation for the price of the real estate separate and apart from the medispa assets.

2. Are there non-competition and/or non-solicitation agreements in place for the current owner and staff? Are there customer/patient lists included in the purchase?

Review the specifics of these agreements. Make sure you are not putting your business at risk of losing staff to competitors, including but not limited to the current owner. Confirm that the purchaser is receiving patient/customer lists with contact information as part of the purchase.

If there are no non-competition and/or non-solicitation agreements in place, then as part of the asset purchase agreement, these provisions must be included or separate agreements must be drafted to protect the buyer of the medispa assets.

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3. What equipment and service agreements are included in the purchase of the medispa?

Evaluate existing service contracts and supplier lists. This will allow you to determine if the service agreements offer premier pricing and are worth keeping or not. Perhaps you own another location and have vendors you’d prefer to use—be sure the existing service contract does not prohibit you from doing so.

Buyers’ counsel must review these contracts to confirm that there are assignment provisions that permit assignment of these contracts to the purchasers of the medispa or whether the contracts terminate upon the sale of the medispa.

4. When the buyer purchases the medispa, does it purchase all intangible assets associated with the medispa?

Clearly define what is included in your asset purchase agreement. Ensure that all business-related credentials (i.e., website, email, social media, etc.), client contact lists, logos and all other identifiers are signed over to you in the agreement.

It is necessary to confirm that all trademarks and copyrights are assigned to the buyer in the asset purchase agreement. If the medispa is recognized by a specific trademark, then it is critical that such a trademark is assigned to the buyer.

If you decide this is the market for you, be sure to ask the right questions, understand the motivations of the seller and be clear about what you are looking for out of a deal.

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