How Much Is Your Aesthetic Practice Worth?
Every practice owner needs to know what the practice is worth at some point. You may plan to sell in a few years, bring in a partner, weigh an offer from a private equity group or buy a practice yourself. The value you have in mind and the price a buyer will pay are rarely the same number.
Shorr Solutions works on both the buyer side and the seller side of aesthetic practice sales. Jay Shorr, a forensic auditor who owned a practice with separate dermatology, med spa and surgery center units, leads our valuation work. We review your practice the way a careful buyer will, so there are no surprises when you sell your aesthetic practice.
When You Need a Practice Valuation
A valuation is most useful well before a sale. It shows where the value sits today and what you can still improve. Owners usually come to us when they are:
- Planning to sell the practice in the next few years
- Buying an existing med spa, dermatology or plastic surgery practice
- Bringing in an associate or partner who may buy in later
- Reviewing an offer from a private equity group or management company
- Planning for retirement, disability or their estate
What Goes Into an Aesthetic Practice Valuation
These are the areas we review on every valuation, whichever side of the sale you are on:
Three Years of Tax Returns
We start with your last three years of business and personal tax returns and confirm how the company is set up and taxed: S corporation, C corporation, or a single or multi-member LLC. We go by the tax returns for revenue. Your P&L and your returns usually agree on revenue, but net profit can differ, often because depreciation shows on the return and not on the P&L. A clean monthly P&L for your med spa makes this step faster.
Adjusted EBITDA and Add-Backs
Buyers look at earnings before interest, taxes, depreciation and amortization (EBITDA), then adjust for expenses that belong to the current owner and will not carry over. Owner health or life insurance, a vehicle, entertainment and family members paid above market are common examples. Every add-back needs backup. Documented ones raise the value, and unsupported ones become questions in due diligence.
Active Patient Charts
A database of 30,000 names is not 30,000 patients. We count active patients, generally those seen in the last three years, and look at what each one is worth over time. That differs by specialty. A med spa patient returns for neuromodulators every three months, while a plastic surgery patient may come in once for a breast augmentation and not return for years.
Goodwill and the Transition Plan
Patients follow their provider. If you sell and leave right away, much of the goodwill leaves with you. A planned transition, where you stay on for a period, introduce your patients to the new provider and help them get credentialed, keeps that value in the practice.
Capital Equipment
Equipment loses value the day it is bought. A laser purchased for $100,000 is not worth that five years later. We pull comparable sales, check what is still owed and look at what each device actually earns. Five lasers collecting dust in a back room add little to the sale.
Real Estate and the Lease
Owning the building and leasing the space are valued differently. When the practice leases, the buyer takes over the lease, so how long it runs and whether the space suits the buyer both matter. A lease with three to five years left on a space that is too large or too costly for the buyer can end a deal.
Marketing and Website
Marketing has value when it brings in quality leads on its own. A website that ranks for your treatments, beyond the doctor’s own name, keeps working after the owner steps away. Analytics that show where new patients come from help a buyer see that value.
How to Raise Your Practice’s Value Before You Sell
The six months before you list are the time to fix what a buyer will notice first. Our Financial Analysis Package covers most of this work.
- Set up a recall system so neuromodulator, filler and post-op patients stay on schedule
- Move personal expenses out of the business and document every add-back
- Keep a separate P&L for each business unit, such as the med spa and the surgery center
- Sell or retire equipment that no longer brings in revenue
- Check your lease term and rent against what a buyer will want
- Build marketing that ranks for your treatments as well as your name
Watch and Listen: How Much Is My Practice Worth?
Jay and Mara Shorr cover practice valuation in more depth in our free recordings. Start with the webinar above, then go further:
Client Stories
How We Can Help You
- Review three years of financials as a forensic auditor would, so your add-backs hold up with a buyer.
- Value your active patients, equipment and lease with comparable data, not list prices.
- Prepare your practice for sale by improving patient retention and profit margin, with financial guidance along the way.
- Represent you on the buyer or seller side and present your practice to buyers in a clear prospectus.
- Plan the transition so goodwill stays with the practice after the sale.
Frequently Asked Questions
How is an aesthetic practice valued?
Most buyers start from adjusted EBITDA, your earnings after owner-specific expenses are added back, and apply a multiple. The multiple depends on how much revenue relies on one provider, how many patients return on a schedule, your margins and the state of your equipment and lease. A formal valuation gives you a range rather than a single number.
What documents do I need for a practice valuation?
Three years of business and personal tax returns, your P&L statements, your entity and tax election details, a list of equipment with any balances owed, your lease and a report of active patients from your EMR. Marketing analytics help too. Plastic surgery practices can start with our guide to a plastic surgery P&L.
Are my patient charts worth money?
Active charts are. Patients who have not been back in three years usually do not count, and charts are worth much less if the selling provider leaves right after the sale.
How far ahead of a sale should I get a valuation?
As early as you can, and at least six months before you list. That gives you time to bring lapsed patients back, document add-backs and fix lease or equipment issues before a buyer sees them.
Do you help buyers as well as sellers?
Yes. We work on the buyer side or the seller side and review the same items, so you know what you are paying for or what you can ask.
