Mergers and Acquisitions in Derm and Aesthetics: Market Outlook

Our team regularly participates in industry conferences, engages with practice owners, and collaborates with both strategic and financial buyers who are focused on the dermatology and aesthetics sector. These activities provide the firm with a broad and current view of market dynamics.

We took a deeper look into the dermatology and aesthetics mergers and acquisitions (M&A) market in a conversation with two of our team members, Drew Thomas and Jordan Frickle, who are closely involved in this sector. 

The following discussion brings together their perspectives on current trends, transaction activity, and what practice owners can expect moving forward.

You’ve been speaking at many conferences and working closely with practice owners. What is your overall view of the dermatology and aesthetics market?

Thomas: Dermatology has seen steady consolidation over the past decade. There are now more than 35 financial sponsor-backed platforms pursuing both organic growth (eg, de novo clinic openings) and inorganic growth through acquisitions. Buyer interest remains robust across these strategies.

The aesthetics space has witnessed a sharp rise in investment since the COVID-19 pandemic. At industry events, I continue to observe M&A momentum in medspas, cosmetic dermatology, cosmetic plastic surgery, and general aesthetics. Practice owners are increasingly approaching the market strategically, working to build and capture value in anticipation of a future sale.

Based on your experience managing client engagements, what advice do you have for practice owners considering a future exit?

Frickle: Whether in medical dermatology, cosmetic dermatology, or medspas, practices that are well-positioned can often attract strong buyer interest and competitive valuations. However, practices that fall short of performance or operational benchmarks typically struggle to generate the same level of engagement or outcomes.

Key attributes that drive maximum value in a sale include:

Stability: Practices should have recurring revenue streams and minimal reliance on a single clinician. Low turnover among clinicians is also critical.

Profitability: Buyers heavily evaluate adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Practices earning more than $500,000 in adjusted EBITDA, with a 20% or greater margin, tend to command higher interest.

Growth Potential: Buyers acquire future potential. Sellers must not only highlight past performance but also articulate a compelling future growth narrative, supported by financial projections.

What recent themes are emerging in the marketplace?

Thomas: Several dynamics are shaping the market:

Medspa Momentum: Demand for medspa acquisitions is at an all-time high. Sponsors seek practices with strong branding, recurring revenue, and professional management. This creates favorable exit conditions for owners.

Staffing Pressures: Recruiting and retaining physicians is increasingly difficult. Independent practices face challenges competing with sponsor-backed groups that offer higher pay, structured paths, and lifestyle incentives.

Unsolicited Offers: Financial sponsors frequently submit unsolicited offers, often under tight timelines and without competition. These can undervalue practices if not properly evaluated.

Challenges for Small Medspas: Despite buyer interest, smaller practices often lack the scale and infrastructure to attract premium offers.

Unsolicited buyer outreach is common. How should practice owners think about valuations?

Frickle: Most sophisticated buyers apply a normalized (adjusted) EBITDA multiple to determine practice value. However, without competition, valuations can be skewed in the buyer’s favor.

A competitive, professionally managed sale process—typically led by an experienced investment banker—introduces multiple qualified buyers and allows for valuation optimization. In a recent dermatology transaction led by Bundy Group, the gap between the lowest and highest bids was 126%, emphasizing the importance of competition in realizing full value. 

CLINT BUNDY

• Managing Director, Bundy Group