Plastic Surgery & Aesthetics – A New PE Darling We Should Have Noticed Sooner
Managing Directors at FOCUS Investment Banking have completed transactions for more than twenty medical practices and surgery centers since the summer of 2019. I hate to say it, but none of those have been in plastic surgery since our team has always focused on specialties with extensive private equity activity. That allows us to create competitive processes with multiple buyers, give our clients choice, and ultimately generate better outcomes. Like most investment bankers our value is not primarily in finding a buyer (though we know how to do that as well as anyone), but in securing an excellent deal from a qualified buyer pool.
For a while now, we have been watching the plastic surgery and aesthetics space for signs of increasing private equity activity. I am happy to say those signs are here. We now have 5+ truly dedicated plastic surgery buyers, some of which are backed by highly regarded private equity sponsors with extensive practice management experience. These are not dermatology groups that have done a plastics deal or two, but companies specially built for this unique space.
We see three major buckets of opportunity that excite private equity investors and surgeons alike:
- Improve Marketing Systems – Plastic surgeons rely on direct to patient marketing and consumer referrals more than perhaps any other medical specialty. That creates opportunities for PE groups to become experts, share best practices, and help physicians make their marketing more effective.
- Develop Ancillary Revenue – Many plastic surgeons have excellent brands that can be extended into the aesthetics/med spa market and beyond. But those businesses require additional management - particularly around staffing, marketing, and operations. Ideally, surgeons stay as productive as possible on the surgical side and leave ancillary operations to a partner incentivized for growth. That’s where PE comes in.
- Recruit Young Surgeons – As in most specialties, many young doctors are less interested in owning a practice than their later-career colleagues. Private equity has bridged the space between ownership and employment in other specialties and can do so here. And because many groups focus primarily on either the face or breast & body, there are opportunities to add additional physicians and broaden the practice’s footprint.
The nature of plastic surgery requires owners to be business- and financially-savvy, which makes them great investment banking clients. We are excited about the opportunity to work with plastic surgeons in the coming years and help them enter exceptional partnerships with private equity. I expect many of my colleagues agree, and that we will see more investment banks targeting the space.
For now, I hope our success in other specialties encourages plastic surgeons to consult with us on a potential private equity deal. Plastics deals will mirror those in other specialties in most ways. Our challenge, as with every client, is to deeply understand the individual practices we work with and convey their unique value to prospective buyers.
For more information on how FOCUS can help you meet your business goals, please contact Managing Director Eric Yetter at [email protected] or 615-477-4741.