Post-Merger Integration: Strategies for Success in the Medical Spa Industry

The medical spa industry has grown 10% every year since 2017 and shows no signs of slowing down. Despite this growth, the industry is struggling to keep pace. The reasons for the industry’s sluggishness in adapting are complex.

The simple answer is that the medical spa industry is highly fragmented and largely dominated by small, independent businesses that lack the capital and resources to:

• Streamline services
• Invest in new technology
• Market their business
• Grow into multiple locations to meet market demand

Because of this, medical spa owners are increasingly looking to merge with or be acquired by larger companies.

This presents an exciting and equally complex opportunity for investors. While the acquisition process may give these small spas the revenue they need, they will need more than capital to achieve long-term success.

These practical post-merger integration strategies are useful starting points to achieve sustained growth and long-term stability.

Maintain Compliance

Because medical spas operate at the intersection of the healthcare and cosmetic industries, they are subject to complex state and federal regulations. These include corporate practice of medicine laws, anti-referral statutes like the Stark Law and Anti-Kickback statute, and other federal and state laws.

This is where finding the right management service organization (MSO) partner comes into play. An MSO can assist by handling administrative tasks like billing, HR management, compliance, and tech support. By outsourcing these tasks, medical spas mitigate compliance risks and free up doctors and staff to focus on what they do best: providing quality patient care.

Focus on Retention

Staff retention and integration are critical in any merger but are even more important in the medical spa industry.

Why?

Medical spa doctors and staff are specialized and highly educated employees, which makes them harder to replace. This is especially true in a crowded market where demand is high, and the supply of trained medical practitioners is low. The post-acquisition strategy should be laser-focused on retaining these skilled employees.

Nurture the Medical Spa’s Culture

Mergers give medical spas access to new resources and expertise. However, they also expose them to just as many risks—particularly regarding employee productivity, satisfaction, and retention.

To ensure success post-merger, create cultural alignment. Begin by assessing the cultural attributes of each staff, including values, beliefs, communication styles, and leadership approaches. Look for areas that overlap—places where both cultures intersect and complement each other while addressing potential sources of conflict.

Target the Right Demographic—the Right Way

While our culture may have once seen medical spa services as frivolous or designated solely for the wealthy, that perception has long since faded. Today, regular visits to medical spas are widely considered an essential part of the ongoing self-care routine, particularly with Millennials and Gen X consumers.

A recent survey suggests that 27% of Millennials and 26% of Gen X consumers would prioritize medical spa cosmetic procedures over dining out. Additionally, more than half of Millennials and nearly half of Gen Z say they have received or are interested in medical spa cosmetic treatments.

Our point?

Post-merger, medical spas must target their eager consumer base where they spend their time: on social media. If you’re skeptical, consider the numbers: Nearly 60% of Gen Z say Instagram advertising influences their buying habits. That’s followed by TikTok (57%), Facebook (36%), and X (34%).

Align your brand image and voice to enhance your marketing efforts. This will reassure consumers of your continued commitment to the company's core values, mission, and vision, even after the merger.

Also, maintain consistency in your branding across all channels to ensure customers recognize your brand, whether they engage with it online or in person.

Put Your Trust in an Advisor With Industry Expertise

At True North Mergers & Acquisitions, you get access to highly knowledgeable advisors with top-notch industry experience, like Randy Krivo, our Managing Director of Medical Practices. Here’s what he brings to the table:

• 35 years building, buying, and selling businesses
• 100+ medical practice transitions
• 100% medical spa industry closing ratio
• $44M enterprise value sold in the past 12 months

Randy knows the medical spa industry from top to bottom. Connect with him today for a successful tomorrow.