Amy Cotton Peterson, Jon Howard Write Healthcare Business Today Article About Growing Private Equity Presence in Medical Spa Industry
Quarles & Brady attorneys Amy Cotton Peterson and Jon Howard authored an article for Healthcare Business Today about the various challenges faced by private equity firms looking to enter the fast-growing medical spa industry. Peterson is a partner in the firm’s Health & Life Sciences Practice Group and Howard is national co-vice chair of the Business Law Practice Group.
In the article, they note the opportunity private equity firms — which currently own just 3% of medical spas — see in the highly fragmented industry. That opportunity also comes with operational and legal risks, though.
An excerpt:
Undoubtedly, private equity’s financial and operational resources are well-positioned to scale up the sector. But that doesn’t mean it’s all smooth sailing ahead. Successful growth hinges on multi-state regulatory fluency as there are many risks that could derail an otherwise positive growth strategy.
It’s no surprise that PE firms are interested in med spas. Their all-cash nature means owners can avoid the reimbursement risk and associated regulatory implications so prevalent in the U.S. healthcare industry and reap higher margins. Also, the industry is quickly expanding across the country and is still in the early stages of consolidation, which makes it even more attractive to prospective investors.
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Ideally, PE firms provide med spa clinicians and business owners the financial, operational, and strategic resources they need to expand—without having to manage these operations themselves.
Yet with more large transactions on the horizon, stakeholders should beware of the regulatory and operational risks that may arise as med spas look to scale. Mindful planning with experienced advisors is key.