How do I tell what a med spa owner actually takes home?
Split the owner’s pay into two jobs: the work they do in the treatment room and the return on the business itself. Find out whether the owner is also the injector or practitioner, who fills the medical director role, and which perks run through the books. Then estimate the cost of the replacements a non-clinical buyer would need, with your accountant.
A med spa’s profit and its owner’s take-home are not the same thing, and the gap matters most when the owner also treats clients. If the owner is the main injector, part of what they take home is pay for clinical work that you would have to hire someone to do. Ask the seller to walk you through every way money reaches the owner, and ask your accountant to help you separate them.
Is the owner also the practitioner?
Ask how many treatments the owner personally performs, and how many are done by employees or contractors. If clients book the owner by name, ask what happens to those bookings when they leave. If you are not clinical, ask your lawyer and the regulator who may perform those treatments, and ask your accountant how to account for that staffing. This page on what makes a med spa profitable covers the wider drivers.
The medical director role
Ask your lawyer and the relevant regulator whether treatments need oversight by a physician or other regulated professional. Ask who fills that role today, whether it is the owner, how they are paid and whether that pay is on the books. Ask your lawyer what a non-clinical owner can and cannot do in your situation. This page on buying versus opening a med spa touches on the same question.
Perks and personal costs in the books
Ask whether the owner runs vehicles, travel, training, family wages or personal subscriptions through the business. Some of these are genuine add-backs and some are real costs of operating. Ask for the support for each one. Compare payroll records and the income statement to what the seller says they earn. A figure you cannot trace to a document should not carry weight in your analysis.
Rebuild the owner’s role as a hire
Write down every task the owner does, then ask what it would take to cover each one with staff, a manager or a contractor. What remains is the part of the earnings that does not depend on the owner’s own work. Your accountant can check that your version holds together.
Related reading
15 pages on the same subject, grouped by topic.
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- Expert answerWhat makes a med spa profitable, and what erodes it?
- Expert answerBuying an established med spa vs opening one
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentWhat is an income statement?
- 02Business Development Bank of CanadaGovernmentWhat are financial statements?
- 03Canada Revenue AgencyGovernmentPayroll
- 04Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
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