Beyond the Booking: Mastering the Top KPIs that Drive Sustainable Growth & Future Valuation

Erica Crawford

Thank you all for coming to our webinar. We love seeing you. We love the engagement. Couple things, if you're new on one of our webinars with us, we love the Q&A section. So I'm going to tell you exactly how this is going to go. So I'm going to introduce my dear friend, Audrey, in a moment.

Audrey is going to share these incredible slides and all of her wonderful thoughts with you. And while she's talking, and any questions that you have, any Q&A, anything that you want to ask, you put it in the chat towards us.

When we are done with Audrey's slides, we are going to do a wonderful Q&A where we can answer any and all of your questions. And this is the time. So please ask a lot of questions. I don't care how specific they are to you, your practice, your demographic.

That is our favorite part about a webinar versus a podcast, is to be able to answer your questions. So feel free to communicate in the chats and in the Q&A, and we will address all of that as soon as we're done. So, with that, I'm excited to get started here.

So I am excited to introduce my dear friend, Audrey. Audrey and I have known each other for a very long time. We get to see each other in person a lot because we both go to a lot of the same aesthetic conferences. Audrey is the chief marketing officer for Aviva Aesthetics, which has over 20 practice locations.

She's been in the medical aesthetic industry for 12 years now, 12, 13 years. Wow. She ha- Crazy. Yeah, I know, right? Time flies. You're faculty for over 30 different societies, associations, conferences, international speaker, global KOL with Merz. She's basically just like, this is her baby.

Her bread and butter is aesthetics, and she knows everything and anything about it. And, for the longest time, she was more on the industry side, like with me. And then now she is on the practice side, like with you all. So it's cool to kind of watch her go through both, because she has a lot of great insights from everything she does.

So take it away, Audrey.

Audrey Neff

Thank you, Erica. And huge shout-out and thank you to, of course, Erica, and also the amazing people and team at Influx for having me. I'm so excited to be here. And Erica, it's been great to share the stage and attend industry events with you over the last many years.

So, nothing but the utmost respect for you, and the amazing team at Influx as well. So I am very excited about what we're going to be talking about today. So let me pull up my PowerPoint, and we will get started.

And then, yeah, just like Erica said, because this is going to be a lot of information kind of thrown at you all at once, but hopefully it's very helpful. Let me move this to this screen.

So yeah, feel free to jot in questions. Hold on. I got to change the screen for my PowerPoint. Throughout, if you think of a question, then Erica is going to moderate all of the Q&As at the end. Let me make sure. Okay. Share screen one. Okay. Erica, let me know if you can see—

Erica Crawford

There

Audrey Neff

my PowerPoint.

Erica Crawford

Yep. We're good.

Audrey Neff

Oh, hold on. Okay. Perfect. All right, so we're going to get started. So today's theme of the webinar is going to be kind of talking about what drives sustainable growth in aesthetics in 2026 and beyond. And just like Erica said, I've been in this industry for 12 years.

It feels like I've been in this industry for a week because I feel like the last 12 years has gone by so insanely fast.

For those that know me, you know that there's nothing that I am more passionate about than helping practice owners truly, obviously across the US, but also across the globe, achieve maximum success in their business. So we're going to really be dialing down on some of the core KPIs that we should be monitoring in our business.

We'll be going through the landscape of private equity and consolidation as well. I'm a big believer that the more knowledge that we have of what is happening in this industry, the more power and leverage that gives us as med spa owners, aesthetic practice owners, whatever that may be.

So today's goal is obviously going to go through KPIs. We're going to go through industry benchmarks from a P&L perspective, and then we're also going to walk through the private equity playbook and how it works because I'm going back to just knowledge is power.

I just want everyone to have as much knowledge as they possibly can have to make more informed decisions for their business in the future. So that's really the goal of today's presentation. I'll probably be skipping over some slides because I'm going to be cognizant of time, and end on time.

So we'll go for 30 minutes, give or take, and then we'll jump into the Q&A. So I'll probably be skipping over some slides. But if anyone wants the full PDF, I'm happy to send that out as well, and you're more than welcome to reach out to me after.

So I'm not going to go through this, but all in all, I've really dedicated, honestly my entire career has been in this industry and this is my passion. I just love educating and spending time with practice owners across the country and the globe and just giving back. And if I can help in any way, shape, or form, my heart is happy.

So for those who have heard me present before, you're probably familiar with the tyranny of the urgent concept. It's something I start off a lot of my lectures, workshops, webinars, whatever it is with, because I think it's something that we are all battling with on a daily basis as practice owners. So really quickly.

Essentially there's four quadrants in the tyranny of the urgent. This was an original concept by Charles Hummel. There is an edit I would make to this for our industry. But all in all, let's just walk through this really quickly and then we'll jump in. So you have quadrant one, which are urgent things that are important.

So crisis, deadlines, meetings, repairs, right? So a piece of capital equipment breaks, you- Perhaps in the morning, and you had a full schedule of patients that were coming in for that laser, whatever it is. So these are things that are super important, and they require your attention right away.

You have quadrant three, which are not important, but also urgent. In our industry, I would move phone calls and emails and voicemails up, because we don't want to not be answering the phone and things like that. So that would be moved up into urgent and important in medical aesthetics.

But these are things that are not so important, but they do require your immediate attention. So, maybe your sales rep pops in at the end of the quarter, we all know what that means. But you need to go talk to them, right? So something that's urgent, but not so important.

Quadrant four, busy work, things that we all do to unwind, and that's totally fine. We all need to take time off, and focus on ourselves as well. But these are things that don't move the needle in any way, shape, or form in your business. And then we have quadrant two, which is what we're going to focus on today.

So these are all non-urgent things, meaning if you don't do something about one of these things today, your practice is not going to burn down tomorrow.

But these are the most important things that have the biggest impact on the longevity and the sustainability of your practice in 2026 and beyond, which would be your vision and mission, planning, clarifying values, relationships, and process improvement. Today, we're really going to be talking about more so process improvement.

Obviously, all of these could be their own presentation, but that's what we're going to be covering today. Everything's going to essentially be falling into quadrant two. So these are things that are very impactful for your business, especially in today's day and age.

So session roadmap, we're going to talk about busy versus valuable. There's two very different things in being busy versus profitable, or being busy versus having a valuable business. We'll go through some of the golden KPIs.

Obviously, that could be a whole another presentation on its own, so we'll kind of just run through some of the top ones. I do want to really dive into private equity and exits.

I think in today's day and age, I really believe that there's a lack of education, and the last thing I want is a practice owner to get taken advantage of, which a lot of practices, to be honest, have been taken advantage of from private equity.

So, my goal is to kind of just pull back the curtain on how private equity works and what their playbook is, so that you have more knowledge to make a more informed decision whether you want to exit next year, in five years, in 10 years, you name it.

I think we should always begin with the end in mind if we're going to pour our blood, sweat, and tears into something, of building a business from the ground up. I would assume most of us one day would like to receive a check for all of those efforts. Marketing for value. We'll probably run through this one relatively quickly.

And then operational excellence, so things to maximize your bottom line.

So let's talk about the valuation gap first, which is, I feel like a lot of times, and I get this, I talk to practice owners every single day.

I'm constantly traveling the country, doing financial analyses, meeting with med spa owners, and there is such a huge gap between busy, the concept of being really, really busy, and being valuable or being profitable. They do not mean the same thing. So busy means, okay, we're booked out. We have tons of leads coming into our business.

Those things do not equal, nor do they increase the profitability of your business. So if we think about busy, okay, lead volume, appointment counts, booking calendar, right? So being busy feels really good, but that's not a fact that you have a very profitable business, right? There's a very big difference between facts versus feelings.

So I feel like my business is doing really good. I feel like I'm really profitable because I'm really busy, versus, I know I'm profitable. I know I have great EBITDA margins. I know my retention metrics. Things that truly are driven by KPIs and data and metrics, and having a really good financial pulse on your business.

And then what valuable measures, and we'll definitely be walking through this today. What value equals is honestly, it's strong EBITDA margins. We'll talk through EBITDA. Having really, really solid patient retention as well. This is something that a potential investor, partner, buyer would definitely look at in your business.

Lifetime value is huge. We obviously all know what, I would assume all of us know what LTV is. Having really strong recurring revenue streams and things like that, such as membership programs, so on and so forth.

So busy med spas. Okay, so busy versus profitable, two different things, right? There's going to be high utilization. So the schedules are full, but what are they full of? Are they full of services that don't necessarily have the best profit margins?

Are you doing a ton of laser hair removal and not doing a ton of actual laser skin resurfacing and things like that? Lower revenue per appointment, so perhaps, even if you have a booked schedule, but patients are coming in and your average revenue per appointment is $400 or $500.

The industry-wide statistic from AmSpa's last State of the Industry Report is like $536 per visit. I find that number incredibly, incredibly low. I think all of us should strive for minimum double. Lower revenue per hour.

The revenue per hour measures the productivity of your providers, and then obviously not paying attention to your margins. Profitable is going to be optimized utilization. Higher revenue per appointment. Strong revenue per hour, so how productive are your people being with their clinical hours and their time, and having strong margins.

So EBITDA, I feel like some of us probably understand what this is. Some of us may not, and that's totally fine. I recently, actually it wasn't recent, but I did a webinar. It was a panel I did with some of the folks at Skytale, brought on an M&A attorney and things like that a couple of months ago.

And we were talking about EBITDA, and no one even asked in the chat, "What is EBITDA?" And then I had people reaching out to me after asking, "It would've been nice if you had explained that." So some of us may have a strong understanding of what EBITDA is. Some of us may not.

In a nutshell, EBITDA is essentially your operating profitability of your business, and this is what is one of the most important things when it comes to determining of whether a business is profitable and sustainable and an asset

So things that hurt EBITDA. So we're going to walk through an example P&L today with industry benchmarks.

But some of the most common ones are going to be too high of payroll, unproductive providers, so you're paying people to be there, but they're not producing four to five times of what they're getting paid, which is something that we should all be mindful of.

Having, obviously, low revenue per appointment, very high patient churn, meaning your retention is not where it needs to be, no recurring revenue streams, and then having too high of facility costs.

On the facilities cost things, where I see this one, kind of, let's call it struggle, is when people open up additional locations when they shouldn't be opening up additional locations.

So I think a lot of us want to open up potentially more than one location, or we want to be five locations or 10 locations, whatever it is, or a second location. I think the biggest gap actually falls on opening location one to location two.

But when you do that, you need to understand that now, if you had a really profitable business but you don't have all the systems and scale and utilization where it needs to be and then you open up location two and your facilities costs you now double, that's going to pull down your EBITDA.

And then why buyers care about this, honestly, from a valuation standpoint and multiples, and we can talk about multiples all day long, multiples are going to be paid based on what your EBITDA is. And it's going to be not necessarily how your EBITDA is reported.

There's typically add backs and adjustments that have to be done from an investor lens to actually show what a true, let's call it pro forma EBITDA, would be. And then there's going to be a multiple attached to that.

So if you were going to sell your practice to private equity today independently, meaning you're going to go hire an investment banker or a broker and sell to one of the... We probably have 20 plus platforms, and there are so many wonderful platforms in this industry, by the way. Typically, you're going to see a three to six X multiple.

You can go up to five to eight times. Eight times is really the high end if your revenue is between four to 20 million. So if somebody had an EBITDA, meaning your profitability of your business is 500K, you're probably looking at around a $2.5 million valuation selling to private equity today.

So what drives your multiple up or down? Having multiple providers, of course. Oops, let me go back. Having multiple providers. You don't want owner dependency or key man risk.

So if one person is driving 90% of revenue, that is a risk from an investor lens, because if something happens to that person, the business is now essentially gone.

So things to think about is having multiple providers, multiple revenue streams, strong retention tactics in the business, such as membership programs, a very strong consultation process. Having a great tech stack as well, not using paper charts. We need to make sure that things are documented and organized.

Having very bulletproof SOPs in your business as well.

So if we walk through some of the KPIs. So there's a million other KPIs that we could talk about, but these are some of the ones I wanted to briefly touch on today.

I could easily go into each of these individually, but for the sake of time, because I want to talk about the private equity landscape as well, we'll go through these somewhat at a high level. But monthly revenue, year-over-year growth. We want to be growing.

I will also add, if a med spa is declining in growth over a several year period, whether it's three years, even if you have a great business, but then the last three years instead of growing, you've done the opposite. If you are trying to sell your practice, that's also a risk to a potential investor and/or buyer.

So you want to make sure that you are growing year-over-year, being mindful of obviously what our revenue per provider and per hour is. Do we have people that we're paying and they're not generating four to five times? Then that's a problem. Revenue per visit, we definitely want to be tracking this metric.

I would hope most of us are tracking this metric today. Going back to AmSpa's data, they said average revenue per visit for med spas in the States right now is like 536 or something. I think that number's so low. I don't know the last time I spent only $536 going to the med spa.

I would say practices that really, really kill it are well over double to triple that number.

If we think about things that measure durability from patient KPI standpoint, obviously new versus returning patient volume, you need both. Both are critical for your business. But we do want to make sure that we have a very strong returning patient percentage in our business.

So some of these targets are a little aggressive because I put these as where an excellent operator would be. So I think these are good goals for us to have. I would target for 70%. Patient retention, I think 75% is for excellent operators. Lifetime value, I would put $6,000 as kind of the average.

I think this should be a lot higher, but obviously that's going to range depending on patient demographics and ages. Obviously, if someone's in their 20s, they're going to have a lower lifetime value than someone that's in their mid-30s, probably. But things to keep in mind.

I think $6,000 is on the lower end, in my opinion, but I think it's a good industry average benchmark. So that would be per year. Lead-to-consult conversion rates, I put 55 on the low end as the minimum I think we should be. Ideally, I like seeing 70%. Consultation-to-treatment conversion rate, I think all of us should be around 75%.

So 75% of people that come in for a consultation, meaning if they are a qualified patient, we are converting them into that treatment plan.

Memberships is something we should also consider, and investors and buyers really love memberships because it's predictable cash flow and revenue, and it increases retention and revenue per patient and lifetime value as well. Then EBITDA margin percentage, 20% to 25% is where you really want to be.

I will say, we have several practices that are a part of Aviva and their EBITDA percentage, we have some that are even close to 30 or higher. Provider utilization as well. Providers, their utilization should typically be 70% to 80%.

If you have providers and their capacity and utilization is only around 40%, you shouldn't be hiring another injector until that one injector is ramped up. And then retail revenue as a percentage of revenue. I think 15% to 20% is a really healthy retail Metric in terms of your gross revenue.

And I will say, looking at practices' financials, the majority of practices probably fall between 3% and 5%. So I find retail, I think a lot of us treat retail as an afterthought.

I think retail's one of the most powerful ways and easiest levers to pull to actually increase our revenue, our lifetime value, our clinical results, our patient experiences, and our bottom line. But that's another topic for another day. We're going to skip through these.

Okay, so I do want to walk through a P&L because I think a lot of us, we obviously all have a bookkeeper or maybe we're doing it ourselves, whatever it may be. But I think it's good for us to know what a healthy benchmark would be in all of these expense categories. So this is an example practice I just made up.

But if we go through this, so you're going to have your payroll section, right? So let's walk through this first. So your payroll, ideally where you want to be with your payroll, and this is going to include your team payroll and owner compensation. So you want to be combined in at around 30%.

If you're barely a little higher or if you're lower, great, but this is where we really want to be. Even on the owner compensation side, something I run into a lot is a lot of owners are perhaps paying them less for tax purposes, and then obviously they're taking distributions and things like that from their business.

That's perfectly fine. That's perfectly fine to do.

And while paying yourself less is going to increase your EBITDA as reported from your P&L, if an investor comes in and they're valuing your business, or if you're working with an investment banker, or if you're doing a financial analysis with Aviva, that's not truly how your EBITDA would be to a buyer.

So from the owner compensation standpoint, and I see this a ton, if someone is generating $1.5 million, they have to be paid because we have to think about it, if this person left, if someone buys the business and this person left, what would it cost to replace this provider?

So it's typically going to be four to five times what you're getting paid and what you're generating. What you're generating is four to five times of what you're getting paid. So this typically has to be normalized, which typically decreases your EBITDA. So, and hopefully this is making sense to some people.

I know this is a lot of information, but I think this is just helpful things for us to know, and I think it's good for us to go through our P&L and just compare ourselves to healthy industry benchmarks.

Benefits, around 2.5% is pretty good. If you're not paying benefits right now, that's also something that would be adjusted and added back from an investor lens if you are doing some type of valuation analysis. Your clinical and COGS, 30% is a really healthy area to be.

Obviously, if you're higher on this, this is going to negatively impact your EBITDA as well. So we do want to be mindful of our clinical costs, how much inventory we are carrying at one time. Marketing, around 4%. And obviously as your revenue increases, you have more room to play there. Facilities and rent, we like to see around 5%.

Professional services, T&E, G&A one and a half. Oops. Whoa, where'd it go? These are kind of irrelevant. But the main buckets I would want to focus on is look at your staff payroll combined, including owner compensation. You want it to be at around 30%. Clinical costs and cost of goods sold, around 30%.

And then facilities, meaning your rent, your lease, whatever it may be. Even if you own the building, there's going to be a market lease associated with that, a cost, even if you own the building, around 5%. So just some things to keep in mind around your P&L.

So let's talk about private equity and exits. Okay. So we all know private equity has been coming into this industry very, very, and in some cases a little aggressively, we could say. Which is a good thing, by the way.

I think some groups have really great reputations, some may not, but I think at the end of the day, I think the fact that we even have all of this private equity interest in aesthetics, it's a really good thing because that means we're in a very healthy industry that is growing.

The investment community has been watching medical aesthetics for quite some time, and now they want to make growth investments into this industry. So this means we have a really amazing industry. I think it's a really exciting time to be a part of medical aesthetics.

I don't want people to think that the emergence of private equity is a bad thing. It means that we're just in a really, really healthy industry and private equity firms, whether it's early market or middle market, want to invest. So why does private equity love aesthetics? Obviously, it's recurring revenue. It's cash paying medicine.

Consumer penetration is increasing. And we'll go through how the private equity playbook works. But at the end of the day, what are they buying? Private equity is essentially buying predictable cash flow. The more predictable cash flow a business has, the higher your value will be.

And obviously that goes down to your profitability and what your EBITDA margins. As well, what PE avoids, once again, anything that is considered a risk. So owner-dependent practices, if you are the business, you don't have a sellable business. Someone may pay you one times what you're bringing in, whatever it may be.

Poor documentation, obviously messy financials, we need to make sure we have those tightened up, and if revenue is concentrated with a single provider.

So how does a private equity deal work in simple terms? So I want to break this down because I think the more knowledge we have is powerful. So what private equity is essentially doing right now, and there's so many different firms out there, they're buying up and rolling up medical spas, aesthetic practices, right?

And what private equity will do is they will buy, let's call it 50, 60, 70, 80, 90, 100 practices, and then they will resell that platform. And so private equity, the reason that they get into an industry is there is a return on investment for private equity and their investors.

So typically from a multiple standpoint, I would say Most practices that are being bought are two million plus in revenue. Could you sell a lot less than that? Yes. Would I advise you do that? No. I think that you should continue building. I don't think anyone should be selling their business, in my opinion, around two million in revenue.

I think you should continue growing, or below that. But everyone has their own circumstances and opinions around that, and you guys know your business and your life and your family and what you guys need better than I would.

But what they're essentially buying is buying everyone's business at a relatively, I would call it low to mid-single digit multiple on EBITDA. So I would say from an average standpoint of your typical practice, you're looking at probably five times. And multiples used to be higher when interest rates were lower.

So could this change in a couple of years? Yes. But as it sits today in 2026, I would say five times is a pretty average multiple on EBITDA. If you're doing upwards of four million, that range would go five times to eight times upwards of 20 million. So eight times is really kind of the high end.

Are there rare circumstances and anomalies that exist in the marketplace? Of course. But from an industry average standpoint, you're really looking at between four and 20 million in revenue, your multiple's still going to be in the single digits.

And then, so private equity is going to acquire as many practices as they possibly can at these multiples. So single digit multiples. They optimize your EBITDA. So they buy a majority stake of your business. You continue building, but you are now an employee of that private equity platform.

You typically are not going to receive everything in cash from a valuation standpoint. You'll have rollover equity for what is called a second bite at the apple because private equity, what they're going to do is as they continue building a platform, they're going to optimize EBITDA as much as possible.

And the reason that they're able to optimize EBITDA is because they have sophisticated management teams, they have economies of scale, purchasing power, additional infrastructure, and support.

So now they optimize everyone's business, make everyone as profitable as possible, and then private equity will resell that platform rolled up at what is called a platform multiple. So platform multiples today. Now, this could change. A couple of years ago, we had transactions that were in the 20 to 30 times multiple.

So in a couple of years, could this change and be a lot higher? Absolutely. But from an average kind of today, 14 to 18. So, PE basically buys the business at, let's call it 5X, and then they'll resell it at, let's call it 15, 16x. So then the delta is that return on investment to private equity and their investors.

So this is ultimately how private equity makes their money. So what private equity firms are looking for, obviously strong EBITDA, strong margins, clean financials, SOPs, documentation, diversification, retention, cash flow, consistent cash flow, and things like that. The reputation of the practice, reviews.

Do you have a really great marketing presence, local presence in your market? Is there a white space to scale? Do you have a tech stack? Are you utilizing things like that to make things more efficient in your business? And then staff retention is another big thing.

If you constantly have people leaving, that is also considered something that is alarming to a potential buyer.

Okay. And I probably only have a couple slides left. So are you better off selling, partnering, or optimizing? So obviously we have lots of private equity platforms. They're all essentially doing the same thing. I think a lot of them have different unique nuances to them, but at the end of the day, they're buying your business.

They're buying a majority stake of your business. So the options that kind of exist today, there's really three. You can sell now to private equity.

So you're going to receive immediate cash and sell a majority stake of ownership, and you'll have rollover equity for a second bite at the apple, and private equity resells that entire platform of 50, 60, 70 practices at a platform multiple. So you'll receive two checks, essentially. The bigger one is going to be the first one.

So now in terms of partnering while retaining ownership, and the reason I wanted to talk about Aviva today is because, and you guys know I'm not someone that goes out there and promotes anything, but why I love Aviva so much is because it gives practices the opportunity to get the multiples that private equity typically gets, which is why I love it so much, because I love helping practice owners.

That's what I love to do day in and day out. So I thought it actually tied in pretty well to this theme. And once again, knowledge is power. This is just meant to be educational for you guys so you know the options that exist in the marketplace.

So Aviva would be the second option, which we're the only platform in the industry that has a true partnership model, meaning you retain 100% ownership of your practice, but you receive the benefits and back office support as if you sold. So we're at 20 locations today, growing exponentially.

So practices that are a part of Aviva receive the purchasing power and the pricing as if they're a 20-location med spa doing 40 million in revenue, except that they still own their practice.

So it's a unique partnership model where you essentially skip that early sale at the lower multiple and you join Aviva, you continue building your business with infrastructure support, our management team, our pricing power, all of the different things, and then you sell at the platform multiple. So it's kind of an additional.

It's not a great fit for everybody. It's for people that are doing two million plus in revenue and they don't want to sell today, but they want more help to continue building their business. So people that want to continue building, they don't want to sell today.

They meet financial criteria, and they're really passionate about the industry and obviously clinical excellence and all of those incredible things that we look for. So you skip the early sale, and you get the platform multiple on your own EBITDA when we sell Aviva collectively as a group. So it's very fun because never before have independent practices been able to get a 15 times multiple on their EBITDA. But with Aviva, that's what we're building. So it's very fun.

So that is one option for the right people. And then the next option is to keep optimizing. Maybe you don't want to partner, maybe you don't want to sell to private equity. You just want to continue building your business, and I think that's a really amazing thing. I think everyone has different circumstances.

I have a good friend that has an incredibly successful two-location practice, and she doesn't want to partner or sell with anybody because she wants to pass down her business to her daughter, and I think that's also a very beautiful thing. So I think all of us know what we want in our core, and what is best for our family.

And our future and our business, and we'll wrap it up with a couple more slides, and I will be finished. So if we look at the private equity versus Aviva model, once again, this is to be educational for you guys because I think it's just good to know the private equity playbook.

So obviously, traditional private equity, you're going to sell at a lower multiple. With Aviva, you sell at the platform multiple, so it makes a business from being worth five times EBITDA to being worth 15 times EBITDA, which is a lot of money.

And then you sell with optimized EBITDA because you skip that early sale that you're getting with private equity. And then obviously you maintain full autonomy because you retain full ownership, and we're building the MSO that middle market private equity is looking to invest in. So it's very fun for the right business.

And then to go through multiples too, once again, I think this is just good knowledge for us to have. So let's say a practice is doing 3 million in revenue with a 20% margin, EBITDA 600K. If we take now could this multiple be six times? Sure, but we're just going to go industry averages right now.

That means your business is essentially at a five times multiple. Selling to traditional private equity is worth $3 million. With Aviva, same business, but you're obviously receiving a platform multiple. When we bring on an investor partner in let's call it three to five years, that same business is now worth 9 million.

So it's a pretty fun opportunity because why I love it so much is we're giving the power of private equity to be used for the benefit and the advantage of medspa owners. So it's something that I love, and it's very fun.

So we're going to skip through these and kind of wind down because I know we want to leave time for Q&A. Oh, okay. So all in all, seven mistakes that quietly kill practice value. We went through these, so kind of as a summary. No documented systems. Reactive leadership, right? We want to be proactive with our business, not reactive.

Ignoring patient retention, we need to be very mindful of this. Not having financial visibility is probably one of the biggest ones. I was literally talking to a medspa owner the other day. I'm doing a financial analysis for her in a couple of weeks, and she has a phenomenal business.

It's a great business, and it's funny because we were on the phone chatting, and she told me, she's like, "I've actually never even looked. I've never even logged into QuickBooks before and looked at my financials."

She's an anomaly because she has an incredible business, but it's been interesting because she's terrified of even looking at her numbers. So I think, once again, knowledge is power. I think we should all be going through our P&L, looking at where we compare to industry benchmarks, because all that does is...

And if we're not in line with industry benchmarks, that's okay. That just means that we have an incredible opportunity to focus on. And so I think the more opportunities we can find, the better our business will be, and I think those are good things.

And then we talked about this, but a goal for EBITDA should be you want to be around 20% to 25%, if not higher. And then obviously, we want to be mindful of our clinical costs, our provider utilization. What are our people bringing in? Is their compensation aligned with that?

Payroll, we want to make sure between owner compensation and our staff payroll is around 30% total, give or take. And then it's really good. I think retail and memberships are two very low-hanging fruit that we can focus on. Retail, definitely, and memberships, they take time, strategy, feedback, and staff training as well.

And then they need to actually be executed on, and then you need to measure and monitor the progress of them. But membership programs are one of the most powerful drivers, I think, in medical aesthetics. And we don't need to call it a membership program. I think that's a very boring name.

I think we should come up with a very creative name for all of our membership programs. But some of the financially, let's call it most healthy practices I have seen have an incredibly successful membership program implemented in their business.

So some things that we can think about, a 90-day action plan. Build a KPI dashboard. So whether you're using your EMR or Illume is a really great tool that exists in the industry, and it's very low cost, and it plugs into your EMR. I love it. It'll build all of those KPIs and custom dashboards for you.

It's a phenomenal tool that I recommend to a lot of independent practices. And then obviously some quick wins. Let's look at our rebooking. Let's look at our memberships. Let's look at our clinical costs and review everything on our P&L. Obviously, we want SOPs and documentation and a good tech stack.

And then we want to build something that is an asset one day. So think about diversifying your providers, growing recurring revenue, and building something that really creates freedom and leverage for you.

The better business you have, the more leverage you have in the industry, whether you're thinking of selling to private equity or considering a growth partnership, you name it.

I think the better business that you can build with the more sustainability, diversification, and value, it just puts so much more power in your pocket, which also equals freedom for you, the business owner.

So key takeaways. There's a difference between busy and profitable, right? EBITDA is your profitability of the practice. Let's be mindful of KPIs. I think it's good just for us to understand how private equity works because it's just, once again, knowledge is power.

I think that there's a lot of, I don't want to call it, but in my opinion, I don't think private equity wants people to truly know how their playbook works. And so my goal is to just be very transparent.

And I think if someone is in a stage of business today where they want to exit and really kind of take most of the chips off the table, then I think that's a phenomenal thing to do.

So I think there's an opportunity that is best fit for every single practice, whether it is selling to one of the platforms today, and there's a lot of great platforms out there with great leadership. There really are.

And if that's something that you want to do, you really, you're burdened with running the business, you just want most of the chips taken off the table, then I think that's a phenomenal route.

For people that want to continue building and they want to take advantage of a platform multiple in their EBITDA instead of private equity taking advantage of it, I would say a growth partner such as Aviva is a great fit. Or there's people that just want to continue building your business, and I think that's a really amazing thing too.

The thing I would advise is I just don't want practices to sell too early. I have a lot of friends that have sold Their practice far too early, and it's a sad thing to see when practices do get taken advantage of.

So I think just the more knowledge you can have, the more business advisors that you can have around you, the better attorneys, your consultants, whoever it is. I think it's really good to surround yourself with people that are knowledgeable and can look out for you and provide really great insights and advice. So thank you all very much.

My email is obviously up here on the screen. If anyone has questions, you're more than welcome to reach out to me.

Erica Crawford

Thank you so much, Audrey. That was amazing. Gosh, we're going to get into the question portion, which is my favorite part.

Audrey Neff

Love it.

Erica Crawford

First off, if anybody has any other questions, feel free to put them in the chat or in the Q&A, and we will take care of them. Also, if we could just drop, Audrey, your email into the everybody too, so it's there as well.

Audrey Neff

Sure. One second.

Erica Crawford

But first thing, and some of them will be my questions coming in with my comments. So at Influx, we work with about 400, 500 different plastic surgeons and med spas, and we actually have an entire department dedicated to private equity-backed multi-location practices.

And we've worked with a lot of different PE companies in this space with a lot of different opinions or strategies or all sorts of things. And one thing I do love about Aviva is that it's really not a traditional PE company, like at all. I don't even know if you would call it that.

Audrey Neff

Yeah.

Erica Crawford

You know what I'm saying?

Audrey Neff

Yeah.

Erica Crawford

Something else. We'll have to invent another name for it, but it's not quite that, right?

Audrey Neff

It's called entrepreneur equity instead of private equity.

Erica Crawford

Entrepreneur equity. Okay. We'll use that.

Audrey Neff

We've trademarked that.

Erica Crawford

Okay. Okay. Now I have something. I'm like, "What do I call it? It's an investment thing?" There's a word for it, but it's not quite PE. But I will say this, there is something I've observed when I watch an existing...

Let's say we have a client, we've worked with them for years, and they get bought by PE, and we watch them go through the transition as we transition away from working with that client as the sole decision-maker to PE company.

And I will say, and this is not an exaggeration, I would say that 90% of the time, they don't realize how much of the decision-making they're giving up. Like somehow—

Audrey Neff

Yeah

Erica Crawford

they think that they're going to continue to make all the marketing and financial decisions, and that's not what happens. And I am curious to get your thoughts on that. How does that happen? Like somebody's selling their med spa or plastic surgeon, right, because we have plastic surgeons here.

Audrey Neff

Yeah.

Erica Crawford

They're selling their practice. But I'm going to be very honest, as soon as the private equity companies come into the space, and let's say they're working with us at Influx, the person who originally owned the practice almost is not our client anymore. It's a private equity company.

Audrey Neff

Yeah. Yes. Correct.

Erica Crawford

Who's a decision maker. And I will say that a lot of people don't fully understand that. They don't understand the control that they're giving up, and I just want to... What are your thoughts on that? Which is, like I said—

Audrey Neff

Yeah

Erica Crawford

we have a whole department. We love PE, but it's just, it's—

Audrey Neff

Yeah

Erica Crawford

we see people mentally go through that, and it's challenging for them.

Audrey Neff

Yes. And I think that's a really good point to bring up because a lot of the platforms, and I see what they put out into the ecosystem, is maintaining your autonomy. Okay.

Erica Crawford

Yes.

Audrey Neff

What we need to realize, and PE will say nice, pretty things.

I want us to know, and once again, there's great platforms out there, but there are also platforms that say certain things, and they do it to lure you in because they want to buy your business for as little as possible because they're going to sell it for three, four times, if not five times more, and keep all that upside.

And on the autonomy thing, a lot of platforms say, "Oh, keep your autonomy," more upside and all of these things. And what I want us to realize is if you're selling a majority stake of your practice, you become an employee after that.

If you no longer own the majority of your business, you are officially an employee of the private equity platform. And just like you said, Erica, those decisions, those executive decisions, they leave the local standpoint. So the local, let's call it level of your practice, it now goes to the overarching MSO of that private equity—

Erica Crawford

Correct

Audrey Neff

firm, and they are the ones that are making those decisions. Most private equity firms have probably 30 plus team members from an operational standpoint—

Erica Crawford

Mm-hmm

Audrey Neff

that sit over top all of the practices with their designated teams, and they are the ones making those decisions.

Erica Crawford

Correct.

Audrey Neff

So if you want to pay someone a certain amount, that's no longer your decision. I actually had a great friend of mine who had two locations.

She sold to private equity, and the culture became toxic because one of the practice managers that had been there for 20 years was getting paid X, and then private equity hired another practice manager at location two and paid her double, and the other practice manager found out about it, and it just created all this toxicity.

And then use of clinical products too. You can honestly, and it is what it is. You can be told what products you can and can't use.

Erica Crawford

Yeah.

Audrey Neff

It's just the reality of it if you sell your business. And once again, this is not to talk bad. I think if you want to sell, and you really are just burdened with that, you built a great business and you want to exit today, great option.

Just make sure you do your due diligence and talk to people that are a part of the platform and surround yourself with really good advisors, and definitely work with an investment banker or broker if you're going to sell it by yourself, or else you will... There is a fee associated with that, but it is a smart thing to do.

Erica Crawford

So—

Audrey Neff

Exactly

Erica Crawford

yeah. Long story short, if you sell, you're losing your autonomy. Yeah. Which is, like I said, it's fine. You have to know that is what's going to happen. That is what occurs.

Audrey Neff

Yeah.

Erica Crawford

So to think anything else that won't happen, that's not what's going to occur. And that's fine. It's just people don't always seem to be aware of it, we've noticed—

Audrey Neff

Yeah

Erica Crawford

when we've seen people get purchased. Which actually leads me to the next thing—

Audrey Neff

Yeah

Erica Crawford

which is actually one of the questions here, but what sort of revenue is Aviva and most PE companies looking for?

Audrey Neff

I would say, you kind of mentioned it, I would say 2 million would be the minimum, with I would say the sweet spot closer to four million. Yeah. I would say on average between all of our locations at Aviva, our average is probably a little over three million if we take into account all of them.

Erica Crawford

Okay.

Audrey Neff

We have some that are much larger than that. But two million is typically the floor that we would consider.

Erica Crawford

Mm-hmm.

Audrey Neff

So Aviva's not built for startup practices, hence entrepreneur equity. But it's built for people that have built a really amazing business. So they're doing over two million in revenue, but they don't want to sell today, and they want to continue building and optimizing with economies of scale, infrastructure, support, continue building.

But you still own 100%, so it's fun because you still make all of those decisions. You still keep your cashflow, your profits, and then you essentially make the decision to skip the early sale to private equity and instead you capture the platform multiple on your EBITDA when we sell Aviva together.

So we've already done the model in oral surgery successfully. Because a lot of people are like, "Oh, this seems too good to be true." And it's like, we've already done it.

So we did it in oral maxillofacial surgery, which in my opinion is a much harder industry to do something like this with because the oral surgeons, so the owners generate literally all of the revenue.

Erica Crawford

Yeah.

Audrey Neff

So if you talk about owner dependency, they have it. And our sister company is called Allied OMS, and so we bootstrapped the concept and the business in 2020 and had a transaction with a valuation of over $550 million, so over half a billion dollars last June, at a 15 times multiple.

So that was what everyone, the oral surgeons, were essentially paid out on. And then you continue building, right? When an investor partner comes in, that's just more support behind the company to continue building. Everyone just will have received a very large check, if you will.

But yeah, so we're bringing the same concept to aesthetics because what we saw in the industry is practices, they're the ones that built a successful business in the first place. Then private equity—

Erica Crawford

Yeah

Audrey Neff

when they roll them all up and sell them, they keep all of that financial upside instead of the med spa owners who were the ones that poured their blood, sweat, and tears into it. So it's ruffling the feathers. I always say that because it really is. But it's fun because it gives med spa owners the power.

Erica Crawford

Yeah. Absolutely.

Audrey Neff

Yeah.

Erica Crawford

And with that, this is another question here. Do you typically see a certain percentage reduction in expenses after moving to that model? I would imagine so, because it's in essence—

Audrey Neff

Yes

Erica Crawford

I don't know if you're supposed to use this word or not use this word, but it's in essence like an MSO, right? So you have the buying power of—

Audrey Neff

Yes. We are an MSO. Yep.

Erica Crawford

Yeah. Okay, good.

Audrey Neff

Yes.

Erica Crawford

Some people, they—

Audrey Neff

Great question. So yes, MSO is, you're right on. So Aviva Aesthetics is the MSO entity that sits over top all of the practices. But once again, you still own your business. It's just tracked via stock ownership.

And yeah, because it's once again, once you join, and we do this when we do financial analyses, we bake in like a cost savings estimate too based on what our pricing is with Allergan and we just got phenomenal new pricing with Galderma that started on July 1st. So it's always exciting every quarter when we get updated pricing.

We send it out to our partners and everyone's like, "Yeah. Oh my gosh, everything just went down." And it's cool because even from an inventory standpoint as well, you don't have to buy in bulk to get a certain price or play the tier games.

Erica Crawford

Correct.

Audrey Neff

Because we have 20 locations ordering from these companies, and we're doing $40 million in revenue, so our pricing is very, very attractive, and it continues to get lower and lower as we get bigger and bigger. And the cool things from that standpoint, from a clinical kind of arena is you don't have to play the tier game.

You can order as little as you want. You're still getting the price.

Erica Crawford

Yeah.

Audrey Neff

So from an injector standpoint, all of our providers, and we have so many industry trainers that are part of the platform as well. It's fun for their injectors and providers because now all of a sudden we had practices that weren't ordering a lot of Radiesse or weren't ordering a lot of XYZ because they had to order a lot of it.

But now when you're a part of Aviva, you're going to get the price and now suddenly you can start ordering as little or as much as you want, and you still maintain the relationship with your local reps as well, which I think is really important.

I think a lot of us love and have had the support from some of our reps for such a long time, and so that was something that was really important for us at Aviva is you still maintain that relationship. You're just getting better pricing.

But yeah, to answer your question, of course, when practices join, and we have case studies that we've done on this as well. You're obviously getting better pricing. We're advising you. You have operational support. We take over your bookkeeping and things like that.

So cost savings are a great thing, but the people that join Aviva, they join because they're really excited about what we're building and they believe in the vision and the mission of it, not just because they're saving money on their COGS and things like that. But it's one of the small benefits, I would say.

Erica Crawford

For sure, which makes sense. Which another, I guess more of a comment or a question. So this is something that it's such a, I wouldn't say debated thing, but we work with a lot of various marketing consultants, right? We work with Josh Suchanek at Skytale.

We also work with financial advisors like Maven Financial or with Terri Ross, all sorts of people, right? And when it comes to marketing, how much percentage of revenue you should be spending from a marketing perspective? Because you gave an example of like a P&L. And I would say from my own experience, it can vary.

We have successful practices who are spending—

Audrey Neff

I agree with that

Erica Crawford

one to 2% of their revenue on marketing. Some 1%, some less than 1%. But then I have some who are spending closer to 20%. All very successful, but I'm going to say, and I feel like this is the most important part, and I want to get your input on it. It all depends on where you are, what stage of growth you're at—

Audrey Neff

Mm-hmm

Erica Crawford

and a little bit what city you're in.

Audrey Neff

Yes.

Erica Crawford

Because you have to spend a lot more in Beverly Hills or Newport Beach or Miami or New York City than you have to do in Knoxville, Tennessee. You know what I'm saying? It's just a factor of location. So I do think that that is a huge part of it. I'm just curious what your thoughts are.

Audrey Neff

Yeah, I totally agree with that. If someone's based in Miami versus Tulsa, Oklahoma, you have a lot more competition in Miami than you do in Tulsa, Oklahoma. That's going to have a direct correlation and impact to your marketing spend. And then stage of business, I totally agree with that, too, right?

If you're starting up or you open up another location that's an hour away or whatever it is, you've got to ramp that location up, which requires marketing. So I totally agree that 5% is more like an industry benchmark of average, but are there nuances of is it lower, is it higher? Of course.

But yeah, I think that those two points that you made are absolutely accurate.

Erica Crawford

Amazing. Okay, good. And then, okay, a couple of other. Would private equity be interested in the owner exiting altogether?

Audrey Neff

Yeah, there is a group out there that buys 100%. If someone wants to email me, I'm happy to. If someone's interested in truly selling 100%, if you're generating a lot of the revenue, you typically are not going to be able to take a check and walk away.

Erica Crawford

Yeah.

Audrey Neff

You will become an employee. You'll be put on whatever compensation that is. You may have, I don't want to call the word quota, but there may be things like that attached to it or an earn-out, and you're not going to be able to just walk away.

Unless you're generating barely any revenue, like less than 10% of revenue, you can't sell 100% of your business and walk away. You'll typically be required to stay on, let's call it three to four years, so that PE firm has enough time to work on replacing you and diversifying the revenue that you're bringing in with other providers.

So there is a group out there where they buy 100% of every single practice. They say it's not private equity, it's family office money. I put them in the exact same buckets. But, yes, so there are options out there if you want to sell.

You can probably sell 100% to many different platforms, too, but once again, that goes back on how much you're producing. And most private equity groups require you to roll over equity, to be honest, because they want you to still have skin in the game. So it's typically—

Erica Crawford

Yeah

Audrey Neff

it's pretty rare to receive 100% cash with what you're selling. Even if you are going to exit the business and you're not going to be producing, you're typically still going to have to roll over equity. But there's different nuances. But to answer that question, yes.

Erica Crawford

Okay, perfect. Another question here. What if somebody already has a PC and an MSO set up? Does that change anything in terms of value?

Audrey Neff

Nope. Nope, it does not. For instance, with Aviva, even though Aviva, we are an M-- And I'll throw my contact info back up here, too. So while Aviva's the overarching MSO, we'll still basically build a new MSO entity for your business.

So a lot of the practices that join Aviva, they already have an MSO, and obviously how your business is structured varies on a state-by-state basis, but you still have that local MSO of how your business is structured, and that's, once again, it's your 100% ownership.

And then you just have basically a second MSO that sits over top, which is Aviva Aesthetics. That's kind of the umbrella MSO that sits over all of our locations.

And the reason that we have to have that is because having a strong MSO team on top of the practices, so your management services organization, when we go to market and we bring in an investor partner at Aviva, let's call it in 2030, whatever it may be, we'll have probably around 30 full-time people at that MSO level providing services to all of our practice locations.

So your business is still structured. We'll restructure it the right way it needs to be. But you still have your own MSO. There's just basically a second layer that sits over top of that, and that is how you're able to get the purchasing power and all of these things.

Erica Crawford

Perfect. And I'm going to bring up just one more thing, and then I think we're going to end off. First off, we'll be sending out this recording to everybody, so if you need to look at the slides or the recording or all that, look, we're so happy to provide all that for you.

Just so you all know, and thank you for sticking around for this Q&A. I find that one area that private equity, or I'd also imagine entrepreneurial equity, would find as a problem, Audrey, is that sometimes we push this a lot. I've done this talk at AmSpa, ASAPS.

I've done the same talk over and over because it's just I have to really like bing it in, which is diversifying your marketing portfolio, and I think that matters a lot when you sell.

Audrey Neff

Yeah.

Erica Crawford

If you have a practice built on just one marketing strategy, I feel like mostly private equity does not want to buy that practice. They need to see that you are getting new patients from multiple places.

Audrey Neff

Yes.

Erica Crawford

Because that way they're not just dependent on one thing. So for example, if your practice is just dependent on paid ads, why would they even want to buy you? They could just run paid ads for a different practice that they have, right?

Audrey Neff

Yeah.

Erica Crawford

Or if it's just on SEO and SEO only, it's like, okay, that's great. It's a little stronger than paid ads—

Audrey Neff

Mm-hmm

Erica Crawford

I would definitely say. But algorithms change, things happen. There's still a little bit of risk. Similar, social media. Well, is that social media for a singular provider? Is that social media for the brand, the practice as a whole?

But ultimately, I feel like the places that get the best valuation and do the best in the sales process end up having many marketing channels.

Audrey Neff

Yes.

Erica Crawford

They're doing email. They're doing text blasts. They have loyalty and membership programs. They're doing SEO, AI, paid ads. They're doing traditional PR, and it's also for the practice, not just for one plastic surgeon or for one injector at a med spa, but it's for the practice as a whole.

And if they have tons of marketing strategies going, so there's tons of different ways patients can come in, the risk factor is a lot less for whoever is buying, whatever platform is buying that practice. That is what I have found to be true after working with a lot of PE companies. Just your thoughts on that.

Audrey Neff

Yeah, and I think that's a great point, and this ties into a theme of what we've talked about today is what can you do to essentially de-risk your practice? It's the same with—

Erica Crawford

Yes

Audrey Neff

marketing too. So how can we create a marketing, an omni-channel, a multi-channel marketing approach?

And Influx is obviously a phenomenal vendor and partner to go to for those, I'm sure a lot of people that are on are already using you guys, but they do phenomenal work, and I strongly encourage you guys to reach out to them if you don't have all of these things set up, and they're great people as well.

But yeah, you want to think of, okay, from a marketing standpoint, you don't want to rely on one channel or put all of your eggs in one basket because then if one day something happens to that basket and the basket goes away and all of your eggs were in that one basket, your marketing channel or your marketing initiatives are essentially nothing now.

Erica Crawford

Yes.

Audrey Neff

So you want to make sure that you're very diversified. So having a great website that is converting at a really good level. Obviously ongoing SEO, AEO is something else that is emerging in the industry with AI search engines and things like that.

But once again, AI is pooling from Google and crawling the internet, and so content remains to be king.

Your Google reviews, an optimized Google Business Profile, being active on social media, having strong referrals and word of mouth, being active in your local community, building local partnerships, whether it's with a local Pilates studio or a high-end cycle bar or partnering with other people in your local market that have your ideal customer and your ideal patient profile.

So I think that when you have all of these things in a well-oiled engine together, that de-risks your marketing.

Erica Crawford

Right.

Audrey Neff

Because now if something happens to one of those channels, you have all of these other things that are still driving potential interest and prospective patients into your business. So I think that's a great point, Erica.

Erica Crawford

Absolutely. Well, thank you. I think that's all we have time for. Thank you so much for coming, Audrey. We will go ahead and...

Audrey Neff

Thanks, Stephanie.

Erica Crawford

We will go ahead and end off for today, but once again, email us. You get a slide, you get our webinar, and we'll be doing this again real soon. So thanks, everybody.

Audrey Neff

Thanks, Erica, and thanks, Influx.