Project Renewal
When a leading Minnesota medical spa approached True North Mergers & Acquisitions about selling their business, we immediately recognized the opportunities.
The medical spa industry is booming, with a 10% year-over-year growth since 2017. The presence of over 50 private equity firms actively seeking acquisitions in this space created an advantageous selling environment, driving competitive interest and potential value for our client.
Our key challenge was finding the right buyer from this pool of candidates—one who could meet financial expectations and show a transition plan that aligned with our client’s core values and culture.
We made it happen, closing a deal:
- With a final bid 30% higher than the target price.
- That included immediate cash payout and 20% rollover equity while deferring taxes.
Here’s how the transaction unfolded.
To prepare for the sale, we researched the major players in the industry, narrowing our list to 50 potential buyers. Knowing this would be a complex transaction, we used our Compass Exit Opinion™ (CEO) to:
- Evaluate current market conditions to estimate likely market value.
- Identify potential deal structures that would minimize tax liability and maximize profits.
- Negotiate a deal that included both immediate cash payout and future growth potential.
Our CEO analysis showed that a recapitalization deal structure—one that included cash at closing and rollover equity—would provide immediate liquidity while also deferring tax liability.
With this established, we were prepared to move into the marketing phase.
To market, we opted for our proprietary QuietAuction™ process. Rather than going public with the sale announcement, our unique marketing process allowed us to maintain confidentiality and minimize disruption to our client’s business.
This approach generated three indicators of interest (IOI) from private equity-backed companies that wanted to expand their medical spa portfolios.
Our team analyzes industry trends, identifies potential buyers, and develops a targeted list of prospects. This thorough preparation ensures we position businesses for maximum value.
Our QuietAuction™ process allows us to engage multiple qualified buyers while maintaining strict confidentiality. This approach creates competitive tension among buyers, ensuring our clients receive the best possible offers.
By conducting multiple rounds of negotiations, we build on that initial buyer tension, often driving up the price while creating a clear runway that ensures we close with favorable terms and minimal disruption.
After analyzing each offer and considering the price, strategic fit, and potential for future growth, our team held meetings with the three most promising candidates.
Following these discussions, we received letters of intent (LOI), entered into negotiations, and ultimately arrived at a final bid 30% over enterprise value.
In the end, the True North Mergers & Acquisitions team facilitated a successful deal, generating multiple competitive offers. The winning bid came from a respected private equity with terms exceeding the seller’s target price.
The deal structure was favorable to the seller in that they were paid in cash at closing. Plus, 20% of the deal was structured as rollover equity, which means our client retained a stake in the business.
