The Dermatology and Aesthetics Mergers and Acquisitions Market: Reflecting on Trends, Looking ahead
Over the past decade, the dermatology and aesthetics mergers and acquisitions (M&A) market has experienced notable trends that continue to shape its trajectory. Starting in the early 2010s, financial sponsors (private equity, family offices, and institutional investors) drove a wave of platform investments into dermatology, creating a foundation for sustained growth. This initial momentum led to a surge in add-on acquisitions in dermatology, a trend that remains strong today. Financial sponsors then began focusing on ancillary frontiers, which included the aesthetics market, (medspas, cosmetic dermatology, and regenerative health). Remarkably, this activity has persisted despite significant challenges, including the COVID-19 pandemic, rising interest rates, inflation, and a cautious buyer sentiment following the record-breaking M&A spending spree of 2021.
As we look ahead to 2025, dermatology and aesthetic practice owners are asking a key question: What lies ahead for practice valuations and M&A opportunities? In this piece, we explore the factors influencing the dermatology and aesthetics market and what they mean for the future of practices.
Continued Investment and Consolidation in Dermatology Aesthetics: 2021–2024
While the broader M&A market faced significant headwinds, the dermatology and aesthetics M&A market not only remained resilient but also demonstrated steady growth. According to PitchBook, dermatology and aesthetics transactions totaled 54 in 2021, 66 in 2022, and 77 in 2023—highlighting a clear upward trend despite macroeconomic challenges. Notably, aesthetic dermatology transactions accounted for approximately 67% of total deals in the dermatology and aesthetics market in 2023 and 2024, further underscoring the strength and appeal of the aesthetics subsegment.
Between 2021 and 2023, add-on acquisitions dominated the dermatology and aesthetics market, making up 73% of all transactions. Platform investments also played a significant role in the dermatology and aesthetics sector, with PitchBook reporting 29 platform deals from 2021 through September 2024. This signals sustained interest from financial sponsors in creating new growth platforms, including within the medspa subsegment of the market.
Economic Update
Alex Chausovsky, Director of Bundy Group Director of Analytics and Consulting, provides an update on broader economics.
Dermatology and aesthetics providers should remain informed about broader economic trends to anticipate their potential impact on business operations. In 2024, the US economy showed resilience and outperformed expectations, with Real GDP increasing by 2.8% compared to 2023 (year-over-year growth). Not only did the feared recession not materialize, but last year’s growth was above the 2% average trend line of the past 2 decades. Most forecasts for 2025 have growth continuing this year, albeit at a somewhat slower pace than witnessed last year.
Consumer-related economic indicators, such as retail sales, credit card spending data, and wage growth, further highlight the strength of the economy. Since consumer spending accounts for two-thirds of US economic activity, its robustness through the end of 2024 is particularly encouraging. Although inflation ticked up slightly in recent months, rising 3.0% year-over-year according to the latest reading of the Consumer Price Index (CPI), wage growth continued to exceed inflation through the beginning of 2025, bolstering household purchasing power and contributing to a more favorable economic environment for healthcare providers. However, key policy initiatives of the new administration, including important changes to the tax code, immigration, and trade (tariffs), require providers to pay close attention to the latest economic developments to ensure ongoing business success.
The Future of the Aesthetics M&A Market: What to Expect in 2025
To provide a well-rounded perspective on the year ahead for the aesthetics market—encompassing cosmetic dermatology, medspa, and general aesthetics—we consulted a panel of industry experts with deep, specialized experience in this field.
Bernie Grondin (McDermott Law Firm)
Bernie Grondin is a partner with McDermott, an international law firm, where he focuses on representing private equity funds, strategic investors, and founders/owners-operators in complex corporate transactions. He says:
The aesthetics market in 2025 remains a key focus for private equity investors, driven by its strong cash flow potential, recession-resistant demand, and scalable business models. As consumer interest in non-invasive procedures and wellness integration grows, the sector is experiencing accelerated consolidation. Private equity-backed platforms are actively acquiring independent practices to achieve geographic expansion, operational efficiencies, and economies of scale. Valuations remain competitive, particularly for practices with robust recurring revenue, advanced technology adoption (such as AI-driven skin diagnostics), and proven management teams. However, deal structuring requires heightened diligence around regulatory compliance, as oversight of non-invasive procedures continues to intensify at both state and federal levels.
Macro Mergers & Acquisitions Market
The broader mergers & acquisitions (M&A) market has faced a series of challenges over the past few years, including economic fluctuations, shifting buyer sentiment, and hesitation among financial sponsors. Here are key factors shaping the market:
- The 2021 “M&A Hangover Effect”: The M&A market had unprecedented activity in 2021, driven by strong buyer demand and extraordinary transaction valuations. However, by 2022, the market experienced a correction, resulting in decreased transaction value and volume. This post-2021 recalibration left many buyers across many industries cautious, impacting deal flow and valuations.
- Financial Sponsor Slowdown: From 2022 to 2024, financial sponsors largely grew hesitant to sell portfolio companies, fearing they might not meet return objectives. Additionally, macroeconomic uncertainties (eg, higher inflation and increased borrowing costs) made sponsors reluctant to commit large amounts of capital to new platform investments, leading to a more conservative investment approach.
- Add-On Acquisitions Dominate: Over the past few years, add-on acquisitions have remained prevalent. These smaller, strategic acquisitions—executed by financial sponsor-backed platforms—allow sponsors to enhance capabilities, expand geographic reach, and improve the financial profile of their platforms.
- Regaining Momentum: In 2024, the M&A market demonstrated signs of recovery. According to PitchBook, North American transaction value surpassed $2 trillion across 17,509 deals, marking a 16.4% year-over-year increase in value and a 9.8% increase in count. These signs suggest a potential return to sustained growth, offering new opportunities for buyers, sellers, and financial sponsors alike.
- High-Quality Businesses Drive Robust Valuations: Even with fluctuations in the M&A market over the past decade, well-run businesses continue to secure strong valuations. To attain “A+” status in the eyes of buyers, a business should demonstrate key strengths such as consistent profitability, a diversified revenue stream and provider base, and strategic positioning in attractive geographic markets or industries, among other factors.
Dana Jacoby (Vector Medical Group)
Dana Jacoby is a healthcare industry leader and CEO of Vector Medical Group, specializing in strategic growth, M&A, and innovation for medical practices and healthcare companies. She says:
The M&A market in plastic surgery is expected to see continued growth in 2025, driven by rising demand for aesthetic procedures and increasing consolidation of independent practices by larger healthcare groups. Private equity firms are likely to target practices with strong cash flows, scalable operations, and advanced technologies like AI and minimally invasive solutions. Additionally, trends such as medspa integration and international expansion will fuel M&A activity, as providers seek to offer comprehensive cosmetic services to a global, growing consumer base.
Stewart Carlin (Bundy Group)
Stewart Carlin is a Managing Director with Bundy Group, where he leads client engagement team. He says:
Based on Bundy Group’s client engagements in 2024 and our ongoing aesthetics transactions set to close in 2025, we continue to see robust buyer interest in medspas as well as cosmetic dermatology and regenerative healthcare practices. Numerous financial sponsor-backed platforms are actively pursuing add-on acquisitions, while a substantial number of financial sponsors are seeking new platform investments. This dynamic continues to position the aesthetics sector as a seller-friendly market for M&A.
For aesthetic practice owners, thorough preparation remains critical to achieving a successful sale. Equally important is leveraging competitive pressure through a well-structured sale process to maximize value and achieve the best possible outcome.
Rebecca Axtell (Well Labs Plus MedSpa Partners)
Rebecca Axtell serves as the Chief Development Officer at Well Labs Plus, one of the fastest-growing medspa platforms in the industry. She says:
Well Labs Plus saw a surge in owner inquiries in the last 6 months of 2024, so we anticipate 2025 to be a big year for partnership engagement. We predict medical spa transactions to increase two- or three-fold in 2025. Owners are seeing the effects of the double-digit growth in aesthetics and what oversaturation is doing in their markets. They are learning that the right partnership holds so much opportunity for themselves, their team, and the success of their practice. Teaming up with the right platform can bring necessary reinforcements to remain successful in this competitive industry. Well Labs Plus offers everything from improved staff benefits for greater retention, scaled purchasing to reduce COGS and increased exposure to more training and development. The owners that engage in partnership earlier than their peers will have a competitive edge in their market and will reap more operational and financial benefits for their future. We believe 2025 will be a busy and exciting year for partnership in the aesthetics industry.
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