Don’t Even Think About Selling Your Medical Spa Until You Hear This with Julie Davis

Bill Walker (00:04):
Today on Aesthetic Appeal, what every seller should know, a personal story of what it's like from the voice of the person who is actually selling their practice. We hope you'll enjoy. Joining us today on the Aesthetic Appeal podcast is Julie Davis, the founder of Pura Vida Body and Mind Spa, located in Fleming Island in the greater Jacksonville area, who will be answering your questions about what it is like to go through the process of selling your med spa through the lens of the seller. Julie is a serial entrepreneur having founded a professional skincare line, physician's first practice solutions healthcare consulting firm, Julie has a bachelor's from UCF, she has a master's in health administration from Ohio University. She has a law degree from Mercer University. Julie, is there anything else that I must be missing? But I mean it could go on and on. The accolades are impressive. She has more than 20 years in the healthcare industry and it's a delight to have you on the show. Wow, welcome.

Julie Davis (01:09):
Thank you, Bill. Thank you. I'm a lifelong learner, so that's probably reflective of what you see there.

Bill Walker (01:15):
That's probably equates to lifelong success too is probably why we're here talking today. Julie, if you would just kind of give a backdrop of how you even got into the medical aesthetic landscape and what your thoughts were initially coming from. You have a heavy acumen in business, so maybe talk some of our listeners through that before we dive into your story about selling.

Julie Davis (01:40):
I actually tell people all the time that I ended up in aesthetics by accident. I'm a very faithful person and believe in God, so I actually don't really believe in accidents necessarily. I think I ended up right where I was supposed to be, but it was a bit by accident in that I had spent my whole career working in the healthcare sector, so specialties like orthopedics and retina and a various whole host of things over the years and I thought I would never leave the traditional healthcare realm. And lo and behold, one day I had a recruiter reach out and say they had this great opportunity for a big plastic surgery group for an administrator. And with some trepidation I took the interview and that's a very short version of how it came to be, but that is basically what happened is I sort of got recruited away from the healthcare sector. And I think it really was probably the Lord telling me you're supposed to be an entrepreneur and you're never going to be truly happy until that's what you're doing.

(02:36):
So came to work in the plastic surgery group and that was when I realized I said, wow, this is great. I don't have to have an MD behind my name in order to do something that I'm very passionate about. I also learned at that time that medical aesthetics is so much more than vanity because I was very ill-informed. I thought it was all about vanity and celebrities and the way people look fake and I had the wrong impression entirely. And so when I learned that it was so much more than that, giving women, especially women, confidence back into their lives and even improving how they functioned at work, there are just so many things that impact the psyche about how we look and feel. And that was when I became really passionate about the space. So it wasn't very long after going there that I said, wait a minute, I'm just going to hang my shingle here. This is something I can do on my own. And I felt prepared from the many years of being in business in the healthcare sector, I thought I would be well prepared. So that's kind of how it came about.

Bill Walker (03:33):
And if you would kind of expand on why you came up with the name for your practice, because there's several aspects in play here, including mind and body in the name itself.

Julie Davis (03:47):
So I really wanted to put the spa in the med spa. So what do I mean by that? Well, many years ago when I started in this industry, there was sort of this emerging med spa concept and most of it was sort of a fluffed up room in a doctor's office and it just didn't seem very spa-like to me. And so for me, I wanted to bring the spa side, that day spa side to things, and really give the experience that people are looking for, which is the serenity, the relaxation, the body parts and the mind parts coming together, where we're improving the outside but we're also improving the inside. And then as we all know, medical aesthetics has just continued to developed and now we're moving into things like wellness related services as well. So it's really the name was meant to grow with me and I think that it's done very well in that way. And then Pura Vida being a Costa Rican term, many people are familiar with is really embodies, I think what we do in aesthetics, and just kind of talking about true life and living, living your best life and sometimes we need to do some self-care in order to live our best life. And so I felt like that just kind of brought it all together for me.

Bill Walker (04:54):
One of the things that I've noticed in my interactions with you, Julie, has been just how thoughtful of an approach you take to so many aspects of your life. If you would maybe talk us through your thought process behind your decision to sell your med spa.

Julie Davis (05:12):
Yeah, so as a consultant, I used to tell physicians all the time, if you walk out of the building, do you have something to sell? And most of the time they realized they didn't. And so when I started my consulting business as well as Pura Vida, more importantly, I really intended to sell it. So from day one, and that surprises people a lot, especially because I am so engaged in my business. I work in it every day. I'm there, I'm present. I'm a very involved owner and I care very much about our clients and their happiness. And so I put a whole lot of love into the business, but it still was always by design to be sold. And the reason for that is there is no greater way than to amass wealth than to be a serial entrepreneur, buying businesses, building businesses, selling businesses, it's a great way. And as many people listening to this podcast might be thinking about, there's an opportunity not just once to sell your business, but now with this emergence of private equity platforms and things, there's this chance to kind of double dip and be able to sort take advantage of that second bite of the pie and really amass some wealth.

(06:22):
So I think what's important to say about that is it gives financial stability to my family, which was really, really important to me is knowing as I age, we're not going to burden our children financially. We'll have enough to live on and live the life we want and travel and do the things that I haven't been able to do while being an entrepreneur because it takes too much of my time. But all those things. But more importantly, I really feel that I'm called to give back and the best way to be able to give back into your community is to have enough financial resources to do so. So there's been times that I've been broke enough that somebody outside of a Publix looking for a charitable contribution, I just couldn't do it. I just couldn't wrap my head around parting with that money when I was on tight times. And so knowing that I'll be able to do more of that as well. So I think we should all strive for that kind of financial wealth.

Bill Walker (07:15):
So for our listeners, definitely when you meet Julie, you can definitely sense that there is this deep sense of grounding and centered footing and everything that she does within the community, it is transparent through her interactions. Julie, I want to touch on something that you mentioned about your family because you really are not at the legacy scenario stage where somebody drops the keys in the mailbox and they walk away. You have a long run in front of you should you choose to continue going for however long you want. So for our listeners who are debating the idea of like, well, I'm not ready to retire yet, you did something very unique, which was you made a decision to stay on your med spa and be a part of the organization that you joined forces with. Would you talk about that and how it played into your exit strategy? Because I think that's interesting.

Julie Davis (08:15):
Yeah, it was a big part of my desire to sell is that was really this great opportunity to keep going, which kind of doesn't make sense. I think most of the time we think of selling a business, we take our chips off the table and we go home and retire and I'm not ready to retire or first of all, anyone that knows me knows that's probably retirement's not going to look like retirement for me anyway. Who knows what I'll be busy doing, but I'm certain it won't be what the normal retirement looks like. But more importantly, I love what I do and I love my business and I genuinely love my team. And so the idea of just walking away from all of it just didn't seem appealing to me. And I think many, many business owners feel the same way because it's like birthing a baby.

(08:56):
It's difficult and you fall in love with your business. And so being able to stay behind and continue to watch it become something even greater than maybe you had the resources to do on your own is really appealing to a lot of people. And it was definitely why I was attracted to looking at platforms as an opportunity to really extend my life in the business for a while and then be a part of something bigger and greater. So now I look at it as I'm not only building Pura Vida, but I'm building the platform and I need it to be successful and I want to be part of making sure that that platform, at least by my practice, is as successful as it can be.

Bill Walker (09:40):
So if you would, you said something on a previous conversation with me, and I love the quote. Please correct me on this, how it goes. You have to kiss a few frogs before you find a prince.

Julie Davis (09:57):
Yes.

Bill Walker (09:58):
Now, okay, so I think that ties into something that you had told me previously as well, which was maybe share with our listeners that you didn't find your perfect match for a buyer as a partner in your practice right out the gate. Maybe talk about how you pulled back from an initial deal before doing a closing.

Julie Davis (10:21):
Yeah, so I learned a lot the first time around and I learned to really listen to my instincts and also to learn from my mistakes. But to answer your question more directly, yes, I definitely kissed a couple of frogs along the way and I learned from that. And I guess, I don't know, I've kissed some frogs in my personal life too, so there you go. But anyway, I think at first I was attracted to really the first platform that came my way. And there was a lot of reasons at the time their leadership team wasn't in place, but they had a long history of being in this space. So there was an attractiveness that I thought they would know how to be successful at this because they had done it in other similar spaces like dentistry. So I was very much aligned with the founders of that.

(11:09):
But as the leadership team came into place, I realized that culturally we were not a good fit. They were asking me to stay on for a five-year term. I really do tell people I felt like I was about to walk down the aisle with somebody that I had all the red flags. And so it was really very much the 11th hour that it was starting to unravel. I think actually both parties were probably feeling that it wasn't a good alignment at that point and it was a very expensive lesson. So to step away from that, and then quite honestly, I kind of rolled right into what I should say was my plan B at the time because an individual, not private equity person had approached me during the diligence phase, which I obviously couldn't speak about at that time, but I listened and I thought, well, here's plan B, let's just see what that's like. And shamefully it was completely different, but it was still a malalignment. And I really knew both times that this was not going to be a good long-term working relationship. And I also in both situations found that my team was not favorable to either of those purchasers either. And with earnout provisions being in the large majority of these deals, it's critical that your team stays in place and that they continue to be happy and productive and perform, or the risk is a pretty high financial risk that you don't make that earnout money.

Bill Walker (12:39):
It's funny you say that talking about the team, because that's something that we talk about with our clients so much is there really is this culture component where, look, an organization that wants to buy your practice can have a great culture. It just may not be the culture that your group is tribally aligned with. And that alignment of culture really is so important because you're right, there are so many times there's a port of the deal that extends beyond the actual transaction closing date that translates to earn out money in you as a seller's pocket and you're not going to be successful. People won't be successful if they haven't thought through what you've thought through, which is what is the right culture fit for our practice and why does it translate into dollars down the road?

Julie Davis (13:32):
Bill, I would say to that too is sometimes, and I think I was quite guilty of this to be honest, I think I was going a hundred miles an hour every day to the point that I wasn't even really in tune with what is our culture of Pura Vida. And this was the awakening moment, which was is not the right time to have it, by the way, because it's a very expensive awakening when you have that much an attorney's fees invested. So I wish I had kind of thought that through a little bit more, and I think it would've also benefited me to been more open with my team up in the beginning because I was a little bit more holding it close to my chest. I was worried about them being fearful and all the things. And what I found is when I found my perfect home with Well Labs, I found that that resonated, they resonated really well in the team, but I involved them very early in the process and I think that made the alignment even that much better. So just some words of wisdom from my experience.

Bill Walker (14:30):
When you look back on the entire process for you, what would you tell owners that they should be preparing ahead of time in order to sell their business?

Julie Davis (14:43):
I think the first thing that regardless of what your business acumen is, is you've got to know your numbers. You really need to know is your financially healthy, you need to understand what EBITDA means, you need to understand how to even have these conversations because it's a lot. And I felt pretty prepared going into these. And then I realized that there's so many things that I don't know, you don't want to be learning it on the fly. That's not the time. But really being intimate with your business, knowing things right down to a granular level, that production by staff, how are they producing at an individual staff layer? Because when the diligence space starts with these things, they are going to do what I call a business colonoscopy. I'm going to tell you that's how it feels. And they're going to look in every crevice and every crack and everything and they want to see it all.

(15:36):
They want to see everything. So a lot of times the math seems like things that we should know, but also is it clean? Do you have a bunch of personal things wrapped in there that's just going to muddy the waters and make it even more difficult to get through the financial diligence process? And then things like contracts. I was in business for seven years before the sale took place, so the amount of contracts with vendors and things that we have in place, there's just so many. And being able to understand what you need to compile and then try to compile that in advance of getting started going to market would've helped me a whole lot and certainly would've saved me a lot in attorney's fees. I was initially relying a lot on a med spa attorney to help me navigate this, and I could have done a lot of this myself if I had done it in a preparatory way rather than trying to do it during the process.

Bill Walker (16:31):
Now, Julie, did you have a broker going through your process on the first two interactions that you spoke to?

Julie Davis (16:40):
So I did not, and that could be part of the reason that things didn't go as well as they should have because it's a heavy lift. One of the things this process that you'll go through is it's going to feel like you have two full-time jobs. And one of them is getting through the diligence process that is going to take up so much of time, but it's so critical that you don't lose sight of generating revenue in your business because you can be going through diligence, if your revenue drops off, they're going to immediately want to know why? Why is revenue dropping? So you cannot forgo one over the other, and it is like having two full-time jobs. So it's just really important to keep that momentum going.

Bill Walker (17:22):
You mentioned due diligence was your process. Did you manage that? Did the broker lean in and help with some of that? How did you handle managing that time commitment?

Julie Davis (17:34):
There's still a lot that you have to gather on your own, even with a broker. I did hire a broker third time around, and it was the best choice I ever made was doing that because at that point, two things happened. One, I kind of had a really good idea of how this process is, and I had compiled a lot of documents along the way. And I say that I want to correct, I actually brought the broker in during the second failed attempt at sale. But the advantage of having a broker is a couple of things. And I want to say it's so important that the broker knows med spas because I met with a business broker who didn't know med spas, and I could tell right away I went, this would not be a good situation. We have a very unique space. So if somebody is considering a broker, you've got to make sure that you're aligning with somebody that actually knows this space, they know what the market will bear, they're going to put it in the best light floor forward and that they understand our language because when we start talking about Emsculpt Neo and all these different things and applicators and cost of goods are different, and if they don't understand that you're going to spend half your diligence time trying to teach the broker what you're even talking about, and that's not ideal.

(18:53):
So when I used a broker that had that experience, it made the process so much better. There was, first of all, also I knew I had somebody in my corner. So number one, I had learned a lot. I knew how to compile the documents at that point, but they really do all the heavy lifting. They're doing all the number crunching. They're the ones that are going to help through most of that financial lift. Having an attorney on board is going to help you with the legal and the contracts and all those kinds of things in that part of the negotiation. And then finally, I'd just like to say is that after two failed attempts on my own, by doing it myself, I said to the broker, I said, how about you go find me a buyer that you think would fit me, literally fit my personality. You know me now you kind of know how I work and can you find somebody that would make a good cultural fit? And they found exactly that it was perfect.

Bill Walker (19:46):
And so I want to make sure that I highlight this point for our listeners. I'm a firm believer in a rising tide lift all boats, and we were not your advisor on your transaction, and it's just out of good faith and good conscience to have a friend like Julie on the show because there's such a good message. I think to come from her voice for all of our listeners, is that if you have a quality industry specific broker, what the advantages can be for you as an owner from somebody who had 20 years of healthcare experience, who has a law degree, who has a master's degree in health and has owned her practice for several years. So I just think that it's really important to highlight the fact that this is somebody that you would look at and say, they definitely know their stuff. She knows the industry, she knows her staff, she knows her numbers, and she's phenomenal. And it's just as a matter of do you have the extra 20 hours in the week to find the right fit?

Julie Davis (20:58):
And it's just the knowledge. I mean, it's big stuff. We don't live in that world unless you have a finance background or finance education or even with my law degree, I mean, I couldn't have navigated the legal on a mergers and acquisition.

Bill Walker (21:17):
To your point.

Julie Davis (21:18):
It's not the type of law I practiced.

Bill Walker (21:19):
You're not going to necessarily have a real estate attorney look over your M and A healthcare deal, right?

Julie Davis (21:25):
That's right. Yeah. I think having people that know the space is critical, and that goes for the attorney as well. If you have an attorney that understands our industry, it's going to be so much easier for you.

Bill Walker (21:38):
What are some key considerations that you took into account when you were interviewing potential buyers as you went along this process?

Julie Davis (21:47):
Well, even though I kissed two frogs, I turned down a lot of frogs that I never

Bill Walker (21:53):
I know. I'm aware.

Julie Davis (21:54):
And I guess I would say that those were just so obvious, but I would say to any of your listeners is when you have that opportunity to sit down, whether it's by zoom or in person, you really do need to interview them. So put your list of questions in writing and figure out just, I mean, I keep going back to this dating concept. I'm not entirely sure why, but really what are your non-negotiables? Because you have them. You have them in business, you know what they are, and really look at yourself internally and say, what is my business culture? But also who am I? Because if you're staying behind and you've got to work alongside a leadership team as now an employee, you really need to be able to work with whomever you've chosen. I think that you'll find if your listeners are in this process or thinking about it, what you'll find is that if you don't interview them, they're only going to tell you the things they want to highlight.

Bill Walker (22:59):
Yes.

Julie Davis (22:59):
And that's no different than interviewing someone that you may hire into your business. If you just sat down and asked, tell me about yourself and go over their resume, you're walking away with very little about that person that you're contemplating hiring. So interview them, interview them hard.

Bill Walker (23:16):
Why do you think there were so many interested private equity firms in Pura Vida? What's in there? Because it is noticeable, the volume of interest you had.

Julie Davis (23:29):
So I guess in truth, I'll never know with a certainty, but I did ask a few people who were willing to be honest with me about it, and one of the highlights that was attractive to them was our reviews. So when I speak about other things on stage, I always make sure to tell people, your reviews are everything and for so many reasons, and here's yet another one. I mean, we know people look at your reviews to try to choose your med spa over another, all that, everybody knows that. But what you might not be thinking about is when you've got 3000 plus five star Google reviews, you are on the radar for private equity or looking, they want reputable practices. They're not looking to buy practices that are subpar or that are failing. They're looking to buy practices that are going to elevate their platform.

(24:14):
So reviews are a huge part of that conversation. I also made a point several years ago to start putting myself out there. So what most people don't know is I'm an introvert. So it was an interesting pivot for me to say, I'm going to go figure out how to position myself to speak on stage for other people so that I can sort of become an expert in my field. But I thought it was both important for my practice and for our patients to see me as a leader in the aesthetic industry. And I think that they see those posts and so they feel like they're going to a very reputable place because they are. And then also my name's out there, people start to hear what I have to say, and I think it helps to position yourself as that type of a business.

Bill Walker (25:05):
I tell people all the time, why are having hundreds, you've got thousands, why are having hundreds of positive reviews important? It's like walking into a med spa and what are the first two things that you are going to pick up? What is the smell and the look that hits me when I walk in and how am I greeted? And it's on the way out, the attention to detail. Would you please give us a positive review if you felt like that we helped impact your life in a positive way? Right? It's the attention to detail that the spa is really well organized, really well led. So very insightful. I want to go back to the selling process. If you would maybe talk about a couple of challenges that you faced that we haven't covered.

Julie Davis (25:58):
So the first time around, I would say the amount of stress of trying to navigate this without a broker. So that meant learning it all at the same time. I'm trying to produce all of these documents and all and filling all these requests, and it was overwhelming to say the least, because it was all foreign to me, quite honestly. I mean, I knew my business, but I didn't understand how to speak about it this way. So the biggest challenge I had, and this actually was some of the tension that started to build during that first deal, was it was very difficult for me to manage the workload. And so I did take my eye off my team.

(26:43):
And they're an amazing team, but if someone's not driving that motivation and driving the marketing and driving the strategy, you can't continue to grow revenue and you will either flatten out or start losing. And at the same time, we had med spas popping up all around us. So there was sort of this perfect storm happening as I'm trying to figure out how to balance all the balls and keep my eye on both things and continue to do a great job in strategy and all that. But I needed to be shifting strategy hugely because I was being impacted. I went from being the only only gig in town, to two years ago, there's five med spas in a five mile radius of me. I mean, it's intense competition, and

Bill Walker (27:26):
Two of those are going to close in the next year and a half.

Julie Davis (27:29):
I do hope you're right. I hate to say that. No, I think actually, actually I've been asked this before, how does that make me feel with them popping up all around? And here's how I look at it, is the more competition in my back door, the better I have to be. So they really just inspired me, I guess, because I just need to know that I'm leading the pack and making sure that our businesses that much better. But that was the biggest challenge, Bill, was really being able to balance it. And lo and behold, guess what suffered? I made sure I got all their requests in and then our revenue started to drop and they wanted to know why. And I really couldn't tell them exactly why, because I had been spending 30 days just with my face and all the numbers.

Bill Walker (28:13):
Well, and you want to be super woman too. I think that's a fault that I see is that it's just the zero defect mentality of wanting to be everything to everybody and thinking like, you've built this amazing practice and you overcome all of these obstacles. I can handle this. Of course, I can handle this. One of the things that I tell our clients is I'll actually tell them like, Hey, don't worry. We'll help you clean up the financials. Where I think a lot of times people can lean in to do some really great work on their own is, what's your inventory process? How do you keep track of your free samples?

Julie Davis (28:55):
Yes.

Bill Walker (28:56):
How are they used? Do you have secure measures for Cipher Lock on your inventory locker, your inventory door? I can separate the Bruno Mars tickets out from the financials and be like, oh, yeah, sorry that one wasn't a client engagement. But it takes a little bit longer lead time from the founder to be able to have those other things in place.

Julie Davis (29:23):
And I would say this too, is if anybody's listening to this and they know they have a practice management system that's not up to par and you're not ready to sell yet, do that before you sell. Because a lot of things that you're going to be requested to provide are going to come from your practice management system or your EMR, and having something that can do the inventory for you and that tracks it correctly and that you can pull reports from will make your life that much easier too.

Bill Walker (29:54):
Julie, if you look back on this whole entire experience, what advice would you give other business owners when they're considering to sell their practice?

Julie Davis (30:04):
I would say the best piece of advice that I could give to you is really putting the thought and the effort in before you go to market, even before you approach a broker almost, I would say get your house in order. So from process, to talk with your team, again, I think I held that too close to my chest and it didn't help. Being open and honest with them about your desire to sell, but what does that look like for your team? Because if they understand that you are committed and you have skin in the game financially and you're staying behind, that will really soften their fears a ton and really sitting down and thinking about the things that, like I said, honestly, I was just the route on the wheel doing my work, just building my practice, making it bigger and better every year and growing revenue and all the things that made me attractive to private equity.

(31:01):
But the reality of it is I had spent such little time reflecting on who is Pura Vida? Who is Julie Davis? What do I want? Who's going to be a good fit for me? What kind of platform? By way of example, I would say that I think part of the reason that I chose the right platform for me, which again, my broker found them, but they're a family office backed rather than private equity backed. And also it's women at the helm, women founder and also with industry experience. So that compared to other, don't mean to be mean Bill, but white males who've never worked in my space coming in and saying, well, we're going to change how you do it. It's just a little bit like, I don't know how that's going to go for me. I'm running a great business here and I don't think you're bringing an additive situation.

(31:53):
You might make my life a little more difficult. So I think just understanding those things about yourself, about your business, about your team, being as open as you can be with them. So there's not some blindside. And I say this, let me tell you, I've heard stories and I bet you can tell them Bill, of people who were happy and ready to sell their business and they get right down to the wire and the team is not staying, and that means the deal is dead. And so I think being open with them is a positive. So words of wisdom.

Bill Walker (32:28):
I think that's a great point. The confidence that's exuded by a strong leader early in the process is going to instill confidence in the troops. And that's true. It's that confidence that you spoke to that helps set the tone early on of like, this is what we're doing. This is the next direction, the next chapter that we're headed towards, and I'm confident about it, so I'm sharing it with you, and therefore you should feel good and feel safe that I'm making the best decisions for all of us.

Julie Davis (32:59):
I can tell you I did something unique in that third group that I was working with, and I was so excited about them, and I was so excited about that platform that I asked Reetu Gupta, the owner, I said, would you be willing to fly from New York to Florida to meet my team? I want you to meet them. Because I knew if they met them, they would feel the same as I did because I knew my team by then. I knew what they wanted. I knew what would drive them to continue to succeed, and I knew that they would feel the way that I felt. So not only did I share it as their leader and encourage them to be open-minded about the process, but I asked that. So as part of my interview process, when I had narrowed it down and said, none of these people, but this is my partner of choice, I asked that for that presence, and I think it was brilliant that they did it. I think it made all the difference.

Bill Walker (33:56):
Very valuable. Julie, an absolute pleasure. Thank you so much for sharing your thoughts and your insights on what it's like to go through this as the seller.

Julie Davis (34:08):
Thank you for having me, Bill. I appreciate it.

Bill Walker (34:10):
Ladies and gentlemen, there you have it, Julie Davis. She is an expert in the med spa industry and is one to watch as you continue to see this industry grow and expand, and we look forward to many great things for her. That's all for Aesthetic Appeal, and thank you for listening.