Business for Sale, Would I Buy It? | Laser Hair Removal Spa

In this series, CapForge’s owner and founder gives us a little behind-the-scenes on what a good or bad business would be. CapForge helps tons of clients either buy or sell business and Matt was a business broker before starting CapForge. Let’s look at some of these businesses up for sale and see if Matt would be interested in buying them.

Video Transcript: 

Alright, so this is the next in the series of Would I Buy This Business, let’s take a look at what we have today, which is a profitable multi-location laser hair removal slash spa with real estate business. Okay, I probably personally wouldn’t get into the laser hair removal business. Not something I’m super passionate about or probably the right fit for. But if it’s a good business and staff are in place, I certainly wouldn’t mind owning it if it made sense. So taking a look at the numbers, gross revenue 1.8 million. Again that’s one of those things I’ve mentioned before it’s a super round number so you know that immediately makes me suspicious that that’s not really what it is. They took some estimates like you know “We make $150,000 a month on average” and then they multiplied that by 12 and came up with 1.8 million. But that’s very likely not really what the number is. The cash flow 646,500. It’s about a 33% margin on the estimated sales that’s not bad. And then they have an EBITDA listed as 724,280 which is you know even better more like a 40% profit margin, which for this kind of business is probably reasonable. The whole question is whether or not this business is really generating that cause again that round revenue number just makes me suspicious. The price – excuse me – the price – I’m okay – The price on this is 6.3 million but they’re saying 3.4 million of that is real estate so if we back that out then the price is about 3 million 2.9 I guess. Which is 4X Multiple which is kind of high still. I think for this business with again round revenue numbers, I keep harping on that, but that immediately just makes me suspicious about this business not really being there being something more going on. 

So let’s scroll down. See if there’s anything in the description that helps. Unique opportunity to acquire thriving medical spa. Operating profitably for over a decade across multiple locations.

Hmm, okay, business generated 1.8, approximately 1.8 million in gross sales. Well if they have the books, they have the records, why can’t they tell us exactly what it generated instead of approximately? And they’re saying keep it above 40% making it highly profitable, great. It’s okay – so four locations; Plano, Dallas, Richardson, and Louisville, all in Texas.

I mean it’s – definitely a 40% profit margin makes up for a lot of potential problems and you can use that for expansion. You can use to pay a note. You can use it to just you know build your personal portfolio of other investments. So I like high-margin businesses, I like multi-location businesses. I like businesses that aren’t gonna be disintermediated by somebody like Amazon. Amazon’s not gonna offer laser hair removal anytime soon. And even if they did probably be done by robots. People might be sketched out by that. So probably a safe business to own for the long term. But I would wanna definitely get more information to know what the real numbers were. And also find out why if they’ve owned it for a decade, it’s a high-profit business, why are they selling? That’s always a key question in a business like this. Why are they selling a profitable business that presumably you know has people in place that could run it or you could hire somebody to run it and just take a little bit of a hit on the net profit instead of selling the business?

It says they have 10 employees. 10 employees in four locations – that doesn’t sound like enough, right? If you’re open five or six days a week, 40 hours a week, you need somebody to do the treatment, somebody at the front desk. Doesn’t sound like enough for a four-location operation. So there’s definitely something more in here to find out about. But with a high margin, the four locations, decades in business, or decade at least in business, this would be one I would consider for sure. I just would wanna get more comfortable with the numbers.