How Profitable is a Wight Loss Business?

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 next in our series of “Would I buy this business?” is an established high cash flowing weight loss business for sale. Okay, weight loss business. So, there’s never a shortage of people in the world who are looking to lose weight. I guess this is probably one that’s got a medical component, let’s see. Comprehensive weight loss service for clients unable to lose weight due to life-changing health conditions. Not sure what that is. It’s over a decade old. The company developed an outstanding reputation. Includes proprietary products and nutraceuticals to reset the client’s metabolism. Okay, superior reputation management. Open to stay for transition. Outstanding growth opportunities. successfully open two additional locations, hmm I’m not sure are those included or not. Advantageous industry outlook, yeah, there always be people looking to lose weight. Strong revenue and profit. Trans sales have grown from 2.8 million in 2020 to 4.9 million in 2023. Adjusted EBITDA  margins also increased from 36% to 45% of sales. These stats have been driven without medication, such as G L P. Significant opportunity if these additional options were added. Current owner is retiring.

Hmm okay, well yeah, that would be a question if they’re just using sort of coaching nutrition coaching and vitamins and supplements, how has the recent explosion of those Ozempic and all the other weight loss drugs coming out impacted that marketer. People just going for the shortcut prescription drugs or are they still more interested in the natural solution? How much is that impacted this business? So that would definitely be one concern that I would wanna investigate more. How they’re doing it, how they’re doing with those changes, and if there’s an opportunity to add those products into the mix. That people still need to come and pay for regular counseling and consultation and vitamin supplements, if that’s where they are making all their money and change to a drug prescription. But I would certainly take a look at this one.

4.9 in sales with 2.2 million in cash flow is definitely a healthy margin. And you know, the growth they’re talking about is pretty significant. Although if it’s been around for 10 years I’d wonder why it grew so much just in the last few years. People have always been people looking to lose weight. So I wanna look at that too but if the numbers hold up I think the asking price [asking price is $7M] isn’t unreasonable, as long as the real reason they’re selling is not retirement but in fact that the weight loss drugs are just really cutting into this market. But on the face of it, it could make a lot of sense. This business isn’t one that requires anything more than a lease space and some employees. You don’t need a lot of equipment or fixtures or investment in anything more than the location. And if the model works one place, you could certainly replicate it, either with your own owned stores or by franchising the system. So definitely some opportunities here. This one’s kind of interesting and I mean if you look at it as you’re helping people achieve goals, they’re not able to achieve on their own, and helping them get healthier and you know there’s a definitely a goodwill component to this kind of business as well. So I would check this one out if this fits my investment size criteria for sure.