If you’ve just received an offer, understanding a med spa offer means understanding its structure, not just its headline price. Med spa deal structure — how a transaction is actually built, beyond the top-line number — often matters as much to your real outcome as the price itself. This is a plain-English glossary of every term you’re likely to encounter, so you can evaluate an offer with clear eyes rather than negotiating terms you don’t fully understand. For the full sale process this glossary supports, see How to Sell a Med Spa: The Complete Owner’s Guide.
The asset sale vs stock sale med spa decision is usually the first structural fork in any transaction. In an asset sale, the buyer purchases specific assets and assumes specific liabilities of the practice — equipment, client lists, lease assignment, goodwill — while the legal entity itself remains with you. In a stock (or equity) sale, the buyer purchases ownership of the entity itself, taking on its full existing legal and financial history along with it.
Asset sales are more common in smaller transactions and give buyers more control over exactly what they’re taking on, which can mean a cleaner diligence process but sometimes a lower headline price to offset the buyer’s flexibility. Stock sales can simplify license and contract transfers in some cases, since the entity itself doesn’t change hands, but they also mean the buyer inherits more of the entity’s historical liabilities — which is exactly why buyers scrutinize stock-sale targets’ compliance and legal history especially closely, including injectable-supervision and provider credentialing records. Tax and licensing implications differ meaningfully between the two structures and should be reviewed with your own tax and legal advisors before you agree to either.
Which structure a buyer proposes often correlates with buyer type: individual operators and smaller acquirers frequently prefer asset sales for their simplicity and control, while PE platforms and strategic buyers building a larger footprint sometimes prefer stock sales for administrative efficiency across a portfolio of acquisitions. Neither preference is inherently better for you as a seller — what matters is understanding which structure is on the table and negotiating the terms within it accordingly.
A med spa earnout ties part of your purchase price to future performance after close — for example, an additional payment if the practice hits a specific revenue or EBITDA target over the following one to two years. Earnouts let buyers bridge a valuation gap when they’re less certain about future performance than the seller is, but they also shift real risk back onto you: if performance dips post-close for reasons outside your control — a departing provider, a market slowdown, integration disruption caused by the buyer themselves — you may not collect the full earnout despite having sold the practice in good faith.
If an offer includes an earnout, the details matter enormously: what metric is it tied to, who controls the practice’s operations during the earnout period, what happens if the buyer changes pricing or staffing in ways that affect the metric, and what recourse you have if you believe the buyer acted in a way that suppressed your earnout payment. These terms are heavily negotiable and should never be accepted as boilerplate. As a general principle, the less operational control you retain during the earnout period, the more skeptically you should evaluate whether the earnout target is realistically achievable and fairly measured.
Med spa rollover equity means reinvesting a portion of your sale proceeds into equity in the acquiring platform, rather than taking your full proceeds in cash at close. The appeal is a potential “second bite of the apple”: if the platform grows and eventually exits at a higher valuation, your retained equity stake can be worth significantly more than your original rollover amount. This is directly connected to the multiple arbitrage dynamic covered in Med Spa EBITDA Multiples — your rollover equity benefits from the same mechanism that made the platform willing to pay a premium for your practice in the first place.
The risk is equally real — your rollover equity is tied to the platform’s future performance and eventual exit, which is inherently less certain than cash in hand today. Evaluating a rollover equity offer means understanding the platform’s stage, track record, and governance rights attached to your equity — minority equity holders don’t always have meaningful influence over major platform decisions, which is worth understanding before you commit a meaningful share of your proceeds to it. See Why Private Equity Firms Buy Medical Aesthetics Practices for more on how platforms evaluate and structure these arrangements, and The Evolution of Consolidation in Medical Aesthetics for the broader partnership-versus-sale decision this connects to.
A portion of the purchase price is often held back in escrow for a defined period after close — commonly six to eighteen months — to cover any indemnification claims that surface once the buyer is operating the practice. If diligence missed something, or a representation in the purchase agreement turns out to be inaccurate, the escrow is the buyer’s first source of recovery before pursuing you directly for additional damages.
The size of the escrow, the length of time it’s held, and the specific claims it can be used for are all negotiable. A larger escrow or longer hold period shifts more risk onto you as the seller; a smaller, shorter one favors you but may be resisted by buyers who want more protection given the compliance-heavy nature of this industry. Understanding escrow terms alongside earnout and working-capital terms gives you the full picture of how much of your headline price is actually locked in at close versus contingent on what happens afterward.
A working capital peg sets a target level of working capital — cash, receivables, and similar current assets net of current liabilities — that you’re required to leave in the business at close. If actual working capital comes in below the peg, your proceeds are reduced; if it comes in above, you may receive an adjustment in your favor. This is one of the more commonly misunderstood terms in a med spa purchase agreement, and it can meaningfully affect your actual net proceeds even when the headline purchase price stays the same.
A med spa letter of intent (LOI) is typically a non-binding document outlining the buyer’s proposed price, structure, and key terms — but “non-binding” doesn’t mean inconsequential. Signing an LOI usually grants the buyer a period of exclusivity, during which you agree not to negotiate with other buyers while they complete diligence. This is exactly why comparing multiple LOIs before signing any single one matters so much: once you sign, you’ve generally taken yourself off the market for the exclusivity period, win or lose.
The med spa purchase agreement (sometimes called the definitive agreement or asset/stock purchase agreement) is the binding contract that follows a successful diligence period. This is where every term discussed in the LOI — price, structure, earnout mechanics, working capital peg, representations and warranties, indemnification provisions — gets formalized in enforceable legal language. This document deserves careful legal review; the gap between what an LOI implied and what a purchase agreement actually says in precise legal terms is where many sellers get surprised after the fact.
Owners who focus exclusively on the headline number often leave real value on the table in structure. A few principles worth applying to any offer: treat every dollar of earnout as worth less than a dollar of cash at close, since it carries real collection risk — this doesn’t mean rejecting earnouts, but it does mean the total deal value should account for that risk discount, not treat earnout dollars as equivalent to cash. Push for operational input during any earnout period, since your compensation is tied to metrics you should have some ability to influence. Understand exactly what governance rights, if any, come with rollover equity before treating it as equivalent in value to cash. And review working capital peg language carefully — a peg set unrealistically high relative to your practice’s normal operating cash needs can quietly erode proceeds you thought were locked in.
None of this negotiation happens effectively without leverage, and leverage comes primarily from having more than one qualified buyer interested at the same time. A single offer, however reasonable it looks in isolation, gives you limited room to push back on structure — the buyer has no competitive pressure to concede. This is the core practical argument for running a curated process with multiple buyers rather than negotiating structure one-on-one with whoever approached you first.
A few specific items in a med spa purchase agreement deserve particularly close attention before you sign: representations and warranties that are broader or more open-ended than the actual scope of diligence performed, indemnification caps that leave you exposed to outsized post-close liability, non-compete or non-solicit terms that are broader in scope, geography, or duration than reasonably necessary, and survival periods for representations that extend far longer than typical for a transaction of this size. Each of these is negotiable, and each is far easier to negotiate before signing than to dispute after the fact.
Understanding a med spa offer means reading past the headline number to the full structure behind it: Is this an asset sale or a stock sale, and what does that mean for what you’re actually transferring? Is any portion tied to an earnout, and if so, on what terms and under whose operational control? Is rollover equity involved, and if so, in a platform at what stage with what governance rights? How large is the escrow holdback, and for how long? What does the working capital peg actually require you to leave behind? Every one of these questions changes what a given offer is actually worth to you — which is why comparing offers on price alone, without structure, routinely leads sellers to accept a weaker deal than a stronger-looking alternative.
For fast reference, here’s every term covered above, med spa deal terms explained in one line each:
If you’ve received an offer and want help decoding exactly what it means, or you’re preparing to negotiate one, see How to Sell a Med Spa: The Complete Owner’s Guide and Crucial Mistakes to Avoid When Selling Your Medical Aesthetics Practice for the red flags to watch for in any structure.