Partner Buy-Sell Agreements
22 Elements of Buy-Sell Agreements Pharmacy Partners Should Consider
By Pharmacy Consultant: Brad MacLiver
A pharmacy’s Buy-Sell Agreement should not be confused with the Purchase and Sale Agreement between a pharmacy buyer and pharmacy seller. The Buy-Sell Agreement is for the partners of a pharmacy. It is the written document that provides rules and guidelines the pharmacy owners will follow during a future transfer of the drug store’s stock. These agreements are created to protect the interests of all of the pharmacy’s partners/co-owners/stockholders. The agreement will direct the actions when a partner is leaving the pharmacy because of retirement, disability, divorce, dissolution, or death.
Below are some various elements co-owners/partners of a pharmacy should consider when creating a Buy-Sell Agreement.
1. Add the covenants (non-compete, etc.) and considerations that will affect the pharmacy’s shareholders if stocks is bought or sold.
2. All pharmacy’s representations & warranties must be preserved.
3. An example of the Bill of Sale should be included the Buy-Sell contract.
4. Any actions to be taken in the event of a payment default should be provided.
5. Co-owners need to agree to the methods of enforcement of the Buy-Sell Agreement.
6. Define the obligations of the remaining stockholders to buy or sell shares from the estate of a deceased partner.
7. Define the procedures for arbitration of disputes.
8. Describe the factors that make the agreement a binding contract.
9. Determine the insurance to be purchased so that the remaining pharmacy owners have the ability to fulfil any obligations to buy the portion of the drug store from a co-owner’s estate.
10. Determine the measures to be taken in the event of a shareholder’s death, divorce, retirement, or termination of employment.
11. During any transition both the business and the premises must be maintained.
12. Guidelines for the purchase of a shareholders’ stock/partnership.
13. Instructions and parameters for obtaining a pharmacy business valuation.
14. List all of the pharmacy’s shareholders names, addresses, and contact information.
15. List the number of shares and voting rights held by each shareholder of the drug store.
16. Outline any restrictions on the purchase or transfer of the pharmacy’s stock.
17. Provide the process of dissolution or liquidation of the drug store business.
18. Remedies need to be outlined in the event of any breach of the Buy-Sell contract.
19. Require all notices, legal issues/judgements, of tenders to purchase be furnished to all of the pharmacy’s co-owners.
20. Specify if the purchase of the pharmacy’s stock should be paid in a lump sum payment, or through monthly/quarterly/yearly payments.
21. The right should be provided to all the pharmacy shareholders to inspect the books and records of the drug store until they are no longer a legal partner of the pharmacy.
22. When the pharmacy’s stock is sold/transferred provide the process the transaction will follow including terms and conditions of the transfer.
Pharmacy Buy-Sell Agreements may also be known by other terms such as:
A Business Will
Cross-Purchase Buy-Sell Agreement
Disability Buy-Sell Agreement
Entity Buy-Sell Agreement
Pharmacy/Franchise Buyout Agreement
Wait and See Buy-Sell Agreement
Disclaimer: BuyingAndSellingPharmacies.com does not provide legal advice. The information here is only a guide for discussion between a pharmacy owner and their legal advisors.
As an owner, or future owners, of a pharmacy that’s considering partners/co-ownership of a pharmacy business, you must do your own due diligence, find the legal and accounting professionals that work best for your situation and can draw up the appropriate documents before you enter into any drug store joint ownership relationship.