Considering Selling Your Pharmacy?
Receive helpfil tips and learn about the process before you make the big decision.
Pharmacy business owners will find the decision to sell their business as one of the most important decisions of their life. Handled properly, it can be very rewarding. Handled poorly, it can become a perilous chore that could lead to a pharmacy owner not maximizing the value or structuring the transaction properly which can lead to lower purchase prices and higher tax liabilities.
With such an important decision an owner of a drug store will want to work with a consulting firm that understands confidentiality and will handle the transaction with the expertise and professionalism you deserve.
This web site provides valuable pharmacy selling tips and links to resources that will assist your decision making and lead you to a comfort level you and your family can have confidence in.
When you have questions, don’t hesitate to contact us. You can discuss your options with us at no cost or obligation. We are here to assit you.
Pharmacy Owners can receive a FREE Pharmacy Valuation. No cost. No Obligation.
Selling a Pharmacy
By Pharmacy Consultant: Brad MacLiver
Pharmacy owners have a lot to consider when they start thinking about selling. At some point everybody will have an exit strategy whether it is done for business and family reasons or it is done due to health circumstances.
Once the decision has been made the pharmacy owner should have a general idea of what the market is willing to pay. They should also consider working with a pharmacy expert such as www.PharmacyValuations.com.
Many pharmacy owners will contemplate selling their drug store themselves and saving the commission. However, would you represent yourself in court? Would you use an experienced real estate agent to sell your home? So… for the largest asset you will probably ever own is it best to go it alone, or have an expert on your team?
When working with someone with experience a pharmacy seller should expect to receive a higher purchase price than they would get by themselves. An experienced consultant will be able to bring extra buyers to the table. Any time there are more interested buyers the price will trend higher than if an owner only has one buyer. There are also hurdles to deal with. A pharmacy owner needs to maintain the business and keep sales from slipping during the many months an acquisition may take to close. If sales slip, the value of the business will follow. Having someone on your team that can manage the hurdles, save the seller countless hours, and bring more offers will result in the seller being to put more money in their pocket than if they would have done the deal all by themselves.
Having chosen to deposit the most money, a pharmacy owner will receive a Pharmacy Listing Agreement from their consultant. This is the contract that provides a pharmacy broker / consultant the business seller’s permission to sell their drug store. During the process of presenting the business being sold to qualified drug store buyers there are negotiations and preliminary offers.
Once the preliminary stages have been negotiated it is time to put forth the details of the potential pharmacy transaction in contract form. This contract is usually called the Purchase and Sale Agreement, but it may also be referred to as an Asset Purchase and Sale Agreement, Pharmacy Asset Purchase Agreement, Asset Purchase Agreement, or variations of these contract titles. Whatever the title is on the contract, this document should be considered the “blueprint” for transferring the pharmacy business to the new owner.
The Pharmacy Purchase and Sale Agreement details how much the buyer agrees to pay and what assets the seller is conveying to the buyer. When the agreement is put in writing, describes the transaction in some detail, and is accepted and signed by both parties, this contract becomes a legally binding agreement. Therefore, during the negotiated development of the Pharmacy Purchase and Sale Agreement proper diligence should be taken.
Due to liability issues, seldom (if ever) will a national chain store purchase a pharmacy’s corporate stock. Also, the Chain buyers will usually close the seller’s location and move the customer files and inventory to the buyer’s nearest chain store. These are called pour-over transactions because the seller’s independent pharmacy is essential poured into the chain’s drug store. Therefore, these transactions are almost always strictly asset purchases.
Other buyers, who are much smaller and don’t have a chain store down the street, will buy the pharmacy’s stock. The buyer wants to keep the location along with the business license, Board of Pharmacy, and other aspects of the working operation. Therefore, these types of transactions will include language in the Purchase and Sale Agreement about the stock and how to handle any issues regarding liabilities.
Elements of the Pharmacy Purchase and Sale Agreement include, but are not limited to: assets being purchase, assets being excluded, aspects of counting and purchasing the inventory, both electronic and hard copies of pharmacy customer files, liabilities, purchase price, closing date, transferring title of the assets being purchased, pharmacy customer file conversion, representations and warranties, non compete, restrictive covenants, transferring the phone, notifying customers, signs, Board of Pharmacy notification, accounts receivables, employment of business seller and pharmacy employees, confidentiality, counting the pharmacy’s inventory, costs associated with the closing, lien searches, actions to be taken before the date of closing, along with the pharmacy’s computers, office equipment, and any automated filling machines.
Although it covers many aspects of transferring the business assets from the pharmacy seller to the new owner, it should be understood that the Purchase & Sale Agreement does not provide tax and legal guidance for the seller. Those issues do not pertain to the buyer of the assets. Therefore, the pharmacy seller should be well advised by a knowledgeable pharmacy broker, accountant, or attorney regarding tax consequences, restrictive covenants, and the structure of the deal. These aspects of the deal may not have any impact from the buyer’s point of view, but if not considered carefully may have affects to the seller’s financial position after the transaction is closed.
Pharmacy owners who are considering selling a pharmacy will benefit when working with a specialist who operates exclusively in the pharmacy industry and can provide expert guidance in bringing about a transaction that provides the most benefits regarding the seller’s tax consequences, family and estate planning. Proper planning and a blueprint that structures the transaction appropriately will increase the net amount of money the seller receives for the pharmacy’s assets.
When you are considering selling your pharmacy learn more about Pharmacy Purchase and Sale Agreements by contacting www.PharmacyValuations.com.