June 10, 2021
Undoubtedly, lawyers and accountants will be involved in the sale of a pharmacy, but long before an owner is ready to sell a pharmacy, they should speak to a particular type of accountant and lawyer. Both professions have tax specialists who can develop strategies to minimize the tax burden when the sale goes through.
Several approaches can ensure that your liquidity event is as profitable as possible. Selling the assets of a pharmacy and selling the shares is one of the considerations a tax lawyer and your tax accountant will contemplate. In most cases, a prospective buyer will want to purchase the assets of your business, which means that you, as the seller, can retain the business entity. However, it may be in your best interests to sell the shares of the corporation. But this is only one aspect in minimizing the frictional tax costs in selling a pharmacy business. It is critical that you speak with these professionals years before you plan on selling a pharmacy.
Before you get started a sale process and decide to entertain any suitors for your business, you will need your lawyer to prepare a Non-disclosure agreement (or “NDA”). This document will have confidentiality provisions that will help protect your information from leaking out or being used unscrupulously. No piece of paper will offer absolute protection, so work with honorable buyers from the start.
Once you have decided on a buyer and verbally agreed on the sale, typically, the buyer will compile a letter of intent (an “LOI”). These letters are usually non-binding but form the basis of the definitive and binding agreements.
The LOI should include such basic terms as a closing date, payment price and terms, and any conditions on which you settle. Before you execute the LOI, your corporate lawyer will help you tailor it to suit your needs. Once both parties have signed the letter of intent, the buyer’s lawyer will use the terms of the LOI to craft the first draft of the definitive purchase agreements.
Having documents such as externally prepared financial statements can go a long way in ensuring you’re prepared to sell a pharmacy. When contemplating a share sale, determining how to deal with redundant assets and preparing a purification step document is crucial. This, along with estate planning, are important discussions to have before deciding to sell.
Many people interested in selling an independent pharmacy in Canada are interested in how long the process takes. We have seen the process take from as little as three months up to several years. Two crucial factors that help speed up the sale are your organization of documentation and the responsiveness of your professional advisors. Our team of experts is available to quarterback your team of experts needed for selling a pharmacy business, and we can’t wait to help you get started. Call or email us today to begin the process.