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March 15, 2021

Important Secrets to consider While Selling a Pharmacy

pharmacy

The stakes for selling a pharmacy are high, with consequences lasting long after the sale. Even a minor oversight from a seller can drastically reduce the sale’s proceeds. EVCOR is a pharmacy brokerage service that can assist owners of Canadian pharmacies achieve the best price for their pharmacy and simplify the selling process.

Questions to Ask Before Selling a Pharmacy

Failure to consider the ramifications of selling a pharmacy unprepared, and uninformed can have dire consequences, both immediate and long-term. The seller should ask themselves the following questions before finalizing the sale:

When the buyer is a competitor, what are the buyer’s intentions?

Depending on the buyer’s goals, operating procedures, and past relationships, the intangible drawbacks could outweigh the monetary gains.

Should the pharmacy be sold to a family member or an external third-party?

An external third-party will often pay more for the purchase, but a trusted friend or family member is more likely to uphold the seller’s goals and legacy.

Should the pharmacy be sold to the pharmacy’s employees?

This would be a great goodwill gesture, but the seller should define a strict timeline to prevent the process from being excessively drawn-out. Before going down this road, consult with your legal counsel and ensure you are adequately protected.

What is the value of the pharmacy?

Sellers should avoid the temptation of getting informal estimates from friends or peers. The potential additional selling price, reduced stress can outweigh the cost of a pharmacy business consultant.

Do I have non-working family members on the payroll?

The seller must inform buyers when the answer is “yes” and clearly explain to the buyers that the non-working family members do not contribute to pharmacy operations.

What is the pharmacy’s multiplier?

The multiplier is determined by prevailing market risks and potential associated with the pharmacy as well as the amount of cash that the buyer will have remaining after debt servicing. Since buyers will pay the multiple on earnings, it is profit, not assets that lead to higher selling prices.

Is the pricing strategy fair?

The selling price of the pharmacy should not be influenced by any external, non-related expenses and considerations such as the seller’s retirement plans.

Has the landlord been notified?

An uninformed or uncooperative landlord can jeopardize or stall a sale. Sellers should notify their landlords as soon as the sale terms are ratified to provide adequate time to address issues and complications associated with the lease assignment.

Does the buyer have an honest assessment of the pharmacy being sold?

Sellers should be prepared to disclose to their pharmacy business consultants and buyers of the pharmacy’s problems and challenges. Delaying this disclosure can reduce the chances of a successful sale or expose the seller to legal repercussions after the sale.

EVCOR is a Canadian pharmacy brokerage service ready to assist individuals and groups seeking to sell their pharmacy. We will determine the current value of the pharmacy, provide plans and insights to increase the pharmacy’s value, and advise the seller to achieve the optimal price during negotiations.