How to Sell a Pharmacy Successfully: Essential Steps and Expert Tips

March 27, 2023

Selling a pharmacy is no small undertaking. It requires expert knowledge, careful negotiation, and extensive market research—all of which can be overwhelming for even the most experienced business owners.

Step No. 1: Get the help you need

That’s why many pharmacy owners turn to a transaction advisor for help. These professionals can provide invaluable guidance and assistance throughout the sale process, from start to finish.

Remember, however, to differentiate between a transaction advisor and a broker. A brokering service is limited in what it can provide you with, whereas a transaction advisor looks at the bigger picture– they don’t want you leaving any value untapped when putting up your pharmacy for sale!

Before you hire a transaction advisor, it’s important to do your homework and ensure you choose the right person or firm. Ask around and get recommendations from your peers in the industry Look at each candidate’s experience as well as their track record of success; this will give you an idea of how likely they are to be successful when selling your pharmacy. We are confident that you will find EVCOR to be the right choice for your needs, but we encourage you to do your due diligence before making a decision.

When working with an advisor, be realistic about your expectations and understand that it can take time for them to find the right buyer. A good advisor will work hard to make sure the sale process is efficient, but ultimately, they cannot control external factors such as market conditions or changes in legislation.

Step No. 2: Understand the time frame

Expect your deal process to last at least six months. Your advisor knows, however, that time kills deals and should work efficiently to conclude the deal.

Pharmacy is always subject to funding framework changes, and when these occur during the deal negotiation, they can have dire consequences to the success of the transaction. The opposite can happen, though. For example, if you have your pharmacy for sale in Ontario, the advent of having prescribing authority for minor ailments helped facilitate deals.

Step No. 3: Prepare

As you put up your pharmacy for sale, there are several things you can do to help speed up the process and maximize your profits. When you’re ready to begin marketing your property for sale, make sure that your advisor takes the necessary steps and doesn’t simply gloss over or cut corners. It’s these crucial preparation stages that will ultimately lead to a successful result. Don’t let them neglect this.

1. First and foremost, make sure all financial records, documents and other necessary paperwork are in order – this will help avoid any delays or complications down the line. Your transaction advisor will provide you with an information request list (IRL) to help you prioritize what to collect.
2. Remain open to negotiation and be prepared to make some compromises.
3. Understanding your pharmacy’s value. This involves obtaining an accurate valuation of your business and understanding what factors influence its fair market price. You should also consider any potential liabilities or risks associated with selling your business. We would never recommend putting your drugstore up for sale without first having a professional valuation analyst perform a certified, comprehensive valuation. This process can even uncover potential upsides that can be used to market your store to buyers.
4. Once you have determined the value of your pharmacy, there is some more preparation to be done. When marketing your pharmacy for sale, your advisor should create an attractive confidential information memorandum (CIM) that highlights all its features and upside. A secure virtual data room also needs to be populated. Your lawyer needs to draft a non-disclosure agreement (NDA) for suitors to sign before reviewing your materials. In consultation with your tax advisors and accountants, an ideal sale structure needs to be ratified.
5. You and your professional transaction advisor need to put together a qualified buyers list (QBL).

Step No. 4: Marketing

To ensure the most optimal terms for your pharmacy, we recommend seeking marketing through a competitive bidding or auction process. Your advisor will monitor and regulate all suitors to guarantee that they remain on task and adhere to set timelines.

During this stage of the process, you can count on your advisor to negotiate in your stead so as to acquire only the best results possible. Usually, buyers are given a three-to-four-week time frame within which their bids must be returned back via your advisor’s office.

Step No. 5: Letter of intent

At this stage, your advisor should have secured a favorable offer, and several backup offers, all of which will be detailed in the letter of intent (LOI). The LOI also outlines what ultimately appears in the definitive purchase agreement (DPA), as well as whether the buyer is suggesting an “asset” or “share” purchase structure. With such preparations made by your advisor beforehand, you can confidently move forward with negotiations knowing that there are options to fall back on if necessary.

Step No. 6: Confirmatory Due diligence and Definitive Agreements

Now that you have made a decision to go ahead with an LOI, it’s time to move on to the next step: confirmatory due diligence. This process typically takes a few months and is conducted simultaneously while readying DPAs. Buyers are expected to pay a visit during off-hours and compile various reports from your systems. Additionally, their lawyer will examine the legal aspects of the potential transaction, and their accountant will review your tax records in detail.

Step No. 7: Closing

After the DPA and due diligence are finished, it’s time to move forward with a series of closing tasks. Buyers’ conditions must be waived; these may come in various forms, such as financing, due diligence and having the banner waive their right of first refusal (ROFR). To complete the process, buyers should secure new licences and set up third-party accounts while an inventory is established for closing day.

Step No. 8: Post-closing

A lot of brokers (not advisors) simply walk away once a deal is closed and they’ve received their commission – they feel their work is done. That’s not the case with full-fledged transaction advisors. A competent advisor will ensure that post-closing tasks are kept on track and that you are properly represented in any price adjustments following the completion of your closing financial statement. Furthermore, they should be available during the holdback or earnout due dates.

In conclusion, the sale of a pharmacy or any other business requires considerable attention to detail. With proper preparation and guidance from experienced advisors, you can ensure the process is favorable for all parties involved and get the best possible terms for your store. From marketing to closing, a professional advisor should be consulted to achieve successful results in the sale of your pharmacy. Contact us now or visit our website for more details.