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Pharmacy Sale Advisory

Protecting Your Wealth:
The Importance of Preparing Your Business for Sale

Business Broker

“The sale of a business involves a community of trusted advisors to effectively preserve the value of a business in a transaction.”

– Max Beairsto, Founder

A business owner could lose significant value on the business if they’re not prepared to sell. This can often be avoided if issues are identified early on in the process by the business transaction advisors, and a plan is put in place to address them. By seeking the right transaction advisory services, your business can be ready for a sale in no time!The sale of your business is essentially a liquidity event, where your business value is converted into cash. Cash for you, your family, and, of course, the taxman. However, if you enlist the help of a community of business transaction advisors, we can help you find the most tax-efficient method to preserve your wealth. EVCOR insists on working with our business transaction advisors and our strategic partners to help you sell your business and ensure your wealth is protected in the process. Understanding your business value is paramount in the business sale process, but it is irrelevant if it is not effectively communicated to the market. Additionally, it is critical to understand deal structure and negotiation tactics to translate the numerical value on paper to actual money in the bank.

The EVCOR Five-Phase Selling Process

The selling process is likely more iterative than either you would believe or want to believe. If you have not prepared your business for sale, you may be losing out on a great deal of unrealized value. Years before you sell, you should make and execute an exit strategy. After that, assess the value and determine if it will provide the necessary funds to carry out your post-sale plans. If this hypothetical sale price is adequate, then it’s time to make final preparations, assemble a business package, and market your business. Eventually, you will be able to negotiate and accept a deal. Don’t be discouraged by the length of time it takes for the entire process to unfold. In our experience, it takes pharmacy owners at least three months to sell their business once they start marketing it, but it could take up to a year. To make this process smooth, we have developed a five-phase process to sell a pharmacy.

Five-Phase Selling Process

Business Valuation

Step 1 – Valuation

EVCOR’s five-phase pharmacy selling process begins with a comprehensive valuation and evaluation of your business. Our Certified and Recognized valuations are trusted by lending institutions across Canada, giving you confidence in the value we determine. With our experience in the industry, we have access to an extensive database of empirical data that can be used to identify opportunities for the buyer to smooth out the process or potentially increase the price. Ultimately, the person with the most information wins; let that be you.

Business Preparation

Step 2 – Preparation

Using an Integrated Approach alongside your trusted advisors, we will help you prepare your business for sale. We will create a Confidential Information Memorandum (CIM) to market your business and generate interest from potential buyers. Additionally, we will connect you with a trusted lawyer, if needed, and create a non-disclosure agreement (NDA) for all interested parties. A list of qualified buyers will be created from our Qualified Buyers List (QBL), and all information will be securely shared with buyers through a Virtual Data Room (VDR). Our team will also work with your accountant, lawyer and tax advisors to devise a sale structure that offers the most favourable taxation outcome. Throughout the entire process, confidentiality will be kept paramount.

Business Marketing

Step 3 – Marketing

In the Marketing Phase, we handle the negotiations and field any questions from interested buyers while you focus on running your pharmacy. We strive to make the process as stress-free as possible for you. We set a bid close date by which offers are due, usually in the form of a letter of intent (LOI), sent directly to your lawyer. We then provide a comparative analysis to help you determine the best offer on the table. After you have chosen the winning bid, we move on to Due Diligence and the preparation of a definitive sale agreement

Business Agreements

Step 4 – Due Diligence and Definitive Agreements

In this phase, we collaborate with your lawyer to review and negotiate the pharmacy-specific and commercial terms of the definitive purchase agreement (DPA). This could take the form of a Share Purchase Agreement (SPA) or an Asset Purchase Agreement (APA), depending on how the offers have come in. The buyer will also carry out due diligence to verify the accuracy of all financial and legal information, as well as any tax due diligence. Once this is complete, the DPA can be signed, and closing tasks can begin.

Business Closing

Step 5 – Closing and Beyond

The Closing Phase is an intensive one, with plenty of tasks to be completed. The buyer will be removing any conditions that have been placed on the agreement, such as financing or due diligence conditions. If applicable, they will enter into a new agreement with the banner provider. An inventory of the pharmacy will need to be conducted, and your staff will have to be informed. After all of this is completed, the payday arrives – what everyone has been working hard for. We will ensure you have the right counsel to manage your retirement funds. Even after this, there may still be some closing financial statements to complete, as well as settling any holdback or earnout amounts. We will remain with you throughout this process.

Estimated timeline for a sale

As a general rule, the transaction process should take six months to complete. Although some transactions can be shorter, taking as little as four months, others take multiple years. There are certain outside factors that might cause unexpected delays, such as financing approval, college and third-party approvals or regulatory changes. At EVCOR, we work hard to anticipate these issues and reduce any delays as much as possible.

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