6 Keys to a successful pharmacy business sale


Natalie Sirianni
Natalie Sirianni

The process of putting your pharmacy up for sale can be a long and stressful one. Natalie Sirianni provides some tips on how to ensure success

Selling your pharmacy is a big decision in your professional career and there are many factors to consider!

Over the years of ownership, you will no doubt have spent tireless hours working to improve both your pharmacy and the health outcomes of your local community. So when it does come time to sell, what is the best way to achieve a timely and financially rewarding sale?

Here we highlight 6 keys to successfully achieving this:

1 – Business performance

Ultimately, any business is bought and sold based on its profitability and return. Therefore, the business performance is a critical factor in the sale of your pharmacy and price achieved. Key measures that buyers will focus on include:

  • Sales growth and sales levels
  • Gross margin
  • Wages
  • Rent

Buyers will look for a pharmacy that they can improve, but they will not necessarily pay for the work they are going to do to improve it! Therefore, a business with a solid history of good financial performance will usually be very attractive in the market. Buyers look for (and will usually pay for) sustained and long term financial success of the business.

2 – Future prospects

The main reason that the current and historical business performance is relevant to a pharmacy sale, is that it can be used to forecast and estimate future business performance. Ultimately, any buyer is buying the future, as opposed to the return you have historically achieved.

Therefore, future prospects and growth potential are critical to any buyer. Development in the area, population growth and growth opportunities that you have implemented in the pharmacy will all be considered. Competition and other future threats will also be accounted for in the price.

3 – Transferability of income

The ease and probability of the financial results of the business transferring to the incoming owner are critical points in any business sale. This transferability of income is fairly reliable in a pharmacy, compared to other health industries such as medical and dental practices where the patients and customers may be more reliant on the current owners or specialists at the practice.

However, the transferability of income can vary significantly between different pharmacies. For example, a fully-managed pharmacy with limited owner involvement has a very high probability of the income transferring to the new owner and hence reduces the risk level for the incoming owner.

On the other hand, customers may come into the pharmacy specifically to see the owner at a single-pharmacist pharmacy with the owner working the majority of the trading hours. This may mean that transferability of the income may be a longer and more difficult process.

Owner involvement is not the only factor to consider here, local area competition can also play a large part in this. For example, in a single pharmacy town where the closest competitor is a significant distance away, the transfer of income to the new owner is almost guaranteed.

4 – Solid management team

Another key factor which will help you achieve success in the pharmacy business sale is a solid management team. This also relates to and assists with the transferability of income. Having a solid management team will not only usually improve the business performance, it will also assist with the transition from the vendor to the incoming owner and allow for a smooth sale process.

Buyers will view a solid management team as a great asset to the pharmacy, which will allow the incoming owner to focus on the business and help to continue to grow the business, without spending too much time on the day-to-day management and operations of the pharmacy. In addition, having a team (as opposed to one manager) means that there is less impact if one of the management staff leaves the pharmacy and therefore less risk.

As such, a solid management team will be attractive to the market and help you to achieve a successful pharmacy sale.

5 – Knowledge of the sales process

Knowledge and understanding of the sales process is a really important factor that can have a large positive influence on the sale, in terms of process, timeframe and final sale price. Experience and expertise here are critical as usually you only have one shot to get it right.

However, selling a pharmacy is something that the majority of pharmacy owners only go through once, or perhaps a few times, in their lifetime.

Therefore it is really important to do your homework about business sales and enlist the help and guidance of those who are experienced in the area. There are a number of people that can assist here including your solicitor, accountant, pharmacy valuer, other pharmacy owners or retired pharmacists and, of course, your business broker. As pharmacy business brokers, we focus on pharmacy sales and work on pharmacy sales day-in day-out.

We have seen and been involved in hundreds of business sales which gives us great experience and expertise of the process and how to go about it the best way. And remember, as your broker our role is to act on your behalf to achieve the best possible outcome.

6 – Market conditions

Some readers may find it interesting that I have left ‘Market Conditions’ as my last point. The reason that I have done this is that, as history shows, if you have ticked all of the first five points mentioned in this article, then the conditions of the market will be much less relevant to the sale of your pharmacy.

The fact still remains that there is a limited supply of pharmacies and there historically have always been buyers.

Demand from buyers is increasing everyday with the exponentially increasing number of pharmacy graduates each year looking to get into their first pharmacy.

Even when times have been tough in pharmacy and risks have increased, time and time again, we have seen that good businesses with solid prospects have always sold in a relatively timely manner and at a good price. So, if you can get the first five points right, then your pharmacy sale will be less impacted by current market conditions and you are more likely to achieve a successful pharmacy sale!

We hope that this article has provided some valuable tips for selling your pharmacy. Whether you are looking to sell in the near future or have just bought into a pharmacy, always remember that the earlier you start preparing your pharmacy for sale, the better.

Natalie Sirianni is an analyst with Medici Capital and Attain Business Brokers

If you would like to discuss your current pharmacy performance or selling your pharmacy, call Natalie or one of Attain’s pharmacy brokers on 1300 ATTAIN (288 246).

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