What are the eleven key steps in buying or selling a pharmacy? Natalie Sirianni counts down the process
Selling or buying a pharmacy can be a fairly long process, usually much longer than selling or buying a property.
The reason behind this is that there are many more steps and processes involved, firstly because it is a business with many moving parts, but also due to the pharmacy legislative requirements.
In today’s article I will run you through the steps involved in a pharmacy business transaction. While the order of these steps can sometimes vary a little, in general, all pharmacy business transactions will follow these steps.
Given that often a pharmacy business is one of the owner’s largest financial assets, it is important that you get these steps right to achieve a successful transaction, whether you are a seller or a buyer!
- Sale of Business Authority
The vendor (owner) of the business engages a Pharmacy Business Broker to sell the business on their behalf.
- Preparation of Marketing Documentation
The Business Broker will prepare a marketing document for the business, which generally includes both qualitative and quantitative information about the pharmacy. It will generally also include a Market Assessment for the business they are selling. (Note: business brokers CANNOT complete valuations of businesses).
- Marketing of Business
The Business Broker will market the business for sale, using various forms of marketing. Generally all interested parties will be required to sign a Confidentiality Agreement to obtain the information on the business.
- Offers & Negotiation
Interested parties will submit offers on the business, which the vendor will review, in consultation with their business broker. There is likely to be some negotiation and back-and-forth at this stage.
- Offer Accepted
The vendor will accept their chosen offer and an Offer & Acceptance document or Heads of Agreement will be signed. The deposit is usually paid at this time into the Business Broker’s Trust Account.
- Finance & Due Diligence
Finance and Due Diligence are often included as conditions of the transaction and are the first step once an offer it accepted. The vendor will need to provide the purchaser and their accountant with the information required for finance and due diligence. These conditions usually have a 28 or 42 day period that they must be completed in.
- Contract of Sale
Once the finance is obtained and due diligence is passed, the Contract of Sale for the business is negotiated and signed. (Note, in Queensland the Contract of Sale is generally signed before the Finance & Due Diligence processes). Often a further deposit is paid at this time.
- Lease Transfer
Once the Contract of Sale is signed, the next step to complete the Transfer of Lease from the vendor to the purchaser. This requires landlord approval.
- Medicare & Pharmacy Authority/Council Approval
The purchaser will also require approval from both Medicare and the Pharmacy Authority or Council in the relevant State or Territory.
The final stocktake is completed the night before settlement to determine the actual stock amount included in the sale.
At settlement, the business officially changes hands from the vendor to purchaser and the purchase price is paid.
Hopefully all of these steps go through smoothly and then the business is officially sold!
Generally in pharmacy, we work off a 90-day period from the time an offer is accepted through to settlement. We are finding that in the current market, these processes can take slightly longer and therefore it is always important to allow for some extra time.
If you are considering selling, it is important to get prepared early so that you can allow for any unexpected delays in the process.
If you have any questions about the market conditions in your area, or the pharmacy business sales process, contact Natalie or the team from Attain Business Brokers on 1300 ATTAIN (288 246).