A look at the current pharmacy market and how to speed up the timeframe of a sale. By Natalie Sirianni
In this article I want to focus on a key issue that is coming up regularly in pharmacy business sales in the current market, which is timeframe to sale.
While the pharmacy market is still strong, we are finding that the sale process is taking longer than it has in the past. Often this is due to factors external to the sale – that is, not the seller or buyer.
The key areas where we are seeing delays are the following:
Although not a significant increase in timeframe, we are finding that the finance process is taking longer than it has in the past. This is in part due to the extra paperwork and reviews completed by the banks. One way to overcome this as a buyer is to build your relationship with your bank early and have documentation to them in a timely manner. The quicker you are in responding, the quicker the bank or financier will be. It will also help to seek pre-approval for finance and guidance on the maximum amount you can borrow.
- Lease Transfer
We are finding that lease transfers are taking longer than they have in the past. Shopping centre locations usually take longer than strip locations, but we are noticing that timeframes are increasing across the board. (Noting that in Victoria for example, there is a time limit for approval for the transfer of lease). The best way to overcome this is again to provide all relevant information to the landlord and their solicitor so that they have all of the information they require and do not have to re-request information.
- Regulatory Authorities
This includes the Pharmacy Authority in your state and the Department of Health for PBS Approval. While in general there has not been a significant increase in timeframes for this, we are noticing that the processes are more complex than they have been in the past and most state authorities require further information. The Pharmacy Authorities/Councils differ in each state, therefore it is important to know the rules and requirements based on your state. The Department of Health have also moved to an online system for PBS Approval and are quoting that this application takes up to 30 business days (although we are seeing it quicker in practice).
So, what can you do about it?
Our key tips for moving through the sale process in a timely manner are:
- Ensure you have advisors (particularly solicitors) that are experienced in pharmacy
The legislation and processes for a pharmacy business transaction are very specific and different to other businesses. Therefore, it is important that you have advisors (particularly your solicitor) that is experienced in pharmacy. This will ensure that they move through the process in a timely manner and do not miss steps, which could cause further delays.
- Request timelines from your advisors before you engage them
This will ensure that you are on the same page in terms of timelines and ensure that they will move quickly through the process and stick to your preferred timeline. The advisor should then also alert you to any upcoming leave they have planned etc. Getting your advisors to commit to certain timelines will certainly speed up the process.
- Have all of your information ready to go
As a vendor, you are required to provide significant information to the purchaser and their advisors for the finance and due diligence processes. Having this information ready to go or easily accessible will ensure you do not hold up the process. Similarly, as a purchaser, having all of your personal finances and information ready to go for finance approval and landlord consent to transfer the lease, will ensure you can move quickly through these processes.
There can always be unexpected delays in a pharmacy business transaction, (which can often be out of your control), however, taking the above steps will ensure you move through the sales or purchase process as quickly as possible.
Please feel free to contact me on 1300 ATTAIN (288 246) if you have any questions about the sales or purchase process or the market in your area. I look forward to discussing with you further!