Three factors to consider when selling your pharmacy


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There is so much to consider when selling your pharmacy that some key factors can get overlooked. Natalie Sirianni looks at 3 things to think about 

These include important decisions such as timing for sale, what you will do after the sale, current market conditions, price you are likely to achieve in the sale, and many more!

In today’s article we are going to focus on three other factors that can sometimes be overlooked in the case of a sale.

Employees & Entitlements
Owners will often consider the future of their employees and how the new owner will treat their staff going forward. Another very important factor to consider relating to the employees is the treatment of employee entitlements in the sale.

Usually for pharmacy business sales the annual leave of transferring employees is paid by the vendor at a rate of 70%.

This is fairly standard due to the tax implications for the new owner. Where it gets more complex is the personal leave and long service leave. Personal leave adjustments on settlements are based on negotiation between the vendor and the purchaser. Long service leave is usually adjusted by 70% also, depending on how long the employee has been with the business.

If you have high levels of outstanding leave, these adjustments at settlement can have a significant impact! Therefore, it is important to monitor these and make sure you know what you are in for. Ensure you speak to your business broker and solicitor early on in the process regarding this. 

Stocktake

The final stock value is usually calculated the night before settlement through a formal and independent stocktake process.

During the process, the stocktaker will exclude any products with a certain time to expiry (usually over 6 months), hence it is important that you and your staff members keep an eye on this in the lead up to settlement. Also, the stock amount is usually determined when the offer is accepted.

Therefore, it is also important to have a good estimate of the current stock levels in the pharmacy prior to selling. Differences between estimated and final stock levels can have a significant impact on the final sale price.

Transition Periods
For most pharmacy business sales, the Contract of Sale will include a standard Vendor Assistance period of 7 days. This means that for 7 days post settlement you will need to be available to assist in the pharmacy with the transition and advising the new owner of the processes that are used.

We often see that the new owner only requires this for a few days, however they are entitled to have this assistance for the full 7 days.

We have also seen cases where offers are made with a longer Vendor Assistance process than this. If this occurs, it is important that the details of the Assistance period and how it will all work (including remuneration) are determined early on in the process, so it is very clear what the previous owner’s roles and responsibilities will be.

There are many factors to consider when selling your pharmacy. Sometimes these factors can have a significant impact on the final result and sale price, so it is important that you get it right!

Natalie Sirianni
Natalie Sirianni

If you have any questions about the process, please call me at any time on 1300 ATTAIN (288 246). I look forward to discussing with you further!

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