Selling your pharmacy comes with tough questions and big decisions. Your legacy deserves personalized attention and industry expertise to ensure your goals are met, and your patients and employees are left in good hands.
To help independent pharmacies remain independent and successful throughout a transition, H. D. Smith launched VentureRx in 2016.
VentureRx fully supports the sale, purchase, start-up and transition strategies of pharmacies. Because many factors are at play during any business change, VentureRx is dedicated to the people and processes involved in starting, buying and selling, with the goal of empowering pharmacy owners to shape the future of their business.
Christian Herrington, H. D. Smith Corporate Vice President Pharmacy Strategies, addresses some frequently asked questions for those considering selling their pharmacy.
1. When should I start planning for the sale of my pharmacy?
Planning ahead is key for a smooth transition. The average sale process can take anywhere from 6 to 12 months. The typical milestones and average timeline for a successful pharmacy sale are:
- 1 month: Financial review, valuation and analysis of current business
- 2 - 4 months: Consideration of potential buyers, introductory meetings and transition discussions
- 1 - 2 months: Negotiations and agreement on a final price
- 2 - 4 months: Buyer financing and ownership transition
Several factors can impact this timeline, including the length of time to collect and review financial data, finding the right buyer, the negotiation period, and the buyer’s ability to obtain financing.
2. What are pharmacy buyers looking for and how can I make my pharmacy most attractive to a buyer?
The most critical step in preparing your pharmacy for sale is gathering and organizing your financial statements. Serious pharmacy buyers are looking for current, accurate financials that provide a clear understanding of your pharmacy’s business and justify its value. Current financial data is not just necessary for the buyer; without it, you won’t receive an accurate and fair price estimation.
Be honest with potential buyers about all aspects of your pharmacy business. Before negotiations, share the good, and potentially not-so-good information with the buyer. Buyers need to know all the pertinent details of a purchase, such as lease agreements, existing debt, past performance and future trends. Sharing this information with your buyer at the onset will alleviate surprises later in the process that could potentially harm the deal.
Curb appeal could make a big difference to some buyers. Consider a fresh coat of paint, fix broken fixtures and make all necessary repairs to ensure your pharmacy is aesthetically pleasing.
3. Which key elements should be the focus for an accurate valuation?
It’s crucial to understand that pharmacy valuations vary dramatically depending on the type of pharmacy business. Differences in margin, cost of goods, inventory and operating expense structures, among other factors, require that every pharmacy use different valuation models. Make sure your pharmacy’s valuation is conducted by a professional using multiple, industry-standard formulations.
4. How do I find a pharmacy buyer and determine if they’re a good fit for my store?
It is paramount to work with a transition partner who has access to a broad network of potential buyers you likely wouldn’t have access to on your own. Your partner should review potential candidates to determine if they are capable and qualified to buy your store. Because of that, your transition partner should be familiar with your business on a level that allows them to scrutinize potential buyers on your behalf and only present qualified candidates that meet your requirements.
When meeting qualified buyers, ask about their current pharmacy business, including how they run their store, staff size, patients, script volume, as well as any niche service offerings. Find out what they value in pharmacy practice and inquire about their long-term business goals to determine if they’re a good match for the future of your pharmacy.
5. What should you look for in a professional transition partner?
Selling a pharmacy is a complex process that can quickly become overwhelming. Finding the right transition partner will save you hours of work, headache and prevent costly mistakes—such as undervaluing your store and wasting your time with non-serious buyers.
A good transition partner will:
- Use multiple formulas to value your store. Be wary of valuations produced using only one formula or a partner who isn't willing to share the process with you.Take the time to get to know your unique pharmacy business, and the qualifications and values you are seeking in a buyer. A partner can’t make personalized recommendations without first knowing your business inside and out.
- Treat the process with confidentiality and professionalism. Be sure your partner has potential buyers sign a non-disclosure agreement to protect your information, before you begin any financial discussions.
- Go beyond the buy-sell transaction. A strong partner will help ensure the new owner of your pharmacy is successful, and the legacy of your business performs long after the sale. Look for a partner that provides value-added services, such as business plan development, marketing strategies and program recommendations. It's your legacy, and it’s important that it is protected.
Let VentureRx support the successful sale of your pharmacy by clicking here or by calling 603-773-5116 for a free, no-obligations needs assessment.