How to sell a pharmacy
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The market for pharmacy business is currently in favour of sellers, with an average of six offers per sale. You may either be wanting to sell your pharmacy and have been advertising it for sale, or you may have been solicited by an eager buyer. Whatever the circumstances, there are some things you need to know before selling a pharmacy business.The sale of a pharmacy encompasses not only the transfer of assets (including property, staff contracts and NHS contracts) but also the ownership of the business itself. If you own the freehold to the premises on which you operate there is another decision to make about whether the freehold is part of the sale, or whether to lease the property to the new owner.
The first thing any prospective vendor should do is engage the services of a sales agent who has experience of dealing with selling pharmacy business, as there is more to selling a pharmacy than to selling any other type of business. Private pharmacy sales tend to achieve 15 to 20 per cent less than the true value of the business, so even with the agent’s fees, it is still very much worthwhile using one; you will save money in the long term. If you are worried about potential buyers flooding you with questions and visits you can request that the sales agent leaves out details of the pharmacy, and just lists the minimum information needed. As the power is in the hands of the seller at the moment, this should not affect the number of enquiries and offers you receive too much.
Do your research – true valuation
Have your pharmacy business valued independently, as well as calculating your own valuation. This is especially important if you have been approached by a buyer when your business is not already on the market, as you will need to make sure that any offer they have made is realistic.
If you have received an unsolicited offer and are now thinking seriously about selling then put your pharmacy on the market. This will help you see how much other interest there is, how much other people are willing to pay, and also show how serious that initial offer was. A very interested party may increase their offer if there is competition.Read our pharmacy valuations page for more details of the services we provide to the pharmacy sector.
Do your research – who is buying?
If you own a pharmacy situated within, or near to a health centre, you will find that the big chains are very keen to buy it. Of course, it is up to you whether you sell to a chain or not, but they are able to pay much more than independent buyers and may make you an offer you can’t refuse. If you are wanting to sell in order to make a big profit on your initial investment, selling to a chain can be a good idea.Providing a full information pack to prospective buyers helps get them interested and allows them to do their own calculations on the business. If you can stay as transparent as possible, answering any questions they may have about staff, stock, the history of the business and plans for the future this will help the buyer feel confident about investing their money to buy your pharmacy.
Get creative
Established business are worth far more than new ones, so if you have only been trading for a short time, consider staying in your business for another year, or more. This will help establish the pharmacy further, and allow you time to build up the customer base, services offered and appearance of your business.
If you are able to, make a few small adjustments and refurbishments to the shop to make it more attractive to a buyer. If there is nothing that needs investment or updating then buyers will be more inclined to buy your business than one where a lot of work is involved. As well as making the pharmacy look more attractive it can help sales, and if you are staying in business for a year or so to establish more security then these small changes may also improve turnover, and therefore the monetary value of your business.
If you are concerned about certain features of your business staying intact (for example treatment of staff or delivery agreements with elderly customers) it is reasonable to ask that a buyer keep these in place, and that this is a condition of sale. No serious buyer will be put off by some simple requests, especially where they help keep trade attached to that business.
During the bidding and sales process
There may be a buyer who stands out as someone you really want to do business with, and if so, consider asking them to put down a returnable deposit with your solicitor as a show of good faith that they intend to buy. This is also a good idea if you are dealing with a buyer you are unsure about, as they will not want to lodge even a returnable deposit unless they are serious.
It is common for the vendor’s solicitor to draw up the paperwork for sale, so ensure you have sufficient funds to cover their costs. The buyer will want their solicitors to look over the paperwork before completing, so leave a fair amount of time for this to take place before chasing for completion. At this time there may be more queries, so be prepared to answer complicated questions and to make amendments to the sales contracts to satisfy the buyer. It is up to you how many concessions you make to a prospective purchase but if you like them it is worth acceding to a few requests.
Your agent should be with you during the whole process, and their advice and experience is invaluable, especially for first time sellers. If you are selling your existing pharmacy business in order to buy a bigger business, consider using the same agency for both transactions if you are looking to buy in the same area. If not, perhaps a national agency with good localised branches would be suitable for your needs.
