Advertorial
SELLING YOUR
PHARMACY
BUSINESS It doesn’t have to be a bitter pill to swallow!
H
aving built up a successful pharmacy business over many years and often over a lifetime, when you start to consider
retirement you will want any sale to be as smooth and streamlined as possible. Selling your pharmacy business will often take more time and involve more preparation than you ever anticipated but planning ahead with the guidance of experienced experts will reap real benefits for you. A well organised seller gives the impression of a well-run pharmacy, which in turn maximises the return on your investment. This article highlights some of the key points to consider in order to ensure a successful sale of your pharmacy business.
PROCESS AND TIMELINE
1. Preparing to market You should consider and confirm what period of notice (if any) is required to be given to the Health Board and/or GPhC, as this may have an impact on the timeframe for any sale. Think carefully about the best form of marketing for your pharmacy business. Whilst some pharmacies are sold privately, the majority are sold via specialist pharmacy sales agents who have significant networks of contacts that you can benefit from. In making your decision, it is important that you understand the financial implications of each option and the impact that each one will potentially have on your time and your staff – especially given that you will still have the pharmacy to run throughout the sale process. At Thorntons, our specialist Pharmacy Team have contacts within all of the main sales agencies and can add value by making any necessary introductions. At this stage, it is also vital for you to engage specialist legal and accountancy expertise.
2. Due Diligence At the outset, ask the buyer to agree to keep all of the information provided to them as part of the sale process confidential, just in case the deal
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does not proceed for some reason. This can be done through a confidentiality or non-disclosure agreement, or through including confidentiality provisions as part of any heads of terms that may be negotiated. One of the first steps in the process is for the prospective buyer to ask for certain pieces of information about your pharmacy business — this is called due diligence. Whilst you will have to provide some or all of this, your lawyer and accountant should be able to assist you to think about how it is laid out and how your responses might be interpreted. The things that may be requested by both the buyer as well as their advisors could include: • 3 years of accounts for the pharmacy; • up to date financial information, including 12 months of NHS payment schedules;
• the latest GPhC inspection report; • employment contracts for all employees; • title deeds and/or (if property is leased) any applicable lease agreements;
• statutory compliance documents (e.g. energy performance certificate, asbestos report, Electrical Installation Condition Report, local authority consents for any alterations to the property).
This is only part of the information which may be requested, but having those documents well organised and to hand will smooth the process when the time comes.
3. Property You may own your own premises and should think carefully about the benefits of selling them as part of the sale, or retaining them. If selling, the overall price agreed will include the premises. If retaining the premises, but leasing to the buyer, you will need to consider and agree the terms of the lease with the buyer - the rent, the duration of the lease, whether any rent deposit or guarantee is appropriate etc. If however, you currently lease your premises, the lease will need to be transferred to the buyer, and the landlord’s consent will be required for that. You should take
this into account when planning and allow extra time for these additional steps in the process of the sale.
4. Legals After all of the initial negotiations are complete and the due diligence process has been completed, the buyer’s lawyer will produce an agreement which covers all of the legal aspects of the sale. This needs to be carefully reviewed by your lawyers to ensure that it accurately reflects the terms of the deal and there are no ‘surprises’ built in to it.
All being well, the hard work which you have put in over the years, coupled with your preparation for the sale, will result in a smooth transaction, culminating in the keys to the pharmacy being handed over in exchange for your well-earned sale value. However, this is not necessarily the end of the road and you should remember that the sale of any business (including a pharmacy) significantly changes your personal circumstances as regards things such as inheritance tax. It is therefore essential that you complete the next logical steps in the process and ensure that you seek proper advice on inheritance tax planning, wills and Powers of Attorney.
The specialist Pharmacy Team at Thorntons regularly advise our selling pharmacy clients on such issues and would be pleased to assist with any queries you may have in this regard.
KIM CAMPBELL Partner 01382 797067
kcampbell@thorntons-law.co.uk
AIMEE GIBBONS Partner 0141 483 9022
agibbons@thorntons-law.co.uk
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