| You will probably be taking an assignment of a lease and will therefore need references for the landlord. Assess your staffing requirements for when you have acquired the business, being aware that under the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE), you will be taking over the existing employees, complete with all of their employment rights, including redundancy pay, sick pay, holiday pay, notice rights, etc. |
Multiples and regional groups with between two and 40 premises, rarely look at businesses with turnovers of less than . Your agent should know of several that have dealt with previous sales and purchases in an efficient manner and the right choice will help ensure a fast and smooth transaction. |
These are normally highly attractive to purchasers because they will dispense upwards of 5,000 prescription items per month and are often sold to those with one or two local pharmacies or, if large enough, to multiples. As the Office of Fair Trading has made us all too aware, nothing is guaranteed for ever.
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It may be possible to secure the business for less than the asking price, but if there is plenty of interest it may be necessary to offer 10 per cent or more above the advertised price. |
True value The true value of a business was referred to above. |
Sales agency A first-time buyer would be well advised to make contact with an established and reputable specialist pharmacy sales agency. The main reason for these changes appears to be because true profits have increased over the period.
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From a total of 100 sales effected by Orridge Business Sales Ltd in 2002 and, so far in 2003, prices seem to be holding up remarkably well. |
Alternatively another look at the classified section of The Journal may be helpful. |
500,000 to be acquired by a first-time buyer. From a total of 100 sales effected by Orridge Business Sales Ltd in 2002 and, so far in 2003, prices seem to be holding up remarkably well. |
When you are ready, make your offer (subject to contract) through the agent acting for the vendor. |
| The main reason for these changes appears to be because true profits have increased over the period. |
If you are in doubt, a reputable agent will value a private business for you for a modest fee and could save you several thousands of pounds and a lot of wasted time. Multiples and regional groups with between two and 40 premises, rarely look at businesses with turnovers of less than . |
Also in this group will fall pharmacies adjacent to or within a health centre. Profit margins To understand the different profit margins you will encounter during your search, it is essential to consider the turnover split. |
These businesses are often easier to finance than smaller ones and it is not unknown for businesses with annual turnover in excess of . |
If the premises are leasehold, ensure that the lease offers enough security of tenure to satisfy your financier. If you are unfamiliar with employment legislation, you will be well advised to consult a specialist employment lawyer. |
| These are normally highly attractive to purchasers because they will dispense upwards of 5,000 prescription items per month and are often sold to those with one or two local pharmacies or, if large enough, to multiples. Apart from the usual chores of notifying the utility companies and dealing with VAT registration, you must give proper notice to the Royal Pharmaceutical Society and the local health authority. |
True value The true value of a business was referred to above. |
Essential small pharmacies In order to qualify as an essential small pharmacy (ESP), a pharmacy must be at least one kilometre from the nearest pharmacy with a National Health Service contract, so they tend to be in rural locations or residential areas. There are exceptions to every rule and it may be that a poorly performing business is simply not being competitive. |
Well before the stocktake date, take a detailed look at all of the stock in the shop and bring to the attention of the vendor areas where you are concerned, for example, overstocking of products you would not expect to sell quickly. |
Do not underestimate the potential liabilities you will inherit. |
| ESPs have not been popular with purchasers, but they should definitely be considered by first-time buyers on the grounds that they tend to be cheap to buy, offer a secure, if not enormous, NHS income, are capable of providing a good overall income and are frequently situated in pleasant surroundings. One hundred businesses is a small sample but, taken as a percentage of all trading pharmacies, it is nevertheless a significant percentage of those that changed hands during the period. |
Turnover Having arrived at your budget figure the next decision is what to buy. |
Our website ( www. Property When you have found your preferred pharmacy there is a lot of research that needs to be done before you reach the offer stage and here you may need to consult professional advisers. |
Apart from the usual chores of notifying the utility companies and dealing with VAT registration, you must give proper notice to the Royal Pharmaceutical Society and the local health authority. Changing circumstances and the effect of the Office of Fair Trading report One of the biggest potential problems you could face is changing circumstances that would affect future trading. |
These are normally highly attractive to purchasers because they will dispense upwards of 5,000 prescription items per month and are often sold to those with one or two local pharmacies or, if large enough, to multiples. |
| Several types of pharmacy fall within this group with plenty of choice of urban and suburban locations. |
When you are ready, make your offer (subject to contract) through the agent acting for the vendor. The main reason for these changes appears to be because true profits have increased over the period. |
They must also have a low level of dispensing. As the Office of Fair Trading has made us all too aware, nothing is guaranteed for ever. |
There may be potential to obtain additional dispensing from nursing homes, or by offering a collection and delivery service. |
700,000 and, the larger the turnover, the greater the competition and the more likely for a premium price to be achieved. |
| A quick look at the classified advertisement section of The Pharmaceutical Journal will identify a selection of agents of all sizes and in various locations. Except in special circumstances, for example, where a pharmacy is an essential small pharmacy (see below), few pharmacies with a turnover below . |
Agenda for 2003 The Pharmaceutical Journal Vol 270 No 7246 p578-580 26 April 2003 This article Reprint Photocopy PDF * 130K Features Buying a pharmacy: A guide for the first-time buyer By Nick Holland-Brown, FCIS, FCMI Buying and managing their own pharmacy business is something that recently qualified pharmacists sometimes aspire to, but knowing where to start is often a problem. If you have no experience in producing these, consider employing an accountant who has; money well spent here will give your case a much better chance of success. |
(Such pharmacies are potentially unsaleable unless they can obtain consent for a relocation or a competitor is prepared to buy the business and close it down. Finally, make sure you are present during the stocktake so that you can agree with the vendor how to treat any problem stock that the stocktakers identify. |
300,000 sell, although at Orridge we do occasionally manage to find a buyer. Choose carefully, ensuring that you find one with experience of commercial transactions and preferably conversant with the sale and purchase of pharmacies. |
Stocktaking Book a reputable firm of stocktakers to act for you in the transfer stock valuation and go through their documentation thoroughly; it should explain precisely the method they will adopt. |
| Turnover Having arrived at your budget figure the next decision is what to buy. If the premises are leasehold, ensure that the lease offers enough security of tenure to satisfy your financier. |
On dispensing you can expect to make a gross margin of between 18 per cent and 22 per cent, whereas OTC sales will give you in the region of 30 per cent to 35 per cent, so a good mix will provide a sensible margin and the security of NHS dispensing. In recent years it has become commonplace for the purchaser's solicitor to set the ball rolling by drafting the sale and purchase agreement. |
Turnover Having arrived at your budget figure the next decision is what to buy. |
Turnover Having arrived at your budget figure the next decision is what to buy. Although the first three months of 2003 have probably been the most uncertain I have known in my 35 years at Orridge, it is interesting to look at the statistics for that period and compare them with 2002 and prior years, remembering that in 2002 we were all aware of the impending OFT report. |
Your agent will be able to tell you which schemes are on offer and which banks are currently keen to lend. Your agent should know of several that have dealt with previous sales and purchases in an efficient manner and the right choice will help ensure a fast and smooth transaction. |