| If there are clauses in the lease with onerous repair covenants you would be well advised to have a professional survey carried out to ensure you are not taking on any unforeseen liabilities. This will ensure you get relevant advice and will probably save you money on legal fees. |
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. |
As a rule of thumb, clearing banks will probably lend in the region of 80 per cent of the true value of a business and possibly also the value of the stock, provided you have security. You will probably be taking an assignment of a lease and will therefore need references for the landlord. |
This will ensure you get relevant advice and will probably save you money on legal fees. |
Your agent will be able to tell you which schemes are on offer and which banks are currently keen to lend. Ascertain when the rent reviews take place and, if a review is imminent, try to find out, by talking to neighbouring shop owners and local estate agents, what the new rent is likely to be. |
| Since you are unlikely to have a track record with suppliers, you will have to rely on a bank reference and possibly character references, so strike up a good relationship with your bank as soon you can. |
Finding and financing are separate operations, but the choice of business is clearly restricted by the availability of funds, so it is important to know at an early stage how much capital is available and how much loan, or other finance, can be raised. Turnover Having arrived at your budget figure the next decision is what to buy. |
Sales agency A first-time buyer would be well advised to make contact with an established and reputable specialist pharmacy sales agency. Also in this group will fall pharmacies adjacent to or within a health centre. |
True value The true value of a business was referred to above. The multiple of true profit has, as expected, dropped slightly in the last quarter of 2002 and the first quarter of 2003 but, conversely, price as a percentage of turnover has increased slightly. |
Your agent should be pleased to explain the basic principles of pharmacy valuation. Several types of pharmacy fall within this group with plenty of choice of urban and suburban locations. |
| The best of these are usually close to a doctor's surgery and also have a thriving OTC trade. |
It is likely that buying a pharmacy will be the largest and most complicated transaction in which a prospective purchaser will ever have been involved, so choosing one's advisers carefully is essential. 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. |
It is likely that buying a pharmacy will be the largest and most complicated transaction in which a prospective purchaser will ever have been involved, so choosing one's advisers carefully is essential. Pick ones that cover the geographical area in which you are interested (some operate nationally) and telephone them for a chat. |
These businesses are often easier to finance than smaller ones and it is not unknown for businesses with annual turnover in excess of .700,000 and, the larger the turnover, the greater the competition and the more likely for a premium price to be achieved. |
Offer and legal process Your solicitor will perform the local searches after your offer is accepted but, before you make the offer, ask the vendor if there is anything that might affect the future trading of the business, such as relocation of another pharmacy, a new or moving health centre or doctor's surgery. |
| The number of pharmacies that agents can advertise is limited by the size of their advertisements, so browse through the websites, where you will find brief details of all of the businesses they have to sell, with the exception of those where advertising is restricted by the vendor. Those in suburbia are usually less attractive to multiples because of their secondary positions and, therefore, offer good value opportunities to independents. |
Alternatively another look at the classified section of The Journal may be helpful. 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. |
Indeed, if there is any shortage of activity, it is becoming apparent that it is due to the shortage of new businesses coming on the market and not, as might be expected, due to the lack of buyers wishing to commit to acquisitions. Alternatively another look at the classified section of The Journal may be helpful. |
Our special feature this month looks at the practical, financial and legal aspects of buying a pharmacy business Mr Holland-Brown is Chairman of Orridge Business Sales Limited Although there is risk inherent in buying a pharmacy, it can be minimised by taking appropriate advice and doing plenty of research before making a final decision on what to buy. The best of these are usually close to a doctor's surgery and also have a thriving OTC trade. |
If the premises are leasehold, ensure that the lease offers enough security of tenure to satisfy your financier. |
| These schemes are offered by the major wholesalers, but do not forget to talk to the local independent wholesalers as well because they may be just as keen to do business with you. Here again the vendor's agent will be pleased to advise you on the procedures. |
The best of these are usually close to a doctor's surgery and also have a thriving OTC trade. |
These businesses are often easier to finance than smaller ones and it is not unknown for businesses with annual turnover in excess of . They must also have a low level of dispensing. |
net ) has, on average, details of about 100 pharmacies currently on the market, for example.) This leaves a band of turnover between .
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Our special feature this month looks at the practical, financial and legal aspects of buying a pharmacy business Mr Holland-Brown is Chairman of Orridge Business Sales Limited Although there is risk inherent in buying a pharmacy, it can be minimised by taking appropriate advice and doing plenty of research before making a final decision on what to buy. True value The true value of a business was referred to above. |
| In recent years it has become commonplace for the purchaser's solicitor to set the ball rolling by drafting the sale and purchase agreement. The trend we found particularly interesting is that after a small drop in the number of pharmacies being sold over the whole period, compared with previous years, the number of sales currently in solicitors' hands and due to complete in the second quarter of 2003 is the highest of the last six quarters. |
Turnover Having arrived at your budget figure the next decision is what to buy. |
Alternatively another look at the classified section of The Journal may be helpful. The main reason for these changes appears to be because true profits have increased over the period. |
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. |
Business plan No matter from whom you will be borrowing, a proper presentation of your business plan will make your task much easier. This is not compulsory but it shows good faith on your part, which could help to fend off any late offers in excess of yours. |
| If you are unfamiliar with employment legislation, you will be well advised to consult a specialist employment lawyer. 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. |
Security can take the form of mortgageable assets, including any freehold property you acquire with the business, but nowadays about 90 per cent of first-time buyers use a wholesaler to act as guarantor under one of their loan guarantee schemes (see p581 ). Offer and legal process Your solicitor will perform the local searches after your offer is accepted but, before you make the offer, ask the vendor if there is anything that might affect the future trading of the business, such as relocation of another pharmacy, a new or moving health centre or doctor's surgery. |
Your agent will be able to tell you which schemes are on offer and which banks are currently keen to lend. You will probably be taking an assignment of a lease and will therefore need references for the landlord. |
The number of pharmacies that agents can advertise is limited by the size of their advertisements, so browse through the websites, where you will find brief details of all of the businesses they have to sell, with the exception of those where advertising is restricted by the vendor.pharmacysales. |
Your agent will be able to tell you which schemes are on offer and which banks are currently keen to lend. This is not compulsory but it shows good faith on your part, which could help to fend off any late offers in excess of yours.
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