| 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. |
These businesses are often easier to finance than smaller ones and it is not unknown for businesses with annual turnover in excess of . |
Different agents and finance houses have different ways of arriving at this figure, which is linked to the return on investment, but they invariably end up close to each other's valuations. Your agent should be pleased to explain the basic principles of pharmacy valuation. |
Those in suburbia are usually less attractive to multiples because of their secondary positions and, therefore, offer good value opportunities to independents. 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. |
| 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. |
Some vendors restrict their agent from advertising their pharmacy details, so the only way you will obtain information about these businesses is to speak to the agent. There are exceptions to every rule and it may be that a poorly performing business is simply not being competitive. |
The best definition of the true value of any business is what it will fetch on the open market, but in the context of obtaining finance it means the value according to an accepted formula within the pharmacy profession. Also in this group will fall pharmacies adjacent to or within a health centre. |
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. 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.
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| 300,000 and . |
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. |
The agent will be able to advise you of potential sources of finance and how much you are likely to be able to borrow. Choose carefully, ensuring that you find one with experience of commercial transactions and preferably conversant with the sale and purchase of pharmacies. |
The best definition of the true value of any business is what it will fetch on the open market, but in the context of obtaining finance it means the value according to an accepted formula within the pharmacy profession. 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. |
Some vendors restrict their agent from advertising their pharmacy details, so the only way you will obtain information about these businesses is to speak to the agent. Choose carefully, ensuring that you find one with experience of commercial transactions and preferably conversant with the sale and purchase of pharmacies.
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It is important that they have a local knowledge of your particular area and that you can strike up a good working relationship with them. Assuming you have chosen your geographical area, you will need to consider the various types of business on offer. |
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. 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. Profit margins To understand the different profit margins you will encounter during your search, it is essential to consider the turnover split. |
| Reach an agreement over the treatment of such items and ensure that the stocktaker in charge is notified on the day. 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. |
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. |
They must also have a low level of dispensing. |
500,000 to be acquired by a first-time buyer. 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. |
| 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. |
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. Once your offer is accepted you may be asked to lodge a returnable deposit with the vendor's solicitor, which he will hold as stakeholder acting between the parties. |
Business plan No matter from whom you will be borrowing, a proper presentation of your business plan will make your task much easier. Multiples and regional groups with between two and 40 premises, rarely look at businesses with turnovers of less than . |
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. 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. |