| 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. |
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 ). 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.
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Alternatively another look at the classified section of The Journal may be helpful. Do not underestimate the potential liabilities you will inherit. |
Also in this group will fall pharmacies adjacent to or within a health centre. |
Buying a pharmacy will be the largest and most complicated transaction in which a prospective purchaser will ever have been involved Plenty of good advice is available at all stages of the transaction — especially in connection with finding and financing the business and completing the legal formalities.700,000 and, the larger the turnover, the greater the competition and the more likely for a premium price to be achieved. |
| 700,000 and, the larger the turnover, the greater the competition and the more likely for a premium price to be achieved. Also in this group will fall pharmacies adjacent to or within a health centre. |
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. 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. |
If you are unfamiliar with employment legislation, you will be well advised to consult a specialist employment lawyer. In order to complete as swiftly as possible after your offer is accepted, you will need to have chosen a solicitor to act on your behalf.
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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. |
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. 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. |
True value The true value of a business was referred to above. |
Your agent will be able to tell you which schemes are on offer and which banks are currently keen to lend. 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. |
Turnover Having arrived at your budget figure the next decision is what to buy.500,000 to be acquired by a first-time buyer. |
A pharmacy which qualifies for an ESP allowance will receive an additional payment over and above its other NHS remuneration and will, therefore, achieve a considerably higher gross margin on dispensing turnover. 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. |
| 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. 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. |
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. Your agent will be able to tell you which schemes are on offer and which banks are currently keen to lend. |
Your agent should be pleased to explain the basic principles of pharmacy valuation. |
In recent years it has become commonplace for the purchaser's solicitor to set the ball rolling by drafting the sale and purchase agreement. 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. |
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. |
| 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. |
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. |
In order to complete as swiftly as possible after your offer is accepted, you will need to have chosen a solicitor to act on your behalf. |
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. |
Sales agency A first-time buyer would be well advised to make contact with an established and reputable specialist pharmacy sales agency. 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. |
| When both parties have agreed the terms, exchange of contracts is usually followed immediately by simultaneous completion. |
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. |
The best of these are usually close to a doctor's surgery and also have a thriving OTC trade. |
Buying a pharmacy will be the largest and most complicated transaction in which a prospective purchaser will ever have been involved Plenty of good advice is available at all stages of the transaction — especially in connection with finding and financing the business and completing the legal formalities. In recent years it has become commonplace for the purchaser's solicitor to set the ball rolling by drafting the sale and purchase agreement. |
Except in special circumstances, for example, where a pharmacy is an essential small pharmacy (see below), few pharmacies with a turnover below . By reorganising or refitting the premises it might be possible to attract more OTC sales. |
| Business plan No matter from whom you will be borrowing, a proper presentation of your business plan will make your task much easier. 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. |
300,000 and . |
net ) has, on average, details of about 100 pharmacies currently on the market, for example. |
Business plan No matter from whom you will be borrowing, a proper presentation of your business plan will make your task much easier. 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. |
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. |
| Profit margins To understand the different profit margins you will encounter during your search, it is essential to consider the turnover split. |
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. |
500,000 to be acquired by a first-time buyer. |
In recent years, larger businesses have become available to first-time buyers due to the support offered by wholesalers. Choose carefully, ensuring that you find one with experience of commercial transactions and preferably conversant with the sale and purchase of pharmacies. |
Your agent should be pleased to explain the basic principles of pharmacy valuation. For example, you may be tempted to buy one of the pharmacies offered for sale privately, but unless you seek independent advice you will not know whether it is correctly valued. |