| 600,000 available to first- and second-time buyers. |
The relationship between dispensing and over-the-counter turnover is an important one to understand because it not only determines the profit margins that the business will make but, particularly with small businesses, has a bearing on its future security. |
There are exceptions to every rule and it may be that a poorly performing business is simply not being competitive. By reorganising or refitting the premises it might be possible to attract more OTC sales. |
300,000 and . |
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. |
| 600,000 available to first- and second-time buyers. |
In recent years, larger businesses have become available to first-time buyers due to the support offered by wholesalers. 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. |
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.600,000 available to first- and second-time buyers. |
(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.
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| net ) has, on average, details of about 100 pharmacies currently on the market, for example. |
If you are unfamiliar with employment legislation, you will be well advised to consult a specialist employment lawyer. |
A prospective purchaser should consider whether the shop could benefit from longer opening hours. 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. |
Sales agency A first-time buyer would be well advised to make contact with an established and reputable specialist pharmacy sales agency. |
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. |
| They must also have a low level of dispensing. When both parties have agreed the terms, exchange of contracts is usually followed immediately by simultaneous completion. |
Pick ones that cover the geographical area in which you are interested (some operate nationally) and telephone them for a chat. Business plan No matter from whom you will be borrowing, a proper presentation of your business plan will make your task much easier. |
Choose carefully, ensuring that you find one with experience of commercial transactions and preferably conversant with the sale and purchase of pharmacies. This will ensure you get relevant advice and will probably save you money on legal fees. |
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 should be pleased to explain the basic principles of pharmacy valuation.
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Your solicitor should warn you about all of these potential problems but, in practice, you may need to prompt him or her. 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. |
| In recent years, larger businesses have become available to first-time buyers due to the support offered by wholesalers. 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. |
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. |
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. |
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. 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. |
Similarly, you need to check whether another agent has a client who has insisted on offering his business at an inflated price. |
| 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. |
Assuming you have chosen your geographical area, you will need to consider the various types of business on offer. |
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. |
Multiples and regional groups with between two and 40 premises, rarely look at businesses with turnovers of less than . |
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. 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. |
| True value The true value of a business was referred to above. |
If the premises are leasehold, ensure that the lease offers enough security of tenure to satisfy your financier. Reach an agreement over the treatment of such items and ensure that the stocktaker in charge is notified on the day. |
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. |
net ) has, on average, details of about 100 pharmacies currently on the market, for example. |
Choose carefully, ensuring that you find one with experience of commercial transactions and preferably conversant with the sale and purchase of pharmacies. |
| 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. |
As the Office of Fair Trading has made us all too aware, nothing is guaranteed for ever. |
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. |
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. |
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. 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. |