| Turnover Having arrived at your budget figure the next decision is what to buy. |
Your solicitor should warn you about all of these potential problems but, in practice, you may need to prompt him or her. As the Office of Fair Trading has made us all too aware, nothing is guaranteed for ever. |
Profit margins To understand the different profit margins you will encounter during your search, it is essential to consider the turnover split. Try to ascertain how much interest in the business there is in order to help you pitch your offer at the correct level. |
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. 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. |
| 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. |
Do not automatically be put off a business which appears to be under-performing. |
By reorganising or refitting the premises it might be possible to attract more OTC sales. Here again the vendor's agent will be pleased to advise you on the procedures. |
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. |
| These businesses are often easier to finance than smaller ones and it is not unknown for businesses with annual turnover in excess of . 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. |
Turnover Having arrived at your budget figure the next decision is what to buy. In recent years, larger businesses have become available to first-time buyers due to the support offered by wholesalers. |
Pick ones that cover the geographical area in which you are interested (some operate nationally) and telephone them for a chat. 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. |
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. |
| 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. Do not automatically be put off a business which appears to be under-performing. |
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. |
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. |
A prospective purchaser should consider whether the shop could benefit from longer opening hours.
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| 300,000 sell, although at Orridge we do occasionally manage to find a buyer. |
Sales agency A first-time buyer would be well advised to make contact with an established and reputable specialist pharmacy sales agency. |
Similarly, you need to check whether another agent has a client who has insisted on offering his business at an inflated price. |
In recent years it has become commonplace for the purchaser's solicitor to set the ball rolling by drafting the sale and purchase agreement. |
| You will need details of the past performance of the business (which should be available from the vendor's agent), together with profit and cash flow forecasts. 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. |
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 could be possible to stay open while the doctor's surgery remains open or to stay open at lunch time. |
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. Try to ascertain how much interest in the business there is in order to help you pitch your offer at the correct level. |
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. Reach an agreement over the treatment of such items and ensure that the stocktaker in charge is notified on the day. |
| 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. 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. |
There may be potential to obtain additional dispensing from nursing homes, or by offering a collection and delivery service. |
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 it has become commonplace for the purchaser's solicitor to set the ball rolling by drafting the sale and purchase agreement. |
The significance of this figure is that while you may put a premium value on working in a Cornish fishing village, the banks will probably not and will consequently lend a percentage of the true value, not your perceived value.
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| 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. If you are unfamiliar with employment legislation, you will be well advised to consult a specialist employment lawyer. |
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. Your agent should be pleased to explain the basic principles of pharmacy valuation. |
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. Our website ( www. |
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. 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. |