From ThoughtSpot 2017: Selling your pharmacy
Of the 20,000 or so community pharmacies in the market, it’s estimated that 700-900 ownership transitions happen each year: they shutter their doors, find another independent buyer, or sell to chains. The key message of ThoughtSpot’s “For Sale or Fire Sale” session was this: PLAN, and put yourself in the position to sell by choice, with timing and terms that are your own. So how do you do it right? Here’s some advice Charlie Le Bon, Director, Pharmacy Ownership and Acquisition from AmerisourceBergen shared:
Understand what drives your pharmacy’s value.
There is a range of obvious ways to evaluate your business—gross margins, total sales, and RX count. There are also some that may not come readily to mind, like reasonable rent, well-trained staff, and whether your pharmacy has kept up with innovations in the industry.
Clean house, literally and figuratively.
Don’t underestimate the appeal of a clean and modern facility and transparent, well-organized documentation that will make sense to a buyer. Note: Hiring an accountant who can standardize reporting is a good investment. Clean up discretionary expenses so that they are understandable and provide a clear picture to the buyer. Upgrade systems that need it, whether it’s an outdated pharmacy or a point-of-sale system, so that a buyer has a clear understanding of his or her ROI after purchase. Your documentation should include your top payers and drugs, your ratio of generics to brand, and the balance of new prescriptions to refills. A balance weighted mostly to “new” prescriptions is a red flag to a prospective buyer, who will ask: why can’t they retain their patients?
Find your buyer.
Commonly, pharmacy sales are a result of retirement, a desire to move to a new location, or unfortunately, unexpected circumstances like a change in the health of the owner or a family member. Whatever the reason for the sale is, determine how important it is to you to find a like-minded buyer who will retain presence in community and continuity for patients and staff. Do you have an internal candidate who might be a good fit if you can structure the deal appropriately? Keep in mind that the best offer may not necessarily be the best price. Consider all the angles of the deal, including tax implications based on how you’ve structured your business. Finally, while you’re looking, maintain confidentiality—from competitors, your patients, and your employees.
Selling the business that you built—or that multiple generations of your family built—may well be a once-in-a-lifetime transaction. Recognize that it will be an emotional process for you, but for the buyer, it’s a financial one. Be realistic, fair, and justifiable in setting your price and in negotiating for terms.
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