Many young pharmacy owners buying their first pharmacy often talk about the emotion of the experience, the excitement, nervousness and panic all rolled into one big fat ball. I’m sure there are many readers who remember that time of their life.
The sale process is likely to be much worse. Again, a great big fat ball of excitement, nervousness, stress, tension.
If you are thinking of selling your business, you best be prepared and plan carefully. These are some of my tips and observations;
1. There are many greedy, or unrealistic, or poorly advised owners out there. Many will blatantly put a premium on their business thinking they will get someone to pay it. Some will. But buyers are a lot more knowledgeable these days and a lot more careful. Unless your business represents a significant opportunity (in which case why would you be selling?) there are not many people these days willing to pay high prices. Some have learnt this the hard way.
Be realistic with what you want for your pharmacy and what your pharmacy is actually worth. It might be worth getting a valuation to gain a better understanding of your pharmacy’s true value.
2. Understand the buying process and the selling process are very emotionally based decisions. A buyer and a seller can look at the same set of facts and come to completely different opinions. Understand your view is just one perspective. Others will look at it differently. Therefore, getting the right advice earlier on in the process from trusted independent parties will be immensely valuable. Particularly on how you should be presenting your business for sale and how to respond to the offers that are presented.
3. Make sure you tidy up your back yard 2 years prior to listing. Most buyers will want to undertake a due diligence process to gain some confidence in the figures you have presented as part of the sale process. Therefore, your financial records need to be open, transparent, easily accessible and easy to understand and interpret….warts and all. You cannot do this after you have started the sale process. It must be done at least two years prior to sale. You don’t want a problem to occur during the due diligence process, that makes a buyer nervous and want to pull out. Also have your lawyer do a preliminary review of all contracts and lease agreements to ensure they are in order and transferable to a new owner.
4. Ensure all your staff employment and wage records are up to date, especially all staff leave entitlements are updated. This will be an important discussion point around settlement time and during the due diligence process.
5. Make a time to go see your accountant prior to the listing, and get some tax advice, particularly around Capital Gains Tax. You need to understand beforehand what your options are. There are very practical issues that can arise from the sale of a business. Particularly around when to sell, how the sale should be structured, how the proceeds should be utilised and how to minimise the tax exposure.
6. Make sure you have your lawyer involved at an early stage to advise you and help you through the process. A good lawyer who is helpful to the process and not one who wants to have an all-out war on spelling and grammar.
7. Also consider how you want the sale process handled. You, or your advisor/broker etc, can approach specific potential buyers and keep it low key, or you can promote it widely and attract as many offers as possible. It is up to you.
8. Don’t be stubborn and inflexible. Any business transaction involves elements of negotiation and flexibility. Try to come to an agreement where both parties are happy. Though sometimes that is not achievable, we understand that. Ideally you want the incoming owner to be successful and take your business to new heights.
9. Show the buyer where the opportunities are. No one knows your business better than you. So, make sure you spend time showing potential buyers where the opportunities are and how they can grow the business.
I hope these tips help you if you’re thinking of selling your pharmacy. The best advice I can give after working with pharmacy owner’s for nearly twenty years, is to be realistic. Worth is not only measured in dollars but time, so remember to always look at the big picture. It is a very exciting time for both you and the future buyer. If you’re organised and flexible, the transaction can work in both your favours.