Buying A Pharmacy - The True Cost

For many of you, the new year may have brought some new year resolutions. Some of those may relate to ownership - or more specifically the purchase of a pharmacy.

In order to ensure that you achieve these resolutions, it is important that you take some time to consider how you plan to achieve these aspirations. Depending on your progress to date, and your experience in the market, this will vary. One of the most important considerations is how to fund the acquisition.

Some important considerations are:

• What are you looking to buy?
• What costs are involved?
• How are you looking to fund it?
• Who is going to fund it?
• How are you going to do the deal?

When looking to buy a pharmacy, it will be important that these are considered before you make an offer on a business.

What are you looking to buy?

Understand what you are looking to buy and what comprises the purchase price. In relation to pharmacy, a purchase price will often include the following: Goodwill, Stock, Fixtures & Fittings, Approval Number, etc. Understand what the purchase comprises and how much each item is.

What costs are involved?

When purchasing a business, there are a number of transaction costs that you will be required to make to complete the deal. These may vary from state to state, however the general costs include: Valuation fees, Loan establishment fees, Accountant fees, Due Diligence fees, Solicitor fees, etc. In some instances, there may also be Stamp Duty and GST required.

Note that your funding/loans will not cover these fees. So it is a good idea to ensure that when making an offer, you consider the transaction costs you will incur in the process and ensure that you have sufficient funds available for this.

How are you looking to fund it?

Funding will relate to a number of key issues. These include what you are purchasing, the contribution you will be making to the purchase as well as the ability to repay the loan. Be sure that you familiarise yourself with funding options and what is required to ensure funding can be obtained.

There are different funding solutions available for different acquisitions. You may wish to contact a finance broker to assist you in structuring and presenting the purchase on your behalf.

Who is going to fund it?

Once you determine how you are going to fund the purchase, you need to work on who is going to fund it. If it is a bank - which bank will you choose; and for what reason?

How are you going to do the deal?

Once you place an offer on a business, both parties will generally be keen to proceed quickly. If you have a plan of how to complete the purchase, this will allow you to spend more time assessing and completing the deal rather than working out the processes. A plan will also allow you to manage the purchase according to a structured process - limiting the emotions of the transactions and ensuring both parties achieve a great result.

What's Next?

If you haven't already done so, I recommend that you attend a Medici Capital Ownership Ready Series. The event covers a wide range of topics related to understanding how to find and assess a Pharmacy to buy and proves a great chance to understand how to formulate an offer.

Once you understand how to analyse an opportunity, take some time to understand the players in the space - business brokers, bankers, valuers, accountants and solicitors. Also, register for Practice4Sale and work out what pharmacies are on the market.

Formulate a plan of the type of pharmacy you are looking to buy and put together a team of people who can help you achieve the sale. This way, when the right opportunity presents itself, you are ready to move. And if your offer is right - you are more likely to achieve a successful result.

Andrew Sirianni
Attain Business Brokers
1300 ATTAIN (1300 288 246)