Eleven Questions to Consider When You Are Thinking of Selling Your CA Pharmacy Business This Year And 8 Tips When You Have Made the Decision to Sell Your Drug Store

By Brad MacLiver
Authorship & Profile at Google

1. Government regulations continue to be imposed at increasing depths for all businesses. Will increased regulations affect your independently owned pharmacy over the next few years and sour the milk for a future pharmacy buyer?

2. There are a larger number of uncertainties that are coming with the new healthcare reform. How will the changes affect the profitability of your California pharmacy business, and should you sell before any negative affects arrive?

3. New taxes, or cuts in deductions, are going to happen. If changes in the tax code will negatively affect the cash flow of your pharmacy, or the cash flow of your customers, should you sell sooner than later?

4. Pharmacy financing is available for financially sound transactions. However, many potential acquisitions, partner buy-outs, and franchise buy-outs are not completed due to a lack of knowing where to find pharmacy financing for California drug stores. Are you familiar with the lenders who will consider financing your pharmacy transaction?

5. Tax for capital gains is currently at 15%. When the Bush tax cuts expire the rate will move to 20%. There is discussions the rate could be moved to 30%. This could mean as much as $150,000 in additional taxes for a $1 million transaction. Since a pharmacy buyer will not offer a purchase price for the current business value + your increased tax liabilities, should you sell your CA pharmacy before taxes are increased?

6. An optimal employment rate, and insured customers, that would increase demand for pharmacy services will not occur for a number of years. Can you really wait for the economy to fully recover and the demand to increase – before deciding to sell your California pharmacy location?

7. Thousands of baby boomers are retiring each day and many of these have businesses they will be selling. Will an influx of businesses for sale reduce the chances of selling your CA pharmacy at top dollar?

8. Included in the new healthcare act is a new property tax. If you are considering selling your pharmacy business so you can retire, or invest in other opportunities, what is the total effective tax you can pay and still net enough cash out of the business to meet your desires?

9. Many pharmacy buyers, who are not properly financed, will request that you carry part of the financing if they offer to purchase your California pharmacy. Are you familiar with carrying and selling a pharmacy business note?

10. In a good economy you should expect that selling your pharmacy business to take 6-12 months. How long will it take to sell your pharmacy in the current economic conditions?

11. Is selling now, or waiting to see what happens, the best strategy to maximize the purchase price of your CA drug store?

8 Tips for Preparing to Sell Your Pharmacy:

1. Be prepared. It is amazing how many pharmacy owners don’t have their monthly financial statements and other reports up-to-date. Have at least 2 years of tax returns and monthly financial statements, along with 2 years of your monthly prescription reports copied and ready so that a package can be prepared for a qualified pharmacy buyer.

2. Work with a pharmacy valuation company that is an expert in the pharmacy industry, to determine the current value of your business. Don’t use simple valuation formulas that might not realistically present the current value of your CA pharmacy, or the competitive pressures of the geographic area where your drug store is located.

3. A quality pharmacy business broker will also be able to bring in a higher purchase price than you can get by yourself. When you attend to the day to day activities of running the pharmacy business and maintaining profits, while not diluting your time with attempting to broker the business yourself, you should net more money even after paying the pharmacy broker commissions.

4. Since most CA pharmacy acquisitions are financed, if you have received any type of pharmacy financing in the past, reconnect with the lender so that you can direct a pharmacy buyer to a lender that knows your business.

5. You can’t sell your California pharmacy business if the buyer doesn’t have an avenue to finance the transaction. If you don’t have a previous lender to direct a pharmacy buyer toward, start working with finance consultants who have funding sources that have experience in providing business loans in the pharmacy industry.

6. You know “curb appeal” works for selling a home. Make sure your business property, equipment, and work areas provide an appearance that will attract the pharmacy buyer.

7. The various taxes you will be required to pay will have a huge impact on how much you are able to deposit from the purchase price of your pharmacy. Work with a knowledgeable tax advisor to assist in the development of your best tax strategy when considering the impacts and affects in how you structure the transaction.

8. Confidentiality can be a concern when pharmacy sellers don’t want their employees and customers to be in a position where they will fear the coming change. Use a pharmacy business broker that has both Pharmacy Purchase & Sale Agreement experience and contacts with qualified pharmacy buyers. A broker with California pharmacy expertise should be able to bring qualified buyers to the table without running public advertisements.

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 Discover tips and resources for selling, buying, financing, and valuing pharmacies by visiting www.BuyingAndSellingPharmacies.com. For a free pharmacy business valuation visit www.PharmacyValuations.com and click on either Retail or Specialty.

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