Selling a pharmacy can be a minefield but help is at hand in a new book from pharmacy sales expert Anne Hutchings. In the ninth of 12 monthly extracts, Anne looks at the importance of effective marketing and identifying serious buyers.

Effective marketing and identifying serious buyers will make selling your pharmacy easier. Knowing how to get the best price, cutting out time wasters and reducing the risk of confidentiality breaches are other vital elements to a successful sale.

For most pharmacy owners, selling up will be the first and last time that they dispose of a business, so there is only one chance to get it right. While it might be nice to think you can just announce that your pharmacy is for sale and the offers will come flooding in, the reality is different. Without a proper presentation of the business, buyers will make low offers. This underlines the importance of having an expert pharmacy agent to help handle the sale for you.

Key documents

When you are ready to sell, your agent will prepare the following:

• A sales memorandum detailing the main points about the business. This document should have enough information to whet the buyer’s appetite with a brief summary highlighting the key figures from your accounts such as turnover and gross profit
• A financial information pack comprising your accounts and other important financial documents such as your NHS statements.

These two key documents will form the basis of the buyer’s interpretation of your pharmacy business. They must be accurate and contain all the core information a prospective buyer will need. This is also the time to explain any issues relating to the pharmacy or your financial documents so as to avoid misunderstanding or loss of trust later in the sale process. A good agent should be able to advise you on your options and help you find solutions.

The crucial thing is to know your potential buyers, and your agent should make it his/her business to know who is ‘in the frame’ for your pharmacy. Your agent should be able to draw up a shortlist of the best candidates among any potential buyers so that you are not troubled with time wasters. This also means that if you are concerned about confidentiality, you will not have details of your business circulated to dozens of people.

If you would like your pharmacy advertised, your agent should be prepared to do this for you at no extra cost. However, they should only advertise the business is for sale with your permission.

An advert should contain brief information such as turnover and the general location of a business in order to maintain confidentiality. Ultimately adverts are a great way to generate additional interest in the business and help to boost the price you might achieve.

Keep an open mind

Limiting your marketing can be seriously detrimental to achieving the best price for your business. Some sellers do not want to sell to a multiple or the competition up the road, for example, when it is often these parties that will pay the highest price. Keep an open mind and look at all options.

Trust your agent to select the best buyers since this is what generates competition and achieves the best offers. In the end, the decision on which offer to accept remains with you. Any buyer who is seriously interested will want to meet you and view the pharmacy.

Viewings should be conducted at your convenience, which may be after hours in the evening or at weekends. From your perspective the meeting is a chance to meet the buyer and form an opinion as to whether you would like to sell to them. The buyer will regard the meeting as an opportunity to obtain more information about the business.

In some cases, would-be buyers may try and strike a deal with you there and then. You should not enter into any negotiations or accept any offer – just refer them back to your agent. Your only real contact with the buyer during the marketing process is likely to be at the viewing, so think before you speak.

Something you may regard as a selling point may actually be detrimental. For instance, you may be selling a business that you have owned for decades with a loyal customer base, but a buyer may have concerns regarding whether these customers will continue their patronage once the pharmacy has changed hands.

Confidentiality

A major concern for many pharmacy owners is how to keep the sale confidential. Understandably, you may be worried that your staff will find out about the sale before you are ready to tell them. This is always a risk, but it can be minimised if properly handled.

The use of confidentiality agreements helps with this. Your agent should make sure that all the potential buyers they are dealing with sign confidentiality agreements, although this is not a watertight solution. Confidentiality can be breached, so it is a good idea to have a contingency plan if this occurs.

Your staff may overhear phone conversations and, since uncertainty breeds fear, they will want to know what is happening. Hopefully this won’t happen, but be prepared and plan how you might deal with it. At some point you are going to have to let everyone know that you are selling up.

When you do this is up to you. Some pharmacy owners ‘go public’ before they even put the business on the market. Others choose to tell their staff when they have reached the point of agreeing a sale with a buyer.

Vendors sometimes worry too much about how their staff will take the news. If you are of retirement age, it usually doesn’t come as a great surprise when you announce your retirement.

 

Anne Hutchings has been dealing with community pharmacists for over 20 years and has built up her company, Hutchings Consultants, to be the UK’s largest independent pharmacy sales agency. ‘Selling your pharmacy for all it’s worth’ (£12) can be ordered from Amazon (ISBN 9781 7846 22411) or from Hutchings Consultants. For a free copy (while stocks last) complete the form online at hutchings-pharmacysales. com or send a cheque for £12 (payable to Hutchings Consultants) to Hutchings Consultants Ltd, Maple House, 53-55 Woodside Road, Amersham, Bucks HP6 6AA