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When is the right time to sell?

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When is the right time to sell?

Selling a pharmacy can be a minefield but help is at hand in a new book from pharmacy sales expert Anne Hutchings. In the first of 12 monthly extracts, Anne looks at the first question you will have to face: is it the right time to sell? 

Is it time to sell your pharmacy – and is selling the right thing to do? Ultimately only you can answer these questions. If you do decide to sell, the time to do so is when your pharmacy is likely to attract a number of good offers. In recent years, with 100- hour contracts and the drift of doctors into health centres, there has been some uncertainty in the market place. However with the threat of 100-hour contracts removed, buyers are now out in force.

Market conditions

Factors such as interest rates, the availability of credit and the tax regime are outside your control, but interest rates and availability of credit are two key factors for pharmacy buyers. And as far as sellers are concerned the news is good. With banks keen to lend to pharmacy buyers and interest rates at historically low levels, acquiring a pharmacy is currently an attractive proposition. The tax rates on a business sale are also favourable at the moment. For most pharmacy sellers the situation is straightforward: providing you qualify for entrepreneur’s relief – and most pharmacy owners do – you should only pay 10 per cent capital gains tax on the sale of your business. Counter trade now accounts for about 10 per cent of turnover in most pharmacies and the emphasis is on delivering health services to increase income. This can be positive for buyers if their target pharmacy is not providing such services as it gives them scope to develop the business.

Consolidation of GP practices has had a significant effect. The opening of a health centre with a pharmacy on-site can have a devastating effect on nearby pharmacies. In England the opening of 100-hour pharmacies has had a considerable impact. Between 2005 and 2012 there were 2,484 applications for 100-hour contracts, of which around 88 per cent were granted. Many owners will have breathed a sigh of relief when this option was scrapped. There has been rather less publicity about internet pharmacies, which also pose a threat to the traditional ‘bricks and mortar’ business. Distanceselling pharmacies can supply NHS prescriptions to anyone as long as the person does not visit the premises. This has opened the door for these businesses to target care homes, as well as providing ‘collection and delivery’ services.

Goodwill values

The squeeze on Government spending has inevitably had an effect on pharmacy services. Despite an ageing population and a year-on-year increase in prescription items, pharmacy turnover has been fairly static in recent years, but pharmacy goodwill values are holding up. Without knowing what the Government plans for the NHS, the future is difficult to predict. However, in the absence of any new legislation to tighten margins, there is no reason for prices to fall.

Is now a good time to sell?

At the moment there is a shortage of pharmacies for sale compared with a huge number of buyers….so if your business is doing well, and there are no negative issues affecting it, then it is a good time to sell. It is important to discuss your plans with your financial adviser and accountant before taking the plunge. Whatever your reason is for selling, you need to be absolutely sure it is the right decision for you. When to sell your business will be one of the biggest decisions you ever make. You should have clear reasons for doing so and clear objectives for what you wish to achieve in the future. Once your pharmacy has been sold, there is no going back.

 

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 9781784622411) or from Hutchings Consultants. For a free copy (while stocks last) complete the form online at hutchings-pharmacy-sales.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

 

 

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