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How long does a pharmacy sale take?

Selling a pharmacy can be a minefield but help is at hand in a book written by pharmacy sales expert Anne Hutchings. In her last article in the series, Anne sets out the timeline for a typical sale, with the caveat that things do not always go to plan...

To give a ‘best estimate’ of the timescales involved in a pharmacy sale, the process can be split into two parts:

  • The period up to the point the sale is agreed
  • The legal process through to completion.

Part 1: Pre-sale agreement

Weeks 1-6

You have decided that you are ready to sell, so you contact a pharmacy agent to request a valuation. The agent will request information that you will need to prepare – this may take you a week or so. The agent will then review the information and prepare the valuation. Expect this to take another week.

You instruct the agent, who then visits you and prepares a sales memorandum and document pack, and selects suitable buyers to market the business to. You are already some six weeks down the road.

Weeks 7–12

The marketing process gets underway when buyers receive details of your business and view the pharmacy, after which offers are called in. There may be a period of negotiation with the buyer before a price is agreed, along with the terms and conditions of sale. It will take around 12 weeks to get to the point where a sale is agreed.

Time can be saved in the initial valuation stage if you have all your financial information to hand and ask the agent to prioritise the valuation for you. It should be possible to reduce this stage to a few days, saving up to three weeks in the early part of the process.

This scenario allows six weeks for the marketing process, but it is possible to agree a sale in less time. You do, however, need to give buyers sufficient time to make a considered decision, and bear in mind that key buyers may be on holiday or their advisers may not be available immediately. If buyers are able to make their offers on a timely basis, you could potentially cut this stage down to three to four weeks.

Overall, the first stage of the sale can be reduced from around 12 weeks to about six weeks if you are organised and everything else falls into place. However, it is more realistic to set your expectations to a 12-week timescale.

Part 2: Post-sale agreement

Weeks 13-24

Once the sale has been agreed, it should take a week to prepare the heads of terms outlining the main points agreed with the buyer such as price, and specific terms and conditions.

The next step sees the start of the legal process, and this is where the timetable can be derailed. If everything goes to plan this stage should take no more than 12 weeks, but more people are now involved: the buyer, seller, both sets of solicitors, accountants, valuers, banks and possibly the local NHS team could all be engaged.

This is a large group, and ensuring they are communicating effectively and co-ordinating their activity can be a challenge.

Other factors that can delay the sale include:

  • Solicitors: Inexperienced or slow solicitors will at best delay the sale and at worst destroy it. Solicitors who still insist on sending everything by post can prolong a sale by weeks.
  • NHS England/Wales/Scotland: Dependant on how the sale is structured, a change of ownership may be required. This can take a month or more to be approved by the NHS. The timescale for handling applications varies, but the 30- days appeal period is standard. If you need to apply for change of ownership, this needs to beprogressed soon after the sale has been agreed to avoid delays.
  • Leasehold property: With a leasehold property the landlord needs to re-assign the lease to the purchaser and this can be a slow process. To speed things up, the landlord and their agent should be warned in advance of the impending transfer. The landlord will require accounts and references from the new tenant (your buyer). These requirements should be passed to the buyer as early as possible. Banks can be particularly slow at providing references.
  • Funder’s requirements: The buyer’s bank may decide that it wants to see interim management accounts or the latest set of accounts, which may not be ready if your yearend has only just passed. This can lead to delays.

A good agent can cut the sale time down by making sure everyone is kept on track. The agent will ensure all parties are liaising with each other, that documents are submitted on time, that NHS applications are correctly completed, and property surveys and valuations are carried out quickly. Properly done, this can reduce the time taken at each stage and minimise the stress levels for all concerned.

On average, a sale can take about six months from start to finish providing no important or unexpected issues arise to cause a delay. This timetable also assumes you are using an agent to handle the sale.

You may be wondering what the timescale might be if you are selling your business privately. From discussions I have had with pharmacy owners who have decided to ‘go private’, the sale typically was agreed relatively quickly.

If you are only talking to one buyer, this part of the process should not be time-consuming. However, things frequently went wrong or there were substantial delays once the sale progressed to the legal stage. It was not unusual to hear of delays ranging from months to a year or more, or the sale collapsing.

Conclusion

Sales rarely go exactly to plan. The best advice is to appoint a first-class team of advisers whom you can depend on and who will guide you through the process while looking after your best interests. Agreeing timescales with your buyer and solicitors is crucial to keeping the sale on track.

Keep on top of the sale by being in regular contact with your buyer, solicitor and any other advisers involved in the sale. Be prepared to deal with unexpected issues that may arise. Good luck!

Sales rarely go exactly to plan


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.

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