top of page
  • Integrity Pharmacy Consultants

Do You Have An Exit Strategy For Selling Your Pharmacy?

Updated: Nov 13, 2023

Learn what steps to take when considering your exit strategy to help maximize the value of your pharmacy.


Examples of exits include:

  1. Retirement – focus on family, hobbies and travel

  2. Change in partnership (business partnership dissolution or divorce)

  3. Unexpected business challenges

  4. Unexpected life event (kids, parents, moving)

  5. Change in career


A professional pharmacy broker can help you increase the value of your pharmacy for a future sale. If you have considered exiting ownership shortly, experts can help you optimize your sale price and confidentially network your pharmacy, especially when they have a large database of qualified buyers.


STEPS TO INCREASE VALUE FOR FUTURE SALE:


  1. Get your financials in order. This is probably the most important consideration when preparing for a future sale. One of the advantages of owning a business is the ability to write off or deduct more expenses than those who don’t own their own business. This reduces profitability and favors lower taxes. However, this can backfire when it comes time to sell because your pharmacy may be much more profitable than your financials reflect and may sell for a higher value. By removing/eliminating unnecessary expenses a year or two before selling, your Profit and Loss Statement and your Tax Returns can reflect that true cash flow and profitability of your pharmacy.

  2. Control Business Critical Expenses. This is another key consideration when preparing to sell. Your Cost of Goods Sold (COGS) is your biggest expense. Are you purchasing medications for the best available pricing? Is your Gross Margin percentage above or below 20%? You may want to shop wholesalers or GPO’s if you haven’t compared for a few years. Can you reduce your staffing hours and possibly reduce the hours of operation? How much is your employee benefit expense?

  3. Improve Store Conditions. When was the last time you entered your pharmacy, taking notice of the aesthetics from a customer perspective? Is there trash or potholes in the parking lot? Are the exterior lights/signage all working? Are the windows dirty or even cracked? Is your flooring clean? Shelves full? When you are getting ready to sell your pharmacy, you want the pharmacy to look it’s best.

  4. Lease. Is the building owned? Leased? If leased, how long is the remaining lease? There are certain situations when you want to have a lease with several years as an option. In other scenarios, you want only a year or less remaining on the lease. Once you determine if your buyer will likely be an independent buyer or a chain, you will know whether you need several years on the lease or 12 months or less and plan your exit strategy accordingly.

  5. Market Conditions. The pharmacy industry continually changes, and independent owners are in the crosshairs. You will receive a higher price when you sell your pharmacy in its prime. When your store is rolling and your cash flows are rolling in, you have more leverage to negotiate. If you wait until the pharmacy is on a decline and cash flows struggle, you will have fewer options and the timing may not be in your favor.

274 views0 comments

Comments


bottom of page