A How-To Guide to Help You Sell Your Pharmacy
- 345 Views Business
- December 9, 2020
Selling a pharmacy isn’t an easy process. In fact, previous pharmacy owners can vouch that the sale of your independent pharmacy is one of the most important transitions you will experience — for yourself, your employees, and of course, your customers. However, putting up your pharmacy for sale in Edmonton or any other place in Canada is extremely complex.
Our experienced advisors can help you through the process. At EVCOR, we’ve identified five phases involved in selling a pharmacy.
Phase 1: Analysis and Valuation
This is the first and one of the most critical steps of selling a pharmacy. Determining the value of a pharmacy involves understanding your total tangible and intangible assets. The sum total of these two assets subtracting any liabilities is often considered the sale value of the pharmacy. However, the final value is always determined by what a buyer would like to pay.
A valuation also helps business owners identify opportunities to enhance their business’s value and strategies to improve their shortcomings. In the sale process, it is the person that has the most information that wins. It is critically important to know your value and what drives it at this stage.
Phase 2: Marketing Preparation
Unless a buyer has already approached you for your business, you will have to take steps to attract buyers. One must create a Confidential Information Memorandum (or “CIM) for interested buyers. It is a marketing document intended to shine a positive light on the company and attract as many qualified buyers as possible. Prior to the CIM, however, is the “one-pager” or “teaser.” This initial marketing material should include just basic and anonymized financial information since this is for general marketing. It is recommended not to give full financial or any confidential information at this step. One will then have to create a Qualified Buyers List based on the interest received, especially for a pharmacy for sale in Toronto, as you will find a multitude of tire kickers in this particular city. Don’t be surprised if you have to eliminate most of the inquiries right away. The teaser is typically followed by the execution of non-disclosure agreements (“NDA”) to take the sale process to the next level.
Phase 3 and 4: Bid Process, Due Diligence, and Definitive Agreements
In this stage, questions are answered, documents are shared, and potentially you might meet potential buyers in person. If traveling is not an option due to COVID-19 or any other reason, you may have to do this virtually, but remember, if a buyer is unwilling to “visit” the location, you can assume that they are not serious buyers. All the material you collated in phase 2 is now shared with the buyer, and any other questions and concerns are also addressed.
At this stage and at the close of the bid process, we would ask for a Letter of Intent (LOI). An LOI is a non-binding contract signed by both parties that essentially takes the pharmacy off the market for a period of time. The next step would be to start preparing an Asset Purchase Agreement (APA) or Share Purchase Agreement (SPA). This allows the buyer to do the confirmatory due diligence process to confirm all the financials and information about the pharmacy are in order before executing the definitive purchase agreement.
Phase 5: Closing Process
Don’t start celebrating already. You still have a few items to sort through before you can handover the business altogether. When selling your pharmacy, you are required to properly closeout your licenses, registrations, guarantees and ensure all conditions are met, including a final inventory count.
Let the Experts Help with the Sale Process
EVCOR offers expert assistance in Toronto, Vancouver, Edmonton, and many other areas, including Calgary, Regina, Saskatoon, Winnipeg, and most other regions of Alberta, Saskatchewan, Manitoba, and Ontario.
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