Introducing a “Succession Workbook” designed for Pharmacy Owners!
It is important to remember that succession planning does not necessarily mean retirement. While retirement is the number one reason for a pharmacy owner to leave their business, there are a fair number who plan on doing something different and may even start a new business.
It is never too early to start developing a succession plan. Even if you feel that succession is many years away, having a plan will make things that much easier when the time comes. It can form part of your overall business plan and of course you can always make changes as your circumstances and goals change over time.
Not having a succession plan can leave you vulnerable and puts the advantage in the hands of the successor (buyer) of your business. A well-designed succession plan could be the difference between an anxious, chaotic and emotionally draining process with a less than desirable outcome versus a knowledge-based and well planned ownership transition…………..
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Thinking about selling your pharmacy?
FSBO or For Sale by Owner
FSBO or pharmacy business "For Sale by Owner" is a pharmacy owner's attempt to sell his pharmacy. FSBO listings can easily attract a lot of potential buyers, but you have to be wary and cautious before considering such offers. These opportunities come with significant risks most of the time. Knowing if the potential buyer is qualified and how the process to engage buyers should work to protect you are a couple of major concerns. In addition, the FSBO seller will be inundated with phone calls and uninvited visits from interested and not necessarily qualified buyers, who will have conversations with staff, which inevitably will be heard by customers.
I think you get the picture and how this strategy can easily and quickly become problematic, to say the least. Let’s face it, most of you have had numerous parties visit your pharmacy and express interest in purchasing it. In today’s marketplace, that will only continue. In addition, from my experience in numerous deals, direct contact between buyers and sellers gets personal quickly. This most commonly happens when a buyer makes a comment about the business to justify the offer presented or to precursor the offer that buyers take personally. This ends up with a breakdown in negotiations which otherwise would not happen if there was an intermediary involved. Here are the most common don’ts, which I tell potential pharmacy sellers to adhere to before engaging in any casual conversation with a seller: (these are just a few of the don’ts which can put you at a disadvantage)
- Don't call anyone you think might be interested in buying your pharmacy business directly.
- Don’t ask a potential buyer what he/she thinks your pharmacy is worth.
- Don’t release any proprietary information without having a signed non-disclosure agreement in place.
- Don’t give a potential buyer a spontaneous tour of your pharmacy.
There is a better way, which allows for a comprehensive bargaining position as well as a professional process to ensure privacy, positive outcome,as well as, sound transition methodology.
FSBR or Business “For Sale by Realtor”
While I have benefited greatly from the services of real estate agents for the sale of several properties I have owned over the years, I would never use one to broker the sale of my business. Here is why and some ideas for alternative approaches.
If you are selling your business and your business includes a real estate asset or assets, by all means, you should include a real estate agent for part of the transaction in partnership with a Mergers & Acquisitions Advisor with experience in pharmacy.
Most pharmacy owners who own real estate typically acquire those properties under separate holding companies, so it’s easy to treat the sale of the property separately from the sale of the operating pharmacy company. Many buyers looking to purchase a business may prefer to rent, so even if your operating company owns a property, you may find yourself selling it separately, or as an option. In most cases, I find pharmacy owners who own the property that the pharmacy is on, keep the property as a retirement investment, and become landlords. If that is the case for you, then I would recommend that you have a lease in place prior to selling if you do not have one already.
A real estate agent is a valuable contributor, whether it is on a commission basis for selling a property, or on a fee-for-service basis as a consultant, on how to approach the sale of your business property. However, when it comes to preparing a pharmacy business for sale, and managing the transaction process to closing, hiring a real estate agent is not your best approach.
You see, an operating business is far more complex than a structure and land. Your business has many dynamics and key performance indicators (KPI’s) that influence its performance, and valuing your pharmacy business fairly, for both you and your buyer, is extremely complex – at least when it’s done correctly.
I often come across real estate listings in my local paper and see pharmacy businesses listed and wonder how an owner and the real estate agent could attract me to buy. As a buyer, I want to speak to someone who knows the business of pharmacy and understands what the challenges are for owning a pharmacy today. I also want to see.........
For more information, please register and request a complimentary copy of the "Succession Workbook" designed for pharmacy owners.
"Succession planning is not just about what you leave behind.......It's also about what lies ahead"
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