By Brad MacLiver
Authorship and profile at Google
When a Florida (FL) pharmacy or drug store is being sold, buyers will seldom pay “out of pocket” cash for the acquisition. Even when cash is available, pharmacy acquisition strategies usually involve financing the purchase of the drug store.
Typical acquisitions take 6-12 months to complete, so the pharmacy seller inFlorida
The acquisition will involve many parties in addition to the seller and the buyer. These parties include attorneys, accountants, lenders, valuation companies, industry specialists, and other professionals. No one wants to pursue 6-12 months worth of work that involves a variety of highly paid professionals without having some degree of confidence of theFlorida
The acquisition process will start with determining the value of the business. Many companies offer valuation services, but pharmacies are a different from most businesses. There are several aspects to the valuing of pharmacies that are unique to the industry, and generic valuations or simple accounting formulas should be avoided. Industry specialists should be consulted when valuing theFlorida
In order to complete a valuation the selling company needs to provide up-to-date data. Lenders will not accept old data, or a sellers “gut feeling.” Lenders need to make a decision to finance based on sound and verifiable information.
Structuring the transaction is extremely important. The seller of course wants as much money as possible and wants cash. The buyer needs to spread out the debt service and wants to have as little cash as possible invested in the acquisition.
Pharmacies and drug stores are in an industry where it is more difficult to obtain business loan due to the majority of the value in a FL pharmacy is the customer files and not hard assets. Therefore, for the acquisition to be financed a lender will need a strong understanding of the industry and what, beyond the collateralized assets, the company offers to reduce the perceived risk.
FL pharmacies have typically been known for generating profits and to be stable businesses. However, they are usually in leased locations, and their furniture, fixtures, and computers will only provide $15-20,000 of collateral for a buyer possibly requesting a million dollar loan. A lot of money is tied up in inventory, but the small pills are considered by a lender to easy to move out the door in the event of default. Due to these circumstances many lenders will not loan money to these traditional money making businesses. A successful transaction takes a lender that understands theFlorida
Tips regardingFlorida
1. Attorneys and CPAs who have been representing the FL pharmacy seller for many years may see the transaction as putting themselves in a position of losing a client when the business is sold. Make sure they are working diligently on the transaction and are not slowing or undermining the process
2. Since pharmacy acquisitions involve 6-9 months of work to complete , all parties involved need to be aware of time tables. Much too often, items of importance end up sitting on the desk of someone that is outside of the control of the buyer or seller.
3. All financial information needs to be current. Over the lengthy process the data supplied to both the buyer and the lender will need to be updated on a continuous basis. Things can change drastically during a nine month period and theFlorida
When pursuing “pharmacy acquisition finance,” for the best chance of success, make sure the valuation company and the lender have expertise in that industry. Choose a company that has the pharmacy experience and expertise, and is a direct correspondent with lenders who understandFlorida
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Authorship and profile at Google
When a Florida (FL) pharmacy or drug store is being sold, buyers will seldom pay “out of pocket” cash for the acquisition. Even when cash is available, pharmacy acquisition strategies usually involve financing the purchase of the drug store.
Typical acquisitions take 6-12 months to complete, so the pharmacy seller in
The acquisition will involve many parties in addition to the seller and the buyer. These parties include attorneys, accountants, lenders, valuation companies, industry specialists, and other professionals. No one wants to pursue 6-12 months worth of work that involves a variety of highly paid professionals without having some degree of confidence of the
The acquisition process will start with determining the value of the business. Many companies offer valuation services, but pharmacies are a different from most businesses. There are several aspects to the valuing of pharmacies that are unique to the industry, and generic valuations or simple accounting formulas should be avoided. Industry specialists should be consulted when valuing the
In order to complete a valuation the selling company needs to provide up-to-date data. Lenders will not accept old data, or a sellers “gut feeling.” Lenders need to make a decision to finance based on sound and verifiable information.
Structuring the transaction is extremely important. The seller of course wants as much money as possible and wants cash. The buyer needs to spread out the debt service and wants to have as little cash as possible invested in the acquisition.
Pharmacies and drug stores are in an industry where it is more difficult to obtain business loan due to the majority of the value in a FL pharmacy is the customer files and not hard assets. Therefore, for the acquisition to be financed a lender will need a strong understanding of the industry and what, beyond the collateralized assets, the company offers to reduce the perceived risk.
FL pharmacies have typically been known for generating profits and to be stable businesses. However, they are usually in leased locations, and their furniture, fixtures, and computers will only provide $15-20,000 of collateral for a buyer possibly requesting a million dollar loan. A lot of money is tied up in inventory, but the small pills are considered by a lender to easy to move out the door in the event of default. Due to these circumstances many lenders will not loan money to these traditional money making businesses. A successful transaction takes a lender that understands the
Tips regarding
1. Attorneys and CPAs who have been representing the FL pharmacy seller for many years may see the transaction as putting themselves in a position of losing a client when the business is sold. Make sure they are working diligently on the transaction and are not slowing or undermining the process
2. Since pharmacy acquisitions involve 6-9 months of work to complete , all parties involved need to be aware of time tables. Much too often, items of importance end up sitting on the desk of someone that is outside of the control of the buyer or seller.
3. All financial information needs to be current. Over the lengthy process the data supplied to both the buyer and the lender will need to be updated on a continuous basis. Things can change drastically during a nine month period and the
When pursuing “pharmacy acquisition finance,” for the best chance of success, make sure the valuation company and the lender have expertise in that industry. Choose a company that has the pharmacy experience and expertise, and is a direct correspondent with lenders who understand
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