Buying a Pharmacy? Make an informed purchase

If you are looking to purchase a pharmacy, EVCOR can help you assess what an appropriate purchase price might be. Whether you’re a first-time buyer or an experienced investor, understanding the process and having the right knowledge can make all the difference. Our valuation approach identifies key points in the pharmacy business that may have gone unnoticed to make sure you’re making a well-informed purchase. Or, perhaps you need help with the due diligence or offer process?

Here are some of the stages you need to be aware of and understand:

Valuation and Preliminary Due Diligence

Conducting preliminary due diligence involves asking questions, reviewing financial statements, and looking at source documents and contracts to identify potential issues or risks.

To assess the pharmacy, you can use a combination of assessment tools, such as rules of thumb and “sniff tests,” but the gold standard at this point is to get an official valuation. It’s important to be mindful not to get stuck in analysis paralysis, as you don’t want to miss out on a great opportunity due to unnecessary delay.

Additionally, remember that you won’t be able to check the accuracy of all the seller’s claims until it is time for confirmatory due diligence. At this point, you will want to be comfortable with the non-binding offer you are putting forward, which will be subject to additional scrutiny of the business.

The Offer

Once you have decided that this pharmacy is right for you, it is crucial to take the next steps to ensure your offer is strong and accepted. First, enlisting advisors such as a valuator with specific pharmacy experience can help identify any potential issues or nuances that could be crucial when framing the offer.

It would also be beneficial to obtain the services of a lawyer to ensure that your non-binding letter of intent is appropriately prepared. Taking these extra steps will demonstrate your commitment and dedication and help ensure that your offer meets all legal requirements.

Furthermore, it reflects positively on your character and shows you are serious about closing the deal. Having a well-crafted offer increases your chances of having it accepted and will help you move forward with the acquisition process.

Due Diligence and Definitive Agreements

Once your offer is accepted, the next step is to conduct confirmatory due diligence (DD). This involves verifying all the details you were given in the preliminary stages and ensuring they are still accurate and up to date. You must ensure that everything matches what was presented during the initial negotiations. To do this, you must review all the documents and perform background checks on all parties involved.

Your lawyer will also begin preparing the definitive purchase agreement (DA or DPA)—the first draft is customarily prepared by the buy side. This agreement should detail all aspects of the deal, including payment terms, warranties and indemnification clauses. In addition, your lawyer will conduct legal due diligence to ensure that all legal matters related to the deal are in order.

Finally, in the case of a share purchase agreement, it is advisable to have your accountant conduct tax due diligence. Once you have completed this process and both parties have signed off on the definitive purchase agreement, you can move on to the closing process.

Closing and Beyond

The Closing Phase is an intensive one, with plenty of tasks to be completed. You will be removing any conditions that have been placed on the agreement, such as financing or due diligence conditions. If applicable, you will enter into a new agreement with the banner provider. An inventory of the pharmacy will need to be conducted, and you will need to meet your new staff. After all of this is completed, the closing date arrives – what everyone has been working hard for. Even after this, there may still be some closing financial statements to complete, as well as settling any holdback or earnout amounts.

Right now, there are more buyers than sellers, so you’ll need to stand out as an exceptional candidate. Our team can provide guidance and support to help you learn how to recognize opportunities in a newly acquired pharmacy, avoid common mistakes, and develop a long-term success strategy.

Click here now to register as a buyer and take the first step towards becoming an independent pharmacist-owner. With the right guidance and enough dedication, you can be well on your way to achieving your goals!