Contemplating a Pharmacy Transaction – The Pharmacy Might Be More Than a Pharmacy!
Contemplating a Pharmacy Transaction – The Pharmacy Might Be More Than a Pharmacy!
Regardless of whether you’re buying or selling a pharmacy business, it’s important to take a step back and think about what is actually involved in the business.? The pharmacy might be more than a pharmacy!
In this article, we consider additional components which may form part of the business and discuss how they impact on a pharmacy transaction.
1.????? Motor Vehicle
It is common for pharmacy owners to own a motor vehicle which is used for delivery purposes.? The contract for the sale/purchase of the pharmacy should clearly specify whether the motor vehicle is included in the sale and if so, the process for transferring the motor vehicle from the seller to the buyer.? In some States, transfer duty will be payable on the transfer of the motor vehicle and as such, it will be necessary to determine the market value on the motor vehicle.
2.????? Gold Lotto Licence
A pharmacy business may have a Gold Lotto agency inside it.? The Gold Lotto agency operates according to a detailed agreement.? If the transfer of the agency forms part of the transaction, it needs to be specified in the contract and the parties need to engage with Gold Lotto to ensure the transfer process is undertaken as soon as possible.? There is a lot of information which needs to be provided as part of that process as well as a training program which takes time to complete.? A stocktake of the Gold Lotto items will also be required.? If the transfer and training process is not undertaken early in the transaction, it is likely to delay settlement.
3.????? Australia Post Agency
Some pharmacies, particularly those located in regional or remote areas, operate as an Australia Post agency, selling envelopes, stamps, housing PO boxes and acting as a collection point for mail and parcels.? Like Gold Lotto agencies, the process of transferring an Australia Post agency is complex and involves a training process which takes time and can only occur on pre-determined dates.? In addition, it is important the contract deals with the items in the post office as part of the plant and equipment, as well as a stocktake of the Australia Post items prior to settlement.
4.????? ATM
If the pharmacy has an ATM attached to it, there will most likely be a licence agreement associated with it.? If so, the licence agreement will need to be included as a material contract which needs to be assigned as part of the transaction.? Also, the licence agreement will need to be carefully reviewed to determine what steps, if any, need to be taken to legally transfer the licence agreement from the seller to the buyer.? If this process is not undertaken carefully, there is a risk the ATM licence agreement will not be properly assigned to the buyer and may also put the seller at risk of breaching the licence agreement.
When contemplating a transaction, it’s imperative to ensure all components of the business are considered and appropriately dealt with in the contract.? If a component is overlooked, it may delay settlement or result in a party not getting their intended outcome in the transaction, either because they do not get the benefit of the asset they thought they were buying or are paid for that asset.
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Sarah Stoddart is the Director of Vitality Law Australia, an award winning commercial law firm servicing pharmacy businesses and healthcare professionals across Australia.? For further information, email [email protected] or visit www.vitalitylawaustralia.com