How can you make the best of selling your pharmacy in the current economic climate? Anne Hutchings offers some advice.

Your pharmacy is likely to be the biggest asset you will ever sell. You will only have one chance to get this right. Do things the wrong way and it could cost you many thousands of pounds.

Some people have a cavalier attitude to selling their business and while this may have worked to a certain extent at the peak of the market, it is not so successful now.

If you want to:

• achieve the best price for your pharmacy,

• agree terms and conditions of sale, which are favourable to you,

• have the sale progress through each stage quickly and with minimum stress.

You need to:

1. Adopt the right attitude. This means being totally committed to the sale. You should therefore be 100 per cent sure that you are ready to sell the business.

2. Be realistic about the price you are likely to achieve for the pharmacy. Take professional advice on this and accept it. I have lost count of the number of pharmacists I speak to who, when I tell them my opinion of the value of their business, reply "but I want...". Often their figure is 20 to 50 per cent higher than the realistic market value. Over-price the business and kill the sale!

3. Be proactive. The only way the sale will progress quickly is if everyone involved is proactive. This means that you, your advisers (pharmacy agent, solicitor, accountant), your buyer and their advisers (solicitor, accountants, finance lender) all need to be committed to the sale and be prepared to work to time scales.

4. Have an excellent team of advisers. In the current economic climate I believe it is more important than ever to have a team of experts looking after your interests. They should consist of:

Pharmacy agent 
A good agent will be there to advise and support you from day one to the day of completion. They will advise on valuation, market the business to appropriate buyers, check the buyer's financial position and negotiate the best price and terms for you. When the sale is agreed, the agent's work does not end. It is part of their job to try to ensure the sale progresses to completion as smoothly and quickly as possible, which involves a lot of liaison between all parties.

Solicitor 
Why don't pharmacists appoint an experienced commercial solicitor? Well, to be fair, some people do, but unfortunately many do not. Perhaps the reason is cost or just that they feel comfortable with the local solicitor who dealt with their house conveyancing.

The sale of a business is very different to the sale of a house and requires a different area of expertise. We have seen it all, from the one-man band solicitors who don't have email facilities and go on holiday just before the sale is due to complete, to the solicitor who produced a two-page contract for a company share sale (a typical contract would be in excess of 50 pages).

Source your solicitor at the outset - if you wait for the sale to be agreed this inevitably results in delays while you decide which firm to use.

Accountants 
Depending on how complicated your pharmacy sale is, you will need advice from someone experienced in business sales. This particularly applies to company share sales. Your accountant may have provided an excellent service over the years dealing with your bookkeeping and annual accounts but this does not necessarily mean they can also handle the issues that arise on a pharmacy sale. Be aware of this and take advice elsewhere if necessary.

Essential documentation

Make sure you have all the basic documentation ready before the business is put on the market. The following is a checklist of what you need:

• Three years' accounts, which are up to date.

• NHS statements for the last 24 months.

• Copies of VAT returns (if available) for at least the previous 12 months.

• Copy of the premises lease if applicable. If you own the freehold, obtain a current valuation of the freehold and also the market rent.

• Energy performance certificate for the business premises.

Extras

What can you do to attract buyers? Look at your business from a different perspective, for example, what would you be looking for if you were buying the business?

Buyers want:

• To know they are making a sound investment. In the current climate it is not just buyers who require this but also their financial backers.

• Potential to increase the turnover and profitability of the business. If you were starting all over again now, what would you do to increase the business? Make a list of all the areas with potential, such as provision of services, collections etc, and summarise the additional income you think could realistically be generated. Also have a look at your costs, in particular expenses that are particular to you, such as a company car. Strip out all costs a new owner would not necessarily incur and make the buyers aware of this.

• A business that they feel is safe from competitors. The 100-hour applications and supermarkets have posed the biggest threat in recent years. If you find yourself under threat from a new contract application, unless you are an expert on the legislation, consult someone who is and who can advise on your options.

• To be confident that the local doctors will still be there in the future. Speak to your local doctors and the PCT etc and find out if there are plans for the future that could affect your pharmacy.

If there are plans that could negatively impact your business, this does not mean that you can't sell it. You have two choices: either be prepared to drop the price to counteract the problem or keep the business if you think you can overcome the problem.

It is good practice to analyse where your prescriptions are coming from, ie the percentage from each of your local surgeries. You may find that the loss of a local doctor who is retiring or moving won't have a big impact as far as you are concerned.

Overall, in the current market, the seller needs to go the extra mile and be prepared for all the questions buyers will want satisfactory answers to.

Anne Hutchings, Hutchings Consultants Pharmacy Brokers

Tel: 01494 722224

www.hutchings-pharmacy-sales.com