It stands to reason that if you are buying your first pharmacy, you probably won’t have any experience of what to do, or expect. Many first-time buyers say they feel daunted by the process, not least because of how much is at stake.

However, it doesn’t have to be daunting. Like many things, knowing where to start is half the battle.

 

How do I get started?

 

My advice here is to ask for help. It would be remiss of any of us to bank so heavily on getting something so complicated right the first time. So, if you’re going to start anywhere, it should be researching and surrounding yourself with a trusted team of professionals who know their stuff.

The team should consist of a specialist finance broker and a pharmacy agent to broker the sale as well as a pharmacy accountant and a solicitor who specialises in pharmacy sales. They will support you through the process, ensuring your interests are looked out for and your money well spent.

Read more: Central London pharmacy sold in ‘under six weeks’ to first-time buyers

From here, the next step should be to look at what you can afford to acquire. Knowing your borrowing capacity and budget will allow you to focus on realistic acquisition targets. You should then contact a specialist pharmacy finance broker. They will be able to assess your borrowing capacity, explain funder requirements and put you in touch with the most suitable bank to match your circumstances.

With the knowledge of how much finance is available to you, the next step is to define the type of pharmacy that matches your budget in terms of things like location, size, profitability and potential. There are a number of specialist pharmacy brokers selling pharmacies. Have a look at their websites to see if you can find your ideal pharmacy and register with them so you receive details as and when pharmacies become available.

Read more: First time buyers bag two West Cumbria pharmacies for undisclosed price

Another option if you have identified local pharmacies that are of interest to you is to try approaching them directly to see if they would consider selling to you. If you do this, you need to be very discreet because most pharmacy owners will not want their staff to know that they are selling their business until the sale is well progressed.

It is worth looking at several pharmacies so you can compare your budget with what is available. This will also let you get a feel for what will work best for you. Pharmacy brokers should have a sales pack available providing the essential information you need to carry out your own appraisal of the business.

The pack should contain details giving an overview of the pharmacy. This should include past accounts, VAT returns, staff costs, premises rents and lease details and NHS statements. At this point, it is beneficial to have an experienced pharmacy accountant review the pharmacy sales pack. They should be able to identify any financial concerns you may wish to raise. This may affect the offer you ultimately make on the business, or indeed if it’s a business you should even consider making an offer on.

Read more: Young pharmacist acquires first community pharmacy aged 27

Once you have found your ideal pharmacy, you will need to consider how much you are prepared to pay for it. If you have received the details via a pharmacy broker, there should be a guide price. It is worth speaking to the broker to get a feel for what sort of offer you will need to make. The broker will have a specific process and timeline for offers. It will be important for you to comply with this if you want your offer to have a serious chance of being accepted.

 

Sealing the deal

 

If you have approached a pharmacy owner privately, you will need to liaise directly with them and make your offer. It may seem easier and friendlier to put a verbal offer forward and seal it with a handshake, but it is advisable to put your offer in writing as well. This will mitigate against any misunderstandings later on.

Once your offer has been accepted, you may be asked to pay a deposit upfront as a goodwill gesture. This should also give you a period of exclusivity which means the pharmacy owner will not enter into negotiations with any other buyers during this time. This will give you time to arrange your finance and have a bank valuation done. This can take two to three months.

By now, you should have appointed your pharmacy solicitor. Try and agree a fixed fee with them so you can budget for all your acquisition costs. Your solicitor should start working on the legal contract and due diligence once your offer has been accepted. There may also be property issues such as lease renewal or property purchase to deal with.

Read more: ‘Renowned’ family-run Oxford pharmacy sold to first-time buyers

Overall, the pharmacy purchase process from start to finish can – and usually does – take a number of months. For example, you may find you have to wait weeks for the bank valuation to be carried out because the banks only use a limited number of valuers and they are extremely busy at times.

Other delays can arise if you need to submit a fitness-to-practise application, which a purchaser must provide if they don't already have one, and a change of ownership application. This can often take months. The other big cause of delays is property negotiations with third-party landlords when a lease needs to be extended or renewed.

This is why it’s so important to have your specialist team of advisers. They will help you overcome issues as they arise and minimise the time the sale takes where possible.

 

Anne Hutchings is managing director of Hutchings Consultants Ltd – pharmacy sales and valuations