Current market conditions are challenging. You will know only too well that your pharmacy costs have soared.

Gross profit for most pharmacies that we are seeing has dropped, sometimes by several percent, leaving a much smaller net profit and even losses for some pharmacy owners.

Here are five steps to maximise the value if you’ve made the decision to sell.

Step one: Market at the right price (starting price does not necessarily equal sale price)

It is crucial to market your pharmacy at a realistic valuation. The days have gone where you could put your business on the market at a huge premium price and still have buyers interested in it and in some cases even reach or exceed that inflated price.

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These days if the price is excessive the pharmacy will have very little, if any, interest from buyers and just languish on the market until either the owner decides to withdraw it or reduce the price to a realistic level.

Conversely, when a competitively priced pharmacy enters the market, it can generate high interest and even competition between buyers, potentially swaying things in your favour.

With this in mind, then, your first step in the sales process is to get a realistic valuation.

You can do this by speaking to a pharmacy specialist sales agent who as a result of dealing with the market every day will be able to give you an initial appraisal and price guide.

There are many factors to take into account, such as, location, profitability, potential, premises size and lease to name but a few. Even if you are within walking distance of your friend’s pharmacy this does not mean that your businesses are worth the same.

Step two: Review your tax position

In this market every penny counts. Once you have discussed the valuation with an agent and are confident you understand the potential value of the business, it is important that you know what tax you will have to pay on the sale.

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Speak to your accountant at the outset and establish your tax position and whether or not you qualify for any tax reliefs that are currently available. If you are trading through a company, you also need to know whether the sale should be an asset or company share sale.

Again, your accountant should advise you on this and advise you on any action you can take to reduce the tax on the sale of your pharmacy. Getting the sale structure right can save you thousands and sometimes hundreds of thousands of pounds in tax.

Step three: Assemble your A-team

This consists of your professional advisers who should all be specialists in the pharmacy market. You will need:

* A pharmacy broker/sales agent who will advise you on valuation, marketing, then obtain offers and negotiate the best price, terms and conditions for you. A good sales agent will also oversee the sale liaising with the buyer, seller, solicitors and accountants right through to completion of the sale.

* A solicitor who is an experienced pharmacy solicitor. This is a crucial step to take if you want a quick and smooth sale. A sale that should be completed in say, 3 months can end up taking 12 months with poor legal representation. Another consequence of a sale taking much longer than it should, is that the legal fees will escalate and a solicitor whose cost seemed reasonable at the start, can end up being very expensive at the end.

* A good tax accountant who is experienced in dealing with pharmacy sales. This has already been discussed under step 2. If you are not sure if your existing accountant has the necessary expertise, consider changing to an accountant who does have the pharmacy expertise.

Step four: Pre-sale preparation

In this market it is really important that your financial information is up to date and available for your potential buyers. The initial document pack for buyers should consist of:

* Three years up to date accounts

* 24 months copies of VAT returns

* 24 months PPD statements

* Copy of shop lease if applicable

* If the freehold is to be sold, a copy of any valuation report you have obtained.

Lack of information will result in poor offers for your pharmacy and may result in you being unable to sell your business.

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If you have a lease on your premises this needs to be secure, renewable and transferable. You will usually need a minimum 15 year term left on your lease (a standard bank requirement). Lease matters can be dealt with during the sale, however this is likely to prolong the sale.

Step five: Negotiate the best deal with your buyer(s)

A good pharmacy sales agent should be able to:

* Obtain the best price for you. The difference in price between you selling privately and using an agent should far exceed the agent’s commission.

* Introduce you to quality, financially qualified buyers and avoid time wasters and, purely curious competitors. Most buyers require funding and with high interest rates the banks have tightened their lending criteria. It is important that a buyer’s financial position is thoroughly vetted to ensure they can finance the offer they have made.

* Control the sale by liaising with the buyers, setting timescales for offers and negotiating them upwards and securing a deposit from your chosen buyer.

If you’ve made the decision to sell, following these five steps will help maximise the value of your pharmacy in 2024.

Anne Hutchings is managing director at at pharmacy sales agents Hutchings Consultants.