Build or Buy a Pharmacy - week 2
I didn’t see that pothole”- the disadvantages of buying an existing pharmacy. Like we have said in the previous article, the conventional wisdom is that purchasing an existing pharmacy is the best way to go. If you can buy a good pharmacy, (and that is a big IF) that is a “preferred” method for entering into the pharmacy business. It however it does not come without potential potholes and requires skilled due diligence. Remember you may be buying a business and paying for future revenue, however you are also purchasing the business’ headaches. There are two ways to buy a business, asset only purchase or purchasing the company. (buying all the stock) There are many complicated reasons why to consider an asset vs. a company purchase and it is beyond the scope of this article to accurately cover this topic. In addition, we highly recommend seeking a qualified attorney’s opinion in order to secure the best situation for your particular circumstances. There are some things to consider as part of your due diligence process when looking to purchase a pharmacy.
1. What liability am I accepting in regards to possible lawsuits, misfills or errors which may have happed in the past and that the owner honestly may not know about yet?
2. Any pending audits, and are you ready for an audit that may have been for a period prior to your acquiring the business.
3. Negotiating the lease, is it for a long enough time frame for you to build and establish your business? Does it have enough flexibility that if you begin doing well, can you expand, move, or “trade up” for space if immediate adjacent space is not available.
4. Can parking access sustain sufficient growth?
5. Have you checked with local zoning boards or the Chamber of Commerce regarding any city or county projects? Are there any pending zoning, traffic or road way projects that may affect traffic, in, out or by your pharmacy?
I think we have all seen the case of a business opening on a busy road only to have an overpass erected a year or two down the road and many businesses along that former busy road are left with no way for people to get off that road conveniently to patronize the businesses. They end up closing down. or moving. That is if they can get out of their lease.
6. Many well established stores, have outdated looks, outdated fixtures, computers, printers and equipment that may need to be replaced in the near future, well before the note is even paid off thus requiring additional capital.
7. Is the revenue increasing or declining and why. This is a very important factor especially when considering the value of “good will. you will be purchasing.
These are just a few of the things to consider when evaluating the negatives of purchasing an existing pharmacy and part of the lengthy due diligence process that should precede the purchase of any existing pharmacy. For more information on the due diligence process visit http://www.hccpharmacysolutions.com/ .
It was also mentioned above that “IF” you could find a good pharmacy in this process. We were making reference to the fact that current market conditions are such that there are many more buyers looking to purchase pharmacies than there are stores for sale. If you know of any stores for sale in all markets, please contact http://www.pharmacymatchmakers.com/
Dean A. Pedalino R.Ph.,C.Ph., FASCP
1. What liability am I accepting in regards to possible lawsuits, misfills or errors which may have happed in the past and that the owner honestly may not know about yet?
2. Any pending audits, and are you ready for an audit that may have been for a period prior to your acquiring the business.
3. Negotiating the lease, is it for a long enough time frame for you to build and establish your business? Does it have enough flexibility that if you begin doing well, can you expand, move, or “trade up” for space if immediate adjacent space is not available.
4. Can parking access sustain sufficient growth?
5. Have you checked with local zoning boards or the Chamber of Commerce regarding any city or county projects? Are there any pending zoning, traffic or road way projects that may affect traffic, in, out or by your pharmacy?
I think we have all seen the case of a business opening on a busy road only to have an overpass erected a year or two down the road and many businesses along that former busy road are left with no way for people to get off that road conveniently to patronize the businesses. They end up closing down. or moving. That is if they can get out of their lease.
6. Many well established stores, have outdated looks, outdated fixtures, computers, printers and equipment that may need to be replaced in the near future, well before the note is even paid off thus requiring additional capital.
7. Is the revenue increasing or declining and why. This is a very important factor especially when considering the value of “good will. you will be purchasing.
These are just a few of the things to consider when evaluating the negatives of purchasing an existing pharmacy and part of the lengthy due diligence process that should precede the purchase of any existing pharmacy. For more information on the due diligence process visit http://www.hccpharmacysolutions.com/ .
It was also mentioned above that “IF” you could find a good pharmacy in this process. We were making reference to the fact that current market conditions are such that there are many more buyers looking to purchase pharmacies than there are stores for sale. If you know of any stores for sale in all markets, please contact http://www.pharmacymatchmakers.com/
Dean A. Pedalino R.Ph.,C.Ph., FASCP
Labels: Build a Pharmacy
posted by HCC Pharmacy Solutions at
10:55 AM
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