When is the right time to sell?

As business brokers, the first question we usually get asked is ‘How is the pharmacy market?’ The second question from pharmacy owners is usually, ‘Is it the right time to sell?’ In today’s article, we will focus on this question – ‘Is it the right time to sell?’ – and examine some factors which may assist in your decision.

There are a number of factors which will affect your decision to sell and ultimately it will depend on your personal circumstances and the characteristics of your pharmacy.

Personal Circumstances

Ultimately the most important factor will be whether or not the time is right for you. Here are some factors to consider:

  • What is your reason for selling?
  • What will you do after you sell?
    • If you plan to retire, are you prepared mentally for this? Where will you invest the proceeds from the sale?
    • If you plan to re-invest into the pharmacy market, what opportunities are available? What is the likely time it will take to find a new pharmacy? Is it financially viable for you to be out of the market for that long? What happens if it takes longer?
  • Do you have any time constraints on when you need to sell by? If you do, it is important to start getting prepared for the sale earlier rather than later.

Market

The current market for pharmacy business sales will also be critical in assessing whether or not it is the right time to sell. There are a number of factors associated with this, not just price. It is important to consider prices being paid, as well as expected timeframe to sale and any specific demand factors or characteristics for your particular pharmacy. Current market conditions can be examined by a number of measures and it is critical to obtain accurate, relevant and current data. Some factors to consider include:

  • Sale Prices
    That is, prices being paid in the marketplace for recent pharmacy transactions. It is important to consider the characteristics of the particular sales to determine the factors that could have impacted the final price paid.
     
  • Capitalisation Rates
    That is, the implied capitalisation rates in recent sales. Please note, it is critical to examine the applicable capitalisation rate in light of any adjustments made to the figures. What is assessed as the Future Maintainable Earnings of a pharmacy is perhaps more important than the capitalisation rate applied.
     
  • Supply of pharmacies for sale
    How many pharmacies are for sale at the moment? What are the characteristics of the pharmacies? Is there limited supply or excess supply of pharmacies with similar characteristics to yours?
     
  • Demand for pharmacies
    How many genuine buyers are there in the market at the moment? What are they looking for in a pharmacy? Is there demand for your pharmacy location and other characteristics? Will buyers be able to finance the purchase of your pharmacy?

 

When considering selling your pharmacy there are a number of factors to consider, some of which we have covered today. Ultimately, the timing of your sale will be an important decision based on a number of factors – both personal and general market factors.

It is also strongly recommended to obtain advice from a number of sources with expertise in the area including your financial planner, accountant, business valuer and perhaps solicitor. Also, as pharmacy business brokers, we see and are closely involved in pharmacy business sales on a day to day basis. We have regular discussions with both current owners looking to sell and buyers, and therefore we are experiencing any market changes almost instantaneously.

We would be happy to have a chat with you about the current state of the market in a confidential discussion. Please feel free to call us at any time on 03 9853 7431.

 

 

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Pharmacy Market Update - July 2015
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