Preparation of the business for sale

Do a proper stock take

Know exactly how much stock you have in your shop. Your sale price stipulates a stock value, and you will only be paid for the stock you have on hand on the day of stocktake. Some stock values have been underestimated by up to $50 000. This reduces the price you receive by $50 000. Ensure you know what your stock value will be at stock take and work towards it.

Do a proper assessment of your stock

Ensure all your stock is in a saleable state and has at least 4 months’ expiry left from the proposed date of sale. Clear out all short-dated stock, stock that has not sold for one year and all damaged and superseded stock.

Shop Lease

Make sure your lease has at least 10 years to run. Banks prefer a lease to be in place for the length of the purchaser’s loan. If you own the premises, and wish to lease it to the purchaser, get you solicitor to prepare a lease that can be sited by the purchaser during due diligence.

Leased equipment

Do not enter any new leases e.g. phone systems, solar panels, computer systems etc. You must pay them out at settlement, and this decreases the money you get for the pharmacy.

Debtors

Focus on getting your account customers to pay up to date. This is good business practice. Recovering this debt post the sale is almost impossible. You can factor the debt to the new owner, but you may lose 15 to 20% in the process. This can form part of your contract of sale, speak to your solicitorB

Bad Debt

Make a list of the bad debt and give it to a debt recovery agency. The customers are no longer yours after settlement and therefore you can be more ruthless in your debt collection.

Franchise agreements

Don’t sign a new franchise agreement, you may like your Retail Brand but this may not apply to potential purchasers. Ensure you understand your franchise agreement with respect to the sale of your business.

Bank security over loans

Ensure that any charges, loans or security the bank has over your business are removed well before settlement.

Owing Scripts

Try to reduce the number of owing scripts to zero at stock take. This can represent thousands of dollars if not done properly.

Scripts awaiting collection

Reduce the number of scripts waiting for collection. You should do this a part of good practice, but a routine of phoning patients on Friday afternoons is a great one.

Consumable ordering

Reduce the amount of label, bags, warning labels, bottles, Webster packs, toner cartridges and pill boxes you have in stock as you move through the sales process. The staff in almost all cases do not know about the sale and may order up big just before the sale.

Removal of personal items from the pharmacy

Before the sales process has started all items within the pharmacy which will not be sold with the pharmacy.