Update 24th March 2020

Please be assured that the challenges raised by COVID-19 and the necessary measures we all need to take to contribute to the governments strategy are very much in our thoughts at present. As a team we are making the necessary changes to how we operate in order to do our part in halting the spread of the virus, protecting both our clients, ourselves and society as a whole.

Despite the changes we all need to make please be reassured that we are doing all that we can at Pharmacy Seekers to support our buyers and owners through these difficult times. Our team is here to assist you with your pharmacy sales, acquisitions and finance whether they are ongoing or planned. For advice and support from the pharmacy specialists get in touch with our team on 0800 195 7518.

So, you have found the perfect pharmacy to purchase to start your career as an owner pharmacist. You have all sorts of plans as to how to grow the business and all the changes you want to make.

But how do you fund the goodwill purchase price plus the stock, plus refit, legal, bank and advisor fees?

You do need some money upfront as a deposit to start the process and make sure you can afford everything.

In addition to the goodwill purchase price you will need to think about the following;

The transaction itself

Legal fees | These could be £10,000 plus depending upon the complexity of the transaction.

Bank fees | These could be £5,000 plus to set up any loan but sometimes this can be wrapped up into the overall loan. Not always so check.

Accountancy fees | Do you need an accountant from day 1? Probably before day 1 to make sure that you have a full understanding of any accounts of the target pharmacy and your bank loan proposals.

Stock | This could be anything from £30,000 to £60,000 plus depending upon the turnover of the pharmacy. How are you going to fund this?

Immediately after acquisition

Cashflow | How much extra cash do your cash flow forecasts indicate you will need during the first few months?

Refit | How much cash do you need to fund refit costs or even just changing the fascia sign?

Relaunch | Do you plan any local marketing to relaunch the pharmacy under your new ownership?

The funding itself

Bank debt | Check with your bank whether they are comfortable supporting an acquisition and at what scale?

Other funding | Do you need other sources of financing such as factoring?

Combining funding | Can you wrap additional funding needs, such as professional fees, refit costs and cashflow up in the bank loan? If not how will you fund them?

How much deposit do you need?

Probably at least 20% of the goodwill price and most likely more if the pharmacy is not very profitable at the point of acquisition before you implement your business plan.

How do you find a bank/ funder?

Ask your friends and colleagues who have already taken the plunge into ownership for their experiences and crucially engage an expert financial advisor who can assist in formulating your request for funding to a bank.

PS Finance is a sister company of Pharmacy Seekers and can not only access a range of more than twenty funders and banks that are keen on lending to community pharmacy but also help you with cash flow calculations and financial forecasts.

Only when your funding is guaranteed can you then sign the legal paperwork to purchase the pharmacy and make your ownership dreams a reality.

For an informal chat contact PS Finance about your funding requirements. Contact Brian at PS Finance on 01923 825 007 or email brianp@ps-finance.co.uk

Pharmacy Seekers – Experienced pharmacy professionals to support your pharmacy purchase

To help you succeed at each step of the road map our team at Pharmacy Seekers have unparalleled experience over decades, working in operational, financial, developmental and leadership roles within the pharmacy profession.

• We provide a supported purchasing process

• We provide end to end support – from decision to purchase to completion

• You will receive director level contact and assistance throughout

• We are the pharmacy specialists and don’t get distracted with work in other sectors

• We can help you prepare your business plan and financial application for funding

• We have an extensive associate network to assist with developing your pharmacy

If you need some informal advice now about buying a pharmacy contact steve@pharmacyseekers.com or chris@pharmacyseekers.com

Chagcrest Pharmacy in Watford, has been under the successful ownership of Kirit Samani for many years. Since acquiring his first pharmacy in the early 1980s Kirit grew his group to three pharmacies navigating the many challenges of the last four decades to add value to his business. When it came time to consider a pharmacy sale Kirit selected Pharmacy Seekers to help him realise the true value of his business.

Having sold two of his group a number of years ago, achieving a realistic return for the hard work he had put into his third pharmacy was a priority for Kirit as he approached the end of his career as a pharmacy contractor. A personal recommendation from a long standing business associate saw Kirit select Pharmacy Seekers as his preferred partner at this critical time to ensure a successful pharmacy sale.

‘Nothing was too much trouble. Pharmacy Seekers were willing and able to help with excellent guidance from the beginning to the end of the process. They were always easy to reach and by my side throughout’.

Kirit Samani, Founder and ex-owner, Chargrest Pharmacy

Taking six months to complete the transaction was not without challenges including slow work by the purchasers solicitors and a number of unacceptable clauses put forward by the purchaser. ‘Andy was very positive, helpful and efficient and ensured that the transaction went smoothly’ Kirit said.

With over 250 pharmacy transactions completed, Pharmacy Seekers are the specialist pharmacy transfer agents for those serious about realising the value of their pharmacy sale. A team of four nationwide consultants with deep regional knowledge and over 80 years experience in the pharmacy sector combined will provide personal, end to end, director level support for your pharmacy sale. A substantial buyer database means that your pharmacy will be presented for sale to credible purchasers very early in the process maximising completion rate and sales value.

Our team

Andy Harwood | Co-founder, Director | South

Robert Miller | Co-founder, Director | South

Steve Jeffers | Northwest Consultant

Chris Ball | East Midlands and North East Consultant

If you are considering selling your pharmacy and need the support of the pharmacy specialists get in touch with our team on 0800 195 7518 for a no obligation discussion about preparing your pharmacy for sale.

When buying a pharmacy, especially if it is your first, it is not unusual for the prospective purchaser to feel a little daunted by the legal process and all the documentation involved.

However, with the right choice of lawyer the process can be made a little easier and more understandable.

The first, crucial step

Themost important decision is to appoint a specialist lawyer who has experience of pharmacy transactions.

Using a mate you went to Uni with, a family friend or the solicitor you used to buy your house is definitely not recommended! Surgeons and GP’s are all qualified doctors but would you want a GP to undertake brain surgery? It’s the same with qualified lawyers, they all have their specialities whether that be family law, commercial law or the even more niche legal area of pharmacy transactions.

All business sales agents can recommend a panel of experienced lawyers for you to choose from and although their fees may seem high, the time they take to undertake the transaction and their advice will actually save you lots of money.

Understand the what type of sale it is

In a previous article we have talked about an Asset Purchase Agreement (APA) and Share Purchase Agreement (SPA) and it is important to understand which process you are using to purchase the pharmacy.

HOTs – What has been agreed?

When your offer is accepted by the vendor, the Pharmacy Sales Agent will draw up a Heads of Terms (HOTs) document outlining exactly what has been agreed to sell the pharmacy from the vendor to the purchaser and this document also outlines the expected timetable.

The HOT’s form the basis for the respective lawyers to draw up the APA or SPA.

Guarantees and warranties

There will be a number of discussions between the lawyers and their clients as to what guarantees, or warranties are required by both vendor and purchaser and this rather detailed legal framework within the APA or SPA is very important for you to understand.

Property and finance

In addition to the APA or SPA which forms the purchase document, there will also be ancillary legal documentation around the property the pharmacy is located in, (lease or freehold) (link the words ‘lease and freehold’ to https://pharmacyseekers.com/insight/overcoming-pharmacy-property-issues/)dealing with landlords and of course the legal documents required by the purchasers bank/ lender for any loan required to fund the purchase.

A step by step approach guided by an expert lawyer will make the whole process a little bit less stressful and enable you to achieve your ambition of owning your first pharmacy. As the industry experts and with a wealth of experience across the team, Pharmacy Seekers can put you in touch with a number of pharmacy specialist lawyers who have the knowledge and experience you need.

Pharmacy Seekers – Experienced pharmacy professionals to support your pharmacy purchase

To help you succeed at each step of the road map our team at Pharmacy Seekers have unparalleled experience over decades, working in operational, financial, developmental and leadership roles within the pharmacy profession.

• We provide a supported purchasing process

• We provide end to end support – from decision to purchase to completion

• You will receive director level contact and assistance throughout

• We are the pharmacy specialists and don’t get distracted with work in other sectors

• We can help you prepare your business plan and financial application for funding

• We have an extensive associate network to assist with developing your pharmacy

If you need some informal advice now about buying a pharmacy contact steve@pharmacyseekers.com or chris@pharmacyseekers.com

When considering pharmacy property matters you are likely to be facing one of two situations. Some will be freehold and others leasehold. Below I will explain the differences with some key areas for you to think about and help you overcome any sticking points.

Freehold

Freehold simply means that once your purchase is completed you will own the property as an asset. The thing to remember is that on top of the purchase price for the pharmacy business there will be an additional amount to pay for the pharmacy property. There are some great points about freehold and some less attractive ones.

The advantages are:

No rent to pay

No unexpected rent reviews in the future

You can do what you like with property without having to ask the Landlords permission

The disadvantages are:

You are liable for all repairs

Additional building insurance will be required

More money to find to complete the purchase

Some people like to hold property as an asset or put it into a trust fund for their children or a pension fund – speak to your accountant / financial advisor about the advantages of this approach.

Some property may come with accommodation above the pharmacy – you could let this for an additional income or use it more creatively to support your pharmacy with added capacity but please look at the law regarding rental properties and the obligations of Landlords towards their tenants.

Some people don’t want to keep the property and will do a “Sale & Leaseback” where you sell on the property and then agree a lease with the new owner and pay an annual rent to them. Make sure you have a full dilapidations schedule agreed in this case at the start of your lease.

Either way you will need to have a valuation of the property early on in the process for your lender to agree a mortgage on the property, much the same as buying a house. Remember to allow for additional legal costs for this process.

Leasehold

A much simpler process is to take over the lease for the pharmacy property from the former owner. Ensure you (and your solicitor) read the lease from front to back to make sure you are aware of what is involved in the lease and can tackle any difficult issues before completion. Particular clauses to look out for are:

Rent Reviews – frequency and how they are calculated

Obligations for repairs/decorations

Break Clauses in the lease for Landlord or tenant

Security of tenure when the lease expires (Landlords & Tenants Act 1954)

Permissions for fit out changes (normally none for non-structural but Landlords permission required for structural)

Permissions / restrictions for signage

Permissions / restrictions to amend trading hours

Ensure the Landlords Insurance for disaster recovery is adequate for your needs

Agree a dilapidations schedule for when the lease expires or you vacate

No Keep Open clauses in the lease

No Authorised Guarantee Agreement (AGA) in place should you ever wish to re-assign the lease

The current lease holder will need to submit a request to the Landlord for a re-assignment of the lease to yourself / Company. Depending how your financial situation differs from the current lease holder this should not be a problem. Sometimes if you are seen as more of a risk they may require a bond payment of x number of months rent.

Once the lease is assigned to you then you are then responsible for rent and rates, even if you move out / stop trading, until either the tenant break clause (if you have one) or the lease expires.

There will be further short articles on particular aspects of the pharmacy purchasing process in future blogs but if you need some informal advice now about overcoming pharmacy property issues then contact steve@pharmacyseekers.com or chris@pharmacyseekers.com

PS Finance

PS Finance is a member of the Pharmacy Seekers group

100% Success Rate. 100% Service. 100% Commitment.

Building your Pharmacy business requires investment, whether you are considering an acquisition, refit, new consulting room, new premises or purchasing new equipment.

100% Success Rate.

PS Finance specialises in leading and advising on debt and equity raising, with a particular emphasis on Pharmacy and Healthcare related businesses. We have a 100% success rate in raising funding for our clients. Last year, we advised on funding to support in excess of £30m of Pharmacy purchases, working closely with a panel of a dozen lenders.

100% Service.

We believe that service is the key to building long-term client relationships. We combine the flexibility and independence of a specialist funding advisory and brokerage service, with the strength of an established and successful group. Brian Phillips, who leads PS Finance, brings 37 years in banking, latterly dedicated for a decade to the Healthcare sector. Our clients therefore benefit from having direct access to experienced funding professionals with the assurance of deep market knowledge, speed and responsiveness right at the heart of our service.

100% Commitment.

What you may be surprised to learn is that at PS Finance there is absolutely no charge for our service. Why not talk to us in confidence about your objectives and ambitions. You’ll receive our 100% commitment.

Learn more on the PS Finance website here: http://www.ps-finance.co.uk

Contact PS Finance today on 01923 825 007 or email us at brianp@ps-finance.co.uk to arrange a no-obligation discussion.

When buying a pharmacy it’s important to know what kind of sale you are looking at.

What is the difference between and Asset sale and a Share sale?

First time buyers may not have come across this before but a pharmacy business can be offered for sale in two distinctly different ways.

Asset Sale

In this scenario the business is usually described as being for sale asking for offers for the Goodwill, Fixtures & Fittings plus stock at valuation.

If the Freehold of the property is being offered for sale then this price will be in addition.

What this means is that the buyer is buying the pharmacy contract , the physical fittings and fixtures in the pharmacy plus assets like delivery vans, etc and committing to buying the freehold or

taking on the lease obligations (assuming the landlord approves of the transfer which will be the focus of another article.)

A cut off date is mutually agreed, normally at the end of a month to coincide with NHS payments.

Any creditors or debtors before the cut off date are the responsibility of the vendor, anything afterwards the responsibility of the purchaser.

Other than ongoing professional investigations basically anything before the cut off date is the responsibility of the vendor.

It’s very important to have the fixtures and fittings of the pharmacy listed so that both parties are aware of what is being sold. e.g. Is the delivery van included or not?

The stock is valued on the day of the purchase and usually requires paying for in full within 14 days.

Its also vital that the transfer of the lease from the vendor to the purchaser is firstly allowed in the lease and secondly that it is understood by both parties what their obligations to the landlord will be in terms of legal fees associated with the transfer.

The transfer of the pharmacy contract from the vendor to the purchaser will have to be approved via a change of ownership application to local NHS commissioners and this could take 3-4 months to be happen (it has been up to 6 months in certain areas), so this needs to be factored into the purchasing process.  There are ways to speed up the purchase but that’s for another article!

Share Sale

If the pharmacy vendor operates as a limited company then they have the option of either selling the pharmacy via an asset sale as above and keeping the company or

selling the company by way of a share sale.

The decision as to which route to take for the vendor will depend on tax advice from their accountants.

The pharmacy is then advertised for sale as a Share Sale of XXX Ltd plus or minus Net Current Assets (NCA)

Usually (but not always) the property lease or freehold will be in the company as will the pharmacy contract.

Therefore no need for a change of ownership application process but new directors and a new superintendent pharmacist will need to be notified to the NHS and GPhC.

Again a suitable transfer date will be agreed at the end of a month to make accounting easier.

The stock will be valued as before but this time its value forms part of the NCA of the company i.e. all the assets, creditors and debtors balanced out at the point the company is sold.

The purchaser is liable for all invoices, even those before the date of the purchase but also receives any outstanding income, (usually the NHS payments).

Both parties accountants have to agree what the balancing figure of the NCA is (the actual process will be laid out in the legal documentation).

It is sensible for both the vendor and purchaser to know what the estimated NCA is likely to be in advance of the sale so that both parties are aware of what the balancing payment is likely to be.

The NCA is usually agreed 3-4 months after the purchase date to allow time for all invoices and credits to be received.

A share purchase process could therefore be quicker for the vendor but complicates the financial due diligence that the purchaser has to do because the new owner will be liable for all the previous actions both professional and financial (crucially tax obligations) of the company that they now own.

The legal process is also more complicated as the purchaser will need the vendor to indemnify them against specified past actions and your solicitor will play a vital role in protecting you.

Always use a pharmacy specialist solicitor as our niche area of business as we know is complex. Using your mate who is a conveyancing solicitor is not recommended!

There will be further short articles on particular aspects of buying your own pharmacy business in future blogs.

If you need some informal advice now on how to purchase your first pharmacy then contact steve@pharmacyseekers.com or chris@pharmacyseekers.com.

Pharmacy Seekers is delighted to announce and welcome Chris Ball as its Consultant in East Midlands and the North East. This key appointment follows that of Steve Jeffers in the North of England in late 2018 and represents a further important step in the company’s expansive regional development programme.

Chris joins Pharmacy Seekers with 35 years’ experience in the sector. A proven business developer with extensive knowledge of pharmacy, Chris was previously Acquisitions & Development Director at both MedicX Pharmacy and the Hub Pharmacy where he acquired 40 plus pharmacies and played an integral role in developing the companies’ strategies and brands.

On joining Pharmacy Seekers, Chris Ball said: “Pharmacy Seekers has rapidly gained an enviable reputation as the established leader in the pharmacy sales and acquisitions space and I’m greatly looking forward to the opportunity of building the business in the East Midlands and North East regions. I know that independent pharmacies and multiples based here will welcome the ability to work with a trusted name in pharmacy sales and acquisitions and will benefit directly from access to Pharmacy Seekers’ strong and established support network.”

He continued: “My focus will be to mirror the dominant position that Pharmacy Seekers has already achieved in London and the South within East Midlands and the North East. I believe that our ambition of creating double-digit sales in the locale within a two year period is entirely realistic and achievable and I am keen to raise the profile of Pharmacy Seekers with new and existing contacts.”

Andy Harwood, co-founder at Pharmacy Seekers, added: “Chris Ball is an outstanding addition to the team and brings with him a wealth of knowledge and experience to the business. We are excited to make this announcement, which will expand and enhance our national presence.”

Whether the instructions we receive from our pharmacy clients are buy-side or sell-side, our objective is always to make the process as easy, straightforward and smooth as possible. Having worked on numerous acquisitions as a buyer, Chris is able to coach pharmacy owners through their individual transactions and draws on a depth of practical experience to create value building ideas and solutions which clients may not have considered themselves. For those pharmacies in the region who are actively seeking to maximise value on sale and for those looking to acquire a Pharmacy business, Chris’ appointment further strengthens Pharmacy Seekers’ position as the market maker of choice.”

There are still over 5,000 independent pharmacies in England and after years of decline the independent sector is now expanding again.

The large multiple Pharmacy companies are now offloading pharmacies in many of locations because the multiple has lost business to an ambitious local operator. There is a lot of opportunity for owning a pharmacy business for the right people with the right support. At Pharmacy Seekers we provide end to end support for our clients with direct contact with our senior team throughout.

So lets put a few myths to rest first;

Now that the Category M clawback has finished and we have a new long term pharmacy contract agreement , independent pharmacy has a bright future. The new service orientated pharmacy contract is one that can be embraced by independents quickly and will provide lots of job satisfaction.

Money is available from many banks to support purchases of pharmacies where the new operator has a good business plan to take advantage of the local opportunities that exist. It’s not just the High Street names either. Over twenty banks are keen on lending to community pharmacy.

Help is available from numerous sources to advise on securing finance, appointing specialist accountants and solicitors, pharmacy contract specialists, etc.

Opening up an internet pharmacy from scratch using the contract exemption for internet pharmacies is a cheap way of entering the market but is very difficult unless you have a local USP or a large sum of money available for marketing to make a success of it. Even a successful internet pharmacy does not create long term capital value in the same way that a bricks and mortar pharmacy does.

Its not a quick process (3-6 months or sometimes even longer) but there are points within the purchase process where you effectively reach a point of no return with the project, well before you actually legally commit. A successful purchase is all about planning ahead and lots of research!

There will be further short articles on particular aspects of the pharmacy purchasing process in future blogs but if you need some informal advice now on how to purchase your first pharmacy then contact steve@pharmacyseekers.com or chris@pharmacyseekers.com.

Manichem sold to Enimed in a landmark M&A transaction advised by Pharmacy Seekers

Enimed, the independent regional community pharmacy group, has acquired the Manichem Group in a transaction led by Pharmacy Seekers. The deal has seen Enimed Group expand its number of outlets by 19, resulting in 26 under its ownership post-acquisition. The value and terms of the transaction are undisclosed.

Andy Harwood, co-founder at Pharmacy Seekers and lead advisor on the transaction, said: “This is a game- changing transaction in independent pharmacy and makes a really big statement, signalling strong confidence in a very robust sector.” He continued: “We are delighted to have secured a successful sale transaction through a discreet M&A process advising Manichem. This is an excellent deal for both parties and has created a significant platform for Enimed Group’s expansion. We wish every success to Vikash Patel, the owner of Enimed Group in starting this exciting new chapter.”

“Once again, this transaction highlights the importance of specialists in being able to access the right contacts

at the right level, deep sector knowledge and intensive research, leading to the completion of the final-stage negotiations with the successful acquirer in a timely manner. We are seeing more and more substantial mandates on both buy-side and sell-side as pharmacy owners seek to realise value.”

The Vendors commented: “Pharmacy Seekers understood the complexities involved with selling a Pharmacy group and brought their considerable knowledge and experience to structure the transaction. With the number of properties involved, it was as much a property deal as it was a Pharmacy one. Pharmacy Seekers recognised what both parties were looking to achieve. They were proactive throughout the process and their commercial approach proved invaluable in resolving issues.”

With over 250 pharmacy transactions completed, Pharmacy Seekers are the specialist pharmacy transfer agents for those serious about realising the value of their pharmacy sale. A team of four nationwide consultants with deep regional knowledge and over 80 years experience in the pharmacy sector combined will provide personal, end to end, director level support for your pharmacy sale. A substantial buyer database means that your pharmacy will be presented for sale to credible purchasers very early in the process maximising completion rate and sales value.

Our team

Andy Harwood | Co-founder, Director | South

Robert Miller | Co-founder, Director | South

Steve Jeffers | Northwest Consultant

Chris Ball | East Midlands and North East Consultant

If you are considering selling your pharmacy and need the support of the pharmacy specialists get in touch with our team on 0800 195 7518 for a no obligation discussion about preparing your pharmacy for sale.