Buying a pharmacy | Types of sale

05 September 2019

Buying a pharmacy

Types of sale

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 or