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Safeguard Against Devaluation


a man in a white coat and glasses in between pharmacy shelves with the caption "SAFEGUARD AGAINST DEVALUATION"

Pharmacies in similar areas with similar gross sales and net profit may sell for a big difference in price. The key to getting you the highest price is to match the ideal buyer for your unique situation. Often, brokers are not interested in finding that type of buyer, rather they go for the quick commission or “slam dunk” sale to the closest chain. It is our fiduciary responsibility to do all that we can to deliver the maximum value. We also work with you to avoid problems and protect your value. Whether it is unforeseen end of lease issues, earn outs or devaluation tactics by experienced buyers, we use our knowledge and experience to protect you. Please give us a call to discuss your situation and let us get you the highest value for your business.

Being Aware of Valuation Methods

When you go to sell a pharmacy you really want to be aware of the valuation methods buyers are going to use. The reason is you may end up pricing it too low or two high. If you look at somebody who’s looking at percent of sales where a multiple of net profit might get you a higher price you want to be aware of that from the start. The first thing we’ll do is a valuation of your store and figure out what the best type of buyer and the best valuation method will be and set your price accordingly.

Sellers and Their Leased Space

One of the common issues I talk about with owners is the situation of their leased space. A lot of sellers think they want to sell at the end of their lease but that can be a dangerous position. Chains will often want a 12-24 month protection on a lease. Independents can’t disclose that too soon because you don’t want a buyer to work directly with the landlord or try to circumvent that process and take the space from you. We work with sellers to make sure that the seller is protected at all times whether selling to an independent or a chain.

Protecting Your Volume

What you really want to be aware of when you go to sell your pharmacy is protecting your volume. Some owners are near retirement and they think they can “take their foot off the gas” a little bit and the volume dips and that can drastically affect your purchase price. You want to run business as usual and protect or grow your volume between now and the time you sell to make sure you get the maximum price for your pharmacy.

Earn-Outs and Selling Your Pharmacy

One of the common questions I get about selling a pharmacy is about earn-outs. An earn-out is really part of the purchase price delayed to the end of the deal where, if a chain or independent retains a certain amount of business, then you get the rest of your purchase price. Earn-outs aren’t necessarily  bad. If you get your asking price and there’s actually an added benefit where maybe they retain more than expected. But we really try to get you 100% of the purchase price up front and any earn-out should be a bonus on top of that.

Protecting Your Pharmacy’s Value

Part of my job as a licensed broker is to protect you from buyers devaluing your store. I would encourage you to give me a call today to discuss your situation. You really want to be aware up front of things that you do in the practice of your pharmacy, especially when it comes time to sell, that can devalue your pharmacy. I can go through those with you to protect your value, and get you the highest price.

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