Assembling your pharmacy transition team

All babies are beautiful – to their parents. It can be the same with a business. After spending years, even decades, building their pharmacy, surviving through the hard times and celebrating the good, many owners have a difficult time seeing their “baby” for what it truly is.

Because they are so close, these owners struggle to remain objective about their business, and about exiting it. In our view, it is imperative that any pharmacist contemplating a sale retain a team of experienced, professional advisors who can help them view the business and the transaction through the broader lens of a realistic market assessment. It’s not good enough to proceed based on “over the backyard fence” anecdotal hearsay. You need to make your decisions based on objective and empirical facts about your business.

Another important reason to assemble a team of advisors is that the sale of anything, by nature, is an adversarial process. One side wants a low price, the other a high price. The buyer will want you to give as much in terms of representations and warranties, and you, the seller, will wish for as few as possible. Not only do you, the seller, need someone on your side to filter the negotiating rhetoric and take your personal feelings out of it; you also need someone to navigate all the complexities, which will be beyond what you have learned operating your business through the years.

Ideally, this will be a multidisciplinary effort provided by a team of advisors, not just one. One solid model for an effective transition team comprises your accountant, a tax specialist, an experienced corporate lawyer, a financial advisor and – perhaps most important – an intermediary who will act as your “quarterback” to ensure everyone is working together and moving in the right direction: towards the goal line. Having any one of these team members missing could damage or derail what would be an otherwise successful exit.

As a team, this set of advisors should provide you with a sense of assurance that they:

• have experience in selling pharmacy businesses;
• have general experience in acquiring private businesses;
• have knowledge of or are able to research your specific market attributes;
• can communicate well and offer effective negotiating tactics;
• can provide well-considered and objective advice, and
• understand the taxation consequences of the transaction.

In the next article in this series, we’ll talk about the qualities and experience you should look for in a transaction “quarterback.”