Time to meet your pharmacy transition accountants

You might have noticed that this blog post, unlike the others in this series, does not include the word “choosing.” That’s because we are realists. We know that in most transactions (at least those in which we have been involved), the pharmacist’s regular, long-time accountant will be on the file. In many ways, that only makes sense. Why reinvent the wheel, after all? Your current accountant knows your business (hopefully), and almost certainly will know all about your books. They also know you, which is an important plus since they will be a vital member of your transition team.

And yet, to be frank, we have found that when pharmacist-owners retain their regular accountant through a sale of the business, it can be both the best of times and the worst of times. After all, a sale transaction is not like the day-to-day (or year-to-year) work of most accountants, and it can be unfamiliar territory for many of them. That can lead to hiccups in the sale process – something you want to avoid, obviously, when putting together your team. On the other hand, we understand the desire to work with an accountant you know, who also knows you. But at the very least, we would suggest that planning for selling your business is a good opportunity to review your current accountant, their experience and their abilities.

Here are some things to think about:

• Do they follow sound accounting practices?
  Now, if you have kept your accountant on for a long time, we would assume the answer is a confident yes. But if it is anything less than that – if there are issues that have concerned you, but you put them on the back-burner – then the time to address them is now, before you start the sale process. If your accountant cannot or will not resolve them to your satisfaction, find another one.
• Do they understand your corporate structure?
  The above applies here, too. If you harbour any doubts about their understanding of your company, get them resolved or find a new accountant.
• Do they have the time?
  In the routine course of running your business, you and your accountant do not tend to deal with each other every day, and there is no need for them to immediately respond to you. Regular check-ins, year-end reports – most of this stuff can wait. The sale of your business is much more time-consuming, and the need for quick responses is often urgent. Make sure your accountant is aware of that need and willing to meet it.
• Do they have a deep understanding of tax implications?
  Just as not all pharmacists are created equal – some have additional training, such as those who are certified diabetic educators, for example – neither are all accountants. It is true that all public accountants prepare year-end statements and file tax returns, but not all of them have the specialized training need to understand the tax implications of your upcoming liquidity event.
• If they don’t, get help.
  So what if you want to have your long-time accountant on your transition team, but they do not have that specialized training? Here is what we suggest: Long before your sale process begins (two years or longer), your accountant should have a tax specialist review your corporate structure and provide guidance on ongoing thresholds to reduce frictional costs from your sale. Appropriate structure matters, of course, but so does the amount of money or investments you have in the company, among many other things. We have seen far too many tragic stories where even a well-designed tax plan went wrong because a tax specialist had not ensured every step was followed.

Next up: How to choose your financial advisor.