By Brad MacLiver
Authorship and profile at Google
When an AZ pharmacy or drug store is being sold, a buyer will seldom pay “out of pocket” cash for the acquisition. Even in the event that cash is available,Arizona
Because acquisitions typically take 6-9 months to complete, the pharmacy seller inArizona
The acquisition will involve attorneys, accountants, lenders, valuation companies, industry specialists, and others in addition to the buyer and seller. No one wants to pursue 6-9 months of work with this many highly paid professionals without having some confidence of the AZ pharmacy buyer’s ability to close the deal.
The process begins with determining the business' value. Although there are many companies that offer valuation services, pharmacies are a special kind business. There are several aspects to valuing a pharmacy that are unique to the industry, so generic valuations or simple accounting formulas should not be used. An industry specialist should be used for valuing theArizona
In order to complete a valuation the selling company needs to provide up-to-date data. Lenders will not accept old data, or a sellers “gut feeling.” Lenders need to make a decision to finance based on sound and verifiable information.
Structuring the transaction is extremely important. The seller of course wants as much money as possible and wants cash. The buyer needs to spread out the debt service and wants to have as little cash as possible invested in the acquisition.
Pharmacies and drug stores are in an industry where it is more difficult to obtain business loan due to the majority of the value in a pharmacy inArizona
Pharmacies have typically been known for generating profits and to be stable businesses. However, they are usually in leased locations, and their furniture, fixtures, and computers will only provide $15-20,000 of collateral for a buyer possibly requesting a million dollar loan. A lot of money is tied up in inventory, but the small pills are considered by a lender to easy to move out the door in the event of default. Due to these circumstances many lenders will not loan money to these traditional money making businesses. A successful transaction takes a lender that understands theArizona
Tips regarding pharmacy acquisitions and finance:
1. Attorneys and CPAs who have been representing the pharmacy seller in AZ for many years may see the transaction as putting themselves in a position of losing a client when the business is sold. Make sure they are working diligently on the transaction and are not slowing or undermining the process
2. Since pharmacy acquisitions involve 6-9 months of work to complete , all parties involved need to be aware of time tables. Much too often, items of importance end up sitting on the desk of someone that is outside of the control of the buyer or seller.
3. All financial information needs to be current. Over the lengthy process the data supplied to both the buyer and the lender will need to be updated on a continuous basis. Things can change drastically during a nine month period and theArizona
When pursuing “pharmacy acquisition finance,” for the best chance of success, make sure the valuation company and the lender have expertise in that industry. Choose a company that has the pharmacy experience and expertise, and is a direct correspondent with lenders who understand AZ pharmacy.
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Authorship and profile at Google
When an AZ pharmacy or drug store is being sold, a buyer will seldom pay “out of pocket” cash for the acquisition. Even in the event that cash is available,
Because acquisitions typically take 6-9 months to complete, the pharmacy seller in
The acquisition will involve attorneys, accountants, lenders, valuation companies, industry specialists, and others in addition to the buyer and seller. No one wants to pursue 6-9 months of work with this many highly paid professionals without having some confidence of the AZ pharmacy buyer’s ability to close the deal.
The process begins with determining the business' value. Although there are many companies that offer valuation services, pharmacies are a special kind business. There are several aspects to valuing a pharmacy that are unique to the industry, so generic valuations or simple accounting formulas should not be used. An industry specialist should be used for valuing the
In order to complete a valuation the selling company needs to provide up-to-date data. Lenders will not accept old data, or a sellers “gut feeling.” Lenders need to make a decision to finance based on sound and verifiable information.
Structuring the transaction is extremely important. The seller of course wants as much money as possible and wants cash. The buyer needs to spread out the debt service and wants to have as little cash as possible invested in the acquisition.
Pharmacies and drug stores are in an industry where it is more difficult to obtain business loan due to the majority of the value in a pharmacy in
Pharmacies have typically been known for generating profits and to be stable businesses. However, they are usually in leased locations, and their furniture, fixtures, and computers will only provide $15-20,000 of collateral for a buyer possibly requesting a million dollar loan. A lot of money is tied up in inventory, but the small pills are considered by a lender to easy to move out the door in the event of default. Due to these circumstances many lenders will not loan money to these traditional money making businesses. A successful transaction takes a lender that understands the
Tips regarding pharmacy acquisitions and finance:
1. Attorneys and CPAs who have been representing the pharmacy seller in AZ for many years may see the transaction as putting themselves in a position of losing a client when the business is sold. Make sure they are working diligently on the transaction and are not slowing or undermining the process
2. Since pharmacy acquisitions involve 6-9 months of work to complete , all parties involved need to be aware of time tables. Much too often, items of importance end up sitting on the desk of someone that is outside of the control of the buyer or seller.
3. All financial information needs to be current. Over the lengthy process the data supplied to both the buyer and the lender will need to be updated on a continuous basis. Things can change drastically during a nine month period and the
When pursuing “pharmacy acquisition finance,” for the best chance of success, make sure the valuation company and the lender have expertise in that industry. Choose a company that has the pharmacy experience and expertise, and is a direct correspondent with lenders who understand AZ pharmacy.
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