By Brad MacLiver
Authorship and profile at Google
When a New Hampshire (NH) pharmacy or drug store is being sold, seldom does the buyer have to pay “out of pocket” cash for the acquisition. Even when cash is available, transactions for pharmacy acquisition strategies usually involve financing.
Acquisitions will typically take 6-9 months to complete, so the pharmacy seller inNew Hampshire
Along with the buyer and seller the acquisition will involve attorneys, accountants, lenders, valuation companies, industry specialists, along with others. No one wants to pursue 6-9 months of work involving a variety of highly paid professionals without having some confidence of the NH pharmacy buyer’s ability to close the deal.
The process will begin with determining the value of the business. There are many companies that offer valuation services. However,New Hampshire
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.
New Hampshire 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 is the customer files and not hard assets. Therefore, for the acquisition to be financed a lender will need a strong understanding of the industry and what, beyond the collateralized assets, the company offers to reduce the perceived risk.
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 theNew Hampshire
Tips regarding pharmacy acquisitions and finance:
1. Attorneys and CPAs who have been representing the pharmacy seller in NH 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 of the financial information needs to be current. Over the long process, the data supplied to both the lender and the buyer will need to be updated on a continual basis. Things can change dramatically during a 6-9 month period and theNew Hampshire
When “pharmacy acquisition finance” is being pursued, ensure that the valuation company and the lender have expertise in that industry for the best chance of success. Choose a company that has both pharmacy experience, has expertise, and is a direct correspondent with lenders that understand NH pharmacy.
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Authorship and profile at Google
When a New Hampshire (NH) pharmacy or drug store is being sold, seldom does the buyer have to pay “out of pocket” cash for the acquisition. Even when cash is available, transactions for pharmacy acquisition strategies usually involve financing.
Acquisitions will typically take 6-9 months to complete, so the pharmacy seller in
Along with the buyer and seller the acquisition will involve attorneys, accountants, lenders, valuation companies, industry specialists, along with others. No one wants to pursue 6-9 months of work involving a variety of highly paid professionals without having some confidence of the NH pharmacy buyer’s ability to close the deal.
The process will begin with determining the value of the business. There are many companies that offer valuation services. However,
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.
New Hampshire 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 is the customer files and not hard assets. Therefore, for the acquisition to be financed a lender will need a strong understanding of the industry and what, beyond the collateralized assets, the company offers to reduce the perceived risk.
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 NH 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 of the financial information needs to be current. Over the long process, the data supplied to both the lender and the buyer will need to be updated on a continual basis. Things can change dramatically during a 6-9 month period and the
When “pharmacy acquisition finance” is being pursued, ensure that the valuation company and the lender have expertise in that industry for the best chance of success. Choose a company that has both pharmacy experience, has expertise, and is a direct correspondent with lenders that understand NH pharmacy.
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