By Brad MacLiver
Authorship and profile at Google
When a Rhode Island (RI) pharmacy or drug store is being sold, seldom does the buyer pay “out of pocket” cash for the acquisition. Even when cash is available, pharmacy acquisition strategies usually involve financing the transaction.
Typical acquisitions take 6-9 months to complete, so the pharmacy seller will need the buyer to provide some proof up front about their ability to close the transaction. Acquisitions will involve many hours of due diligence and negotiation, so the process should involve qualified parties.
More parties will be involved during the acquisition process in addition to the buyer and seller, including attorneys, accountants, lenders, valuation companies, industry specialists, and others. Nobody wants to engage in 6-9 months worth of work involving so many highly paid professionals without having some confidence of theRhode Island
The process will first begin with determining the business' value. There several companies that provide valuation services. However, pharmacies inRhode Island
The selling company must to provide up-to-date data to perform the valuation because lenders will not accept old data or a sellers “gut feeling.” They need to make their decisions 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 in RI 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 pharmacy industry.
Tips regardingRhode Island
1. Attorneys and CPAs who have been representing the pharmacy seller 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. SinceRhode Island
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 pharmacy seller inRhode Island
When pursuing Rhode Island “pharmacy acquisition finance,” for the best chance of success, make sure to work with a company that has expertise in that industry and is a direct correspondent with lenders who understand pharmacy.
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Authorship and profile at Google
When a Rhode Island (RI) pharmacy or drug store is being sold, seldom does the buyer pay “out of pocket” cash for the acquisition. Even when cash is available, pharmacy acquisition strategies usually involve financing the transaction.
Typical acquisitions take 6-9 months to complete, so the pharmacy seller will need the buyer to provide some proof up front about their ability to close the transaction. Acquisitions will involve many hours of due diligence and negotiation, so the process should involve qualified parties.
More parties will be involved during the acquisition process in addition to the buyer and seller, including attorneys, accountants, lenders, valuation companies, industry specialists, and others. Nobody wants to engage in 6-9 months worth of work involving so many highly paid professionals without having some confidence of the
The process will first begin with determining the business' value. There several companies that provide valuation services. However, pharmacies in
The selling company must to provide up-to-date data to perform the valuation because lenders will not accept old data or a sellers “gut feeling.” They need to make their decisions 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 in RI 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 pharmacy industry.
Tips regarding
1. Attorneys and CPAs who have been representing the pharmacy seller 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
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 pharmacy seller in
When pursuing Rhode Island “pharmacy acquisition finance,” for the best chance of success, make sure to work with a company that has expertise in that industry and is a direct correspondent with lenders who understand pharmacy.
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