Using Business Notes for Financing a Rhode Island Pharmacy Acquisition

By Brad MacLiver
Authorship and profile at Google


When acquiring or selling a Rhode Island (RI) pharmacy or drug store, one alternative is to have the seller originate the financing and carry back a business note.

 

At first glance many pharmacy owners will not want to take this approach. They want their cash and their exit. When a pharmacy owner in Rhode Island is considering selling their drug store, looking at the benefits of originating a business note and not just the perceived costs, they may find that offering "Private Finance" in the form of a Pharmacy "Business Note" will provide them an alternative course of action.

             Advantages of Creating and Selling a Rhode Island    

                                   Pharmacy Business Note
1.  The process of selling a pharmacy or drug store to an individual can be easier and less time consuming when the Rhode Island pharmacy seller agrees to carry a business note, than a buyer pursuing traditional financing.

2. By offering Seller Carryback Financing, often referred to as Private Finance, a pharmacy business owner in RI can greatly increase the number of potential buyers for their business, and most likely sell the business at a higher price.

3. When a pharmacy business note is created there are the options of keeping it for monthly income, selling the entire Rhode Island pharmacy note for a large lump sum, or selling part of the pharmacy business note to meet current financial needs and keeping the remainder for future income.

4. Selling either a portion, or the entire pharmacy business note in Rhode Island, frees up capital that can be used for new ventures, or paying off old debt.

5. When a RI pharmacy business note is created and sold, with the proper professional guidance, a transaction can be structured that allows the pharmacy business seller the biggest advantage in achieving the seller’s goals.

When originating a Rhode Island pharmacy business, note the interest rate and terms are set and agreed upon between both the seller and buyer of the business. The business seller accepts the promissory note, which is secured by the business and includes any inventory and equipment that belongs to the business. The seller of the pharmacy business then sells the note to an Investor who is willing to hold onto the pharmacy note in exchange for compensation. Because an Investor is unable to go back to the pharmacy business buyer and retroactively change the terms of his purchase agreement, the note seller must discount the note. The Investor is compensated from the difference of what the note was originated for and the discounted price paid for the Rhode Island pharmacy business note.

Business Note Tips:

1. Poorly structured business notes may prevent their sale, so seek professional advice before originating a financial instrument that can’t be sold.

2. Sellers of business notes need to fully understand the Investors risk in order to successful sell the business note.

3. Private Finance, in the form of a Business Note, is an alternative that should be looked at as a business financing option.

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