Purchasing a pharmacy is something that requires some careful thought and consideration. There are a number of legalities that are associated with purchasing this type of business and having a good understanding of them will make it much easier to ensure your purchase runs smoothly. Here are a few of the key considerations to keep in mind.
Valuation And Survey
You need to have the pharmacy valued to ensure the price you’re negotiating is in alignment with the actual worth of the pharmacy in question. Lenders also need a valuation figure to determine how much they can offer you as a loan.
A pharmacy’s valuation depends on its most recent trading figures and accounts, but there are other factors to bear in mind too, such as proximity to GP surgeries and health centres, the local population’s general needs, and other economic factors such as location.
A valuation must also examine financial risks faced by the pharmacy such as staffing costs, imminent lease renewal, rental prices, and the percentage of business that comes from OTC sales and care homes.
Furthermore, growth potential is taken into account. The valuation price is higher if scope can be found for adding more services, or if significant development is taking place around the location. On the other hand, if there is stiff competition, it’s unlikely the owners will negotiate.
Preparing The Heads Of Terms
In most acquisitions, it’s important to prepare heads of terms from the outset to give an outline of what has been effectively agreed between the seller and buyer.
Negotiating a period of exclusivity gives you the peace of mind of knowing the seller cannot offer or negotiate the pharmacy’s sale to another buyer. Typically, you’ll need to put down a deposit as an exchange for this, but this should be able to be refunded if any issues are found when carrying out due diligence that cause you to withdraw from the transaction.
Conducting thorough due diligence is essential to ensure the property has a good title without any issues like restrictive covenants. If the property is leasehold, this must be reviewed too, to ensure you’re aware of rents, payment frequencies, provisions for rent reviews, the term length and other conditions in order to assess if they’re viable.
NHS contracts and contracts with key suppliers need to be checked and reviewed to make sure they can legally be transferred with no termination provisions.
There are a number of areas that need due diligence to be carried out by your advisory team including:
- Regulatory inspections and compliance
- Financial history and accounts
- Employee contracts
- Operating procedures
- Third Party Contracts
- Patient details disclosures
- IP rights
Registering The Premises
If you’re purchasing the assets of the pharmacy, or are being granted the lease, you may have to register the property’s ownership change with the GPhC (General Pharmaceutical Council). There are time requirements which need to be met for this registration purchase.
Fitness To Practice Certification
Before you can provide NHS pharmacy services, a fitness to practice certificate must be presented by the superintendent pharmacist. If no superintendent pharmacist has yet been appointed, this must be done as soon as possible and the form containing their information needs to be submitted to the General Pharmaceutical Council.
Clearly, seeking professional advice is paramount when buying a pharmacy. Experienced professionals can help ensure the process runs in a streamlined and efficient way without any disputes or delays.