Going it alone - How do you get your foot on the ownership ladder?
This article was first published in Independent Community Pharmacist on 21 June 2018.
At Christie & Co, 81% of the pharmacy applicants registered in our national database are first time buyers. As a first time buyer, it is important to ensure that you take a few key steps to understand the purchase process, thereby maximising your chances of getting onto the pharmacy ownership ladder.
Due to the continuing strength of the market and the relative scarcity of opportunities, most sales generate competitive bidding with many agents adopting ‘best and final’ offer processes, to give all interested parties the opportunity to submit offers. So what should you do to make sure your offer is considered in the best possible light?
First of all, applicants should register with a reputable pharmacy specialist agent. It is important to communicate your specific search criteria to the agent and have regular conversations with them to highlight your desire to acquire a business.
When outlining your requirements be aware, however, that with the scarcity of pharmacies coming to the market each year, it is best not to be too specific in your search. If you do, you’re effectively restricting the number of pharmacy opportunities that will be presented to you.
Money, money, money
At the outset, it is important to know what you can afford. We always recommend speaking to an independent financial adviser. In understanding your financial circumstances, they will be able to advise you on the price range you should consider, as well as outlining the funding process in the event you are successful in having an offer accepted. Many agents will ask for evidence of proposed funding, so if you have already received such advice you will be better placed to continue your discussions with them.
A financial adviser may recommend that a formal business plan is collated to support a funding application. This will typically include a CV of your experience to support how you intend to operate and improve the business, along with a summary of existing performance levels, as well as financial projections. There are many accountancy practices that specialise in pharmacy businesses, and so they should be able to offer specific support and advice in this respect.
When viewing the property, make the most of the opportunity and be prepared. Do your homework ahead of your viewing: understand what services the business does or doesn’t offer, the level of competition, proximity to local doctors’ surgeries, and the customer profile. Go armed with questions. Discussing the business with the vendor will not only give you a better understanding of the business but will also prove to them that you are serious. Most importantly, provide feedback to the agent – good and bad. By doing so, the agent can then provide timely feedback to the vendor, while also having a better understanding of your requirements.
Understanding the offer process and ensuring you provide salient information is crucial. Most agents will clearly outline the information they require in support of an offer. Failure to provide all the information requested may prevent your offer from being considered.
Additionally, early discussion with the NHS England local area team (LAT) will help you understand regulatory requirements you will need to deal with, for example how they deal with Fitness to Practice applications and the transfer of ownership process. Knowing how the LAT deals with these processes and their timings can further support the offer process.
If your offer is accepted – congratulations! However, there is still a long way to go! If you haven’t already done so, it is important to engage a solicitor who has experience in the pharmacy sector.
Preparing and obtaining bank, landlord, and professional references is often overlooked, but this can be a significant time- saving exercise so ensure that you are ready to complete these and understand what is needed from each party.
Overall, remaining positive and responsive to demands and checkpoints, alongside instructing the appropriate solicitor, accountant, broker and bank will significantly impact the swift and efficient completion of your first acquisition. Good luck!
The article can be viewed on Independent Community Pharmacist here.