Preparing for the next generation of independent community pharmacy
Independent pharmacies have positioned themselves as leaders in communities across the nation by offering personalized attention, education and healthcare services at a moment’s notice. This level of service has established a legacy of care that patients can rely on when they need it the most.
However, all independent pharmacy owners will reach a point when they must ultimately transition out of their businesses. The ever-shifting healthcare landscape, new competitors entering the market, changes in third-party payer plans, shrinking reimbursement and the health of an owner or their family members are all scenarios that could lead an owner to sell sooner than expected.
While it may be difficult to consider retirement or transitioning out of their business, independent pharmacy owners who start planning an exit strategy years in advance have a better chance of connecting with the right buyer and securing a more favorable deal. It can take a long time to find a qualified buyer who shares the same values and passion for independent pharmacy, which is critical to maintaining patient and staff continuity through the transition.
In my experience working with independent community pharmacy owners across the country, I’ve identified three ways owners can map out their exit strategy and ensure their legacy endures for future generations, even if they are no longer the ones behind the counter.
1. Surround the business with trusted experts
Independent pharmacy owners who engage experts with the skills needed to develop and execute a seamless exit strategy are better positioned to maximize the value of their business when they are ready to transition, especially if they do so at least two years in advance. Business coaches, acquisition advisors, accountants, financial planners and attorneys are vital resources that can help owners plan for their exit, while allowing them to keep their focus on what is most important — their patients. Pharmacy owners should spend time with these experts to give them a clear understanding of what they would like to accomplish through their ownership transition. By doing so, that trusted team could provide the guidance and support that will bring a seller together with a like-minded buyer, who will serve their community with the same level of dedication.
2. Determine the value of the pharmacy
Independent pharmacy owners should be able to gauge what their business is worth by having accurate, detailed and organized records. This information will help generate a realistic estimate for what the pharmacy might command in the marketplace, and ensure buyers feel confident that they are acquiring a reliable business. Having solid answers to questions about average prescription volumes, gross margins, etc., can quickly calm the most common concerns that a buyer might have. Without these details, the perceived value of the pharmacy is likely to decrease, jeopardizing the business’ true value and potential earnings upon the owner’s exit.
3. Improve issues for today and the future
Pharmacy owners should also work with their team to remedy any existing issues that could deter a prospective buyer from acquiring the business. From such superficial issues as outdated fixtures, bad lighting and worn carpeting to more serious problems as narrow profit margins, inaccurate financial statements and declining prescription counts, every detail is significant and can contribute to a declining business evaluation. However, with enough lead time, support and elbow grease, owners can make modest improvements now that have a big impact on the overall value of their business when they are ready to sell.
Community pharmacy owners have plenty of options when it comes to exiting on their own terms. If they take the initiative and plan wisely, it is possible to get the full value for their business and preserve their legacy of care in their community for decades to come.
Charlie Le Bon is the director of pharmacy ownership services at AmerisourceBergen.
However, all independent pharmacy owners will reach a point when they must ultimately transition out of their businesses. The ever-shifting healthcare landscape, new competitors entering the market, changes in third-party payer plans, shrinking reimbursement and the health of an owner or their family members are all scenarios that could lead an owner to sell sooner than expected.While it may be difficult to consider retirement or transitioning out of their business, independent pharmacy owners who start planning an exit strategy years in advance have a better chance of connecting with the right buyer and securing a more favorable deal. It can take a long time to find a qualified buyer who shares the same values and passion for independent pharmacy, which is critical to maintaining patient and staff continuity through the transition.
In my experience working with independent community pharmacy owners across the country, I’ve identified three ways owners can map out their exit strategy and ensure their legacy endures for future generations, even if they are no longer the ones behind the counter.
1. Surround the business with trusted experts
Independent pharmacy owners who engage experts with the skills needed to develop and execute a seamless exit strategy are better positioned to maximize the value of their business when they are ready to transition, especially if they do so at least two years in advance. Business coaches, acquisition advisors, accountants, financial planners and attorneys are vital resources that can help owners plan for their exit, while allowing them to keep their focus on what is most important — their patients. Pharmacy owners should spend time with these experts to give them a clear understanding of what they would like to accomplish through their ownership transition. By doing so, that trusted team could provide the guidance and support that will bring a seller together with a like-minded buyer, who will serve their community with the same level of dedication.
2. Determine the value of the pharmacy
Independent pharmacy owners should be able to gauge what their business is worth by having accurate, detailed and organized records. This information will help generate a realistic estimate for what the pharmacy might command in the marketplace, and ensure buyers feel confident that they are acquiring a reliable business. Having solid answers to questions about average prescription volumes, gross margins, etc., can quickly calm the most common concerns that a buyer might have. Without these details, the perceived value of the pharmacy is likely to decrease, jeopardizing the business’ true value and potential earnings upon the owner’s exit.
3. Improve issues for today and the future
Pharmacy owners should also work with their team to remedy any existing issues that could deter a prospective buyer from acquiring the business. From such superficial issues as outdated fixtures, bad lighting and worn carpeting to more serious problems as narrow profit margins, inaccurate financial statements and declining prescription counts, every detail is significant and can contribute to a declining business evaluation. However, with enough lead time, support and elbow grease, owners can make modest improvements now that have a big impact on the overall value of their business when they are ready to sell.
Community pharmacy owners have plenty of options when it comes to exiting on their own terms. If they take the initiative and plan wisely, it is possible to get the full value for their business and preserve their legacy of care in their community for decades to come.
Charlie Le Bon is the director of pharmacy ownership services at AmerisourceBergen.