Should I Sell My Pharmacy?

Is it time to sell and is selling the right thing to do? Ultimately, only you can answer these questions. Here are a few points to consider:

Market conditions

Factors such as interest rates, the availability of credit and the tax regime are outside your control. However, interest rates and availability of credit are two key factors for pharmacy buyers. With banks keen to lend to buyers and interest rates at historically low levels, acquiring a pharmacy is currently an attractive proposition.

Tax rates – on a business sale are favourable. For most pharmacy sellers the situation is straightforward: providing you qualify for Entrepreneur’s Relief – which most pharmacy owners do – you should only pay 10% capital gains tax on the sale of your business.

Government cuts – The squeeze on government spending has inevitably had an effect on pharmacy services. Despite an ageing population and a year-on-year increase in prescription items, pharmacy turnover has been fairly static in recent years. Pharmacy goodwill values though, have been holding up. What does the future hold for goodwill value?

The funding cuts announcement in December 2015 took a slight edge off pharmacy valuations. However, the market was a very strong sellers’ market and is still a sellers’ market.

The other factor which could affect pharmacy sales is the Brexit vote. This has created some general instability in world financial markets but it is too early to say what the longer term effects will be. However, this could creative a positive situation for potential pharmacy acquirers because:

In times of instability and financial turbulence, the banks have traditionally been keen to lend to buyers for pharmacy acquisitions. As these are strong and dependable business models.

Similarly, if as predicted by some pundits we go into a recession, pharmacies are quite resilient and a good investment for prospective business owners.

Is now a good time to sell?

Yes, if your business is doing well and there are no negative issues affecting it. Add to this the fact that there are plenty of buyers and low tax rates on the sale, then it’s a good time to sell.

Deciding to sell when a situation develops that will adversely affect the value of the pharmacy, can have a substantial impact on the value of the business.

Whatever your reason is for selling, you need to be absolutely sure it is the right decision for you.

Posted in Blog on 25th October 2016

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