How to Decide Whether to Sell a Pharmacy or Not?

Selling your pharmacy or any business for that matter depends on how aware you are of how the market is performing and weighing the financial risks such a move could have.

Before working with pharmacy business brokers to detail your next steps, some factors will affect your decision to sell or determine how much value you’ll get out of selling. Consider these determinants as you’re talking to business brokers in Toronto.

Watch Market Performance

The pharmacy M&A market in Toronto these days reflects a seller’s market. You may well find that selling your pharmacy now may be wise because so many are going for significant values.

That said, study every market factor in order to make a clear and thoughtful decision. You should pay attention to interest rates. The lower that rate is, the more value you stand to get from a pharmacy sale as prices generally go up while rates go down. Much like real estate in Toronto, pharmacy valuations are inflated.

You don’t have much control over interest rates or other market conditions such as a tax regime or credit availability. Have a talk with your pharmacy business consultant about these factors before deciding whether a sale is feasible.

Also, Take a Look At Your Closing Tax Costs.

The way your sale is taxed is likely to change in the near future. This may lead to decreased net proceeds you’ll see from your pharmacy sale. But, again, this is something you won’t have control over, but there are ways to mitigate this and reduce frictional tax costs. Considering that pharmacists have to pay a lot of taxes already, owners will welcome any tax relief they can get. You just need the right advisors to guide you through the highly complex tax regime in which we live.  

Are There Any Funding Framework Cuts?

Any cut in reimbursements can adversely affect pharmacy valuations. As you talk to pharmacy business brokers, you should seek to understand how future cash flows that the pharmacy generates impacts its value.

Stability in the market is critical here if you’re to get maximum value. Banks resist the urge to lend money to market segments for acquisitions if things are unstable or the market is hard to read. Business brokers in Toronto will advise against a sale if they know you’re unlikely for a buyer to secure financing. Or they don’t think the regulatory environment is stable enough to capitalize on a potential sale.

If you’re considering selling your pharmacy, you should do so when the conditions are most ideal and the market is strong enough before contemplating a sale. Also, it would help if you looked for opportunities to help make your pharmacy operate better and improve its value, contact Evcor to learn more about our services.