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by Mike Jaczko and Max Beairsto

All babies are beautiful – to their parents. It can be the same with a business. After spending years, even decades, building their pharmacy, surviving through the hard times and celebrating the good, many owners have a difficult time seeing their “baby” for what it truly is. Because they are so close, these owners struggle to remain objective about their business, and about exiting it. In our view, it is imperative that any pharmacist contemplating a sale retain a team of experienced, professional advisors who can help them view the business and the transaction through the broader lens of a realistic market assessment. It’s not good enough to proceed based on “over the backyard fence” anecdotal hearsay. You need to make your decisions based on objective and empirical facts about your business.

Another important reason to assemble a team of advisors is that the sale of anything, by nature, is an adversarial process. One side wants a low price, the other a high price. The buyer will want you to give as much in terms of representations and warranties, and you, the seller, will wish for as few as possible. Not only do you, the seller, need someone on your side to filter the negotiating rhetoric and take your personal feelings out of it; you also need someone to navigate all the complexities, which will be beyond what you have learned operating your business through the years.

Ideally, this will be a multidisciplinary effort provided by a team of advisors, not just one. One solid model for an effective transition team comprises your accountant, a tax specialist, an experienced corporate lawyer, a financial advisor and – perhaps most important – an intermediary who will act as your “quarterback” to ensure everyone is working together and moving in the right direction: towards the goal line. Having any one of these team members missing could damage or derail what would be an otherwise successful exit.

As a team, this set of advisors should provide you with a sense of assurance that they:

  • have experience in selling pharmacy businesses;
  • have general experience in acquiring private businesses;
  • have knowledge of or are able to research your specific market attributes;
  • can communicate well and offer effective negotiating tactics;
  • can provide well-considered and objective advice, and
  • understand the taxation consequences of the transaction.

In the next article in this series, we’ll talk about the qualities and experience you should look for in a transaction “quarterback.”

Mike Jaczko, BSc. Phm, RPh, CIM®, FEA, a pharmacist by background, is a portfolio manager, partner and member of KJ Harrison Investors, a Toronto-based private investment management firm servicing individuals and families across Canada. For more information on this topic, email mjaczko@kjharrison.com.

Max Beairsto, B.Sc. Pharm., MBA, CVA is a pharmacist and valuation analyst with Enterprise Valuators Corporation (EVCOR), an Edmonton-based business valuation firm that focuses on business valuations and sale advisory of small and mid-sized private companies. You can reach him at max@evcor.com


4 strategies for pharmacy financial planning for 2021

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Mike_Jaczko_Max_Beairsto
The new year is (finally) here and that means the time is right, while 2021 is still fresh, to plan your pharmacy's financial plan for the year ahead. Read more

Year-end tax tips for pharmacy businesses

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Mike_Jaczko_Max_Beairsto
It’s time to clean up your investment pantry for tax-loss selling purposes. Read more

The three stages of financial planning for your pharmacy

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Mike_Jaczko_Max_Beairsto
No business remains the same over the course of its lifetime, from startup to exit. Read more

Are you prepping for retirement?

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Mike_Jaczko_Max_Beairsto
Whether we acknowledge it or not, we all have a nagging little voice in the back of our heads that goes around and around wondering whether we currently have enough money to retire and if so, can we continue to enjoy the lifestyle we have come to expect? Read more

How do In-Trust For accounts work, and why should you care?

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Mike_Jaczko_Max_Beairsto
Many small business owners, including independent pharmacy owners, continue to utilize “In-Trust For accounts" or ITFs to help save money for their children, for a number of reasons. Read more

Rx metrics – The first six months of COVID and pharmacy finances

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Mike_Jaczko_Max_Beairsto
Earlier in the year, we reported on the economic implications facing pharmacists and pharmacies during the first four months of the COVID-19 pandemic. Read more

Determining a pharmacy’s value before you buy

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Mike_Jaczko_Max_Beairsto
To successfully acquire a pharmacy, you need to collect adequate information from reputable sources, understand the regulatory environment and sources of revenue, utilize trusted professionals, and be wary of irrational enthusiasm. Read more

Rx metrics – The first four months of COVID and pharmacy revenue

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Mike_Jaczko_Max_Beairsto
Undoubtedly the COVID-19 pandemic has changed the way pharmacists practise. Read more

The pharmacy phoenix will rise from the COVID-19 ashes

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Mike_Jaczko_Max_Beairsto
Pharmacy is in a unique position to come back stronger than before the pandemic. We submit that no one wants to benefit from the misfortune of others, but there is and will be many sound commercial opportunities here. Read more