Buying Or Selling A Pharmacy – What’s Involved?
Whether you want to sell your pharmacy or buy a pharmacy, we’re here to support you at every step of the process.
Buying or selling a business is a daunting prospect, and pharmacies are no different. It could be that you built your pharmacy from scratch and worked hard over decades to make it successful, so selling it is not an easy decision. Or it might be that this is the first time you’ve bought a pharmacy and have a lot to understand when it comes to what’s involved.
Whatever your circumstances, we are here to make the process as stress-free as possible. In this guide, we’ll outline the major events and what to expect between instructing a solicitor and handing over or receiving the keys to your old/new pharmacy.
First Step – Deposit & Confidentiality Agreement
Soon after making an offer or accepting an offer, you need to agree a price, find a lawyer and an accountant to work with you – and you’re off.
At this point, the seller will ask for a deposit from the buyer, which is held by the seller’s solicitor. This deposit tells the seller that the buyer is serious and committed to buying the pharmacy on the agreed terms.
A Deposit Agreement is signed by both parties, setting out the terms for the deposit’s return to the buyer if, for example, the buyer is unable to proceed with the purchase.
The buyer pays the deposit.
At this stage, a Confidentiality Agreement is signed by the buyer, ensuring that they won’t share the information about the pharmacy with anyone other than their solicitor and accountant.
Second Step – Information Gathering
This is the due diligence part of the process and involves the buyer’s solicitor issuing a standard questionnaire to the seller’s solicitor and asking for lots of information.
The questionnaire will have questions on the business itself, the accounts, employees and operational matters such as computer set-up and insurance.
The seller then answers the questions and provides any relevant documents.
This is an important part of the process and can take a while – but it’s time well spent as it’s important to get it right. As a seller, it’s a good approach to provide as much detail as possible to reduce the number of replies that come back from the buyer.
Throughout the remainder of the process, the seller has a duty to update any of the earlier replies if anything changes.
Third Step – Sale & Purchase Agreement
The buyer’s solicitor drafts the Sale & Purchase Agreement and sends it to the seller’s solicitor to review.
The seller’s solicitor will make amends that are in the best interests of the seller. The buyer’s solicitor will act in the best interests of the buyer. The document will go back and forth between the solicitors until both parties are happy, and their interests are protected.
This Agreement contains warranties, which are statements that the seller makes about the pharmacy. The seller must ensure the statements are all true or make changes accordingly – the facts and circumstances of the warranties are called disclosures.
All the disclosures are contained in a Disclosure Letter.
This must be accurate in order to reduce the seller’s liability. For example, if the buyer incurs a loss in the business after purchase due to a warranty being untrue but the seller made a disclosure stating the warranty was incorrect, then the seller won’t be liable for this loss.
It’s important that sellers and buyers receive expert legal advice to ensure that every warranty has been understood and all disclosures have been made and accepted.
For sellers, it’s vital that they have the necessary disclosures to reduce any future liability, and for buyers, it’s key that they are fully aware of the disclosures and what they mean for the business going forward.
Property Details
Also contained within the Agreement are the arrangement details with regard to the property that the pharmacy business operates from – whether the property is leasehold or freehold and how the buyer intends to manage this.
If the seller leases the property, this might be transferred to the buyer as part of the purchase transaction, or the buyer might decide to obtain their own lease. Normally, the landlord needs to agree to the transfer of the lease or will grant a new lease to the buyer.
Alternatively, the buyer might buy the freehold of the building that the pharmacy is based in.
Paperwork
Alongside the Agreement, many documents will have to be signed by the seller and buyer as part of the transaction process. The paperwork will be prepared and agreed between the solicitors.
Fourth Step – Money
It’s important to ensure the finances are dealt with early on in the transaction process.
When we act for the buyer, we would speak with their funder and associated solicitors to establish the bank funding being used to buy the pharmacy and make sure that all arrangements are in place early on.
When we act for the seller, we would advise them on what they need to do to ensure their banking issues are sorted as early as possible, for example, that plans are in place to transfer any outstanding borrowing on completion of the sale.
Fifth Step – NHS Contract
If the pharmacy assets are being purchased as part of the transaction, the buyer must apply to NHS England for the transfer of the NHS contract into their name. The application is complex, and the seller must be willing to help. The form should be submitted at the start of the purchase transaction.
When buyers are making their first business purchase, they will also need to complete and submit a Fitness to Practice application.
Sixth Step – Completion
The completion of the sale or purchase of a pharmacy, depends on a number of factors, including:
- Gaining consent for the transfer of the NHS contract
- Resolving any property issues
Once everything is in place, a date can be set for completion.
What Happens After Completion?
After completion, your solicitor will handle all the paperwork for you and ensure you can begin to focus on your new pharmacy business or on your next venture.
Post completion matters might include:
- For a property purchase – submitting an SDLT return, paying any stamp duty owed, applying to Land Registry to register the property transfer
- Preparing the handover of all the transaction documents
How We Can Help
Our property lawyers have broad experience of helping clients to buy or sell businesses including pharmacies. We understand the complexities of what’s involved, and this includes an awareness of what could pose a problem in the future and taking the necessary action to resolve all potential issues. Acting efficiently and effectively, we will ensure the transaction process is transparent and completion is successful.
Working closely with you, we will make sure that your interests are protected throughout the process and that your goal is achieved in the best possible way.
Make an enquiry today
If you want to buy or sell a pharmacy, we are here to help. To speak to us about your acquisition or disposal, please contact Bartletts Solicitors today at our Liverpool, Chester or Wrexham offices Tel: Chester office on 01244 313 301 or our Liverpool office on Tel: 0151 227 3391 or email advice@bartletts.co.uk or complete the free enquiry below:
