Professional Services for MA Pharmacy Owners

by Brad MacLiver
Authorship and profile at Google

Pharmacy Acquisitions
There are a number of factors to be concerned about when selling a pharmacy. There are sink holes to avoid and actions that can be taken, which allow the seller to deposit more in the bank. www.PharmacyValuations.com provides expert guidance and manages the acquisition process.

Pharmacy Buyers
www.PharmacyValuations.com provide free services that assist pharmacy buyers with the leg work that goes into acquisition searches. This reduces the buyer’s cost of acquisitions and allows more money to be available for acquisitions.

Pharmacy Financing
Sellers need to make sure they are dealing with qualified buyers and not tire kickers. Financing is available to make sure that the deal gets done. www.PharmacyValuations.com packages and presents funding requests to a number of lenders who understand the dynamics of the pharmacy industry and who generally offer better terms than local banks. Whether buying a single location or a small chain, or when there are needs to refinance other pharmacy business debt - funding is available from $200,000 to $100 Million.

Free Pharmacy Business Valuations
PharmacyValuations.com provides free pharmacy valuations for pharmacy owners who are considering selling their drug store. When making a decision, pharmacy owners want expert answers to base their decision on.

Independent drug store owners and regional pharmacy chains located in: 
Massachusetts (MA)… when you are considering selling, financing, buying, valuing, or expanding your community pharmacy or regional drug store chain you will find value tips, resources and information at the following:

1. For Tips and Resources about buying, selling, financing, or expanding a pharmacy or drug store business: www.BuyingAndSellingPharmacies.com.

2. By connecting with us at   Facebook   Twitter   LinkedIn  you can discover the latest news and trends affecting the pharmacy industry and whether the equity in your business is increasing or decreasing due to the current market conditions

3. View pharmacy business videos at YouTube 

4. Click now a FREE  Pharmacy Business Valuation

5. We will be posting new pharmacy related articles for Pharmacy Owners on this Blog.

MA - Merry Christmas!

Merry Christmas Massachusetts drug store and pharmacy owners.

The new year will bring with it some new factors affecting the pharmacy industry. Reimbursements and net profits may be affected. When you have questions about the value of your business, are considering selling a current location or buying a new pharmacy contact the pharmacy industry experts at www.PharmacyValuations.com.

Do you like positive quotes? Watch our Christmas video we produced for our friends in pharmacy: http://youtu.be/Lm-6ls-rzrY

Financing Massachusetts Pharmacy Franchises

By Brad MacLiver
Authorship and profile at Google


A Massachusetts (MA) pharmacy franchise is a contractual relationship between two parties. One, the Pharmacy Franchisor is the party that developed their drug store business model, branded the pharmacy related products, and produced the system the pharmacy franchisees will operate under. The second party, the Pharmacy Franchisee, purchases a franchise license from the Pharmacy Franchisor, and usually pays an ongoing pharmacy franchise fee, or royalty fees, to use the name, products, systems, trade secrets, etc., created by the Massachusetts Pharmacy Franchisor.

There are a number of options for financing a pharmacy franchise business. All pharmacy franchise funding sources, for drug stores, prefer lending to a pharmacy franchisee who will be working with a nationally recognized name and long track records. Newer pharmacy franchise models won’t possess these two traits and will be considered more risky.

Traditional Bank Financing used in funding a pharmacy franchise is available when a pharmacy franchise has the track record and pharmacy name recognition. Many of the banks will show interest in this type of funding opportunity. Unfortunately once the bank reviews the loan documents, many of these banks decline the funding request because they don’t understand the security provided for the Massachusetts pharmacy loan. Community drug stores will typically not have many traditional assets to offer as security. Pharmacy lenders will use traditional methods for analyzing cash flow available to service debts, and they will also need to understand the nontraditional collateral that will secure the loan.

Borrower, even incorporated borrowers, consider the independent drug store owner’s personal credit rating as a factor, along with their personal tax returns and financial statements. The amount of actual cash on hand and the verification of the source of the down payment will be critical factor in qualifying for a pharmacy business loan in Massachusetts.

Pharmacy Franchise Funding Tips for Massachusetts Pharmacies:

1. Because there are many pharmacy franchise financing options available, pharmacy owners should perform proper due diligence then obtain the pharmacy funding that best suits their situation.

2. It is advisable to have an accountant or attorney that is familiar with pharmacy franchise financing to review the pharmacy business loan documents.

3. There are Massachusetts pharmacy consulting services and franchise associations who can help guide a prospective pharmacy franchisee or borrower or a drug store loan.

4. New pharmacy owners need to make sure their funding request is enough to get the pharmacy running and profitable. Less than ample funding for the initial stages may put the drug store in a position of needing additional funding. Smaller working capital loans that would be in a subordinated position will be more difficult to obtain at a later date.

When pharmacy owners have questions and need information regarding pharmacy franchise business loans, or any types of funding for community drug stores and Massachusetts pharmacies, they should contact a pharmacy industry specialist who can provide quality answers and sound advice.

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Available Pharmacy Financing Types in Massachusetts

By Brad MacLiver
Authorship and profile at Google


There are a number of different options available for funding MA pharmacy franchises, specialty pharmacies, and traditional community drug stores.

SBA Financing for Pharmacy Business Loans

The U.S. Small Business Administration (SBA) partially guarantees loans for pharmacy franchise lenders reducing the risk exposure for the lender. A loan program called 7(a) is a standard for funding pharmacy franchises. These loans can provide funds for pharmacy franchise entry fees, real estate where the pharmacy will be located, property improvements, working capital, and pharmacy related equipment.

Borrowers for the pharmacy franchise must be creditworthy, without any bankruptcies, have ample down payment, but there are variations here, and the business must be able to repay the loan from the cash flow of the Massachusetts pharmacy.

Terms can range from 5 to 20 years. Within SBA standards interest rates may be adjustable or fixed and will be negotiated by the lender dependent on the financial strength of the pharmacy transaction.

There are SBA fees for guaranteeing pharmacy business loans. These fees, which are paid to the government and not kept by the bank, can be rolled into the pharmacy financing.

Patriot Express Business Loan Program

This is another SBA loan program that can be used for Massachusetts pharmacy franchise business loans and is reserved for military veterans, active service members, their spouses, and survivors. The Department of Veterans Affairs would be involved in the pharmacy loan process.

Pharmacy funding from the Patriot Express program can furnish relatively fast approval times, may accept a smaller down payment from the borrower than traditional business loans, and lower credit scores may also be accepted. Patriot Express business loans provide opportunities for lower interest rate pharmacy business loans.

Funding for Pharmacists in MA Who Are Veterans

There are specific franchise loan programs available for honorably discharged veterans and these Vet programs can be considered for pharmacy franchise loans.

Pharmacy Financing From the Franchisor

Financing a pharmacy franchisee is a usual topic in discussions with a pharmacy franchisor. Franchisors should be able to direct potential drug store franchisees toward funding programs that have previously been successful for their other pharmacy franchisees in Massachusetts. Preferred lenders will already be familiar with the pharmacy franchisor and their systems.

Pharmacy franchisors may also provide some funding internally. Lower collateral will be offset by higher interest rates. This may help with qualifying for a pharmacy acquisition of a franchise, but may hurt the franchisee’s long term cash flow. Due diligence of pharmacy franchisor funding should be completed before any final decisions are made.

Personal Assets Used in Pharmacy Finance

Not all prospective Massachusetts pharmacy franchise owners have enough cash on hand. Part of the drug store business financing may require the borrower to liquidate personal stocks, provide personal assets as collateral, refinance their home, or use their 401k to assist the lenders security for making the pharmacy business loan.

If the borrower still doesn't have enough personal assets, a family member or a friend may then be required as a partner in the MA pharmacy.  Because the cash and assets of the pharmacy partner will also be at risk of loss, these partners could require controlling interest in the pharmacy.

Retirement Accounts Used in Pharmacy Finance

It is possible that retirement plans can be self-directed and used to invest into a pharmacy franchises.  Stock in the pharmacy franchise can be purchased by the retirement plan; this is similar to how retirement plans may currently be investing in mutual funds and publicly-traded stocks.  Reduced debt service and increased profit potential may occur when incorporating this option that uses decreased external financing in funding the franchise.

The downside is to this method is that if the Massachusetts pharmacy crashes, the retirement fund will also.  So, this method of providing inexpensive financing for the pharmacy should be weighed against the risk of failure.

Because of many factors such as deferred taxes, early or improper distributions, and IRS involvement, financing a pharmacy transaction that uses a retirement account should be handled by a company who has expertise in this field. Pharmacists and investors interested in using this financing method should perform research on the Employee Retirement Income Security Act of 1974 (ERISA).

Pharmacy Franchise Agreement Buyout Funding

Make sure to understand how pharmacy situations in Massachusetts are changing.  Economic conditions are a concern, the mail order pharmacy industry is growing, and market shares are shifting. All of these can have a negative impact on the cash flow of a pharmacy franchise. Drug store owners paying franchise royalty payments may not survive the tightening profit ratios. Due to this, these pharmacy franchises may only have the options of bankruptcy, or buying out the franchise agreement when allowable.

Buying out the franchisor allows the pharmacy to remove the franchisor from the equation. This in turn allows the MA pharmacy owner more flexibility in their business decisions. The pharmacy franchisor sold the drug store franchise with expectations of earning income from the cash flow their pharmacy franchisees. Due to their long term plan, Franchisors may not be willing to allow the pharmacy franchisee to remove itself from the franchisor. However if a Franchise Agreement Buyout can be negotiated, the buy-out transaction can also be financed.

Unfortunately many banks don’t understand the dynamics of the Massachusetts pharmacy industry. This lack of pharmacy knowledge results in the banks looking at the funding request and all they see is a business that has very little collateral compared to amount of financing the pharmacy is requesting. To assist the successful funding process a pharmacy owner is advised to use a pharmacy industry specialist to capitalize on the funding opportunities that are available.

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Sale & Purchase Agreements in Massachusetts

By Brad MacLiver
Authorship and profile at Google


A Pharmacy Listing Agreement is the contract that provides a pharmacy broker the business seller’s permission to sell their Massachusetts drug store. During the process of presenting the business being sold to qualified drug store buyers there are negotiations and preliminary offers.

Once the preliminary stages have been negotiated it is time to put forth the details of the potential Massachusetts pharmacy transaction in contract form. This contract is usually called the Purchase and Sale Agreement, but it may also be referred to as an Asset Purchase and Sale Agreement, Pharmacy Asset Purchase Agreement, Asset Purchase Agreement, or variations of these contract titles. Whatever the title is on the contract, this document should be considered the “blueprint” for transferring the pharmacy business to the new owner.  

The Pharmacy Purchase and Sale Agreement details how much the buyer agrees to pay and what assets the seller is conveying to the buyer. When the agreement is put in writing, describes the transaction in some detail, and is accepted and signed by both parties, this contract becomes a legally binding agreement. Therefore, during the negotiated development of the Pharmacy Purchase and Sale Agreement proper diligence should be taken.

Due to liability issues it is seldom that a Massachusetts pharmacy’s corporate stock will be purchased. Therefore, these transactions almost always are only asset purchases.

The elements of the Pharmacy Purchase and Sale Agreement in Massachusetts will include but not be limited to: assets being purchase, assets being excluded, aspects of counting and purchasing the inventory, both electronic and hard copies of pharmacy customer files, liabilities, purchase price, closing date, transferring title of the assets being purchased, pharmacy customer file conversion, representations and warranties, non compete, restrictive covenants, transferring the phone, customers to be notified, any signs, Board of Pharmacy notification, the accounts receivables, the employment of pharmacy and business seller employees, any confidentiality, pharmacy inventory county, all costs associated with the closing, lien searches, actions necessary before the date of closing, the pharmacy’s computers, its office equipment, any automated filling machines, etc.

Although it covers many aspects of transferring the business assets from the Massachusetts pharmacy seller to the new owner, it should be understood that the Purchase & Sale Agreement does not provide tax and legal guidance for the seller. Those issues do not pertain to the buyer of the assets. Therefore, the pharmacy seller in Massachusetts should be well advised by a knowledgeable pharmacy broker, accountant, or attorney regarding tax consequences, restrictive covenants, and the structure of the deal. These aspects of the deal may not have any impact from the buyer’s point of view, but if not considered carefully may have affects to the seller’s financial position after the transaction is closed.

Massachusetts Pharmacy owners who are considering selling will benefit when working with a specialist who operates exclusively in the pharmacy industry and can provide expert guidance in bringing about a transaction that provides the most benefits regarding the seller’s tax consequences, family and estate planning. Proper planning and a blueprint that structures the transaction appropriately will increase the net amount of money the seller receives for the pharmacy’s assets.

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Should a Broker be Used in Massachusetts When Buying Pharmacies

By Brad MacLiver
Authorship and profile at Google


When deciding between using a MA pharmacy broker, or pursuing the acquisition of a pharmacy yourself, buyers of Massachusetts pharmacies and drug stores need to weigh several factors including skills, knowledge, and time.

Many pharmacy buyers are experts behind the counter, but many who have never bought a Massachusetts pharmacy in the past, don’t have the complete understanding of all the variables including State and Federal Regulations, negotiating the best price, structuring the deal, and the best options for financing the acquisition. These are skills that several pharmacy buyers think they possess, but pharmacy buyers need to recognize how many times they have actually purchased a pharmacy compared to a MA pharmacy industry expert.

Knowledge is power and using a pharmacy broker with extensive know how in valuing and transferring pharmacies will save a Massachusetts pharmacy buyer considerable time and headaches resulting in a more cost efficient transaction. The cost of acquisition must be taken into account in the analysis of Return on Investment (ROI). If the acquisition benefits the buyer, any additional time spent with a stagnant transaction results in benefits lost.

Transactions are definitely time consuming. When handling a transaction yourself, how many additional hours will you need to work to complete the Massachusetts pharmacy acquisition and then still not be certain if all the details were done correctly?

Just finding the appropriate pharmacy to buy can be an expensive, laborious, and time consuming process. If the pharmacy’s numbers appear to provide the ROI the pharmacy buyer requires, is the pharmacy seller in MA both cooperative with the buyer and knowledgeable about the transaction process?

Massachusetts pharmacy sellers, their attorney, their CPA, and even their families can slow the process. Pharmacy buyers need to understand this and have the credentials that all of the various parties can have faith in while undergoing the many steps of the acquisition.

After a pharmacy has met the buyer’s preliminary requirements, a current market pharmacy business valuation based on a sound financial and market analysis, and not just a simple accounting or multiple formula, needs to be completed to verify the current value of the pharmacy. In today’s market, pharmacy sellers usually want a higher acquisition price for their family owned pharmacies, than what the current market is willing to pay. A certified valuation completed by a third party who possesses extensive experience in the MA pharmacy industry will help guide the buyer and seller in their negotiations.

Buying a Massachusetts pharmacy business is not like buying a used car. There are many steps that must be taken. Pharmacy buyers who are not discussing an acquisition with a pharmacy seller who will actually move forward with providing all the documentation and financial statements will be losing valuable time in their acquisition search. Both the seller and buyer need to have a meeting of the minds and provide a collective effort in pursuing the closing of the pharmacy acquisition. By the time a closing occurs and all aspects of the transaction have been completed, substantial cash and time will have been invested.

When inexperienced parties are undergoing the acquisition process it can be a draining experience full of headaches and worries. A smoother and more confident process can be accomplished when a Massachusetts pharmacy industry expert is involved in the transaction. A pharmacy broker will take steps to pre qualify the buyer. This allows the seller the knowledge they are working with a real buyer and not a tire kicker.

If the buyer will need financing to complete the deal they will find many banks will not finance a pharmacy acquisition. A broker working exclusively in the pharmacy industry in Massachusetts will have sources of funding who understand the industry and will fund pharmacy acquisitions.

In pharmacy mergers in MA and acquisitions it is important to understand confidentiality, and how the perceived changes may affect employees and customers. A broker acting as the middle man between the buyer and seller can assist the confidentiality of the transaction.

There are many things to consider when purchasing a pharmacy. Using a Massachusetts pharmacy business broker who specializes in the pharmacy industry will benefit both parties involved in the buying and selling of a pharmacy.

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Using Tax Strategies in Massachusetts When Selling Pharmacies

By Brad MacLiver
Authorship and profile at Google


Industry Roll-Ups are where an industry’s many players are consolidated into smaller groups for economic benefits. MA pharmacy buyers participate in the pharmacy industry roll-up to achieve economies of scale in purchasing, marketing, information systems, logistics, distribution, and top management. Massachusetts pharmacy sellers both independent owners and drug store chains must consider their current market value, recognize the narrowing of profit margins, and realize what their tax consequences will be if they sell.

When MA pharmacy owners sell their pharmacy it is considered a capital asset. The difference between the amounts it is sold for and the amount spent to either purchase or start the Massachusetts pharmacy is a capital gain, or a capital loss. In the U.S., all capital gains must be reported and the appropriate tax paid.

Specific tax strategies can be used to help offset the tax liabilities when selling a pharmacy or a drug store. Unless a professional is handling a large number of pharmacy acquisitions, they usually do not know these federal regulations that allow for reducing the tax liability for the pharmacy owner in MA.

Many Business Brokers, CPA’s, attorneys, and other professional advisors inform their clients that selling a Massachusetts pharmacy will result in tax consequences. However, most of these professionals do not handle the buying and selling of pharmacies on a daily basis and may not realize the different aspects of structuring a pharmacy transaction allowing the reduction of the tax burden to the pharmacy owner.

There are some capital gain tax strategies that must be implemented before any obligation to sell the pharmacy in Massachusetts. When a drug store owner is considering selling their pharmacy either now, or in the next few years, it is urgent the best course of action be considered now instead of later.

Estate planning when selling a MA pharmacy should also be a consideration. Specific federal regulations allow an asset to be converted to an income stream, provide a tax deduction, increase asset diversification, and provide risk reduction, along with offering effective retirement and estate planning. If the pharmacy seller in MA is nearing a retirement age, or if they will be working as a pharmacist for another company instead of being an owner, they should then also consider estate planning.

As reimbursements are cut, more regulations are applied, and Massachusetts pharmacy profits continue to slip, more independent pharmacy owners in MA along with small and regional pharmacy chains will be considering selling their pharmacies and drug stores. Tax considerations should be a paramount part of the decision process.

Massachusetts pharmacy owners should consult with a pharmacy industry expert for advice on structuring the sale of their pharmacy. Someone with extensive experience in pharmacy and drug store acquisitions will have the knowledge and expertise to structure the transaction for tax considerations. Like all tax planning issues, waiting until the end of the year is not always the best strategy. Following this advice can place larger sums of money in the bank of Massachusetts pharmacy owners when a pharmacy is sold.

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