We’re back with 3 more tips for ensuring a smooth process when financing a pharmacy purchase. Earlier in the year I covered my first 3 tips for a smoother process, the article is linked here if you missed them!
In this article I’ll cover key tips for understanding the metrics of a store you intend on purchasing, how to move quickly when the right opportunity presents, and how to differentiate your offer from others.
4. Understand the metrics of the business you are purchasing.
When you purchase a pharmacy, it is crucial to understand the numbers behind the store. Not everyone is familiar with Profit and Loss Statements, Balance Sheets, and Script Reports, to name a few. There are two key actions for this tip. First, ensure your offer is subject to due diligence (sales brokers will typically guide you on timeframes). This will give you or the industry accountant you’ve engaged the chance to review the data and ensure the numbers stack up. Essentially, you’re taking a look under the hood to ensure the business you’re buying is as it was advertised.
The second action ties in directly with Tip 3 from my previous article, Know Your Budget, which involves getting your capacity assessed. However, at this stage, you’ll typically have a specific set of store figures to complete the assessment. This will also give you an idea of how the banks will view your application from a borrowing power perspective.
5. Move quickly when the right opportunity presents.
Many of you would have experienced seeing a pharmacy come up for sale only to find out its under offer within in a week or two. That’s generally because someone has done the work mentioned in these articles and has been ready to put in a strong early offer.
When the ideal pharmacy becomes available, it’s essential to act swiftly. Delays can result in losing the opportunity to another buyer. Having your capacity assessment completed and your team of advisors ready will allow you to move quickly and confidently. Delays happen when your team of advisors aren’t engaged at the outset. This eats into some of the most important phases of your purchase, starting with due diligence, and creating a domino effect for subsequent stages. Being on the back foot not only causes delays but, at times, additional costs too.
6. Develop your differentiated offer.
To stand out in a competitive market, crafting an offer that differentiates you from other buyers is crucial. Having a finance and due diligence clause built into your offer is standard. You can create confidence with the sales broker and vendor by being able to confirm that you have had your borrowing capacity assessed, your purchasing entity set up, and have engaged the necessary industry experts. Presenting to the sales broker (and vendor) as organised and decisive can be the difference in landing the pharmacy you want or missing out.
Additionally, showing your willingness to keep the process moving forward will demonstrate that you’re a serious buyer. Being a proactive buyer will typically be reciprocated by a proactive vendor, leading to a smoother process overall.
Written by Matthew Edginton, Finance Broker – AP Group
AP Group are the leading pharmacy experts in Australia and specialise in helping first time buyers find the right pharmacy and secure the finance to support their purchase.
We connect existing owners with over 5000 ready and eager investors via our cutting-edge online Data Room. Our Data Room keeps confidential listing data secure and allows buyers to make informed decisions on each of our pharmacies for sale.
AP Group have built connections with all the major banks and a host of smaller lenders, ensuring that first time pharmacy buyers find a better deal.
About the Author:
Matt is a solutions guy. Whether it’s training his two sausage dogs (Sassy and Lenny), learning different plant varieties, or helping his clients with complex lending — he enjoys being presented with a challenge and finding ways to overcome it. His finance journey began in 2018 when he moved to Melbourne from Adelaide (some might also say this was for better access to AFL).
Before joining AP Group, Matt trained as a mortgage broker with one of the largest construction finance brokers in the state. He worked closely with several experts in the field – setting him up with the knowledge, experience and skillset he has today.
For Matt, he loves the combination of complex finance work and giving excellent customer service. He’s personable, dedicated and responsive, working tirelessly to find finance solutions to help you achieve your goals.