In the fast-paced world of pharmacy sales, smooth settlements are the goal, but delays can and do happen. Whether you’re buying or selling a pharmacy, unexpected roadblocks can derail timelines and cause frustration. Understanding common causes of settlement delays and knowing how to navigate them can help keep the process on track.
We have found the below as some of the most common reasons settlements stall and how to get things moving again.
1. Lease Assignment Delays
One of the most common causes of settlement delays is the lease assignment process. The purchaser needs to take over the existing lease or negotiate new terms with the landlord. However, landlords and their solicitors don’t always move quickly, which can create bottlenecks.
How to get back on track:
- Start lease discussions early, preferably concurrently with contract negotiations and at the latest as soon as the contract is signed.
- Ensure the purchaser has all required documents ready to submit.
- Maintain regular contact with the landlord’s solicitor to push for updates.
- Engage an experienced pharmacy broker or legal team to facilitate negotiations.
2. Contract Negotiation Issues
Disagreements over contract terms can drag out negotiations, especially if there are unexpected requests from either party. Differences in expectations regarding stock valuation, settlement timelines, or liability clauses can all slow things down.
How to get back on track:
- Clearly define key contract terms from the start to avoid surprises.
- Work with experienced pharmacy solicitors who understand industry-specific contracts.
- Ensure both purchaser and vendor are responsive to legal queries to avoid unnecessary delays.
3. Delays in Regulatory Approvals
Purchasing a pharmacy in Australia requires approval from regulatory bodies like the State Authorities (such as NSW Pharmacy Council) and the Australian Community Pharmacy Authority (ACPA). These approvals can take weeks or even months (in the case of NSW Pharmacy Council) if applications aren’t complete or if the workload of the approving body is high.
How to get back on track:
- Submit applications as early as possible to allow time for processing.
- Ensure all documentation is accurate and complete to avoid back-and-forth corrections. Check that items such as entity names match etc.
- Stay in close contact with regulatory bodies to monitor progress and address any queries promptly.
4. Finance Clauses and Loan Approvals
Pharmacy transactions often rely on bank financing, and loan approvals can be another source of delay. Lenders may take longer than expected to assess applications, especially if additional information is needed due complication with entities etc.
How to get back on track:
- Purchasers should seek loan pre-approval before making an offer to streamline the finance process.
- Maintain open communication with lenders and brokers to ensure everything is progressing.
- Vendors should be aware of finance conditions and timeframes to set realistic expectations.
5. Third-Party Bottlenecks (Franchisors, Suppliers, and Wholesalers)
Some pharmacies operate under franchise agreements or have supply contracts that require third-party consent before settlement. Delays in securing these approvals can push back timelines.
How to get back on track:
- Identify any third-party approvals required early in the process.
- Engage with franchisors, suppliers, and wholesalers as soon as possible.
- Ensure all required documents are submitted promptly to avoid unnecessary delays.
6. Delayed Stocktake and Valuation Disputes
The valuation of pharmacy stock is a critical part of settlement. Disputes over stock levels or valuation methods can result in last-minute disagreements that slow down the process.
How to get back on track:
- Use an independent stock valuer experienced in pharmacy sales and book them in as soon possible (when the settlement date is agreed upon).
- Agree on stock valuation methodologies upfront in the contract.
- Ensure both parties are present during the stocktake to resolve any issues immediately.
7. Lack of Communication Between Parties
A common but avoidable cause of settlement delays is poor communication. Misalignment between buyers, sellers, brokers, solicitors, and financiers can cause unnecessary holdups.
How to get back on track:
- Establish clear lines of communication between all parties from the outset, such as a settlement manager that can work with all parties.
- Set regular check-ins to ensure progress is being made.
- Use a pharmacy broker and their settlement manager to coordinate and keep things moving efficiently.
Final Thoughts
Settlement delays can be frustrating, but they don’t have to derail the transaction. Proactive planning, clear communication, and working with experienced professionals can help navigate these challenges and keep the process on track.
At AP Group, we specialise in pharmacy transactions and have the expertise to help buyers and sellers manage the settlement process as smoothly as possible. If you’re facing delays or want to ensure a hassle-free transition, feel free to reach out to our team for guidance.
Written by Aaron Whelan, Settlements Manager – 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:
Aaron was voted the nicest guy in the office! He is the team PT and encourages us all to get out and exercise at lunch time. With a career that’s seen him coaching at Australia’s top swimming club and swimming through the tech-savvy waters of Apple, Aaron brings a unique blend of precision and efficiency to our team.
He’s our go-to guru for all things during a settlement process and is seriously good at making sure milestones are being achieved and projects are delivered on time.
Aaron has a knack for building relationships that outlast the latest iPhone, and he’s all about optimising operations with the meticulousness of an architect planning his next masterpiece.
Not only does Aaron hold a degree from RMIT, but he’s also had the honour of learning from the big shots in the pharmacy world.
Outside of his professional prowess, Aaron’s a fanatical admirer of architecture, a fitness fanatic, and a sports enthusiast. Whether he’s diving into swimming, racing through Formula 1 stats, or tackling the NFL, he’s always in the game. Plus, he’s got an eye on the ever-changing world of tech – the gadgets and gizmos that make the future look pretty darn cool.