Pharmacy Solutions is currently engaged in selling about 30% more pharmacies than we would normally anticipate at this time of the year.
We believe this increase is due to the culmination of a number of factors, including; the slowdown in business sales in the previous 18 months now catching up, the poor economic environment and general lack of business confidence, the continued negative reporting of pharmacy’s outlook, unsustainable rents which have led to several receiver sales, and that the future of some established brands may be unsustainable in their present form.
With more choice in pharmacies for sale, buyers have become more discerning, and with financial institutions scrutinizing deals more closely, the issue of obtaining finance remains a key problem for buyers as vendors attempt to hold their selling price expectations.
Valuers are also under pressure from lenders and consequently valuations are coming in at lower levels than a year ago. Settlement timeframes have expanded from an average of 68 days two years ago to over 90 days at present (this is further exacerbated in NSW where timing for settlement is conditional upon meeting Pharmacy Council deadlines).
The return on investment of pharmacies in the current market is increasing but remains slightly below valuation levels, however good pharmacies (in all price categories) still attract plenty of interest from buyers. Pharmacies that are experiencing slow or limited growth can expect to sell at valuation levels, which vary depending on style of pharmacy and its location in Australia.
Overall there is no doubt that there has been a softening in prices and vendors wishing to sell their business need to be realistic in the current market.
The increase in complexities surrounding the sale of a pharmacy business has made it extremely important to consider every detail of the transaction well in advance. The lease, the finance, the contract, the valuation – each requires many specific lines of enquiry to make certain that all is in readiness for a timely settlement.
Every sale poses its own challenges and Pharmacy Solutions Australia has the expertise to handle all the intricacies of any sale. For a confidential discussion about your specific requirements please contact us.
Peter Marshall
Managing Director
Pharmacy Solutions Australia
peterm@pharmacysolutions.com.au
0417 721 203