Pharmacy Sales and Acquisitions

When deciding between an asset purchase or a share purchase for a pharmacy, it depends on how the business is structured.

In an asset purchase, you buy the pharmacy’s assets like goodwill, stock, and fixtures without taking on its liabilities. It’s simpler and often used for sole traders or partnerships. Legal costs tend to be lower, but NHS licence transfers are required, which can take up to three months.

With a share purchase, you buy the company’s shares, inheriting both its assets and liabilities, including any debts. This involves more due diligence and higher legal costs but avoids delays from NHS licence transfers.

Each option has different legal and financial implications, so it’s crucial to assess your specific situation with professional advice.

The level of due diligence done for your pharmacy purchase may vary, but it is essential for securing a sound investment. Key areas include:

• Financials: Review at least three years of audited accounts, profit and loss statements, and cash flow forecasts.
• NHS Contracts: Assess the number of NHS contracts and the pharmacy’s dispensing activity.
• Regulatory Compliance: Check for any regulatory or compliance issues, including staff contracts and insurance claims.
• Assets and Liabilities: Verify the value of stock, fixtures, and any outstanding liabilities like debts or leases.
• Prescription and Payment Reports: Examine prescription item reports and payment schedules to understand revenue stability.

First, decide whether the sale will be an asset purchase or a share purchase, as each has different legal and financial implications. An asset purchase involves selling the business’s assets – like stock, goodwill, and fixtures – while leaving behind liabilities, which is more common for sole traders or partnerships. In contrast, a share purchase involves transferring the ownership of the company’s shares, meaning the buyer acquires both assets and liabilities, including debts.

Once the structure is determined, you’ll need to negotiate and agree on the terms of sale, typically outlined in a Sales Purchase Agreement (SPA). This document specifies what is being sold, any warranties (such as ensuring no outstanding litigation), and how the business and assets will be transferred. If it’s an asset sale, the buyer will need to secure NHS England’s consent for the pharmacy’s change of ownership, which can take several months. Throughout the process, professional advisors, such as solicitors and accountants, play a key role in drafting agreements, conducting due diligence, and ensuring that all regulatory and legal requirements are met before finalising the sale.