Tuesday, January 21, 2014

Acquisition and Financing Services


Professional Acquisition and Financing Services for Oregon (OR) Pharmacy and Drug Store Owners


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.


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.


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.



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Monday, December 9, 2013

Oregon Pharmacies - Merry Christmas!

Our staff want to wish all of the hard working owners and their staffs at Oregon (OR) drug stores and pharmacies a Merry Christmas and an excellent 2014.

When you have questions about pharmacy business valuations, drug store financing are considering buying or selling a pharmacy you can count on the integrity and pharmacy expertise at www.PharmacyValuations.com.

Do you like positive quotes? Watch our Christmas video: http://youtu.be/Lm-6ls-rzrY

Monday, January 30, 2012

Oregon Pharmacy Franchise Financing

By Brad MacLiver
Authorship and profile at Google


An OR pharmacy franchise is a contractual relationship between two parties: 1) The Pharmacy Franchisor, the party who developed the business model of their drug store business, branded their pharmacy related products, and created the system the pharmacy franchisees will operate under.  And 2) The Pharmacy Franchisee, who purchases a franchise license from the Pharmacy Franchisor and typically pays an ongoing pharmacy franchise fee (or royalty fees) to use the name, products, systems, trade secrets, etc., created by the Oregon 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 in Oregon 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 pharmacy loan. Community drug stores typically have very little traditional assets to offer as security. Lenders for pharmacy will use traditional methods for analyzing the cash flow available to service to the debt, and they will also need to understand the nontraditional collateral that will secure the loan.

As a borrower, even when incorporated, the independent drug store owner’s personal credit rating will be a factor, along with 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 an Oregon pharmacy business loan.

 
OR Pharmacy Franchise Funding Tips:

1. Because there are many pharmacy franchise financing options available, pharmacy owners in Oregon 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 pharmacy consulting services and franchise associations who can help guide a prospective Oregon 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 Oregon pharmacy owners need information or have questions regarding either pharmacy franchise business loans or any type of funding for community pharmacies and drug stores, they should contact an OR pharmacy industry specialist who provides both quality answers and sound advice.



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Monday, January 16, 2012

Types of Available Oregon Pharmacy Financing

By Brad MacLiver
Authorship and profile at Google


There are a number of different options available for funding Oregon (OR) 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 Oregon 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 Oregon 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 Oregon 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 OR 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 in Oregon.

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. Preferred lenders will already be familiar with the Oregon 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 in Oregon, 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 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 does not have enough personal assets then a family member or a friend may be required as a partner in the Oregon independently owned family drug store. Since the pharmacy partner’s cash and assets will also be at risk of loss, these partners may require some controlling interest in the drug store.

Retirement Accounts Used in OR Pharmacy Finance

Retirement Plans can be self-directed and used to invest into a drug store franchise. The retirement plan can purchase stock in the pharmacy franchise. This is similar to how the retirement plan currently may be investing in publicly traded stocks and mutual funds. Lower debt service and higher profit potential may result when incorporating this option that uses less external financing in funding the franchise.

There is a downside to this.  If the Oregon pharmacy crashes, the retirement fund will crash as well, which means that the method of providing less expensive financing for pharmacy must be weighed against the risk of failure.

There are various variables such as deferred taxes, early and/or improper distributions, and IRS involvement that mean funding a pharmacy transaction in Oregon with a retirement account should be handled by a company with expertise in this arena. Investors and pharmacists interested in using this structure for financing should research the Employee Retirement Income Security Act (ERISA) of 1974.

Pharmacy Franchise Agreement Buyout Funding

It is crucial to know that pharmacy situations are changing and economic factors are a concern, the mail order pharmacy 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 Oregon 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 pharmacy owner in Oregon 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 OR 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 an Oregon pharmacy owner is advised to use a pharmacy industry specialist to capitalize on the funding opportunities that are available.

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Thursday, January 12, 2012

Purchase & Sale Agreements in Oregon

By Brad MacLiver
Authorship and profile at Google


Pharmacy Listing Agreements are types of contracts that provide pharmacy brokers with the business seller’s permission to sell their Oregon drug store.  While in the process of presenting the business that is being sold to qualified drug store buyers, there are preliminary offers and negotiations.

Once preliminary stages are negotiated, it is then time to put forth details of the potential pharmacy transaction in the form of a contract.  This contract is usually known as 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 details of the Pharmacy Purchase and Sale Agreement explain how much the buyer will agree to pay and what assets the seller in Oregon is conveying to the buyer. After the agreement is put in writing and the transaction is described in detail and both accepted and signed by both parties, this contract will become a legally binding agreement. It is important that during the negotiated development of the Pharmacy Purchase and Sale Agreement, both parties take proper diligence.

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

Elements in the Pharmacy Purchase and Sale Agreement will include, but are not 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 prices, closing date, transferring title of the assets being purchased, pharmacy customer file conversion, representations and warranties, non compete, restrictive covenants, transferring of any phones, notification of customers, signs, Board of Pharmacy notification, accounts receivables, employment of business seller and pharmacy employees, confidentiality, counting the pharmacy’s inventory, any and all costs associated with the closing, lien searches, actions to be taken before the date of closing, along with the pharmacy’s computers, office equipment, and any automated filling machines.

Although it covers many aspects of transferring the business assets from the Oregon 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 Oregon 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.

Oregon pharmacy owners who are considering selling will benefit when working with a specialist who operates exclusively in the Oregon 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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Thursday, December 1, 2011

Should a Broker be Used When Buying an Oregon Pharmacy

By Brad MacLiver
Authorship and profile at Google


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

Many Oregon pharmacy buyers are experts behind the counter, but many who have never bought a 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 many pharmacy buyers believe they possess, but pharmacy buyers need to recognize how many times they have actually purchased a pharmacy compared to a pharmacy industry expert.

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

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

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

Oregon 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 an Oregon 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 pharmacy industry will help guide the buyer and seller in their negotiations.

Buying a pharmacy business in Oregon 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 an Oregon 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 an OR pharmacy acquisition. A broker working exclusively in the pharmacy industry will have sources of funding who understand the industry and will fund pharmacy acquisitions.

In Oregon pharmacy mergers 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 in OR. Using a 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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Saturday, November 26, 2011

Using Tax Strategies When Selling an Oregon Pharmacy

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. OR pharmacy buyers participate in the pharmacy industry roll-up to achieve economies of scale in purchasing, marketing, information systems, logistics, distribution, and top management. Oregon pharmacy sellers both independent owners and drug store chains must consider their current market value, narrowing of profit margins, and what their tax consequences will be if they sell.

When pharmacy owners in Oregon sell their pharmacy it is considered a capital asset. The difference between the selling amount and the purchasing or starting amount of the 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 Oregon 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.

Many Business Brokers, CPA’s, attorneys, and other professional advisors inform their clients that selling a pharmacy in Oregon 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 OK pharmacy. 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 an Oregon 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 OR is nearing a retirement age, or will be working as a pharmacist for another company, instead of being an owner, then estate planning should also be considered.

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

Oregon pharmacy owners should consult with a pharmacy industry expert for advice on structuring the sale of their pharmacy. Someone with extensive experience in Oregon 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 pharmacy owners when an Oregon pharmacy is sold.


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