W… Pharmacy
The Company
W… Pharmacy was opened in 1961 in a Maryland suburb, not too far from Baltimore by a husband and wife team. The seller, who is the daughter of the couple, had worked there since childhood and held a strong attachment to the pharmacy but saw that sales were slowly declining. Concerned that the business could no longer operate as independently as it once had, the seller responded to a handwritten letter from King & King and together they agreed to list the business.
Goals
Initially the seller had no idea how to price the pharmacy. At the time, W… had about 450 sales per week but that number had been steadily declining. We made it our goal to value the business quickly and accurately to land on a deal that would provide the client with the highest possible price.
Solutions
Our process for valuing and pricing the business was quick and easy with cooperation from the seller as they provided us with all of the necessary business documents. Through analysis of the documentation history, lease agreements, inventory, and FF&E (furniture, fixtures, and equipment), we suggested a slightly high asking price of $450,000 plus inventory.
Results
Within two weeks we had the pharmacy under contract and six weeks later the transaction was closed. Our client was thrilled when the pharmacy sold for $400,000 plus inventory, after negotiation with the buyer. The buyer agreed to assist our client with selling off their FF&E and even offered to continued full-time employment. As for the property, the seller was able to work out a buyout agreement with the landlord. This smooth transfer of possession was made possible by our established relationship with buyer representative as well as the client’s active cooperation.
G… Pharmacy
The Company
King & King connected with the seller of a small five-year-old pharmacy within a medical building located in northern Virginia. The seller agreed to work with us to list her business because she wanted to spend more time at home with her young children while her husband worked. Based on our commitment to help small businesses increase their chances of selling quickly and profitably, we spent the next 75 days working with this client to land the best possible deal.
Goals
The challenge with selling the pharmacy was not that it was only five years old, but also that it still had five years left on its lease. With an unidentified price expectation on the client’s part, it was our goal to evaluate the business and come up with realistic asking price as well as a solution to the unwanted lease agreement.
Solutions
With our extensive proprietary database we were able to get offers on the table from two large chain buyers. The two companies were presenting similar offers and the client was pleased to have more than one option. As for the five-year lease, the seller hired an attorney to successfully negotiate herself out of the agreement.
Results
The client ended up going with the offer she felt more comfortable with. The transaction was closed only 75 days after the listing agreement was signed, once both parties agreed on the negotiated offer. The buyer offered the seller a full-time position, which she turned down to spend more time with her children and sell insurance part-time.
While this small pharmacy was purchased by a much larger company, our negotiations with the potential buyers encourage them to make fair and reasonable offers. The client always has the opportunity to accept the initial offer or come back with a counter offer. In the end, the client was extremely pleased with the outcome of the sale.
C… Pharmacy
The Company
C… Pharmacy had been established only 13 months when the seller contacted King & King, by virtue of a referral from a friend in the business, to list the business. The seller had already invested over $100,000 to start the business and knew that they were going to need some help to keep it afloat.
Goals
Once we listed the business, we found that chain stores and regional multi-location operators would more than likely not be interested in the acquisition of this pharmacy due to its low sales volume. Another challenge we found was the seller’s asking price of $280,000. These challenges shaped our goals which were to identify a realistic asking price and an ideal market buyer.
Solutions
Without the interest of the big name pharmacies, we had to get creative to connect with the right entrepreneur to purchase this business. Not long after being engaged to sell the pharmacy we were approached by a prospective buyer who had seen the listing on our website making an inquiry. After pre-screening the buyer to determine their suitability we setup an initial site visit for the prospective buyer. The buyer was very interested from the start so we immediately began working with both the buyer and seller to help them negotiate a suitable price and mutually agreeable terms for the sale.
Results
The transaction closed just four months after the listing agreement was signed. The original asking price of $280,000 was very high based on the volume of business, so the seller was pleased to receive the offer of $160,000 plus inventory. Since the buyer was not a pharmacist, the seller agreed to work part-time and assist in the process of hiring a full-time pharmacist. The seller agreed to hold financing for six months in order to complete the transaction.
The buyer planned to hire outside sales representatives to promote compounding and specialty drugs as he has had success with that business model in the past. This case highlighted King & King’s ability to work with low-profit businesses and attract qualified buyers. With our proprietary database and resourcefulness, King & King is able to offer small businesses opportunities for maximized profit and a speedy resolution.
