Buying my pharmacy

What are your professional goals? What are your preferences in terms of a practice? Do you want to practice alone or with partners? Do you want to practice in the city, in the suburbs, or in a rural area? Do you want to be affiliated with a chain or a banner? These questions call for careful consideration. This exercise is crucial, as the answers will determine how you will proceed.

Professional realities
As a sole proprietor or affiliate, you will have to:

• Find a partner or a replacement in case of sick leave, maternity or paternity leave, or other absence
• Hire administrative staff, lab technicians, etc.
• Assess your insurance needs

Your personal life
Your professional choices will have an impact on your family life and your personal goals: having children, buying a home, etc. So it’s essential to consider these aspects.

Buying a pharmacy is a major investment ($3 million to $5 million). The cost will depend on a number of factors:

• The prescription volume (number of active client files in the pharmacy)
• The market share
• The operating costs
• The size of the establishment (building or other assets)

Affiliation and association
Most pharmacies are affiliated with a banner or a chain. The services offered vary accordingly and limitative clauses may apply at the time of resale, depending on whether or not you are the owner of the lease. It is therefore very important that you examine the contract in detail. Lastly, since there are on average two owner pharmacists per pharmacy, a good partnership agreement is a must.

Examine the purchase offer
Should you buy the seller’s shares or the assets of the practice? Do the terms of sale suit you? Does the appraisal reflect the actual value of the practice? Is the selling price fair? If you are incorporated, who should buy? The tax consequences vary according to the type of transaction. In addition, since it’s important to distinguish between the retail store activities of the business and the dispensary activities. A thorough analysis is a must. A financial advisor can help you make sense of it all and assess financing options.

Buying a pharmacy requires a substantial down payment. To obtain financing, personal financial statements showing your income, your expenses, your savings and your debts is required.

Make your plans
A balance sheet and cash flow statement are helpful tools for professionals which can be used to:

• Assess your borrowing capacity
• Establish a repayment plan over 7 to 12 years
• Determine if a lease is the best option
• Establish the operating budget plan for your pharmacy (projections)
• Identify the best tax structure (incorporation, your professional income, etc.)
• Plan your personal budget and savings
• Determine the work pace required to meet your obligations

Offer accepted!
You had in hand all of the seller’s documents, did all the due diligence, obtained your financing, and your offer (or counter-offer) was accepted. If all the conditions are satisfied, you can go ahead with the transaction.

Other steps must be completed before officially becoming the owner of your pharmacy. The transaction must be organized and finalized.

At the finish line
With the draft contract in hand, you’re almost there! Before signing, you must:

• Obtain your registration numbers: NEQ, GST/QST, etc.
• Apply to the RAMQ
• Have insurance: property & casualty, life, disability
• Become a member of the Association québécoise des pharmaciens propriétaires
• Plan the transition and set up the accounting
• Prepare the legal closing documents

You must also be sure to notify the Ordre des pharmaciens du Québec of the transaction and comply with the regulation: Pharmacy Act.

Make things easier for yourself
To become owner of your pharmacy, you should leave nothing to chance. It’s a rigorous and demanding process for one person to handle. You should have people to assist you and advise you.

The Financial gives you access to all the resources you need to help you make the right choices.

Professionals you can trust
For more detailed answers and a thorough analysis of your situation, place your trust in one of our advisors.