Everybody wants a bargain! The irony of course being, when everyone wants it, the price invariably pushes up and it no longer becomes a bargain. Buyers become apprehensive about any pharmacy business that has been on the market for a long time. There becomes an assumption that there is something wrong with the business and ironically it is these businesses end up selling at ‘bargain’ prices.
Given demand still exceeds supply in the pharmacy market, in most cases, the only delay in selling a pharmacy business is the asking price. Everyone wants top dollar for their asset, and this is completely understandable as you have likely poured your heart and soul into building your business.
When pricing your business, you should try to pretend you don’t own it. Look at the ‘bank valuation’ and think like a prospective buyer: What you would be prepared to pay for the business? Once you have worked out what you would be willing to pay, think about what you would think is a bargain, it should be a very different number.
When you advertise at the right price, you attract buyers. When you attract multiple buyers, instead of competing with you they compete with each other. Sounds simple, right? It is.
Pharmacy businesses which are advertised at the right price frequently sell within 14 days of going to market and, sell for above asking price.
Valuation is everything
The bank valuation will help you assess what potential purchasers can borrow from their financier. With so much riding on how much your potential purchaser can borrow, a valuation is the best first step in understanding a realistic price for your business. Given purchasers can typically only borrow around 70-75% percentage of the independent bank valuation, an asking price well above that valuation amount will knock out most buyers before you start.
Meet the market
Once you know the bank valuation of your business, the next step is to meet the market. Unfortunately, this is where most sellers struggle. Meeting the market has a massive benefit: it attracts buyer interest. No one is going to offer you top dollar for your business if they aren’t interested in reviewing it because it is overpriced. However, set the price right and you might just find that a battle of buyers ensues, pushing your sale price higher.
Develop a pricing strategy
A pricing strategy is a good way to maximise both buyer interest and sale price. Helping you set this strategy in place is where agents should really earn their keep.
Taking into consideration market demand and the intended buyer, business type and likely competition level, your agent should advise you an appropriate asking price. You should trust your agent’s advice when setting the asking price, they have your best interests at heart and, if you don’t trust them you shouldn’t engage them.
Completion is the real sale
For agents, generating offers is a relatively easy part of the process. Remember that you haven’t really sold your business until the money hits your bank account. Your agent should help you assess offers based not only on the price offered but on the likelihood of completion as well. The best business agents will manage your transaction all the way to settlement to ensure your best likelihood of completion.
– Robert Whelan, Managing Director at AP Group