Exit Strategies - What are my options? 

Natalie Sirianni

27 June 2023

As a business owner, one of the questions that you should regularly ask yourself is, “What is my exit strategy?” While you may not be planning to get out of your business anytime soon, it is critical that you always review the options for your exit strategy, so that you know what you are working towards and also so that you are prepared should your circumstances change.

Choosing “not to exit” also means you are effectively reinvesting in your pharmacy.

It is a great idea to include your exit strategy as part of your business plan and review and update each year.

Here are some of the key exit strategies for pharmacy business owners:

1. Sell the business on the market
We are very fortunate that we have a strong and active pharmacy business sales market which allows for fairly smooth market sales of the businesses. This allows many pharmacy business owners to sell the business on the market, which is a 100% sale of the business. This process is currently taking around 6-12 months to complete (from initial Market Assessment to final settlement) and involves the costs of your business broker, solicitor and other advisors. As mentioned in some of my recent articles, the process is taking longer now than it has in the past, so I recommend that, if you are considering selling, you start getting prepared earlier rather than later!

When you are listing your business for sale with a business broker, if you are concerned about confidentiality, make sure you speak with your business broker about how they will market the business and the sales and marketing process they will use.

2. Sell the business in an off-market sale
While less common, some pharmacy business owners prefer to sell their businesses in an off-market sale. Sometimes owners will go direct to an interested party who may be a local pharmacist or friend etc. If you choose this pathway, it is important that this process is managed correctly to achieve a solid sale price. It can be difficult to maximise sale price without the competitive tension of the market, but can work in certain cases and lead to a successful outcome. You should ensure in this process that you do not “leave anything on the table”, so to speak, and maximise your sale price.

This process will also involve the costs of your solicitor and other advisors, and business broker (if you choose to use one to mediate the process).

3. Bring on a junior partner
This is a great approach for exiting your business, if you would like a staged approach. Partnerships can work really well in pharmacy, by combining the experience and business acumen of the senior partner with the energy, enthusiasm and clinical knowledge of the incoming or junior partner. From a financial point of view partnerships also can work very well, as the senior partner continues to earn from the business and stage the exit to retirement, and also assist to fund the junior partner in. Which in turn, allows the junior partner to buy into a larger business than they would be able to if they purchased the business outright. However, there are additional risks associated with going into partnership rather than selling the business outright, so it is really important that you get legal and financial advice on this from your solicitor and accountant to protect you as much as possible. And make sure you get a Partnership Agreement set up at the start.

If partnership is the path that you choose to take, the process of bringing the junior partner into the business (once you have found the partner and agreed on terms) is similar timing to selling the business outright, as you go through similar steps. However, the process of finding the partner can take much longer than finding a buyer to sell outright, as the junior partner will be assessing your business, but you will also be assessing your capability for working with this partner moving forward. It can take some time to find the right person, right fit and right deal/structure. And therefore, if partnership is the path you would like to go with, make sure you start a few years out.

These are just a few of the options for exiting your business, but are the main ones that are used by pharmacy business owners.

If you have any questions about your options, feel free to call me on 1300 ATTAIN (288 246) to discuss.