Why Pharmacy Owners Sell Their Pharmacies
By Colony RX
At Colony RX, we speak to pharmacy owners daily who are considering the sale of their pharmacies.
We understand that selling a pharmacy can be a very emotional demanding experience. Most pharmacy owners are absorbed by their business for hours a day, sometimes over a period of decades, and sometimes over multiple generations. When it is time to part ways with a pharmacy, it can be a difficult process. For this reason, it is important to carefully analyze the common reasons why pharmacy owners sell their pharmacies, if only for reference that others have been in your shoes.
Pharmacy owners sell their companies for several common reasons. The following are some of the most common reasons:
- The Owner is Burned Out: One of the most common reasons that pharmacies are sold is due to fatigue, boredom, and burnout. The ongoing daily grind of managing small business stressors can be very tiresome, especially in light of many industry changes. Beyond the actual stress, many pharmacy owners sell because they are no longer challenged or interested in the business. We sometimes hear pharmacy owners say that they will just take more time off and leave operations to their staff. These pharmacy owners underestimate the value of their presence in the store, and this plan often leads to disaster. If owners are not running their stores, someone else will run them into the ground, and take the value of the business with it.
- The Owner Wants a Change:Other times, the owner is not necessarily burned out, but just needs a change. They don’t want to stop working in their pharmacies, they just want to stop owning them. These owners are the ideal partners for Colony RX because, whenever possible, we prefer (but not require) that the existing owner have some involvement in the operation after the sale.
- Retirement: Pharmacy owners are passionate, driven individuals who typically love what they do. When a pharmacy owner has a sincere love for their business and work, they will stick with it until they can no longer physically keep up. As a result, many owners keep a pharmacy until it has finally come time for them to retire. The right time to retire is a deeply personal decision and is based mostly on how pharmacy owners want to spend their time going forward.
- Physical Illness or Family Problems: Significant changes in a pharmacy owner’s life are causes to sell a business. When illness strikes, pharmacy owners need to have their affairs in order so they are not leaving a major burden (operating or selling the pharmacy) on their families. Likewise, an owner’s spouse may become very ill, requiring them to become caretaker, leading to disinterest in the pharmacy and a desire to sell.
- Divorce or Partnership Breakdown: Sometimes, it is necessary to sell a business as part of a divorce settlement (especially when the husband and wife are business partners). Similarly, sometimes partners who share common ownership of a pharmacy need to get “divorced” and when one partner doesn’t have capital to buy out the other, the easiest path forward is to sell the pharmacy.
- Need Cash for Other Things: Sometimes pharmacy owners sell because they need the money for other things, such as other investments.
- Short-sightedness: When running a pharmacy, curve balls and unexpected events are common. When these seemingly small events continue to build, they can become insurmountable. Owners becoming too comfortable with the operation, getting into a habitual routine and overlooking the big picture often times put the business in peril. Some examples of this are when there is no redundancy in staffing, when there is no strategy for growth, or when a pharmacy owner is over-leveraged his personal assets to run the business.
- Competition When pharmacy owners begin to see increased competition, they have two choices: The first is to proactively invest more time and resources in the pharmacy to keep up or choose an alternate path: sell. This can be a monumental decision, but the best time to sell a business is when things are stable or growing. The worst time to sell is while in a downward trajectory. In pharmacy, competition is now coming from the payers, including PBM mail order and closed networks.
- Sticking to the Plan: Some pharmacy owners start their pharmacies with a pre-determined exit date in mind. For example, I once heard a pharmacy owner say that he would sell his pharmacy on his 65th birthday as a present to himself.
- Opportunity to Capitalize: Right now, things are relatively stable in pharmacy. Savvy business owners know when their industry is in a stable time and sell during that time, instead of waiting for decline. Up, down and sideways trends come and go, from industry to industry; at times, many years apart. The smart pharmacy owner recognizes these opportunities and will strike while the iron is hot.
Whatever your reason for selling, give Colony RX a call to find out if we can help you move forward. Your call will be 100% free and confidential, and you will feel better after speaking with us.