Pharmacy Myths
Tue, 18 November 2008 AEST
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PrintFrank Sirianni
Based on our own assessment of what we are hearing and seeing throughout Australia.
Myth Buster
"Pharmacy sales activity has been quite for the past 4 - 6 months, nothing around."
Depending on your perception of the terms 'quiet' or 'nothing around' we have seen enough evidence to suggest that myth is far from true. Sellers and buyers are out there and successfully completing the transactions. If you take the sum of deals done in Australia through Brokers and privately over the last 6 months it would average out to about 24 per month changing hands, far from quiet.
What is occurring which may skew perceptions is the good pharmacy opportunities that do come up for sale hardly get any time in the market before they are snapped up by willing experienced buyers. They understand it is a seller's market and gone are the days of picking up a bargain. If you had money to invest or equity to get you into a pharmacy who wouldn't with the average return on investment including capital growth around 20% per annum.
Compare that to the current returns from property or shares!
Lessons for all players
The key lessons for anyone looking to buy are:
- Know what you want - the better your understanding of what you are looking for, the quicker your ability to decide when an opportunity arises. It's still a seller's market.
- Know what you can afford - you will need between 20 and 40% deposit or equity contribution. In simple terms, if you have $200,000 saved, you can afford to buy a business with a purchase price of $670,000 and $1 million. Remember to allow for stamp duty (if required), GST, and fees (valuation, legal fees, due diligence, etc.)
- Work to a plan and act - In a seller's market the sale will always go to buyers that are ready, prepared, and decisive.
Share your opinions or comments about buying or selling a pharmacy at Ask An Expert (http://experts.medici.com.au) - the Medici Capital Knowledge Base. Ask a question, or comment on of the articles submitted at any time.
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