The Crucial Steps You Must Take When Buying The Assets of A Pharmacy

Pharmacies are a big part of the healthcare industry, but they can be difficult to establish. First, you must purchase property, arrange deals with manufacturers and wholesalers, set-up a compliance policy, train personnel, and obtain the proper licenses. You may consider purchasing the ownership interests in a pharmacy that is already established. Alternatively, you may purchase the assets (i.e. inventory, computers, etc.) of an existing pharmacy and take over the operations. However, while you avoid the business development process, purchasing the assets of a pharmacy, or any business, isn’t as simple as signing a contract. The following are four steps you must take to successfully buy a pharmacy.

Due diligence review

Due diligence refers to an investigation into the books, operations, and structure of your potential pharmacy. The purpose of due diligence is to ascertain the value of and the potential risk involved in the venture. Generally, you want to speak to a lawyer and an accountant who are experienced in the pharmacy industry to accomplish this task.

Additionally, due diligence involves reviewing lease agreements, franchise agreements, payor contracts, and other contracts to ensure that they are assignable to you as the new owner. Finally, you must determine the specific terms of the arrangement.

Prior to conducting a due diligence investigation, you may be asked to sign some sort of contract or non-disclosure agreement. You should always review these with a lawyer.

Contract of sale assessment

A contract of sale for a pharmacy depends on what you want, when you want it, and how you want it. For example, do you want a formal, binding contract before or after financing is approved? Will the contract for sale be contingent on sufficient financing, and in what form should the financing take place? Asking yourself these questions can help you determine what type of contract should be created.

Additionally, consider under what conditions the contract will become binding. When and how the binding bargain comes into power is crucial, because it balances the various risks between you and the seller.

Other considerations to remember

There are a few other issues you need to take into consideration before buying the assets of a pharmacy. First, how will you structure the entity that is purchasing these assets and that will conduct the business? Will it be as a sole proprietorship, partnership, or corporation? Next, think about precisely what is included in the sale. Some things that may be included are the building, inventory, land, contracts, and staff. Do you plan on assuming duties under a potential lease or will you take the pharmacy and relocate? If you want to stay in the same building, find out if you can renovate to make it suit your plans. Many buildings set limitations on what you can do.

What obligations will you have to the exiting employees? They may require things like bonuses, insurance, and retirement, so be sure to discuss this before buying the pharmacy. You should also find out if there are any lingering employee disputes or possible employment lawsuits. Furthermore, think about what type of obligations you have under state or federal law. You should review the applicable laws regarding overtime, sick leave, maternity leave, and safety.

As you can see, there are countless nuances with which you will need to contend when buying the assets of a pharmacy. A thorough due diligence review should answer all, if not most, of these questions. A lawyer experienced in pharmacies and business transactions can also help you ask the right questions to get the answers you need.

What to do before the deal is finalized

Before you finalize the purchase of the pharmacy’s assets, you need to reach out to the landlord, payors, and other third parties. You will need to build a relationship with these professionals and obtain their consent to assume the seller’s obligation under the existing contracts. Usually, the assignment process will cover the respective contracts like the lease and franchise agreements, but many payors will require you to sign a new contract after closing the deal.

Finally, you need to obtain licensure from the state Board of Pharmacy in the state where the pharmacy operates and any states where it mails medications. You also need to enroll with Medicaid and Medicare. The approval process can entail a complex web of regulations. For example, Medicare requires you to produce evidence that you are licensed by the state Board of Pharmacy before you can receive approval. Therefore, obtaining permission isn’t the only issue, but also when and how you obtain it. It is best if you seek the assistance of a lawyer to guide you through this process.

The lawyers at Brown & Fortunato, P.C. can help you throughout the entire process of purchasing a pharmacy. Call us at 1-806-345-6300 or Contact Us by email for more information about how we can help you and our Practice Areas. You can also visit us in person at 905 S. Fillmore St., Suite 400 in Amarillo, TX to learn more.