What to look out for in your next pharmacy transaction
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Written by
Sarah Stoddart
- and posted in Pharmacy
Buying or selling a pharmacy is a major milestone, and whether it’s your first or fifth deal, the fine print always matters. While purchase price and settlement date often get the most attention, there are several other conditions that can have a big impact on the success of your transaction, both legally and practically.
Here are a few key conditions you should consider before signing on the dotted line.
1. Customer Accounts and Loyalty Programs
In today’s pharmacy landscape, customer data is gold but who owns that data can be a grey area.
Many pharmacies offer loyalty programs, hold customer accounts or maintain records for Webster packing and other ongoing services. But who actually owns this data? And what happens to it after settlement?
It’s important to ensure the sale contract clearly outlines what will happen with customer records and accounts. Will they be transferred to the buyer? Will customers be notified? Is there any restriction on using that information post-settlement? These are questions worth sorting upfront, especially when it comes to compliance with privacy laws and continuity of patient care.
If you’re the buyer, make sure you’re getting what you think you’re paying for. If the value of the business relies heavily on customer retention, the contract should support a smooth transition.
2. Employee Interviews and Retention
People make the pharmacy. That’s why employee-related clauses are some of the most important parts of any pharmacy transaction. Most buyers want to retain key team members to ensure stability post-settlement, but employment can’t just be transferred automatically without consent.
A buyer should be given the opportunity to interview existing staff and offer new employment agreements, conditional upon the sale proceeding. This allows the buyer to assess whether the team aligns with their expectations and culture. However, interviews are not “as of right” and need to be incorporated into the conditions of your contract.
Get clear advice on your obligations and don’t overlook this step. A smooth handover with a well-informed team can make or break your first months of trading.
3. Nursing Home Contracts
If the pharmacy services nursing homes or aged care facilities, those contracts are typically a key part of the business and need to be treated that way in the transaction.
Some contracts are tied to the pharmacy as an entity, while others are personal to the pharmacist or subject to third-party approval before assignment. The contract of sale should clearly deal with this.
As the buyer, you’ll want to ensure the nursing home arrangements are valid, transferable and in place from day one. That might mean a special condition in the contract making the sale conditional on transfer of the nursing home agreement or at least consent being granted. Consider too what happens if the nursing home does not agree to the transfer.
Sellers should also be transparent about any service-level expectations or hidden costs in delivering on these agreements. Surprises here can quickly sour a good deal.
Every pharmacy transaction is different and so are the risks. While it’s tempting to focus on the big-ticket items like goodwill value or lease terms, it’s often the smaller (but critical) operational details like customer relationships, staff retention and third-party contracts that determine whether your transaction feels like a win or a headache.
Invest time in getting good legal and accounting advice, and make sure your contract isn’t just boilerplate or rushed. A well-drafted agreement that reflects the true nature of the business can give both sides confidence and results in a much smoother transition.
This article is intended to be for general information only. It does not constitute legal advice nor does it establish a relationship of client and lawyer. Specific circumstances or changes in law may vary the accuracy or applicability of the information published. We recommend seeking specific legal advice particular to your circumstances before taking any action, or refraining from taking any action, on any issue dealt with in this article.