modiplusv2

Pharmacy News | July 2025

sanja@modiplus.co.uk (Sanja Milosevic) — Thu, 31 Jul 2025 09:23:30 GMT

We trust you are enjoying the warm weather as we welcome you to our Summer Newsletter!

Pharmacy market and selling activity

The trend in the pharmacy sales market shows a continued activity with a mix of buyers and sellers, including large multiples and independent owners. We have seen large multiples disposing branches and there’s also a rise in first time buyers and small and mid-sized groups acquiring.

Pharmacy contract and increase in funding

The March 2025 funding deal looks promising and much needed boost for community pharmacies and a step in right direction compared to previous years. The Community Pharmacy Contractual Framework (CPCF) budget is to £3.073 billion for the 2025 / 2026 financial year, which will provide an uplift of over 30% compared to previous year. Additionally, an extra £215 million will be directed towards expanding existing Pharmacy First and other services.

(Source: Community Pharmacy England)

Outlook for pharmacies

· Uncertainty in the budget – the upcoming autumn budget is expected to influence future activity in the pharmacy sales market.

· Integration of technology and AI – technology, including AI and automation is playing a larger role in pharmacy operations and customer experience.

· Growing role of pharmacies – pharmacies are taking on a larger role which may lead to further changes in the market.

Factors influencing the sales market

· Government policies – government regulations, particularly around funding and potential changes to CGT rules, can impact buying and selling decisions.

· Economic growth and healthcare spending – increasing healthcare spending and an aging population are driving demand for pharmacy services.

· Online pharmacy growth – the online pharmacy market is expanding, with companies like Pharmacy2U and others gaining market share.

· Competition from online pharmacies – online pharmacies are becoming more popular, which may affect the traditional pharmacy model.

Simplifying the sale of pharmacy and our checklist for a successful sale

Selling a pharmacy can be daunting due to regulatory, financial and operational factors, but with the right strategy, we can help you streamline the process and avoid common pitfalls.

Here is our recommendation for a smoother sale: -

1. Prepare early and get organised – collate key documents for the sale such as accounts, FP34s, VAT, returns, lease agreements, staff contract and compliance certificates.

2. Valuation – use pharmacy specialist agents to assess the value of your pharmacy based on profit multiples, dispensing volume etc (EBITDA workings).

3. Decide on the sale type – asset sale or company share sale where your accountant will be best to guide you.

4. Choose the right advisors – Broker helps you market the pharmacy and find a buyer. Please consider appointing a pharmacy specialist accountant and solicitor who have expertise to guide you through the whole sale process to completion.

5. Marketing the pharmacy – appoint a pharmacy specific broker such as Modiplus who will market your pharmacy in confidence and discreet. All buyers are vetted for funding and sign our confidentiality agreement allowing them to share sales information only with the bank, their accountant and solicitor.

6. Due diligence – you will be asked to use digital data rooms to share financials, FP34s, supplier contracts etc. Be transparent to disclose everything upfront to avoid delays or warranty claims.

7. Handle property efficiently – if leased, ensure that there’s at least 10 years left or obtain an extension. If freehold owned, prepare to sale the freehold or grant a new lease to the buyer. Please ensure lease terms meet buyer’s lender requirements.

8. Navigate NHS and GPhC requirements – For an asset sale, buyer must apply for transfer of NHS contract which usually takes between 2 to 4 months. For a share sale, no NHS approval is needed, however, notify NHS and GPhC of director / superintendent changes within 30 days.

9. Completion and handover – sign a Sale Purchase Agreement (SPA) or an Asset Purchase Agreement (APA), and hand over to the buyer.

Other exciting news

As we continue to grow, we are pleased to announce that our associated company Silver Levene was acquired by Xeinadin Group , a top 20 accountancy and business advisory firm in the UK. We highly recommend their pharmacy team of accountants with over 35 years of experience providing specialist accounting, tax and other advisory services to community pharmacies and pharmacists. For more information, please contact the pharmacy partners Mr Vinku Shah or Mr Shivam Modi on 020 7383 3200.

Looking further ahead, we will be at The Pharmacy Show at NEC Birmingham on 12 and 13 October 2025 . If you are thinking of selling or buying a pharmacy, or looking for specialist pharmacy accountancy and tax advice, our team will be happy to discuss options with you at stand number M20 located next to the business theatre.

Last month we participated with our associated company Silver Levene – A Xeinadin Company in the annual 10km London Legal Walk. The charity raised c£1m to support communities’ most vulnerable people and we thank you for your continued donations to support such a good cause.

Legal and financial advisors

Please engage a pharmacy specialist legal and financial advisor who will guide you through the process and assist you with any complex issues such as tax, legal contracts, etc. If you would like to sell/buy a pharmacy, need accounting or tax advice through our associated company Silver Levene – A Xeinadin Company, please contact us on 020 7383 3200. We have been providing specialist accounting and tax advisory services to community pharmacy for over 35 years. Your query will be directed to the right person. Silver Levene - A Xeinadin Company offers fixed price packages for accounting and tax services as well as valuations, cashflow and profit forecasts, raising loan finance, due diligence and accountancy work for asset and company sale transactions.

Thinking of selling or buying?

If you would like a free valuation or to talk about how you could achieve a fantastic price for your pharmacy, please do contact us on our direct dial number 020 7380 3446 and ask for Sanja . We would welcome the opportunity to have a chat with you.

We look forward to hearing from you.

This article is based on current legislation and practice and is for guidance only. Specific professional advice should be taken before acting on matters mentioned here.

Pharmacy News | February 2025

Wed, 26 Feb 2025 08:55:14 GMT

Welcome to our Winter Newsletter!

Pharmacy market trend and buyers’ appetite

If you are thinking of selling your pharmacy, there is still a demand for pharmacies across the country as the market remains buoyant. The pharmacy market has seen an increase in the number of pharmacies entering the market and completed sales. This is driven by economic pressures, fiscal policies, lack of funding, and exit of larger multiples from the market, such as Lloyds Pharmacy and Boots, which has led to the rise of independents and consolidations.

The appetite remains strong from the first-time buyers, with independent and smaller chains the most active in the pharmacy acquisitions.

Valuation calculations

We have also seen the valuation of pharmacies improving, and on average we are achieving a goodwill price of 85p to 90p in £1 of turnover for standard hour contracts. Demand for pharmacies with a turnover of more than £750k to £1.5m with healthy profits is particularly attractive for the first-time acquisitions or an existing independent operator looking to expand. Below is a range of estimated valuations, if you are looking to sell: -

However, every pharmacy is unique and has its own selling points, which can push the price higher than the current benchmark. It’s all about skilfully marketing the business for sale.

Bank interest rates and lending requirements

The Bank of England reduced the base rate to 4.5% this month (February 2025) to support economic growth. We have regular catchups with several primary and secondary lenders, and the consensus is that interest rates will go down further by a quarter percent by May 2025. Lower interest rates should make borrowing more affordable, which in return will boost confidence and attract more buyers. The new government funding will also improve pharmacy valuations, which is imminent.

Six steps to selling your pharmacy

Selling a pharmacy requires planning, attention to detail, and professional guidance. If you are thinking of selling your pharmacy, experience tells us that you should have your house in order for a smooth sale.

1. Financial Records

Please ensure that your financial records are up to date and accurate. The prospective buyer will review your financial statements and other documents such as FP34s, VAT returns, staff schedules etc. to ascertain the profitability of the pharmacy. Therefore, it is crucial to provide the buyer with a clear picture of your pharmacy’s financial history.

2. Valuation of your pharmacy

Before you decide to sell your pharmacy, ensure a professional valuation is completed by a pharmacy expert so that you have an estimated sale price. This is important as your pharmacy will also be valued by the buyer, their advisor, and the bank. We would be happy to help you with the valuation and come and meet with you in the evening or on the weekend when the pharmacy is closed. For a FREE valuation of your pharmacy , without any obligation, contact us on 020 7380 3446 .

3. Contract and agreements

Please review all contracts and agreements that are in place relating to your pharmacy, such as supplier agreements, standard operating procedures, employment contracts, etc. This will form part of the due diligence process by the buyer.

4. Staff cost

High locum and staff costs will reduce the value of your pharmacy, which is reflected in your net profits. Therefore, ensure the pharmacy is not overstaffed and vice versa; it is not running on the skeleton staff either, which will deter prospective buyers. Your staff cost should be between 8% and 15% of your total turnover, depending on the size and level of other services provided.

5. Lease and rent

Please ensure there is an existing lease in place that is protected under the Landlord and Tenant Act 1954. Further, please ensure there is at least 10 years left on the lease, which can be renewed at the end of its term. The buyer’s bank will not facilitate a loan if there is an issue with the lease. From our experience, assigning a lease with the council takes longer in comparison to the private landlord. If you own a freehold and wish to retain ownership, then a new lease will need to be created.

6. Premises

You will need to obtain an Energy Performance Certificate (EPC) and an asbestos and fire risk assessment report, which will be part of the buyer’s bank requirement. You can do a Google search for a local company to perform all three checks.

Legal and financial advisors

Please engage a pharmacy specialist legal and financial advisor who will guide you through the process and assist you with any complex issues such as tax, legal contracts, etc. We work with a panel of pharmacy specialist solicitors and our associated company, Silver Levene LLP , Chartered Certified Accountants. They have been providing specialist accounting and tax advisory services to community pharmacy for over 35 years.

If you would like to sell/buy a pharmacy, need accounting, or need tax advice through our associated company Silver Levene LLP , please contact us on 020 7383 3200 . Your query will be directed to the right person. Silver Levene LLP offers fixed price packages for accounting and tax services as well as valuations, cashflow and profit forecasts, raising loan finance, due diligence, and accountancy work for asset and company sale transactions.

Other exciting news

As we continue to grow, we are pleased to let you know that we have now settled in our new modern office premises located at Maple House on Tottenham Court Road in central London. If you are in the area, we would be delighted to welcome you and talk about any burning issues over a cup of coffee.

Thinking of selling or buying?

If you would like a free valuation or to talk about how you could achieve a fantastic price for your pharmacy, please do contact us on our direct dial numbers: 020 7380 3446 or 020 7380 3424 and ask for Sanja or Diana in the first instance. We would welcome the opportunity to have a chat with you.

We look forward to hearing from you.

This article is based on current legislation and practice and is for guidance only. Specific professional advice should be taken before acting on matters mentioned here. Should you require any advice please do not hesitate to contact us .

Pharmacy News | August 2024

Thu, 29 Aug 2024 09:37:14 GMT

Welcome to our Summer Newsletter and we trust that you are enjoying the late summer weather! This summer has been extraordinary so far, full of sporting events such as football, tennis, cricket and the Olympic games!

We have been very busy in the last quarter, whereby we have seen the first-time buyer appetite remain strong. Similarly, we have seen an increase in the number of sales enquiries of smaller pharmacies while others are holding off awaiting the outcome of the new funding and success of Pharmacy First scheme.

On average we are achieving goodwill price of between 85p to 90p in £1 of turnover at present. The average profit margin has shown an improvement to 32% despite medicine shortages.

Data from Pharmacy First (NHSBSA)

The launch of the Pharmacy First has gone off with a positive start, it has been very encouraging to see so many patients benefiting from this scheme, and your exceptional efforts in delivering these services have been commendable. However, we note that monthly payments are still critical, and concur that it is completely unreasonable for pharmacy to be penalised financially for the NHS’ failure to drive public and GP referrals.

The NHS Business Services Authority (NHSBSA) has released figures for the Pharmacy First Service covering the period of February to April 2024 as follows: -

Overall, it has been a good first quarter whereby an average of 9,154 community pharmacies delivered and claimed over 423,310 Pharmacy First consultations receiving £36,270,000 reimbursement fees. It is encouraging to see that the Pharmacy First consultations increasing month on month.

Pharmacy integration and change of ownership

In July 2024 there were 10,054 community pharmacies (excluding DSP) in England, a loss of 1,593 since March 2015 when there were 11,647. Further, there has been a change in distribution of pharmacy ownership since January 2021 with the following result: -

48% are small independents owning between 1 to 5 pharmacies compared to 40% in 2021,
18% are medium groups owning 6 to 99 pharmacies compared to 13% in 2021; and
34% are larger groups owning 100 plus pharmacies compared to 47% in 2021.

Can the new government deliver on its promise and provide adequate funding to stop pharmacy closures? Community Pharmacy England has been continuing to make the case for the community pharmacy sector following the election, and negotiations are expected to resume in September. Lack of appropriate funding is driving many owners to sell their business.

Thinking of selling your pharmacy privately? Think again….

If you are thinking of selling your pharmacy privately, think again. As you are at risk of agreeing on a price that is likely to be well below the market value. Private buyers are also more likely to want to renegotiate the price and waste time going back and forth on trivial issues or even pull out at the last minute with no compensation for example non-refundable deposit to cover your costs. By appointing an agent such as us, we will vet the prospective buyers and keep them in line to focus on the important matters. We will also market widely to get maximum exposure, viewings, and therefore number of offers to consider and achieve the highest price possible.

Five steps to selling your business and we can make it work for you…

If you are thinking of selling your pharmacy, we can help you. Just follow these steps and we will do the rest: -

We will give you a free desktop valuation of your pharmacy.
You need to collate the financial documents and send it to us.
We will discuss the valuation with you and arrange meeting to firm the price, if you decide to go ahead with the sale.
We then sign an agreement and will start to market and line up offers to consider.
We reach the stage of exchange of contract and completion.

For a FREE valuation of your pharmacy , without any obligation, contact us on 020 7380 3446 .

Other exciting news

We will be at The Pharmacy Show at NEC Birmingham on 13 and 14 October 2024 . If you are thinking of selling or buying a pharmacy, or looking for specialist pharmacy accountancy and tax advice, our team will be happy to discuss options with you at stand number M20 located next to the business theatre.

Last month we participated with our associated company Silver Levene in the annual 10km London Legal Walk which celebrated its 20 ^th year. The charity raises vital funds to ensure legal help reaches our communities’ most vulnerable people. We thank you for your continued donations to support such a good cause.

As we continue to grow, we are pleased to announce that we have finally moved into our new modern office premises located at Maple House on Tottenham Court Road in central London. If you are in the area, we would be delighted to welcome you and talk about any burning issues over a cup of coffee.

Thinking of selling or buying?

If you would like a free valuation or talk about how you could achieve a fantastic price for your pharmacy, please do contact us on our direct dial numbers: 020 7380 3446 or 020 7380 3424 and ask for Sanja or Diana in the first instance. We would welcome the opportunity to have a chat with you.

Alternatively, if you would like to buy a pharmacy, need accounting, or tax advice through our associated company Silver Levene , please also contact us on the same numbers. Your query will be directed to the right person. Silver Levene offers fixed price packages for accounting and tax services as well as valuations, cashflow and profit forecasts, raising loan finance, due diligence, accountancy work for asset and company sale transactions.

We trust you all have a good Summer and look forward to hearing from you.

Pharmacy News | April 2024

Tue, 16 Apr 2024 11:10:22 GMT

Welcome to the spring edition of our quarterly newsletter

Initial reaction to Pharmacy First

Recent research conducted by AIMp found that 70.8% of the pharmacy owners do not think there is sufficient funding allocated for the scheme, 20.8% say it is too early to say and just 8.3% responded saying it was adequate. Their #Fight4Pharmacies campaign was also launched on 20 March 2024 outside Parliament which created an extensive amount of interest with the media and politicians.

The success of the Pharmacy First scheme will vary and depending on factors such as local implementation, public awareness, pharmacist training etc. To address funding shortfalls, pharmacy owners need to explore other options such as reallocating resources, securing additional funding and enhancing relationships with GPs.

Pharmacy contract and funding

The old contract has expired, however, there is no news regarding the pharmacy funding negotiations. The negotiations are taking place between Community Pharmacy England (CPE) and the Department of Health and Social Care (DHSC) , supported by NHS England (NHSE) .

The reasons for the sale of community pharmacies

The sale of community pharmacies can occur for various reasons and under different circumstances as follows: -

Retirement - You may choose to sell your business when you reach a retirement age or decide to exit the profession for personal reasons. Selling the pharmacy allows you to liquidate your assets and transition into retirement.
Relocation - Changes in your personal circumstances or opportunities in a different location may prompt you to sell and move elsewhere. Relocation could be due to family reasons, lifestyle preferences, or professional opportunities.
Financial reasons - Financial challenges or the desire to capitalise on the value of the pharmacy may lead you to consider selling. This could include factors such as declining profitability, changes in reimbursement rates, or the need for additional capital investment.
Expansion or consolidation - A multiple may acquire as part of their expansion or consolidation strategies. Selling to a larger entity can provide you with higher value in some cases.
Launch of Pharmacy First and providing new services - The running of pharmacies has undergone several changes over the years, particularly with increased automation, digitalisation, and expansion of online services. The model has gone through a complete overhaul. We are seeing lots of our clients for whom we provide accountancy services at Silver Levene who are struggling with Pharmacy First services due to staffing issues which is resulting in decline of their profit margins.
Market dynamics - Changes in the healthcare landscape, regulatory environment, or consumer behaviour may influence your decision to sell. Adapting to evolving market conditions or responding to competitive pressures may involve selling the pharmacy to a buyer better positioned to navigate these challenges. Following large corporate disposals, we are now seeing the goodwill value increase compared to last quarter, which makes it an ideal time to exit, if you are looking to sell. With bank interest rates likely to go down from June, affordability becomes easier too.
Succession planning - You may sell your pharmacy as part of succession planning efforts, either transferring ownership to family members or grooming internal staff to take over management. Selling the pharmacy ensures a smooth transition of ownership and management responsibilities.

The sale of community pharmacy is typically a complex process that involves legal, financial, and regulatory considerations. You as pharmacy owners may work with sales agents, financial advisors, or legal professionals to facilitate the sale and ensure compliance with relevant laws and regulations governing pharmacy ownership and operation.

If you are thinking of selling, it is paramount to get your house in order and speak to your accountant well in advance and prior to putting the pharmacy on the market. We can provide accountancy and taxation services through our associated company Silver Levene with a proven track record of over 30 years.

Changes in ownership

With last year’s corporate disposals, the tide has turned, and more pharmacies are now run by independents compared to corporates. The recent Sigma conference in South Africa highlighted this issue, as shown in the table below courtesy of RWA Pharmacy:

*Data as at February 2024

Other news

As we are continuously growing, we are pleased to announce that we will be moving into our new modern office premises in July located at Maple House off Tottenham Court Road in central London. We are only a stroll away from our current office at Warren Street and will keep you posted on the big move.

Thinking of selling or buying?

Alternatively, if you would like to buy a pharmacy, need accounting, or tax advice through our associated company Silver Levene , please also contact us on the same numbers. Your query will be directed to the right person. We refer you to a link to our brochure which includes a list of services which you may find useful to read.

Pharmacy News | December 2023

Mon, 04 Dec 2023 16:29:24 GMT

Welcome to the winter edition of our quarterly newsletter

The future of community pharmacy

Nobody knows the future of community pharmacy and the right time to sell. As always, you should consider selling when there is no threat to your business that will affect its goodwill. You might decide to sell due to retirement, ill health or you are going into a new venture. We have seen goodwill values drop in the last 12 months or so due to corporate disposals and other distressed sales flooding the market. But it’s not all gloom and doom as equally, we have been extremely busy completing many deals over the last quarter. Most of the transactions have been to first time buyers, independents, small and medium size groups with a forward-looking plan to grow while the large multiples downsize.

We believe next year will present a good opportunity to exit, if you are looking to sell the business, as interest rates start to fall, cost of living crisis abate, and the banks start to lend proactively again.

Pharmacy First service

This service will launch on 31 January 2024 which will be a new advanced service and will replace the Community Pharmacist Consultation Service (CPCS). The pharmacies will receive a first initial fixed payment of £2,000 that can be claimed from December 2023 and a monthly fixed payment of £1,000 from February 2024 for pharmacy contractors who reach a minimum number of monthly clinical pathway consultations (from 1 consultation in February 2024 to 30 consultations from October 2024).

Community pharmacists should seize the opportunity and provide maximum amount of services that they possibly can, to increase sales and profits to mitigate the cost increases of the last couple of years. This will also increase the value of the business.

The Pharmacy Show 2023

The Pharmacy Show returned to the NEC Birmingham on 15th and 16th October 2023. Over the course of two days, there were over 8,500 pharmacy professionals attending the show and over 300 exhibitors. A highlight of the show, an automation system (robotic) whereby even a small pharmacy

can invest into one model for hub and spoke which was previously only an option for larger groups. There is a whole host of affordable options that will allow you to automate those everyday tasks such as dispensing medication and managing stock levels etc.

Our joint stand with Silver Levene was located next to the Business Theatre where some excellent speakers with thought provoking ideas commented on the future of the pharmacy and new funding. Whilst exhibiting, we had numerous enquiries on selling and buying a pharmacy as well as pharmacists looking for an accountancy and tax advice. The show was a success, and we look forward to exhibiting again next year, our 17th year bar the covid years.

Pharmacy Valuations

If you are thinking of selling your pharmacy, we advise that you seek professional advice and valuation from a pharmacy expert or pharmacy sales agent. The valuation is determined by several factors to name but a few as a reminder: -

EBITDA (Earnings before interest, tax, depreciation, and amortisation) profits – this is a preferred measure to value pharmacies and bank’s valuer will do the same.
Financial information – Accounts, FP34s, VAT returns should be up to date.
Location – pharmacies located in a health centre or next door to a surgery will still fetch abetter price, if there is more footfall too.
Lease and rent – ensure there is at least 10 years left on the lease and is renewable. A very high rent will be a detriment to sale, buyers will account for any future rent and increases.
Staff costs – high staff and locum costs will reduce the value of the pharmacy.
NHS/OTC/services/wholesale/online/export sales – please ensure that these are analysed separately in the accounts.
Growth potential – for example if you are not doing many of the services, the buyer will see this as an opportunity to enhance business and this is an attractive proposition for the buyer.

Interest rates and buyers’ appetite

The banks have maintained the level of lending appetite despite the rise in interest rates and economic pressures. We are pleased to report that most of our recent completion were to first time buyers which leads us to believe that they have a strong desire to acquire good, solid and profitable businesses. To facilitate their lending, many of the banks that are active in the pharmacy market are seeking increased due diligence, business plans, personal guarantee etc.

The table below shows interest rates at their peak, and the prediction for 2024 through to 2027 (source Bank of England ).

Other news

We have been busy attending the Chemist + Druggist , Pharmacy Business and AIMp awards as well as exhibiting at The Pharmacy Show . It was nice to see our clients, prospects, colleagues and many familiar faces within community pharmacy attending those events. We look forward to attending the

same next year.

Thinking of selling or buying?

Finally, we wish you a Merry Christmas, and a Happy, Healthy and Peaceful New Year. We look forward to talking to you soon.

Pharmacy News | July 2023

Wed, 26 Jul 2023 15:38:00 GMT

In our Summer 2023 newsletter, we report on important matters relating to the pharmacy sector

NHS is 75!

We celebrated the 75 ^th birthday of the NHS on 5 ^th July 2023, this milestone makes a perfect opportunity to recognise dedicated staff who make the NHS what it is today. Treating over a million people a day, the NHS touches all our lives. Community pharmacies are an integral part of the NHS, recognised for their hard work, dedication and making a key contribution most recently by administrating new record of 5 million flu jabs.

Government investment for community pharmacy

The government has promised a £645m investment in community pharmacies over two years which will help community pharmacies. However, there are still questions that need answering and it is not clear if this is a one-off cash injection or new long-term commitment. This is a significant investment in community pharmacy set out to improve access to primary care. It is a step in the right direction for pharmacy however more investment is required to address the funding crisis, staff shortages and medicine supply issues.

Continuing corporate closures and disposals

After months of speculation, LloydsPharmacy permanently closed 237 of its stores in Sainsburys on 13 June 2023. Only a few weeks later, Boots made a shocking announcement that it is set to close 300 branches within the next 12 months. Several of the big pharmacy multiples such as Rowlands Pharmacy are also considering taking similar tough decisions of closure and/or disposal. These changes mean that pharmacies that are being off-loaded by the larger multiples are being acquired by medium, smaller and other independent groups, including many of the first-time buyers and investors, which is a positive for community pharmacy.

New NHS Pharmaceutical and Local Pharmaceutical Services (PLPS) Regulations

With new regulations, 100-hour pharmacies can opt to reduce their core contractual hours from 100 to 72. Some of our clients have already taken advantage of this and submitted application to reduce the hours. With reduced opening hours, the overheads such as staffing costs will be lower, and in return the profits will be higher. Therefore, if you are looking to dispose a 100-hour pharmacy, a higher price can potentially be achieved.

Pharmacy locum rates

On another note, the locum rates have increased to record highs for the second year in a row according to the C+D salary survey . The average locum rate has risen by a fifth to nearly £39 per hour, the main factor being shortage of pharmacists, the cost-of-living crisis and inflation. The recent Lloyds Bank webinar suggested that locum costs could potentially go down in the coming months following the large corporate disposals.

Interest rate woes

Banks are still keen to lend money to support acquisitions of pharmacies, however, with current interest rates of 5% which will likely increase to 5.5% in early August ( Bank of England ), makes it very difficult for first-time buyers to enter the market. In our most recent transactions, we have seen banks requesting additional security and increased deposit from 20% to 30%. First-time buyers are having to borrow additional funds from family and friends or going into partnerships to secure the deal.

Preparing your pharmacy for a sale

There will always be a market for good pharmacies that come up for sale. So, what should you do to make your pharmacy attractive to a potential buyer and get the best price possible?

Signage – ensure there is a proper signage to the pharmacy. We visit pharmacies regularly and note that many do not have a proper sign to direct patients into the pharmacy. You want to aim for a higher football and therefore business.
Shop window – an attractive shop window will always attract customers. Ensure that your windows are cleaned on regular basis and display offers / promotions to boost sales.
Pharmacy shop floor – your pharmacy layout plays a significant role in patient perception which will have a positive impact on sales. Ensure it flows and is free of clutter and boxes. A clinical feel and look of the pharmacy inspire confidence in the patients.
Online presence – having a good website will attract new customers. From our experience when we get instructed to sell the pharmacy, usually there is no or very limited online presence. Potential new customers do tend to check the website and read reviews prior to their visit so having a good professional looking website is important.
Competition – be mindful of your competition and what are they offering. This is very useful information to attract more customers and offer better products at competitive prices. You can also monitor your competitors and how they are preforming by subscribing to PharmData for a small monthly fee of £3.59.

It is not only the aesthetics of the business but also financials; you should also engage a pharmacy specialist accountant at least few years prior to selling to get your financials in order which will also help maximise the goodwill of your pharmacy.

Other news

We will be at The Pharmacy Show at NEC Birmingham on 15 and 16 October 2023. If you are thinking of selling or buying a pharmacy, or looking for specialist pharmacy accountancy and tax advice, our team will be happy to discuss options with you at stand number N20 located next to the business theatre.

Last month we participated with our associated company Silver Levene LLP in the annual 10km London Legal Walk . We thank you for all your donations to support such a good cause and we were pleased to have been featured in The Law Society Gazette who announced this year’s charity walk as biggest ever with a record 16,000 participants raising a total of £910,000 .

Thinking of selling or buying?

If you would like a free valuation or talk about how you could achieve a fantastic price for your pharmacy, please do contact us our direct dial numbers on 020 7380 3446 or 020 7380 3424 and ask for Sanja or Diana in the first instance. We would welcome the opportunity to have a chat with you.

Alternatively, if you would like to buy a pharmacy, need accounting, or tax advice through our associated company Silver Levene LLP , please also contact us on the same numbers. Your query will be directed to the right person.

Silver Levene LLP offers fixed price packages for accounting and tax services as well as valuations, cashflow and profit forecasts, raising loan finance, due diligence, accountancy work for asset and company sale transactions. Contact us for more details.

We trust you will all have a good Summer and look forward to hearing from you.

Pharmacy News | April 2023

Wed, 05 Apr 2023 10:17:22 GMT

As Easter 2023 is approaching, what does the next quarter have in store for pharmacy?

Challenges for pharmacy in 2023

2023 started with shocking news of large corporate multiples announcing closures to their branch numbers - Lloyds Pharmacy to close all its 237 branches in Sainsbury’s , Asda closing 7 pharmacies and Tesco closing 8 pharmacies. To top this, there was a further leak in the national press in early March that Aurelius , parent company of Lloyds Pharmacy , has put all of its 1,300 branches at risk of closure.

In addition, a recent RPS survey found that three quarters of pharmacists are so stressed and were thinking about quitting. The Pharmaceutical Services Negotiating Committee (PSNC) met for a full committee meeting early in February 2023 to consider the urgent funding and capacity crisis, as well as proposals from the Department of Health and Social Care (DHSC) and NHS England on price concessions reform and relief measures to ease pressure on pharmacies.

Surely, this should be a wake-up call for the Government to support the pharmacy sector. The rest of 2023 is likely to be a challenging year for the sector with the UK likely to experience a shallow recession, high interest rates, taxes, inflation, energy costs and rising cost of living which has hit everybody hard. The Government urgently needs to decide whether they want to build community pharmacy into their plans to improve access to primary care or stand by and see the sector continue to dwindle in numbers.

How will this impact pharmacy sales?

Pharmacy owners contemplating a sale in the next 6 to 12 months, should bring forward their plans and consider a sale sooner rather than later to maximise the value of the business. With the banking crisis upon us again, there is a fear that the banks will tighten their lending policies even further. They are currently lending 70% for the goodwill of the pharmacy compared to up to 90% in 2021/22. This will have an impact on valuations.

There will be further divestments in the coming months, with more multiples and small turnover pharmacies sold off and despite more stock coming to the market, the pharmacy business remains attractive. It will be a buyer’s market for a while, and they are being more selective in what they purchase.

It is not all doom and gloom!

On a more positive note, we have had more first-time and independent groups register with us and are looking to acquire a pharmacy or pharmacies. First-time buyers are bridging the funding gap with the assistance of mum and dad. Small and medium sized independent groups with a good track record and funding support, are proactively looking to grow their estate. We have also seen an increase in enquiries from investors and those looking to buy a DSP and / or an online pharmacy, with existing contractors looking to operate it alongside their pharmacy.

If you are looking to sell, you need to get your ducks in row and initially provide the following for a desktop valuation:

+ 3 years accounts.

+ If selling branches, provide turnover figure per branch and a split of NHS and OTC sales.

+ FP34s for the last 3 months.

+ VAT returns for the last 3 months.

+ A summary of staffing schedule.

+ Details of the lease and rent.

Selling your pharmacy is one of the most important decisions you will have to make, it pays to have experience on your side.

On the other hand, if you are located within proximity of a Lloyds Pharmac y, you may want to consider acquiring that branch which in return will protect your business, increase your item number, turnover and profit and you will dominate the area. An owner managed pharmacy can offer a far better and more consistent service to their patients rather than a large multiple. We can assist you through our associated company Silver Levene and advise you on a purchase of a Lloyds Pharmacy . We have seen an increase in enquiries from prospective buyers and existing clients looking to acquire those branches and it pays to have an expert advice for guidance on accounts, making an offer etc.

We specialise in community pharmacy sector and have done so for over 30 years helping many pharmacists acquire their first pharmacy or expand their existing portfolio.

Other news

We also look forward to participating together with our associated company Silver Levene in our annual 10km London Legal Walk through the Royal Parks on 13th June 2023. The money raised is to provide much needed free legal advice to the poorest and most vulnerable people in our community from families living in terrible housing conditions to women and children who have been trafficked to the UK. If you would like to sponsor us and make donations, please go to the following webpage: - https://londonlegalsupporttrust.enthuse.com/pf/silver-levene-2023

Thinking of selling or buying?

If you would like a free valuation or talk about how you could achieve a fantastic price for your pharmacy, please do contact us on 020 7380 3446 or 020 7380 3424 and ask for Sanja or Diana in the first instance. We would welcome the opportunity to have a chat with you.

We wish you a happy Easter break and look forward to hearing from you.

Pharmacy News | December 2022

Mon, 12 Dec 2022 11:22:36 GMT

As we wind down 2022, what does 2023 have in store for businesses and pharmacies in particular?

2022 was expected to be a year where growth would accelerate coming out of Covid lockdowns. People were looking to go out more, shop in retail malls (rather than online), travel, catch up with family & friends and do everything else they missed since the start of Covid. How different has it turned out! Government in chaos, war in Ukraine, high energy prices, high inflation, cost-of-living crisis, and high interest rate.

Community pharmacists were also extremely optimistic as incomes had gone up due to all the Covid services. Those who sold in late 2020, 2021 and to September 2022 enjoyed the best prices for their pharmacies. However, since then, the market has turned slightly especially after the “mini” budget which was disastrous for many would be sellers & buyers. The banks got cautious and started pulling their lower interest rate offers. To add insult to injury The Bank of England has forecast that the current recession is likely to last to the end of 2023. The constant drip feed of negative news makes people nervous.

Pharmacists fear a lack of access to walk-in healthcare on the high street will drive patients to NHS services such as A&E, adding to pressure there. The trend also jeopardises government plans to shift more work from GPs to pharmacists. NHS data shows 34.1 per cent of pharmacies in England reported at least one unplanned closure since October 2021. The most common reason was staff shortages.

PSNC reported they are discussing a series of measures with the Department for Health and NHS England and seeking additional funding for pharmacies who are facing staff shortages while other costs continue to rise. Rising costs of medicines and supply issues without commensurate funding adds to ever mounting workload for contractors. Nurses planning to go on strike this month will no doubt add to workload pressures.

Nevertheless, despite all the turmoil, the demand for pharmacies remains buoyant.

What we have noticed is that since the appointment of the new Prime Minster and the Chancellor, the market has settled down and interest rate expectations have anchored at around 4% rather than 5 or 6. New enquiries have picked up and demand for good pharmacies is remarkably high. There are many first-time buyers, small and medium sized groups with healthy appetite and are looking to grow their estate. Pharmacies with turnover of more than £750,000, 5,000 or more items, in the community or high street, with sensible rent and other overheads are sought after. The first-time buyers are looking for bigger shop fronts giving them an opportunity to provide services too. We have many buyers on our database looking to buy throughout the UK.

With the recent acquisitions by Well and Avicenna, there is an appetite for larger group opportunities. We have also witnessed an increase in enquiries looking to sell their pharmacy by 29% this year compared to last year. Our findings show the reasons for sale apart from retirement is also due to the staff shortages, leading to additional stress and delays in hundreds of thousands of prescriptions.

At Modiplus, we have had an extremely busy year. These are samples of pharmacies that we sold this year:

We specialise in community pharmacy sector and have done so for over 30 years helping many pharmacists acquire their first pharmacy. With large multiples disposing and many smaller pharmacies coming on the market, we foresee this trend to continue into 2023. In 2022 we saw an increase in first time buyers’ registration on our books as well as existing owners looking to expand their portfolio. We have also registered several investors.

We exhibited at the Pharmacy Show 2022 at NEC Birmingham in October and would like to thank those that visited our stand. It is always nice to see you and have a chat face to face!

We would also like to thank those that completed our client satisfaction survey earlier this year. We are pleased to inform you that we have donated £1,000 to Save the Children charity which has been posted on our social media platforms and we are immensely proud to support such a worthy cause.

Selling your pharmacy is one of the most important decisions your will have to make, it pays to have experience on your side.

If you would like to talk about how you could achieve a fantastic price for your pharmacy, please do contact us on 020 7380 3446 or 020 7380 3424 and ask for Sanja or Diana in the first instance. We would welcome the opportunity to have a chat with you.

Alternatively, if you would like a free valuation of your pharmacy, accounting, or tax advice through our associated company, please also contact us on the same numbers. Your query will be directed to the right person.

Season’s Greetings and wishing you a happy, healthy, and a peaceful new year.

Are you thinking of buying a pharmacy?

Fri, 10 Jun 2022 08:03:56 GMT

Finance experts Umesh Modi and Vinku Shah advise first-time buyers on the steps they should take to make the acquisition a smooth process…

We have been specialising in the community pharmacy sector for over 30 years and have helped many pharmacists acquire their first pharmacy. Several of our clients have also transitioned into multiple pharmacy owners under our specialist guidance and support through the years.

Acquiring the first pharmacy can be a challenge to most pharmacists especially when they do not have the necessary skill in reading the numbers presented in terms of the target pharmacy’s performance and how to interpret these in order to arrive at a valuation for the purpose of submitting an offer. Without the guidance of a specialist accountant in community pharmacy, one of the major risks is that one could end up paying more than what the pharmacy is worth. Once the offer is accepted, there are other challenges to overcome to get the deal over the line.

Our sister company Silver Levene LLP , a chartered accountancy firm with a specialist community pharmacy department, can help make the acquisition a smooth process for you:

1) Assessing the risk

Once the target pharmacy has been identified, we can assist with assessing the risks and advise if it would be a viable investment so that you are able to make an informed decision. At this point, we will gain an understanding of your knowledge of the target pharmacy and be able to provide you with further guidance on income/profit generation and growth potential.

2) The valuation of the business

Based on the information already provided by the seller’s agents, we may request further data in order to work out a valuation for the pharmacy and provide you with a range of offer to submit. This is to ensure that you are not overpaying for the target pharmacy and bidding within sensible parameters.

3) The negotiation process

Sometimes when the initial offer is not accepted, a negotiation may take place and we would provide guidance on how to go about it with a view to successfully bidding for the target pharmacy.

4) Financial and tax advice whether an asset purchase or a company purchase

The target pharmacy may be sold as an asset sale which usually happens when a chain is selling one of its pharmacies or it could be a company sale whereby the vendor(s) may own only one pharmacy and are selling the company’s shares (this is common when the vendor(s) are retiring pharmacists).

Each of these transactions will have their own financial and tax implications that will need to be considered at the time of acquisition and we will provide sound advice in either case with a view to maximising your tax benefit and protecting you from over-paying through inadequate due diligence.

5) Accounts and tax due diligence

This is the crux of the whole transaction and we advise all our clients (first time buyers as well as those expanding) not to compromise on this. We carry out a thorough and an in-depth review of the accounting records and information provided by the vendors, conduct our own independent checks to support the figures presented and liaise with our client throughout highlighting areas of concern. One of the major risks, for example, in a company purchase is that there may be undisclosed liabilities or overstated assets and if this is not accurately verified, you could end up paying a lot more to the vendors potentially leading to long standing disputes to recover sums overpaid. Litigation could take years, is a distraction and very costly indeed. It is far better to seek professional advice from the outset from an experienced firm then to have to face a dispute after the acquisition.

6) Financial and tax aspects of the asset/share purchase agreement

The asset/share purchase agreement is a binding agreement between the parties encapsulating the mechanism of the sale price, payment terms, financial and tax warranties, indemnities and tax covenant etc. We review these agreements in detail, particularly to the financial and tax matters to ensure that and any risks are identified and mitigated through requesting relevant clauses be inserted/removed in the agreement.

7) Loan to finance the purchase

The acquisition is most likely to be financed by borrowing from lenders and we have a panel of pharmacy specialist lenders that we introduce our clients to. The lenders understand the community pharmacy business and are willing to work with ambitious pharmacists/entrepreneurs and to help them grow. As we conduct considerable business with many of these lenders, we are often able to negotiate better terms for our clients. The lending fee or interest saving can sometimes more than cover the cost of our services to you. Each case is judged on the creditworthiness/security of the borrower.

8) Business plans, cashflow and profit forecasts

As part of our complete due diligence package, we assist in drawing up the business plans, cashflow and profit forecasts which will be required by the lenders to secure the finance for the acquisition.

9) VAT/PAYE registrations

Within 4 weeks of completion date, we will assist you with registration with the relevant authorities for all taxes for example VAT, PAYE, Self-assessment, etc.

10) On-going accounting/tax services

Post completion, we offer a range of compliance services like bookkeeping, MTD compliant VAT returns, payroll, management accounts, annual accounts, corporation tax, personal tax, tax planning, financial services etc. You will have a dedicated and well-trained team dealing with your all your accounting and tax requirements.

11) Recommending pharmacy specialist service providers

We deal with several pharmacy specialist service providers such as solicitors, lenders, stock takers, etc that we introduce to our clients. We recommend using professionals that specialise in community pharmacy as they understand the business and its requirements thereby saving valuable time and costs.

As daunting as it may sound, buying your first pharmacy need not be a complicated affair as long as you use the right professionals who may seem slightly more expensive at the outset but will save you a lot of time and cost in the long run as they will be able to deal with any complications of the transaction efficiently.

First time buyers guide to identifying a target pharmacy

Thu, 22 Oct 2020 08:07:15 GMT

Finance experts Umesh Modi and Vinku Shah advise first-time buyers on the steps they should take to make the acquisition a smooth process…

We have seen a surge in first time buyers looking to snap up pharmacies with good profits and growth potential despite the current climate. In fact, during the economic downturns, pharmacies tend to do well because of the impact on people's lives. Covid-19 has demonstrated that whilst everyone else was in a lock down, community pharmacies kept their doors open. It is an excellent business model. Inevitably though, there are many pharmacists that are looking to retire, and this could present an opportunity for the IT savvy to innovate, find efficiencies, increase turnover and improve profits. Retirement pharmacies are in great demand at the present.

We summarise some of the factors to consider when identifying a target pharmacy.

1) Location

It is important to note that a good opportunity rarely lands on your doorstep and therefore you may need to look further afield for the pharmacy that meets your requirements. Once you have identified that pharmacy, you should also research the environs of the target pharmacy for example whether there are any surgeries nearby, what is the closest competition, is there regular passing traffic, parking availability, any planned regeneration of the area, etc. All these factors although not exhaustive, can have an impact on the business and therefore should not be overlooked.

2) Dispensing base

A pharmacy with a higher number of dispensing items (usually 5,000 items dispensed per month on average and above) is generally attractive as it reflects the big patient base although such pharmacies tend to have a higher price but are also attractive for lenders provided the buyer has sufficient security, funds, etc. If the target pharmacy has a lower number of dispensing items, you should research thoroughly whether there is scope for increasing the numbers.

3) Growth potential

Turnover and profitability growth are important factors to consider when purchasing a pharmacy for example are there any services currently not being offered which could add to the turnover and in turn increase profitability. A review of the current overheads could also help identify areas where costs can be reduced for example is the pharmacy relying heavily on locums? Are there any leases for equipment and can these be renegotiated with better terms?

4) Turnover split

Usually the turnover would be made up of NHS remuneration, over-the-counter sales (OTC) and service income. OTC and service income usually has a greater margin than NHS turnover and therefore as a buyer one should consider whether there is scope for increasing these so that it adds to the overall profitability. One should also consider if there is scope to increase the NHS turnover – this would be the case where the percentage of electronic prescriptions to total items dispensed is below 90%.

5) Gross profit

The gross profit is calculated as turnover less the cost of buying drugs that have been sold and when taken as a percentage of sales, it ranges between 25% - 35%. A pharmacy with a gross profit of 25% usually indicates that the buying of the drugs is not efficient and there is room for improvement through scouring for deals with the suppliers. Higher margins are achieved through higher greater services income.

6) Staffing costs

Staff salaries, National Insurance Contributions and pensions are the highest overhead for community pharmacy, and these should be reviewed. The staffing costs should be generally 6 - 8% of total turnover for an owner managed pharmacy. Legal advice should be sought if staff are not to be retained post completion as redundancy costs may have to be paid.

7) Innovation

With the community pharmacy sector becoming more competitive, it is important to streamline repetitive processes to create time for the provision of value-added services which will increase the patient base and lead to long term growth. There are various innovative products available in the market for example investment in robots for dispensing which will also attract tax relief as well as improve the bottom line in the long run. Alternatively leasing of equipment could ease cashflow as well as reduce the corporation tax as the lease rentals will be tax deductible.

8) Premises

If the vendor owns the freehold of the premises from which the pharmacy operates, they may offer to sell it although it is a rare occurrence. In such a scenario, the buyer should get an independent valuation of the premises to ensure that they are not overpaying for the premises. If the premises are offered as leasehold, it is very important that the lease can be assigned to the buyer. Generally, the lease should be in line with the term of the mortgage if borrowing from a bank for example, if borrowing for a term of 15 years then the lease should have an unexpired term of at least 15 years. If there is a long enough lease in place already, then you should check on when the rent review dates are as you will need to reflect this in your projections.

9) Financing

It is important that the buyer has sufficient level of funding and security in place to complete the transaction. This would generally cover the purchase price, legal and professional fees for solicitors and accountants, valuation fees, payment for stocks if agreed separately, net assets in case of a company purchase, etc.

It is advisable to engage with a pharmacy specialist lender early in the transaction as they will be able to advise you on the lending requirements.