What Is Your Pharmacy Worth in South Florida?

One of the most important aspects involved in preparing to buy or sell is determining the real value of your pharmacy. You have to consider financial factors such as annual gross sales, salary, inventory, average prescription value and much more.

How are pharmacies valued?

Ultimately, a pharmacy’s real worth is determined in the marketplace by what a buyer is willing to pay for it. But several standard valuation methods provide a general approximation of value. Some of the most commonly used models focus on “hard financial” information, such as revenue, profits and the value of assets.

Add-Backs

Some owners have acquired expenses, such as a salary, personal costs, excess labor, or contributions to a retirement plan, that a new owner might not have to handle. These costs can be supplemented back into a pharmacy’s profits, which will increase the value.

Assets and Liabilities

Assets like inventory and real estate can affect a pharmacy’s value, as can liabilities like debt, leases, contracts or commitments. When estimating your pharmacy’s value, all of the assets and liabilities need to be brought into consideration.

Gross Profit

Usually, gross profit is the turnover minus the cost of goods. Some auditors subtract staff salaries before determining gross profit. When comparing businesses advertised through more than one agent, check which method is used to know whether the figures printed are comparable.

What is net profit?

Net profit is what’s left after the overheads expenses are subtracted. But, it does not include the repayment of any loans used (for example, to buy the business).

If the owner is the pharmacist, he or she will, in conjecture, have been paid a salary before net profit is estimated. Owners can do what they please with the net profit after loan repayments are executed. This can include leaving the cash in the business “for a rainy day,” investing it in developing the business or paying themselves an additional income.

Other costs that must be deducted before you can determine net profit:

• staff salaries (including pharmacists’ wage)
• insurance
• rent and business rates
• electricity and heating bills
• travel costs
• telephone
• postage
• stationery

Figuring Out Your Pharmacy Worth

When trying to figure out the value of the pharmaceutical business, things can get complicated. To have confidence in your decisions, you need the expertise of a certified business appraiser to assist in the process. Certified business appraisers and brokers have numerous databases, extensive records and precise formulas help determine the value of companies. Many Sunbelt Business Brokers are certified appraisers themselves and will ensure you make the right choices.

Sunbelt Business Brokers of West Palm Beach provides dedicated business brokerage services for all of your buying and selling needs. Whether you are an established business owner nearing retirement and looking to sell, or an ambitious entrepreneur seeking your next investment opportunity, there is no reason to look beyond Sunbelt Business Brokers. Visit us at 800 Village Square Crossing, Suite 216 Palm Beach Gardens, FL 33410 or contact us at (561) 832-9222.