By Brad MacLiver
Authorship and profile at Google
When a Maine (ME) pharmacy acquisition has been accomplished by using the private financing method of a pharmacy business note, the holder of the Maine pharmacy note has the option of selling the pharmacy business note for a lump sum of cash instead of waiting for the monthly payments and taking the risk those payments will always be made. Pharmacy business notes can be sold by using a discounting method. Instead of buying a pharmacy note at its face value, the pharmacy note will be discounted. Meaning the Investor will pay less than face value due to the risk being transferred from the Pharmacy Note Holder (the note seller) to the Pharmacy Note Investor (the note buyer).
Most pharmacy business note sellers inMaine
#1. What is the motivation for selling the ME pharmacy note? What are the desired goals? Is reducing the exposure to risk a consideration? Is there a financial decision to pay off debt? Is capital required for a new venture? Are there dreams of exotic vacations or world travel that could be accomplished with a lump sum of cash? How important is it to accomplish these goals? What are the opportunity costs if you don’t have the lump sum of cash to achieve your goals, or invest in something that pays a higher return? Determine investment and family priorities.
#2. What is the Current Fair Market Value of the pharmacy business? This is what someone is really willing to pay for the business, and not just an “earnings times x” formula. Real aspects of what is happening in the pharmacy industry must be considered and it is advantageous to have aMaine
#3. How much cash is immediately required by the holder of the pharmacy note?
#4. A pharmacy note that is seasoned has more value than a “green” note that doesn’t have a payment history. Are you willing to hold the note for a certain amount of time to allow the business buyer time to prove to an Note Investor the capability of the payor making the payments?
#5. Are you willing to sell only a portion of the Note (this is called a “Partial Sell”)? The discount rate can be a more attractive proposition when only a portion of the note is sold and the Maine Pharmacy Note Investor is not holding all the risk.
Understanding the Risk for the Note Buyer:
#1. Pharmacy Buyer Competency - There is the risk that the pharmacy buyer may not run the business as efficiently as you have, sales drop, and the pharmacy business buyer in ME cannot meet the payment obligations. Incompetency could lead to late payments, missed payments, or bankruptcy.
#2. Pharmacy Industry Changes - Changes caused by influences either within the industry, or regulations governing the industry, can make it increasingly difficult for theMaine
#3. Future Competition - Sales and income of the store may be affected by yet unforeseenMaine
#4. Loan to Value - When originating a pharmacy business note you may be creating financing where there is a “negative loan to value.” Example: the ME pharmacy business note is for $300,000, but there is only $100,000 of tangible assets for collateral.
#5. Title Insurance –Maine
#6. Time Value of Money - Where a dollar received today is more valuable than a dollar received in the future.
#7. Opportunity Costs - When the selection of holding the pharmacy business note inMaine
It is beneficial to discuss the options and potential origination of a pharmacy note with Pharmacy Business Note Investor before the Purchase and Sale Agreement is finalized for the acquisition of the pharmacy. This provides the pharmacy business seller, and future note seller, valuable insight into structuring theMaine
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Authorship and profile at Google
When a Maine (ME) pharmacy acquisition has been accomplished by using the private financing method of a pharmacy business note, the holder of the Maine pharmacy note has the option of selling the pharmacy business note for a lump sum of cash instead of waiting for the monthly payments and taking the risk those payments will always be made. Pharmacy business notes can be sold by using a discounting method. Instead of buying a pharmacy note at its face value, the pharmacy note will be discounted. Meaning the Investor will pay less than face value due to the risk being transferred from the Pharmacy Note Holder (the note seller) to the Pharmacy Note Investor (the note buyer).
Most pharmacy business note sellers in
#1. What is the motivation for selling the ME pharmacy note? What are the desired goals? Is reducing the exposure to risk a consideration? Is there a financial decision to pay off debt? Is capital required for a new venture? Are there dreams of exotic vacations or world travel that could be accomplished with a lump sum of cash? How important is it to accomplish these goals? What are the opportunity costs if you don’t have the lump sum of cash to achieve your goals, or invest in something that pays a higher return? Determine investment and family priorities.
#2. What is the Current Fair Market Value of the pharmacy business? This is what someone is really willing to pay for the business, and not just an “earnings times x” formula. Real aspects of what is happening in the pharmacy industry must be considered and it is advantageous to have a
#3. How much cash is immediately required by the holder of the pharmacy note?
#4. A pharmacy note that is seasoned has more value than a “green” note that doesn’t have a payment history. Are you willing to hold the note for a certain amount of time to allow the business buyer time to prove to an Note Investor the capability of the payor making the payments?
#5. Are you willing to sell only a portion of the Note (this is called a “Partial Sell”)? The discount rate can be a more attractive proposition when only a portion of the note is sold and the Maine Pharmacy Note Investor is not holding all the risk.
Understanding the Risk for the Note Buyer:
#1. Pharmacy Buyer Competency - There is the risk that the pharmacy buyer may not run the business as efficiently as you have, sales drop, and the pharmacy business buyer in ME cannot meet the payment obligations. Incompetency could lead to late payments, missed payments, or bankruptcy.
#2. Pharmacy Industry Changes - Changes caused by influences either within the industry, or regulations governing the industry, can make it increasingly difficult for the
#3. Future Competition - Sales and income of the store may be affected by yet unforeseen
#4. Loan to Value - When originating a pharmacy business note you may be creating financing where there is a “negative loan to value.” Example: the ME pharmacy business note is for $300,000, but there is only $100,000 of tangible assets for collateral.
#5. Title Insurance –
#6. Time Value of Money - Where a dollar received today is more valuable than a dollar received in the future.
#7. Opportunity Costs - When the selection of holding the pharmacy business note in
It is beneficial to discuss the options and potential origination of a pharmacy note with Pharmacy Business Note Investor before the Purchase and Sale Agreement is finalized for the acquisition of the pharmacy. This provides the pharmacy business seller, and future note seller, valuable insight into structuring the
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