Selling your pharmacy or digital health business to a private equity buyer has both good and bad points: on the plus side, you are more likely to close a financially satisfactory transaction quickly. On the negative side, you are giving up control of your business to a buyer that may not have the same long-term goals for the business as you. Read on for our expert overview of what happens when you sell your business to a private equity buyer.
Private equity buyers will typically have finances ready to go, meaning that as soon as they have completed their due diligence process and reviewed your financial documents, an offer can be made and a deal closed very quickly. This is of particular benefit if you need an influx of finances rapidly – in the case of a health emergency, for example.
Depending on the deal that you make with your private equity buyer, you may be expected to stay on as manager/CEO. If you were looking for a clean break from the organization then this is obviously not the route for you. In this scenario, though, you do retain some input into how the business operates – although you will have obligations to your new owners. You may, however, be able to leverage the expertise and contacts of the investor to better grow the business
Unfortunately, in other cases (where you sell your business to a private equity buyer and step away completely) the continuity can be one of the things that you have to sacrifice. Typically the buyer in these instances will be focused on rapid growth ready for a resale and the attendant profits on the initial investment. This can often come at the detriment of your employees, suppliers and above all, your customers, so if you have concerns about this then private equity may not be the way to go. In other (considerably rarer) circumstances, the private equity buyer may simply be looking to build a portfolio of similar businesses so as to leverage better buying power and customer monopolization – once again, not necessarily something that you want your life’s work becoming associated with.
As with selling to a private buyer, ultimately you as the business owner get to decide who takes over – at least in the short term. If you can afford the time to be choosy, then don’t hesitate to spend some time with potential buyers and find out from them firsthand what their plans are, how much they know about the pharmacy business or digital health industry, and how long they anticipate keeping hold of the business. Do some due diligence, too – find out how successful the private equity firm has been with previous acquisitions, how the company culture fared, and ultimately – how previous sellers feel about the process and the firm.
It can be a fine line to walk between getting your financial compensation quickly, no strings attached and being able to look after your employees and customers even after you have stepped down. For an expert analysis of your goals and potential buyers, you need to talk to a dedicated professional consultant. The Pinnacle Pharmacy Group is dedicated to only working in the pharmacy and digital health sectors – providing an unrivaled depth of knowledge and expertise in mergers and acquisitions to help guide you through this tricky period.