Correctly valuing a business is the cornerstone of good mergers and acquisitions activity –it is the foundation for negotiations, it determines from the outset if a company is going to be a good fit for your portfolio, and it lets you get an idea of whether both you and the seller are on the same wavelength when it comes to the worth of the assets.Valuing a pharmacy business accurately is not something that can be done easily and quickly, however. There are a great many different factors to take into account, as well as various methodologies that can be adopted.
One of the factors that can often be overlooked, particularly by business owners or buyers that adopt the more basic financial equations methods, is the condition of the market. As with any product or service, if there is no current appetite for the business then it has a reduced value. Likewise, the opposite is true –if you are looking at purchasing a pharmacy business in an area that has seen rapid uptake of similar businesses recently, then the odds are that you will end up having to pay more.
Knowing the intricacies of the current market can help you to position yourself when it comes to moving forward with the business transaction –you will be better placed to make an offer that is aligned with the state of the market.
As the buyer, you are less likely to have an emotional attachment to the business being transacted than the seller. Often, the person selling the company will have poured hours of their lives into making it a success, and this can translate very rapidly into an over-valuation –which is one of the key reasons that you should get your own valuation conducted in the first place. However, you can easily get carried away with the potential that you see in a business and become emotionally invested in the activity, so make sure that you stay conscious of the limitations of the business, as well as the possibilities.