To truly understand the value of your pharmacy business, identify weaknesses and opportunities for growth, expand or enter the mergers and acquisitions market, you need a professional valuation. This activity gives you a reasonable sense of what your business is worth – essential for negotiating on the transaction market – and lets you set appropriate growth goals if you plan on retaining the business for the short or medium term. Before you get the experts in, though, there are a few things you can do to prepare.
Get your books in order
The biggest thing you can do to prepare for a valuation is to ensure that your financial records and reports are all accurate and available. Often, when an entrepreneur starts a pharmacy or digital health business, the financial side of things can be deprioritized – as long as there is enough money coming in to pay employees and overheads, then the business is fine. Unfortunately, to get a true valuation of the worth of the business, you need to have more than just a record of good cash flow – you need in-depth accounts receivable figures, detailed costs of goods sold breakdowns and evidence of solid financial accounting practices.
Have all of your contracts ready
Another key metric in the company valuation process is the relationships that your business has – with suppliers, employees, customers (if applicable). Make sure that you have all of your contracts to hand when you enter the valuation process – your valuation expert will need to know the details of contract lengths, review periods, opt-outs and, of course, costs. This will also apply to any premises-related contracts, as well as those for your equipment – if the rent for your location is likely to be raised in the near future, this will impact your overall valuation, as will the impending expiry of the warranty on any key equipment.
Have a defined growth plan
The bulk of your business valuation will rely on historical and current data. However, if there are established, workable growth plans in place, then this can also have an impact. If you have a community pharmacy business, for instance, and you know that there is a new housing development in the pipeline – this is important information as you can reasonably expect that your customer base will grow. Have detailed plans in place, and your business valuation will increase accordingly.
Use an expert
You probably already know that you need an expert to conduct the valuation for you, but you can also benefit from a pre-valuation consultation. This will help you to get everything you need in place and ready for review, as well as give you the opportunity to make improvements that will raise the value. Pinnacle Pharmacy Group operates solely in the pharmacy and digital health space, and have consulted on and conducted numerous valuations over the years – we have the expertise, experience, and knowledge to help you with every step of the process.