5. Whilst stage 3 is being carried out the lawyers will also be preparing the purchase agreement with the seller s lawyers.

Transcription

1 Avicenna operates a scheme to support pharmacists acquire their first pharmacy. At the same time Avicenna will give practical support in running the commercial and business side of the pharmacy, the part of running a pharmacy which many first time independent contractors often find overwhelming. Who are Avicenna? Avicenna is the largest independently owned pharmacy buying group in the UK, supporting more than 1,000 independent pharmacists in running their pharmacies. What does Avicenna offer the independent pharmacy? In addition to rewarding members with excellent commercial and financial benefits, Avicenna offers extensive support services including: bespoke business advice, member support, patient services, regulatory guidance, training and events. How does the phased acquisition work? 1. The Avicenna scheme is designed to enable you to acquire and run your own pharmacy. The first stage is for you to find a pharmacy that you want to own and run. Avicenna is made aware of pharmacies for sale from time to time that might suit a first time contractor so if you do not have a pharmacy in mind then we can help to find one. However, since you will be running and, in due course, owning all of the pharmacy, we think it better that you find a pharmacy that you want to own. We will, however, help you with this process if you so wish. 2. The percentage of the pharmacy that will be owned by you and the percentage to be owned by Avicenna will need to be agreed. We will also need to agree how and when we transfer ownership from Avicenna to you. This is described in more detail in the section on ownership. 3. We (you and Avicenna) will then need to carry out preliminary due diligence on the pharmacy. This will be involve an initial investigation into the pharmacy including its operational and financial performance and investigating events that are taking place locally that will affect the future of the pharmacy. 4. If you and Avicenna are of the opinion that the pharmacy suits both of our objectives then we proceed to the next stage which is appointing lawyers and accountants to carry out due diligence. This involves them performing a more detailed examination and analysis of the pharmacy to ensure that we understand everything that we need to know. 5. Whilst stage 3 is being carried out the lawyers will also be preparing the purchase agreement with the seller s lawyers. 6. After all of these stages are completed we will then sign the purchase agreement and we will jointly own the pharmacy.

2 How will we own the pharmacy? The pharmacy will be owned by a company that owned by Avicenna and you in the proportions that we agree. If the pharmacy is currently owned by a company then it is likely that we will be asked by the vendor to acquire that company. This is because it is usually more tax efficient for the vendor to sell the shares in the company than it is for the company to sell the business. This is called a share sale. If the pharmacy currently operates as a sole trader, or the vendor is happy for his company to sell as a business, then we will form a company that will acquire the business of the pharmacy. This is usually called an asset sale. The company will have three directors, you will be one of them, Avicenna s director of retail operations will be another, and Avicenna s CEO will be the third. In this way all of Avicenna s experience will be available to guide you in managing the pharmacy. You will be the Superintendent Pharmacist with full responsibility for all pharmacy aspects of the business. What does Avicenna provide? In addition to support and expertise in acquiring the pharmacy, Avicenna will also provide the following: 1. Purchasing support to ensure that you can purchase your supplies in the most efficient and cost effective way through Avicenna nominated suppliers. 2. Accounting support. We will provide a bookkeeping service, produce monthly management accounts and discuss these with you to ensure that you understand these. 3. ACE+ service. This is the highest level of support that Avicenna offers its members, providing regulatory, training and business support to help you run your business efficiently and legally. Your pharmacy will automatically become an Ace+ member. How does everyone get paid? You will be paid a salary in line with salaries paid to pharmacists in a similar pharmacy. Avicenna will charge a management fee for the services they provide. The profit made by the pharmacy will be used to decide how much dividend to pay and this will be paid to you and Avicenna in proportion to our shareholdings. Ownership This is crucial to the way this scheme operates. At the very start of the process Avicenna will need to agree with you the proportion of the shareholding that will be held by each party. Each party s shareholding will be in proportion to the amount of the capital contributed by each party. We will also need to agree how and when you acquire additional shares from Avicenna and the price at which you will purchase those shares. This will be set down in a Shareholders Agreement that will also state how the two parties will work together in the future.

3 How much will this cost? Obviously the largest cost will be the price paid for the pharmacy. This is a price for the goodwill plus, if it is a share sale, the net assets of the company. Other costs will be as follows: Stock: at valuation, typically 50,000-70,000 Legal fees: 7,000 Accountant s due diligence: 5,000 Stamp duty (for share purchase): 0.5% of the purchase cost Other advisors: 2,000 How much money do I need? This will be determined by the price of the pharmacy but an example is as follows: Share Sale Asset Purchase Goodwill 600, ,000 Stock 50,000 50,000 Net assets 100, , ,000 Stamp duty 3,750 0 Lawyers fees 8,000 8,000 Accountants fees 5,000 5,000 Other advisors fees 2,000 2,000 Working capital 100,000 Total purchase cost 768, ,000 Bank loan to finance acquisition 60% 450, ,000 Amount to be financed by purchasers 318, , , ,000 Avicenna 80% 255, ,000 ownership Your ownership 20% 63,750 75, , ,000 These numbers are for illustrative purposes only.

4 What do I do next? the application form at the end of this document to susanne@avicenna.org. Salim Jetha will review your application and will then call you to discuss your position and how we can help you to acquire your own pharmacy. The conversation will be confidential and with no obligation. We look forward to hearing from you. Salim Jetha CEO, Avicenna plc

5 Title: First name: Surname: Address: Tel no.: Mobile no.: Professional qualifications: RPS Registration number: Location in which you wish to acquire a pharmacy Have you identified a pharmacy? Do you already own a pharmacy?