Wednesday, December 21, 2011

Using Business Notes for Financing a Colorado Pharmacy Acquisition

By Brad MacLiver
Authorship and profile at Google


When acquiring or selling a CO pharmacy or drug store, one alternative is to have the seller originate the financing and carry back a business note. At first glance many pharmacy owners will not want to take this approach. They want their cash and their exit. When a Colorado pharmacy owner is considering selling their drug store, looking at the benefits of originating a business note and not just the perceived costs, they may find that offering Private Finance in the form of a Pharmacy Business Note will provide them an alternative course of action.

Advantages of Creating and Selling a Pharmacy Business Note in Colorado

1.  The process of selling a Colorado pharmacy or drug store to an individual can be easier and less time consuming when the pharmacy seller agrees to carry a business note, than a buyer pursuing traditional financing.

2. A Colorado pharmacy business owner can greatly increase the number of potential buyers for their business by offering Seller Carryback Financing, which often known as Private Finance.  They will most likely sell the business at a higher price.

3. When a pharmacy business note is originated, there are several options including keeping it for monthly income, selling the whole pharmacy note for a large lump sum, or selling part of the Colorado pharmacy business note to meet current financial needs and keeping the remainder for future income.

4. Selling either a portion or the whole CO pharmacy business note will free up capital that can be used for either new ventures or paying off old debt.

5. When a pharmacy business note is created and sold in CO, with the proper professional guidance, a transaction can be structured that allows the pharmacy business seller the biggest advantage in achieving the seller’s goals.

When originating a pharmacy business note the terms and interest rate are set and agreed upon between the seller and buyer of the business. The seller of the business accepts the promissory note, which is secured by the business including any inventory and equipment that belongs to the business. The pharmacy business seller then sells the note to an Investor who is willing to hold the pharmacy note in exchange for compensation. Since Investor can’t go back to the Colorado pharmacy business buyer and change the terms of his purchase agreement, the seller of the note must discount the note. The Investor is compensated from the difference of what the note was originated for and the discounted price paid for the pharmacy business note.

Tips:

1. Poorly structured business notes may prevent their sale, so seek professional advice before originating a financial instrument that can’t be sold.

2. Sellers of business notes need to fully understand the Investors risk in order to successful sell the business note.

3. Private Finance, in the form of a Business Note, is an alternative that should be looked at as a business financing option.

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Resource Box
More information about financing pharmacy transactions in Colorado is available at www.WashburnAndAssociates.com.
You have permission to reprint this article provided this resource box is kept unchanged and included with the article.
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