Valuing a Drugstore or Pharmacy
Businesses in the pharmaceutical industry sell a wide range of prescription and over-the-counter medications. Pharmacies may also sell beauty products, consumable goods, and toiletries. In recent years, the pharmaceutical industry has seen healthy revenue and profit growth. IBIS World predicts that this trend will continue in the coming years. This is ideal if you are looking to buy, expand, or sell a pharmacy or drugstore. However, this industry is highly competitive. Understanding the principles of valuing a drugstore or pharmacy can help you find success in this industry.
There are many factors to consider when valuing a drugstore or pharmacy. Whether you are buying, expanding, or selling a drugstore pharmacy, it is best to start with a business valuation. Peak Business Valuation, business appraiser, is happy to help! We provide business valuations for many pharmacies and drugstores across the nation. As part of a business valuation, we can discuss the strengths and weaknesses of your pharmacy. In addition, we determine the fair market value of a drugstore or pharmacy during the valuation process. This can help you take steps to maximize the value of a pharmacy.
In this article, we highlight a few factors a business appraiser considers when valuing a drugstore or pharmacy or drugstore. Keep in mind, these are only suggestions. For further guidance, receive a business valuation for a pharmacy. Start now by scheduling a free consultation with Peak Business Valuation, business appraiser.
Market Multiples for a Drugstore or Pharmacy
Below, we share an average range of market multiples for a pharmacy or drugstore. Valuation multiples are ratios that compare the value of a business to a financial metric. These metrics often include earnings, cash flow, or sales. These values can help you understand the fair market value of a drugstore or pharmacy. Peak Business Valuation often uses multiples when valuing a pharmacy or drugstore.
- SDE Multiple Average Range: 2.25x – 2.97x
- EBITDA Multiple Average Range: 2.99x – 4.18x
- Revenue Multiple Average Range: 0.21x – 0.34x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
How to Value a Pharmacy
There are many valuation approaches a business appraiser can use when valuing a drugstore or pharmacy. Peak Business Valuation often uses the market approach and/or the income approach. The market approach measures the value of a pharmacy or drugstore using valuation multiples. Contrarily, the income approach measures the future cash flow potential of a pharmacy. Business appraisers receive training to determine which method is best for your pharmacy or drugstore. This can include using a combination of valuation approaches.
If you are buying or selling a pharmacy or drugstore, it is important to understand the value. You can start by receiving a business valuation. The following paragraphs highlight a few success factors an analyst considers when valuing a pharmacy or drugstore. To learn more, see Value Drivers for a Pharmacy, How to Value a Pharmacy, and Valuing a Pharmacy. For more specific guidance, schedule a free consultation with Peak Business Valuation, business appraiser, today!
Key Success Factors
Peak Business Valuation is a professional business appraiser. Peak values pharmacies and drugstores on a regular basis. With our guidance, you can understand the importance of the following success factors. This information can help you increase the value of a pharmacy or drugstore you are buying or selling.
Stock Control:
First, it is important for pharmacies and drugstores to have good stock control. Pharmacies provide numerous types of prescription and over-the-counter medications. Having effective stock control requires pharmacies to be aware of the amount of medication in stock as well as their expiration dates. With good stock control, pharmacies can ensure patient safety and satisfaction. In addition, this success factor can help avoid unnecessary expenses and penalties at a pharmacy. This has a significant impact on the value of a pharmacy or drugstore.
Location:
Next, the location of a pharmacy or drugstore plays an important role in its success. To secure a strategic location, pharmacies must be aware of the high-demand areas. Typically, it is best to locate in areas with multiple medical practices and health institutions. It is also important for your pharmacy to be located in an easily accessible area. With a strategic location, you can promote steady cash flow and increase potential customers at your pharmacy or drugstore. Peak Business Valuation considers your location when valuing a drugstore or pharmacy. Schedule a free consultation with Peak Business Valuation today!
Workforce:
Furthermore, pharmacies need to have a strong workforce to succeed. It is crucial to hire individuals with sufficient education, training, and experience. It is also important that pharmacy employees have good customer service skills. Having a skilled workforce can help improve the efficiency of your drugstore or pharmacy. In addition, this can help reduce risks at a pharmacy. With a skilled workforce, you can strengthen the reputation of your pharmacy. Doing so helps increase the value of a pharmacy whether you are buying or selling it.
Supplier Relationships:
Finally, having strong supplier relationships comes with many benefits at a pharmacy or drugstore. For example, by having strong supplier relationships you can ensure a reliable supply of medications and products. In addition, having good relationships with suppliers can lead to discounted prices on bulk orders. As such, this success factor can have a positive effect on the profit margins of a pharmacy or drugstore. Peak Business Valuation may assess your supplier relationships during a business valuation for a pharmacy.
Summary
The above success factors can help you establish a successful pharmacy. There are many other factors to consider when valuing a drugstore or pharmacy. To learn more, receive a business valuation for a pharmacy. During a business valuation, you can learn the fair market value of a pharmacy. This is important whether you are buying, growing, or selling a pharmacy. In addition, we can help you understand how to maximize the value of a pharmacy or drugstore.
Peak Business Valuation, business appraiser, works with pharmacies and drugstores across the nation. We are happy to help you understand the value of a pharmacy. If you have any questions about valuing a drugstore or pharmacy, schedule a free consultation with Peak Business Valuation today!
