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Client Case Study Industry: Pharmacy Business Area: Business Expansion

Background & Problem Suburban retail pharmacy, subsequently a franchised retail outlet(s). The client, having purchased his pharmacy some time ago and using our business support on a quarterly basis, now wished to expand the business into a group of pharmacies and to this effect had identified one pharmacy for take over, with more wanted and subsequently purchased. The client, although knowing what he wanted, had no knowledge on how to proceed, determine feasibility or package the deal for obtaining funding. The intention being to borrow 100% of the cost of purchase on each occasion. Actions Taken The solutions proposed were as follows: 1. Reviewed the financial data of the selling company and calculated a value. 2. Using the value and the existing pharmacy business determined the feasibility of the deal. 3. Together with the purchaser devised a strategy covering negotiation with seller as well as the approach to lenders. 4. Assisted the purchaser with the negotiations with specific input in having the seller accept the valuation. 5. Assisted with the drafting of the sale agreement. 6. Amalgamated the accounting and staff functions of the two branches which were kept separate. 7. Subsequently assisted with the purchase of another pharmacy which involved a minority stake being retained by the seller. 8. Formed a new company for tax reasons and as the company was kept legally separate for strategic reasons. 9. Drafted the sale agreement as well as the shareholders agreement. 10. Amalgamated the administration into the group. 11. Consolidated the monthly management accounts for performance reporting. 12. Gave monthly business support on the many business issues facing the client. After a number of years, the owner disposed of the three branch pharmacy group and purchased a franchise retail operation. Under the Business Support Program (BSP), this was expanded to a four branch operation, trading under three companies, one in partnership, but as a group. Over time, three branches were disposed off for strategic reasons. Assistance was given in strategy, negotiation of buy and sell of the branches/companies, reporting systems, franchiser renegotiations. The Result • Top performing retail pharmacy measured on financial bench marks • Improved relationship with lenders • Enhanced confidence of the owner and recognition by his peers • Ability to survive major adverse legislative initiatives and economic recessions • Effective oversight of the companies’ performance • Wealth creation for the owner • Largest franchise operation in the geographical area

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CS_BusinessExpansion