The Summit Group
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Sale Of A Business: Pharmacy

The client

The owner of a retail/wholesale pharmaceutical business in the Lower Mainland.

The issue

The owner had been approached by a national pharmaceutical company wishing to expand into British Columbia. He did not know if the offer presented was fair market value, he did not know how to manage the sale process and he was not sure if he should take the business to market rather than just deal with this one potential buyer.

The solution

The Summit Group was hired to handle negotiations, structure the deal and liaise with other professional advisers.

Early on, it was decided to put the business for sale to the market to determine levels of interest and develop a bit of an “auction” atmosphere. Of the potential purchasers contacted, many expressed interest in this business and a number of very good written offers were received.

Another challenge was that the purchasers were all only interested in an asset transaction. An asset transaction would deny the seller his ability to utilize his personal capital gains exemption. Through liaising with a mergers & acquisition tax expert, the Summit Group was able to structure the sale to be a combination share/asset transaction; the seller realized on his personal capital gains exemption, the buyer received the asset transaction they required, and the after tax proceeds to the seller were maximized.

In the end, the business owner realized the maximum value for his business and paid the minimum of income tax.