One of the greatest opportunities open to Australian registered pharmacists is the ability to purchase your own pharmacy business.
Owning your own pharmacy means that you are free to manage the business as you wish, choose your own staff, and build wealth through maximising the profits of the business.
Buying a pharmacy business can sometimes be complex, but the buying process can broadly be broken down into the following five steps.
Step One: Review your ‘Heads of Terms’
Documents which might be referred to as ‘Heads of Terms’, ‘Term Sheet’ or ‘Offer to Purchase’ are often produced at an early stage in the buying process. If a business broker is involved in the transaction, it is often the broker who will produce this document.
It is important to check that all of the main terms of the transaction are correctly recorded in this document, and to know whether the document is legally binding or not. If it is legally binding, it will be important to ensure that it includes all necessary conditions.
We recommend that legal advice be sought before signing any documents regarding a pharmacy purchase because of the potential for those documents to be legally binding.
Step Two: Financial and legal due diligence
The next step is for your accountant and lawyer to undertake financial and legal due diligence. They need to check and verify that the information you have been given about the pharmacy is correct and not misleading. Your accountant will likely review financial statements from the previous three years. Your lawyer will undertake checks, such as verifying:
- the legal owner of the pharmacy
- that the pharmacy is registered with the regulator
- the terms of the lease, and
- security interests registered over the business.
Step Three: Negotiate the terms of the sale contract
Every sale contract is different. Your lawyer will negotiate and advise you on the terms of the sale contract. It should contain important warranties and indemnities in your favour, to help protect your interests if information or representations provided to you about the business prove to be inaccurate.
The sale contract should also include conditions that need to be satisfied prior to completion. For example, the following conditions must be met :
- approval to the change of ownership from the state regulator (in NSW, the Pharmacy Council of NSW)
- grant of a new PBS approval number to the purchaser, and
- either the lessor’s consent to assignment of the lease or the grant of a new lease (if the owner’s lease has expired).
More conditions may be required depending on the circumstances of the pharmacy being purchased.
The contract should provide that if one of these key pre-conditions cannot be satisfied by a certain date, then the purchaser has the right to rescind the contract and reclaim the deposit paid.
Step Four: Satisfaction of the pre-conditions and exchange of contracts
Once all parties are happy with the content of the contract, it can be signed and exchanged. This is when the contract becomes legally binding.. The deposit is normally paid by the purchaser at this stage – typically 10% of the purchase price.
Your lawyer will assist in ensuring that the pre-conditions have been satisfied.
At this stage of the process, the lessor may ask for information about the purchaser, such as his or her financial standing and assets. If the lessor consents to assignment of the lease, there will be a Deed of Consent to Assignment for the parties to consider, negotiate, and sign.
There are other important steps which must also be taken under the applicable Retail Leases Act for your state. This includes purchasers being provided with a Disclosure Statement from the lessor.
Step Five: Completion
Once the pre-conditions have been met, and the balance of the purchase price has been paid, the lawyers will arrange completion. At that point, any security interests over the business and mortgages over the lease will be discharged. Key documents will also be handed to the purchaser’s lawyer, such as the Australian Securities and Investments Commission (ASIC) transfer key for the registered business name of the pharmacy.
The transfer of the lease, or the new lease, will then need to be registered.
On the completion date, the purchaser becomes the owner of the business and is handed the keys to the premises, and a new ownership journey begins.
This article was written by Principal, Georgina Odell. For further assistance in buying or selling a pharmacy in New South Wales, Victoria, or Queensland, or establishing a new pharmacy or relocating an existing pharmacy anywhere in Australia, please contact Georgina on (02) 9018 9975 or email her on godell@meridianlawyers.com.au
In addition to providing specialist advice about buying or selling a pharmacy, our team of pharmacy lawyers regularly advises clients about their obligations in employing and managing staff, franchising, privacy, obtaining finance, partnership and shareholder agreements, dispute resolution, retail leases and Pharmacy Location Rules.
Disclaimer: This information is current as of March 2025. This article does not constitute legal advice and does not give rise to any solicitor/client relationship between Meridian Lawyers and the reader. Professional legal advice should be sought before acting or relying upon the content of this article.
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