Long-time independent pharmacist Bob Graul has made some big changes and taken a new direction recently. In this interview with ComputerTalk senior editor Will Lockwood, Graul talks about the process of selling his pharmacies and how this motivated him to get involved in his current project: www.RxOwnership.com, a Web site designed to facilitate independent pharmacy ownership transition.
CT: Bob, you sold your pharmacies recently. Tell us a little about this.
Graul: I sold the last store of two stores this past September. About
the time I turned 60, realized that at some point I had to get serious
about succession planning. I had no one in the family and no business
partners interested in taking over. So shortly after I turned 60, I'd
bought out all my partners in Rancho Santa Fe Health Mart Pharmacy and
I started doing some research. I'd bought stores in the past, but never
sold one. It was a new process. NCPA [the National Community
Pharmacists Association] had some information online that was great,
but I still had some unanswered questions. By the time I'd turned 61, I
decided it is really time to do this and I reached out to my local
McKesson sales team and asked if they knew anyone interested in
purchasing the business. I also talked to a few friends in pharmacy. I
had about six people look at the store. One bought.
CT: What are some of the decisions you have to make?
Graul: To begin with, you have to decide when you want to sell, how you
want to advertise that you are selling, and how you value the store.
And then you have to figure out the actual process of selling a store.
Much like selling a home, there's a lot of paper work, a lot of forms
that need to be filled out. But the fact that you are selling a
pharmacy complicates the process even more because there's licensing
involved. You have to decide how you are going to structure the
transaction. Will it be an asset sale or a stock sale? How will you
handle receivables and payables? There are a lot of questions and
addressing them is one of the goals of the Web site,
www.RxOwnership.com, though it also serves as a link to me and to other
sources of information and assistance.
CT: What did you learn from this experience about the challenges facing pharmacy owners who want to sell stores?
Graul: The primary challenge in most owners' minds is determining
the value of the pharmacy. How much should you ask and what's a
reasonable price for an offer? That's why on the Web site we have a
valuation tool that uses, I think, 11 of the most common industry
accepted formulas for the valuation of a pharmacy. Valuation is not an
exact science by any means. These tools will give you a ballpark
number. You can also check around to see if there are other sales in
the area for pricing guidance. But having these formulas available is
important. Then there's a benefit to having someone to talk to, to say
"How come there's a wide spread in the numbers from the different
formulas?" That's where I can come in. The formulas are based on
different theories about how pharmacies are valued and, depending on
the type and quality of the numbers entered, you can get a pretty wide
spread on the formulas. So being able to interpret them is important
CT: So valuation is one big challenge. What else?
Graul: Confidentiality is another big challenge. When they first
consider selling, most owners don't want their employees knowing right
away, because it may create some uncertainty among the employees, not
knowing who the new buyer is going to be and what will happen to them.
You may lose some valuable employees. You don't necessarily want your
customers to find out. They may take this as a time to decide to shop
somewhere else. And you certainly don't want your competitors to know.
I can give the clients I work with as much confidentiality as they
choose. Actually, on the Web site in the confidential advisor contact
form that they use to reach me, there are four different levels of
confidentiality they can choose from. And this is one of the first
discussions I have with a pharmacist looking at transition. I want to
know if I can talk to local sales people, move up a level and talk to
vice presidents of sales, or if I can speak to senior management. I get
their comfort level about who I can speak with. If they want to be
completely confidential, that's OK too because one of the things we're
looking to do with the program is to develop some matching between
buyers and sellers. It is not impossible to locate a buyer even if you
want to be completely confidential.
CT: Who is the Web site for?
Graul: The site is open to anyone. It is designed without passwords or
the requirement to divulge any information. I'll work with anyone who
puts in a lead on the Web site. It is designed to be a tool for
community pharmacists to level the playing field. The way the ownership
transfer process has generally worked is that a chain comes in and
makes an offer on a store and the owner may not have any other
information or tools to work with to evaluate the offer or decide if
there's another way to do it. So, the Web site offers important
information to help owners decide whether or not they should maybe look
around and see if they can't find an independent who will keep their
store open, continue the legacy they started, and keep their valued
CT: What about challenges for potential buyers? What are they and how do you address them?
Graul: The issues a buyer faces really depend on the circumstances. She
could be a younger pharmacist only a few years out of school. It may be
the first time she's considered owning a store. There are going to be a
lot of business issues, such as developing a business plan. Then
there's the task of finding a pharmacy for sale in a suitable location.
Financing is always an issue, of course. A lot of the background
information that explains the process, the ways to develop a good
business plan, is on RxOwnership.com. This is primarily what the buyers
are interested in. Then there's also a lot of specific information
about how to make an offer, for example. Quite honestly, not being an
attorney or an accountant, I always recommend that a buyer or a seller
have a good lawyer and accountant. When it comes to a purchase offer or
a buy-sell agreement, you really need experts and your own people to do
that for you. So I don't get into that level of detail, but I do give
them an awful lot of information in general about it. And then a lot of
times buyers aren't sure if they should buy or not. So they're asking a
lot of questions about what ownership is all about. How much work is
involved? What's the time commitment? What's the risk? Again, the Web
site offers guidance.
CT: Is there information for students?
Graul: The Web site has a lot of information and statistics from the
NCPA Digest on the trends in pharmacy. It talks about the benefits of
pharmacy ownership and offers a lot of links for further information.
From my experience at trade shows, I'd say at least a third of the
people who come up to the RxOwnership booth looking for more
information are students. What resonates most with students is the
freedom pharmacy ownership gives them to control their own practice
setting. Obviously whether you can make more money as an owner is
something people are always going to want to know about, but control
over the practice setting is really more on people's minds. For
example, if they want to do a diabetes clinic and they work for a large
corporation, it is more difficult. They have corporate structure they
need to go through to get approval. If you own your own business it is
much simpler to sit down and decide if you can do it. And for years
that's what we did at the stores I owned. Anytime a new idea came up,
we'd sit down and look at it and determine whether we could restructure
a little to afford it. We'd ask ourselves: What's our break-even point?
Do we think we can make money on it long term? But the primary
motivation for everything we did was: Is it going to help our
customers? Because I feel that if you stay customer focused and develop
your programs based on this, you are going to be successful. And when
you own your own business, you are the one making these decisions. You
can start a diabetes clinic, you can do medication therapy management,
you can do the immunizations that are legal in your state. So I think
the flexibility of being able to control your practice setting is very
very appealing to the younger pharmacists. The swing over the past 10
years has really been toward looking to the kinds of services a young
pharmacist can provide that will really use all of the training she
CT: Thanks for you time, Bob. Any final thoughts?
Graul: I would really like to say a word of thanks to McKesson, who is
powering the Web site, for entering this area. Ownership transfer and
succession planning have been topics on the agenda of every meeting
I've been to for years. NCPA has done a really nice job working in this
area, but has been a lone ranger. McKesson has a legacy in independent
pharmacy and they are very committed to it. They've stepped up to
develop the Web site, bring me on as a consultant, and then I have
regional people who work with me on the program. I think it is a huge
commitment that McKesson is making to the independent segment and they
deserve credit for it.