$30,000 Retainer Fee . . . . Are You Kidding Me?

We just learned of a Merger and Acquisition company who is charging a retainer fee of $30,000 to sell Independent & Small Chain Pharmacies. Yes, $30,000 just to retain this company. Once you sign the contract and pay $30,000, you are under contract for a year. At the end of the year if they don’t sell your pharmacy, you are out $30,000. Ummm “Hello! Houston . . . we have a problem!”

The Keep Your Pharmacy Open team recommends researching 3 to 4 consultants or brokers before making a decision that is the best fit for you. The following information should help you with your research.

1. Confidentiality Agreement – Reveal very little information and nothing confidential until the consultant or broker signs a confidentiality agreement. The consultant or broker will have a confidentiality agreement they can sign and fax to you. You do not need your lawyer to develop one for you. If they don’t have one to send to you, that is a huge “red flag”. Move on to the next company to evaluate.
   
2. Industry Experience – Are they experienced in consulting pharmacy owners? Or will they consult any business owner who can fog a mirror? Pharmacy Owners have different challenges than other business owners. You need someone involved in the industry that knows and understands your challenges, the laws of pharmacy, and reimbursement rates.
   
3. Success Rate – are they successful in selling pharmacies? Are they doing a preliminary evaluation (at no cost to you) on your business before agreeing to work with you? If so, this means that they are determining if they can be successful in selling your pharmacy. This is actually a good sign for you. This means the business has integrity and is looking out for your best interest. Watch out for the ones that just want to list your pharmacy. You need someone who is going to actually sell your pharmacy not just put it on a list with others.
   
4. Retainer Fee’s – Yes, most will charge some sort of retainer. The retainer depends on how many pharmacies you are selling, the locations of your pharmacy or pharmacies, and how much work needs to be done on the front end. Typically, the retainer can range from $1,500 – $10,000. In multiple store situations the retainer is based on the time required to produce the finished work product. Anyone charging a $30,000 retainer (for one or two pharmacies) is a huge red flag. You will end up paying more money to this company than you should to sell your business and they don’t even specialize in pharmacy (another red flag).
   
5. Your Best Interest – Are they educating you on all of your options? Your pharmacy business may not be ready to sell. A good consultant or broker will recognize this and highlight all of your alternatives. They can either help you develop an exit strategy with a plan to begin selling your store in a certain time frame or recommend another firm with that expertise. Of course, you can still put the pharmacy on the market whenever you want. The good consultant will educate you on your options so that you can make the best choice.
   
6. Personality – sometimes the basic ingredients are there but the chemistry and trust factors are missing. Keep in mind this is someone that is going to be working with you for a few months. You want to make sure the communication is there, the integrity is there, and that your personalities are a good match.
   

Sellers are not the only people who need a consultant. Buyers will often hire a consultant to help them find the best pharmacy to acquire. It is vital to their success that they make the right purchase and grow at the right rate. Purchase the wrong pharmacy or growing a business to fast, could be detrimental to your business.

For a complimentary evaluation contact SHB Consultants at http://www.sell-your-pharmacy.com/.