Wednesday, December 21, 2011

Using Business Notes for Financing Pharmacy Acquisitions in Montana

By Brad MacLiver
Authorship and profile at Google


When acquiring or selling a MT pharmacy or drug store, one alternative is to have the seller originate the financing and carry back a business note. Many pharmacy owners will choose not to take this approach at first glance because they want their cash and their exit, but when a Montana pharmacy owner considers to sell their drug store, if they look at the benefits of originating a business note and not just the perceived costs, they may discover that offering Private Finance as a Pharmacy Business Note will provide them with an alternative course of action.

Advantages of Creating and Selling a Montana Pharmacy Business Note

1. The process of selling a MT pharmacy or drug store to an individual can be easier and less time consuming than a buyer pursuing traditional financing when the pharmacy seller agrees to carry a business note.

2. By offering Seller Carryback Financing, which is often referred to as Private Finance, a MT pharmacy business owner can vastly increase the number of potential buyers for their business and, most likely, sell the business at a higher price.

3. When a Montana pharmacy business note is created there are the options of keeping it for monthly income, selling the entire pharmacy note for a large lump sum, or selling part of the pharmacy business note to meet current financial needs and keeping the remainder for future income.

4. Selling either a portion, or the entire pharmacy business note in Montana, frees up capital that can be used for new ventures, or paying off old debt.

5. When a pharmacy business note is created and sold, with the proper professional guidance, a transaction can be structured that allows the Montana pharmacy business seller the biggest advantage in achieving the seller’s goals.

When originating a pharmacy business note the terms and interest rate are set and agreed upon between the seller and buyer of the business. The seller of the business accepts the promissory note, which is secured by the business including any inventory and equipment that belongs to the business. The pharmacy business seller then sells the note to an Investor who is willing to hold the pharmacy note in exchange for compensation. Since Investor can’t go back to the pharmacy business buyer and change the terms of his purchase agreement, the seller of the note must discount the note. The Investor is compensated from the difference of what the note was originated for and the discounted price paid for the Montana pharmacy business note.

Tips:

1. Poorly structured business notes may prevent their sale, so seek professional advice before originating a financial instrument that can’t be sold.

2. Sellers of business notes need to fully understand the Investors risk in order to successful sell the business note.

3. Private Finance, in the form of a Business Note, is an alternative that should be looked at as a business financing option.

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