Estate Planning in Wyoming for Pharmacy Owners

By Brad MacLiver
Authorship and profile at Google


Given the current market conditions, many WY pharmacy owners are experiencing reduced profit margins and are considering to sell.  For a number of years, a Wyoming pharmacy industry roll-up has been happening, consolidating the pharmacy seller’s customer traffic into fewer pharmacy locations. However, there are a number of pharmacies that are not in a geographic location with other nearby pharmacies, so consolidation can’t take place. Some pharmacy and drug store owners, despite where they are located or what is happening in the industry, have taken a stance and won’t consider selling. However, just like paying taxes, an exit of the business, is eventually inevitable.

Estate Planning is a topic many people, in all industries, shy away from. For the pharmacy owner who works 6 days a week, takes very few vacations, fills scripts all day, then mops the floor and does the books at night, there usually isn’t much time to consider additional things such as estate planning. However, knowing that there will eventually be a transfer of the business, it is important for the Wyoming pharmacy owner to consider a proper succession plan for the pharmacy business.

Developing a plan to transfer the business will be time consuming, but done correctly will allow the business to be successfully transferred in an acceptable manner. An estate plan for a pharmacy owner in Wyoming does not need to be changeless process. Fine-tuning, updating, and amendments are recommended as government regulations, economic conditions, and personal expectations change.

Estate planning allows a pharmacy owner in Wyoming to anticipate and arrange for the transfer of the drug store. The plan will be formatted in attempts to eliminate uncertainties, assist the transfer by trimming expenses, and reduce taxes.

The process may involve Trusts, Wills, Living Wills, Power of Attorney, Medical Power of Attorney, Business Valuations, Life Insurance, Charitable Remainder Trusts, Buy-Sell Agreements, and other legal documents. All of the different aspects of the estate planning are to provide the pharmacy owners coordinated directives.

When there are non-family members as partners in the drug store business, it is essential that the estate planning incorporate a Buy-Sell Agreement. A buy-sell agreement, governs the transfer of the business between pharmacy partners. The agreement may also be known as a partner buyout agreement, or a business will. To help protect the family in the event of a partner’s death, the buy-sell agreement may be funded with a life insurance policy.

Estate planning, buy-sell agreements, and the transfer of Wyoming pharmacies should incorporate a pharmacy business valuation executed by a third party that has expertise in the pharmacy industry, performs a large amount of pharmacy business valuations every year, and has current industry data as a solid foundation for their conclusions. Applying simple accounting formulas or multipliers or using valuators inexperienced in pharmacy will not provide an accurate business valuation.

Pharmacy owners typically spend a major part of their life building the business. Their efforts should not be in vain because they refuses to accept their mortality and plan accordingly. The only pharmacist in some small pharmacies is often the owner. If their scripts cannot be filled by a licensed pharmacist then the customer files must be transferred to another pharmacy according to law.  A pharmacy’s business value potentially drops to a negligible figure in just a few days after the passing of the owner because of this.  The contingencies outlined in an estate plan should address this issue. Unfortunately due to not having an effective plan in place, each year a number of WY pharmacy owners die and their family is left with an asset with very little value.

Tips:        
1. When the family drug store is the sole means of income for several family members it becomes even more crucial to have a succession plan in place.
2. To avoid disputes, estate plans should be developed with clear directives.
3. A major objective for most completing an estate plan is to reduce tax liabilities as much as possible.  Expert tax advice should be sought.
4. There are many online sites and books available to provide advice and documents when developing an estate plan.  It is advisable to have a paid expert review the completed documentation when going the self-help route to ensure that it can be legally complied with when the time comes.
5. It is essential to talk with children and other family members of the pharmacy owner in WY while developing the estate plan, especially if there are some family who work in the business while others don’t.


 

Financing Wyoming Pharmacy Franchises

By Brad MacLiver
Authorship and profile at Google


A WY pharmacy franchise is a contractual relationship between two parties. One, the Pharmacy Franchisor is the party that developed their drug store business model, branded the pharmacy related products, and produced the system the pharmacy franchisees will operate under. Two, the Pharmacy Franchisee will purchase a franchise license from the Pharmacy Franchisor.  They usually pay an ongoing pharmacy franchise fee or royalty fees to use the systems, products, name, trade secrets, etc., that were created by the Pharmacy Franchisor in Wyoming.

There are a number of options for financing a pharmacy franchise business. All pharmacy franchise funding sources, for drug stores, prefer lending to a pharmacy franchisee who will be working with a nationally recognized name and long track records. These two traits are not possessed by newer pharmacy franchise models and will be considered more risky.

Traditional Bank Financing used in funding a pharmacy franchise is available when a Wyoming pharmacy franchise has the track record and pharmacy name recognition. Many of the banks will show interest in this type of funding opportunity. Unfortunately once the bank reviews the loan documents, many of these banks decline the funding request because they don’t understand the security provided for the pharmacy loan. Community drug stores typically have very little traditional assets to offer as security. Lenders for pharmacy will use traditional methods for analyzing the cash flow available to service to the debt, and they will also need to understand the nontraditional collateral that will secure the loan.

As a borrower, even when incorporated, the independent drug store owner’s personal credit rating will be a factor, along with personal tax returns, and financial statements. The amount of actual cash on hand and the verification of the source of the down payment will be critical factor in qualifying for a pharmacy business loan in Wyoming.

WY Pharmacy Franchise Funding Tips:

1. Because there are many pharmacy franchise financing options available, pharmacy owners in Wyoming should perform proper due diligence then obtain the pharmacy funding that best suits their situation.

2. It is advisable to have an accountant or attorney that is familiar with pharmacy franchise financing to review the pharmacy business loan documents.

3. There are pharmacy consulting services and franchise associations who can help guide a prospective pharmacy franchisee or borrower or a drug store loan.

4. New pharmacy owners in WY need to make sure their funding request is enough to get the pharmacy running and profitable. Less than ample funding for the initial stages may put the drug store in a position of needing additional funding. Smaller working capital loans that would be in a subordinated position will be more difficult to obtain at a later date.

When pharmacy owners have questions and need information regarding pharmacy franchise business loans in Wyoming, or any types of funding for community drug stores and pharmacies, they should contact a pharmacy industry specialist who can provide quality answers and sound advice.

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