Scott Hayton at Hutchings gives his views on the changing market for pharmacy sales
Published: 23 March 2022
In the third in our series of interviews with some of the key people in the Healthcare world, PDT’s James catches up with Scott Hayton, Director at Hutchings Consultants Ltd for an overview of how the pharmacy agent’s market has changed and how they have adapted over the last 2 years.
James: Hi Scott, lovely to see you. We all know what a busy year it has been for the sector. How have you seen the pharmacy agent’s market change in this time?
Scott: I think 2020/2021 was a hugely significant year for the sector and there was almost a 100% uptick in buyer registrations as confidence levels in the sector grew. I think that while many other sectors were struggling, the pandemic both tested and successfully demonstrated the resilience and strength of pharmacy, not only as a service to the community but as a business model for investors.
The positive effects also came with some complications for the market though and whilst Wales and Scotland’s Governments both delivered clear and quickly actioned messages of support, it took many months for NHS England to confirm how the Covid Advance monies and additional support would be treated. This added a layer a complexity for the legal processes. Some pharmacy owners made the decision to either get involved in the vaccinations drive or to delay sale plans in order to provide their communities with access to healthcare when many GP’s closed their doors. This meant that the expected ebb and flow of pharmacy sales normally seen in an average year, was much more difficult to predict.
James: What about sales levels, have they remained high?
Scott: Overall, activity levels in the sales market were very good, particularly in the latter half of 2020 which saw a marked increase versus the same period in 2019 and this trend continued through 2021.
In the first few months of 2022, we’ve seen a further increase in activity across the sector with more pharmacy owners approaching the market whom we expect are owners that delayed their plans through the pandemic to help the cause.
James: This is great. With this increase in activity what changes or innovations are you taking that offer something different in the pharmacy market?
Scott: Our ethos has always been to approach our role with a strong sense of integrity and ethics, giving pharmacy owners honest appraisals of their businesses and advice on how they can achieve the best outcome for their sale, free of charge. This is really important to us because we’re not a company that is just focused on the numbers.
As an independently owned business (like the majority of our clients) we’re individuals too and appreciate the magnitude of the decision our clients have to make when, having built their business through decades of hard work, they begin to think about retirement and selling. There’s a huge amount of energy, financial planning and emotion that goes into it all, so it’s only right and fair that they should make the decision based on accurate and not inflated figures.
We also position ourselves to avoid any conflict of interest whatsoever which again, is very important to us. It allows us to give clear and honest advice to our client (the seller) during the sale and provides reassurance we always act in their best interests.
James: Are there any additional areas of advice you offer?
Scott: We do a number of things, we provide accountancy services and tax advice through our sister company Hutchings Accountants and every year we run a number of free webinars and seminars as well as writing reports and articles with the aim of focusing on preparing for sale. We’ll sometimes work with a client for many years before they make the decision to proceed to market.
James: How have you adapted to the challenges over the last 2 years, and do you see this developing further?
Scott: With the significant jump in demand for pharmacy businesses during the pandemic, we’ve seen premium prices being achieved in an extremely confidential manner by approaching a handful of high quality pre-vetted buyers from our database.
This is in part due to the higher demand and confidence and also our knowledge of the buyers in the market, their requirements, finances and being able to pick out those best suited to the opportunity.
This works really well for certain pharmacies in popular locations around the UK and the parties recognise they’ve a unique, time limited opportunity to secure the business off market for a price. For other pharmacy businesses, a competitive bidding environment can be more suitable and has certain benefits such as providing a cross section of the market and reassuring a seller of the business’ true market value. That’s something you don’t necessarily have with one or two offers on the table. It also gives the seller more options to choose from.
Often there is a lot more for a seller to consider than just the headline price offered, and this is normally evident when you’ve offers from different parties to compare and consider and even more so when you drill down into the detail of those offers. The approach taken is always weighed against other considerations including most importantly the client’s objectives and goals. Things like timescales, confidentiality and price are usually the key considerations as we discuss and agree a strategy with our client.
James: Thanks Scott, it sounds like the next year is going to be a busy one.
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