Medici Capital is the industry leader in pharmacy valuations and accredited to conductpharmacy valuations for all the major banks and lending institutions Australia-wide. Thefollowing article was prepares by Medici Capital to discuss some issues surrounding the valuation of a pharmacy.
Pharmacy valuations are commonly conducted using the capitalisation of future maintainableearnings approach. The capitalisation rate appropriate for a pharmacy reflects its desirabilityand:
- Gross profit margin;
- Rent terms and costs;
- Pharmacy characteristics;
(Inc. Location, Product Mix, Presentation, SWOT) - Prevailing interest rates (overdraft) plus allowance for risk.
It is important to note that the asking price is not related to turnover. Rather, it's a functionof the expected maintainable income to the buyer. Value assumes a willing buyer exists and thereis sufficient time to market the pharmacy properly.
Medici Capital provides 5 different versions of our valuation:
(The following list is ordered by the complexity of the valuations.)
- Indicative Valuation
- Market Appraisal of Value
- Comprehensive Valuation
- Brownfield Valuation
- Greenfield Valuation
Indicative Valuation:
Medici Capital provides Indicative Valuations on-line through Medici Express. Through this system,you can process a valuation within 24 hours (or faster if urgent) to provide you with an indicationof what value the pharmacy will be.Market Appraisal of Value (MAV):
A MAV is essentially an accountant's/broker's valuation. It is primarily providedfrom the analysis of a trading statement/profit & loss statement and provides a slightly moredetailed perspective of the value of the pharmacy.Full Valuation:
Medici Capital's Full Valuation provides full comprehensive analysis of a pharmacy and producesa financially and economically robust value for the pharmacy based on statistical and analyticalevidence. The capitalisation rates are generated based on a risk assessment model ensuring thatmarket verifiable rates are applied for valuation purposes.Brownfield Valuation:
An extension on the full valuation, Brownfield Valuations are based on significant changes tothe operational environment of the pharmacy that would cause a significant shift in the incomeof the business - ie location change or significant resizing of business. These valuations takeinto account the effects of the changes to the operations and resultant financials of the business.Medici Capital with it's analytical background is in a unique position to be able to calculatethese valuations.Greenfield Valuation:
The next step from a Brownfield Valuation is a Greenfield Valuation: the case in which a businessis newly established from scratch. Medici Capital can accurately forecast the operating capacityof the pharmacy and past clients have contacted us to claim that forecasts of our GreenfieldValuations have accurately matched the actual operating performance of the business as timeelapsed.It is important to note that Medici Capital are not accountants. We are analysts and researcherswith specific focus on valuations, finance and management consulting in the health sector. Ourproducts and services are based on statistical research and each report/assurance we provideis based on financial, verifiable evidence.
All our valuations have been accredited with the major banks and lending institutions Australia-wide.And, when full disclosure is received, all our valuations can be completed within 5 working days- sooner if the valuation is urgent.
As an expert witness, our analysis are accepted by courts throughout Australia because of themathematical nature of our work - we do not estimate, guess or compare figures. We logically,methodically and mathematically determine the true values of pharmacy.
To discuss a pharmacy valuation; or to determine which valuation suits your requirements, contactMedici Capital on (03) 9853 7933.
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