What documents will a buyer ask for when you sell a pharmacy?

rajkamalbhatti

Sep 25

6 min read

Updated: 7 days ago

A buyer asks for six files: NHS and contract, financial, premises, people, regulatory, and systems and suppliers. Almost all of it already exists somewhere in your pharmacy. What holds a sale up is never the documents you have - it is the four or five you do not have, or have in a version nobody ever signed.

Four people read the pack - the buyer's solicitor, the accountant, the lender and the buyer - and none will take your word for a number that ought to have a document behind it. The valuation is built out of it, and a pack that arrives in pieces gets priced as a risk.

What will a buyer want on the NHS contract?

The NHS file sets the price, and the buyer wants it from the source, not from your spreadsheet. Put in two to three years of it as the NHS Business Services Authority (NHSBSA) produced it.

The monthly Schedule of Payments, still called the FP34, for the last 24 months, with the FP34C declarations submitted through Manage Your Service (MYS).
Item numbers month by month. The direction matters more than the level.
Service income identified separately - Pharmacy First, New Medicine Service, vaccination. Income that depends on you personally is the first thing a buyer questions.
Your entry on the pharmaceutical list: listed name, premises as listed, integrated care board (ICB), core and supplementary hours.
Locally commissioned services such as supervised consumption or needle exchange. Ask the commissioner in writing whether each continues under a new owner.
Live correspondence with the ICB or NHS England: a breach or remedial notice, a payment query.

A patchy set of Schedules is one of the worst signals in the pack, and the excuse is thin - the NHSBSA Information Services Portal holds six years of Schedule of Payments data for a registered contractor. On an asset sale the buyer makes its own change of ownership application under regulation 26 of the National Health Service (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013; on a share sale the contractor is the same legal person, so none is needed - see what happens to the NHS contract.

What financial documents will a buyer ask for?

Three years of filed accounts, management accounts to the most recent month end, and evidence for every add-back. The accounts are the starting point; the add-backs are the argument.

The trial balance or nominal ledger behind each set of accounts, so an adjustment can be tested rather than assumed.
A schedule of add-backs with a document for each: your drawings, the car, the relative on the payroll, the one-off legal fee.
Wholesaler statements and buying terms, which show real purchase margin, not headline discount.
Every finance agreement: the robot, the van, the till system, the card terminals.
The last stocktake, with the controlled drug and fridge lines identified.

What lease and premises documents will a buyer ask for?

All of the lease, not the copy in the drawer: the original, every deed of variation, the licence to assign from the last transfer, the rent review memoranda and the current rent demand.

Whether the lease is contracted out of the security of tenure given by Part II of the Landlord and Tenant Act 1954. Section 38A(3) makes the agreement to exclude security of tenure void unless the landlord served the warning notice in Schedule 1 to the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 and the Schedule 2 requirements, including the tenant's declaration, were met. A recital in the lease saying the procedure was followed is not proof on its own; the buyer's solicitor will want the notice and the declaration themselves.
The alienation clause: what the landlord can demand on assignment - an authorised guarantee agreement, a rent deposit, a personal guarantee.
Any change of control clause, which can pull the landlord into a share sale that would not otherwise need consent.
Consents for the consultation room and the shopfront, plus the service charge accounts.
The occupational arrangement, if you sit in a health centre. A licence to occupy is not a lease and carries no security of tenure, so a lender lending against the business will want the document itself.

Where the lease requires the landlord's consent and that consent is not to be unreasonably withheld, the Landlord and Tenant Act 1988 puts the landlord under a duty to decide within a reasonable time, and the burden of showing it acted reasonably sits with the landlord. That is a right, not a timetable, which is why the lease moves completion dates.

What will a buyer ask for about the staff?

On a business or asset sale the staff transfer with the pharmacy under TUPE, the Transfer of Undertakings (Protection of Employment) Regulations 2006, so the buyer inherits whatever is in the employment file. On a share sale the employer does not change and TUPE is not engaged, but the buyer asks anyway.

Employee liability information under regulation 11: identity and age of each employee, the written particulars required by section 1 of the Employment Rights Act 1996, disciplinary and grievance action and tribunal claims in the last two years, and any collective agreements. It is due not less than 28 days before the transfer.
Written particulars for everyone, including the Saturday driver and the relative who has never had a contract.
Payroll detail: hours, pay, holiday entitlement, untaken holiday, pension scheme and contributions.
Anyone on maternity leave, long-term sick, notice, or with a live grievance.
The locum bill and the rota as actually worked. If you work six days, the buyer has to price your replacement.

What regulatory and governance records does a buyer check?

The inspection report, the SOPs, the controlled drug registers and the responsible pharmacist record - and the registration itself, which does not travel with the business. Where the owner changes, section 74H of the Medicines Act 1968 makes the entry for those premises cease to be valid unless the new owner notifies the registrar in writing within 28 days of the change.

The most recent General Pharmaceutical Council (GPhC) inspection report, with anything still open from it closed before the buyer reads it.
The standard operating procedures, with review dates and signatures.
Controlled drug registers and destruction records. Registers must be preserved for two years from the date of the last entry under regulation 23 of the Misuse of Drugs Regulations 2001, and a buyer checks whether the balances reconcile.
The responsible pharmacist record, kept for not less than five years - from the day an electronic record is created, or from the last day a written record covers - under regulation 5 of the Medicines (Pharmacies) (Responsible Pharmacist) Regulations 2008.
Records of prescription only medicine sales and supplies under regulation 253 of the Human Medicines Regulations 2012, kept for two years from the date of the last entry, and the private prescriptions themselves for two years from the date of supply.
Indemnity cover and claims history, the error and near miss log, complaints in the last two years, and your Information Commissioner's Office registration.

Which systems and supplier contracts does a buyer need to see?

The PMR contract, the supplier ties and everything the pharmacy runs on. This is the file people forget.

The patient medication record (PMR) contract: supplier, term, notice period, whether it can be assigned, and what migration costs.
Electronic Prescription Service nominations, and how concentrated they are on a single surgery.
Monitored dosage system patients and care homes: the numbers and any written agreement.
Wholesaler and buying group agreements, including any rebate or loan tied to continued supply. A tie that becomes repayable on a sale can end a deal.

What should you hold back, and how do you keep the sale quiet?

Release in stages, and keep people and patients out of the first pass. A buyer under a confidentiality agreement is entitled to test the business, not to walk your dispensary in opening hours.

Patient data does not go into the data room. Give numbers, not names. The controller for those records is the pharmacy owner - you or your company - and the PMR is not a diligence document.
Staff names, addresses and individual pay wait. Roles, hours, length of service and total cost are enough until exclusivity. The regulation 11 deadline is a backstop, not a starting point.
The landlord waits too. Approach after heads of terms.

The lease, the employment file and NHS income that will not reconcile take months rather than weeks to put right, and all three are visible on day one. They come straight off how long the sale takes, so if you are thinking of selling, build the pack first.

This is general information about the documents a buyer asks for, not legal, tax or financial advice; your solicitor and accountant confirm the legal and tax points for your own sale. The NHS regulations cited apply in England and the landlord law in England and Wales; Scotland and Northern Ireland differ. If you want a second pair of eyes on the pack before it goes anywhere, send us the list of what you already have.

Rajkamal Singh Bhatti MPharm is a practising pharmacist (GPhC registration 2230365) and a former Superintendent Pharmacist of a national group of 120 branches, which he took through insolvency and sale. He founded RSB Consulting.