BUSINESS SALE & ACQUISITION (WITH PHARMACY/PHARMA LENS)
- Gaea Kassatly
- Dec 3
- 4 min read
A. Seller Checklist – “Exit Readiness” & Deal Execution
1. Strategy & Valuation
Clarified your goals (full exit vs partial sale vs partner buy-in).
Obtained a valuation (formal appraisal or broker’s opinion of value).
Reviewed with tax advisor for likely tax consequences (capital gains, ordinary income, etc.).
2. Financial Clean-Up
Identified personal/non-business expenses run through the company.
Prepared clean, recent financial statements (P&L, balance sheet, cash flow).
Gathered at least 3 years of financials and tax returns.
Documented any one-time or non-recurring expenses.
Pharmacy/Pharma-specific:
Verified inventory records (including controlled substances, active SKUs).
Run reports on script volume / production volume, payer mix, margins.
Compiled PBM audit results, chargebacks, DIR fees, and recoupments.
Organized key regulatory/quality expense data (compliance, remediation projects, etc.).
3. Legal & Regulatory Housekeeping
Confirmed entity is in good standing with state authorities.
Reviewed operating agreements/shareholder agreements for transfer restrictions.
Identified any existing or threatened litigation or claims.
Checked for liens, UCC filings, or tax issues.
Pharmacy/Pharma-specific:
Collected all licenses and registrations (board of pharmacy, DEA, FDA, state agencies).
Documented inspection history (board, DEA, FDA; 483s, warning letters, etc.).
Confirmed all required policies/SOPs exist and are reasonably current.
Identified any corrective action plans or outstanding regulatory obligations.
4. Contracts & Key Relationships
Compiled customer and vendor contracts.
Reviewed leases (real estate and equipment) for assignment/change-of-control clauses.
Identified “must-have” contracts for the buyer (e.g., key suppliers, payors, distributors).
Confirmed IP ownership (trademarks, patents, trade names, domain names, software, formulae).
Pharmacy/Pharma-specific:
Collected PBM, payor, and 340B contracts (for pharmacies).
Gathered API and excipient supply agreements, quality agreements, CMO/CDMO contracts (for manufacturers).
Identified any exclusivity or minimum volume commitments.
5. Employees & Key Personnel
Identified key employees essential to continuity.
Reviewed any existing employment or independent contractor agreements.
Considered whether retention bonuses or equity incentives will be offered.
Pharmacy/Pharma-specific:
Identified PIC/Responsible Pharmacist, QA head, regulatory lead, plant manager, etc.
Confirmed which individual licenses are tied to operations (and how transitions would work).
6. Pre-LOI Prep
Prepared a high-level data set for potential buyers (financial highlights, key metrics).
Set preliminary expectations for price range and structure (cash, notes, earnout).
Engaged core deal team (M&A/transactional counsel, CPA, possibly broker).
B. Buyer Checklist – Evaluation, Due Diligence & Closing
1. Strategic Fit & Deal Structure
Clarified why this business fits your strategy (geography, product line, vertical integration).
Decided whether you prefer an asset sale or stock sale (and why).
Identified your financing sources (cash, lender, seller note, investors).
Defined your appetite for deferred payments and earnouts.
2. LOI (Letter of Intent)
Included purchase price and payment structure (cash vs deferred).
Defined earnest money deposit and when it becomes non-refundable.
Defined due diligence period and target closing date.
Listed key conditions to closing (financing, lease assignment, license approvals).
Addressed exclusivity/no-shop (if desired).
Clarified whether specific LOI provisions are binding (confidentiality, exclusivity, etc.).
Pharmacy/Pharma-specific LOI items:
Condition closing on required state, DEA, FDA, Medicaid, PBM, and payor approvals.
Addressed how inventory (including controlled substances) will be valued and handled.
Identified key regulatory or product milestones tied to any earnout.
3. Due Diligence – Legal
Requested full set of organizational and corporate documents.
Verified ownership and any options or phantom equity.
Reviewed key contracts and leases (including assignment/change-of-control clauses).
Reviewed all litigation, claims, complaints, and governmental inquiries.
Analyzed regulatory compliance and risk areas.
4. Due Diligence – Financial
Reviewed at least 3 years of financials and tax returns.
Analyzed trends in revenue, margins, and cash flow.
Identified working capital requirements and seasonality.
Confirmed existing debt and contingent liabilities.
Pharmacy/Pharma-specific:
Evaluated payor mix, reimbursement trends, and PBM/plan exposure.
Reviewed impact of DIR fees or clawbacks (if applicable).
Assessed financial impact of regulatory remediation/quality initiatives.
5. Due Diligence – Operational & Commercial
Assessed customer concentration risk.
Reviewed supplier/vendor dependency and alternatives.
Evaluated management team and staff capabilities.
Evaluated IT systems, data integrity, and cybersecurity.
Pharmacy/Pharma-specific:
Reviewed script volumes, prescriber relationships, and clinical programs (for pharmacies).
Reviewed manufacturing capacity, batch success rates, deviation levels, and quality metrics (for manufacturers).
Assessed stability of licenses and approvals, and anticipated burden of maintaining them.
6. Deal Documents & Risk Allocation
Negotiated APA or SPA with clear purchase price and payment terms.
Reviewed and negotiated representations & warranties.
Ensured indemnification provisions (caps, baskets, survival periods) align with your risk tolerance.
Confirmed non-compete, non-solicit, and confidentiality provisions where enforceable.
Coordinated with tax, regulatory, and accounting advisers on structure.
7. Closing & Post-Closing
Prepared closing checklist with documents, consents, and funds flow.
Confirmed all regulatory and contract conditions are satisfied or waived.
Finalized settlement statement and wiring instructions.
Planned communications to employees, customers, payors, and regulators.
Documented transition support from seller (duration, scope, compensation).
Pharmacy/Pharma-specific:
Confirmed plan/timeline for change-of-ownership filings and license transitions.
Confirmed continuity plans with key prescribers, payors, and customers.
Scheduled post-closing quality and compliance reviews.
Your pharmacy or pharma company is too regulated to “wing it.”
If this checklist has you realizing how many moving pieces there are—good. That’s the point.
Now let’s protect the value you’ve built. Schedule a Pharmacy & Pharma Deal Consult and get legal guidance tailored to your sale or acquisition.
For educational purposes only.
This checklist and accompanying materials are provided for general informational purposes and do not constitute legal advice, nor do they create an attorney–client relationship.