Using Business Notes for Financing a Pharmacy Acquisition in North Dakota

By Brad MacLiver

Authorship and profile at Google

When acquiring or selling a ND pharmacy or drug store, one alternative is to have the seller originate the financing and carry back a business note. At first glance many pharmacy owners will not want to take this approach. They want their cash and their exit. When a pharmacy owner in North Dakota is considering selling their drug store, looking at the benefits of originating a business note and not just the perceived costs, they may find that offering Private Finance in the form of a Pharmacy Business Note will provide them an alternative course of action.
                          
Advantages of Creating and Selling a North Dakota Pharmacy Business Note

1.  The process of selling a pharmacy or drug store in ND to an individual can be easier and less time consuming when the pharmacy seller agrees to carry a business note, than a buyer pursuing traditional financing.

2. By offering Seller Carryback Financing, often referred to as Private Finance, a North Dakota pharmacy business owner can greatly increase the number of potential buyers for their business, and most likely sell the business at a higher price.

3. When a pharmacy business note is created there are the options of keeping it for monthly income, selling the entire pharmacy note for a large lump sum, or selling part of the pharmacy business note in North Dakota to meet current financial needs and keeping the remainder for future income.

4. Selling either a portion, or the entire pharmacy business note in ND, frees up capital that can be used for new ventures, or paying off old debt.

5. When a North Dakota pharmacy business note is created and sold, with the proper professional guidance, a transaction can be structured that allows the pharmacy business seller the biggest advantage in achieving the seller’s goals.

When originating a pharmacy business, take note that the terms and interest rate are set and agreed upon by both the seller and buyer of the business. The business seller will accept the promissory note, which is secured by including any inventory and equipment by the the business that belongs to them. The pharmacy business seller sells the business note to an Investor who is willing to hold the pharmacy note in exchange for compensation. Since Investor can’t go back to the North Dakota pharmacy business buyer and change the terms of his purchase agreement, the seller of the note must discount the note. The Investor is compensated from the difference of what the note was originated for and the discounted price paid for the ND pharmacy business note.

Tips:

1. Poorly structured business notes may prevent their sale, so seek professional advice before originating a financial instrument that can’t be sold.

2. Sellers of business notes need to fully understand the Investors risk in order to successful sell the business note.

3. Private Finance, in the form of a Business Note, is an alternative that should be looked at as a business financing option.

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