Goodwill-heavy deals are cash-flow deals
A pharmacy changes hands mostly on the value of its prescription file, so the balance sheet you show the bank is thin on collateral and heavy on goodwill. Banks finance these purchases anyway, because pharmacy cash flow is among the steadiest in retail, but they underwrite the earnings: normalized profit, script volume and payer mix, staffing costs once the owner is behind the counter, and the lease. Our Fractional CFO service builds that case properly. Walla Assaf spent years in banking and corporate finance before founding Tauro, so the package is written the way credit committees actually read.
The diligence starts before the offer, because a script file is only worth its durability. We test the things that quietly change the price: whether volume leans on one nearby prescriber or clinic, how much of the mix sits with a single payer, whether the lease term outlives the loan, and what staffing really costs once the vendor, who worked sixty hours a week for free, hands over the keys. A file that looks identical on a broker sheet can be two very different businesses underneath.
Where the bank stops short of the full price, structure fills the gap: a vendor take-back, a staged payout, or a smaller deal. We model each option against the covenants you would be signing, through our Business Financing Advisory work, before you commit to any of them.
The lender package that gets to yes
Credit committees say no to uncertainty more often than to risk, so the package answers the questions before they are asked.
| What the lender asks for | What we prepare |
|---|---|
| Normalized earnings | Profit adjusted for the vendor's salary, one-time costs and your own pharmacist hours after close |
| Revenue quality | Script counts and mix by payer, dispensary versus front-store revenue, clinical-services growth |
| Debt-service coverage | A forecast with sensitivities for reimbursement changes and generic price movement |
| Opening balance sheet | The inventory purchase at close, working-capital need and the first year's capital spending |
| Reliable statements | CPA-prepared financials through our Compilation & Review Engagements |
The same discipline applies at renewal. A lender who receives clean covenant reporting every quarter prices the next request differently from one who has to chase you for statements.
After close: the working-capital rhythm
The first squeeze arrives on schedule. Wholesaler terms are short and rigid, while ODB and private-plan remittances lag the dispensing they pay for, and the inventory you bought at close has already consumed cash. The first months routinely feel tighter than the projections promised, even in a store performing to plan.
We run a rolling 13-week cash forecast so payroll, the wholesaler and the loan payment never compete by surprise, and we keep the covenant calendar: statement deadlines, coverage certificates and the ratios the bank will test, checked before the bank checks them. Payables run on approvals through Plooto rather than on whoever opened the mail, which is how a new owner keeps control of cash while still learning the store.
A monthly scorecard in pharmacy units
Bank-ready reporting and owner-ready reporting are the same numbers presented for decisions. Each month you see:
- Scripts per day and average value, against the trend you underwrote
- Margin per prescription beside front-store margin, so the two businesses stop hiding each other
- Payroll as a share of gross profit, the number that decides a second pharmacist
- Inventory days, where creeping stock quietly eats the loan payment
- Clinical-services revenue, the growth line most stores underuse
The scorecard exists to settle real questions: extend evening hours or not, hire or hold, renovate the front store or shrink it in favour of the dispensary counter.
The second store, on evidence
Expansion is a coverage question before it is an ambition question. We test whether the first store's cash flow can carry a second loan through its slow first year, and how the structure should hold both locations, since a corporation per store and one corporation for both trade off lender preference, liability and eventual sale flexibility. GTA banners and landlords move quickly when a unit opens up; owners who already know their number can move quickly too. The same modelling applies in reverse when a consolidator comes knocking with an offer for your store: knowing what the cash flow supports tells you whether the number on the table is generous or merely round.
