Legal Instruments of the Sale - Where Do I Sign
By: Jeffrey S. Baird, Esq; Brown & Fortunato, P. C
The Following Sample Legal Instruments of Sale Contained Herein Are Provided for Discussion Purposes Only Related to the National Community Pharmacists Association (NCPA) Ownership Transition Business Tools Website and Do Not Constitute Legal Advice from Brown and Fortunato Law Firm or NCPA. Contact a qualified business attorney to help you navigate the process of selling your pharmacy.
Mutual Nondisclosure Agreement (NDA)
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A mutual NDA is a legal document that requires all parties involved to keep certain information confidential. All parties are sharing confidential information and must sign the agreement for it to be valid. Any information the companies share that is covered by an NDA is considered secret and cannot be shared without legal consequence
Regulatory and Compliance Due Diligence Checklist
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Virtually all agreements to purchase a pharmacy's assets OR stock contain a clause making the sale conditional upon a satisfactory due diligence exercise being carried out by the buyer.
Acknowledgement Letter - Purchase of Assets
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If the seller receives a letter from the buyer describing intention to purchase the pharmacy assets, the seller should send an acknowledgment letter. While the letter essentially serves as a receipt, it also tells the buyer the next steps to be taken regarding the asset purchase. The letter should begin with an acknowledgment of the receipt of the document in question and should advise the buyer what action will be taken on the document The acknowledgment letter communicates to the buyer that the document is being taken seriously and being acted on with all due urgency. The deeper aim of the letter is to build goodwill and trust for the company on the part of the client.
Asset Bill of Sale and Assignment
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The bill of sale is the binding legal agreement, which is used when selling the pharmacy business assets, such as prescriptions, inventory, furniture, fixtures and equipment. Contracts, agreements, and leases relating to the purchase assets to which the seller is a party or by which the seller is bound are agreed to be assumed by the buyer.
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In a Stock Purchase, all of the outstanding shares of stock of the pharmacy business are transferred from the seller to the buyer. The buyer in effect steps into the shoes of the seller, and the operation of the business continues in an uninterrupted manner.
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When a pharmacy owner sells his pharmacy, a part of what he is selling is the “goodwill” of the business, or the professional or service reputation that draws patients there and the habits they have that may continue to bring them there. Without a non-compete clause, the owner would be free to go across the street, and immediately open a competing pharmacy. The non-compete agreement protects the buyer of the pharmacy by inserting such a provision in the bill of sale agreement covering the pharmacy.
