This document is designed to codify the considerations for
identifying potential owners of new Capital Chemist stores (both buying a new
store or opening a greenfield site). Some of these considerations may also be
important with changes of ownership.
There is no one single rule about who gets to partake in Capital
Chemist ownership. It is a negotiation between interested parties. Which
guidelines are used and in what order they are treated will vary because each
transaction brings a unique set of circumstances.
In all cases it is the group’s expectation that due
consideration be given to all existing partners who are potentially affected by
the new location or changes to an existing location.
The following factors should be taken into consideration –
and CCHO will facilitate discussions with these factors in mind.
The person who identified the opportunity would reasonably
have expectations of ownership.
Finding the pharmacy could be as simple as making initial
contact with a broker or it could also be the result of long-term approaches to
a store encouraging the owner to sell or it could be due to relationships with
developers that can take years to come to fruition.
When dealing with a broker be aware that other members of
the Capital Chemist group may be having similar discussions about the same
pharmacy; for this reason we recommend that you inform head office early in the
process to avoid a bidding war against ourselves.
Has a pharmacist been groomed for the role through
employment as an existing employee in a Capital Chemist pharmacy? Their mentors/employers
might potentially have expectations of involvement.
In the case where an employed pharmacist from one store is
contemplating moves to ownership outside of their current store, it is expected
that discussions take place with their current employer before any decisions
are made. It is noted that often these transactions retain a degree of
commercial-in-confidence which may limit the timing and content of discussions.
Is there an existing partner willing and able to assume the
mantle of hands on managing partner (e.g. an owner not currently managing a
store, or an owner wishing to relocate)? An existing partner might expect to be
considered above a non-owner.
There is a list of potential owner pharmacists who have been
through a modest degree of vetting by CCMC. Nominally these pharmacists are
“more ready” for ownership. CCMC expects that potential owners provide a 500
word submission on why Capital Chemist is the model for them, and a copy of their
CV. These are kept on file at CCHO for when potential opportunities arise.
In addition the aspiring owner should have a discussion with
CCHO staff (over three or four hours) about the CC model, the finances, how the
process works and how the path to ownership may proceed.
Importantly CCMC requests a meeting with potential owners,
preferably well before ownership is imminent. This is a chance for CCMC to
share the group’s values and allows the prospective owner an opportunity to
understand the rights and responsibilities that come with ownership and group
If any partners know of pharmacists who might wish to become
owners in our group, please refer them to the Group Business Manager to start
Which nearby pharmacies might be impacted? Do the local
owners want to be involved? The definition of local will vary with each
transaction but generally would include pharmacies that might have customer
behaviour impacted by the proposed pharmacy.
The managing partner has the right to select partners who
they feel will bring skills and expertise to the business. They may need
someone with HR skills, management skills, computer skills or marketing
experience. The mix of owners’ skills and experience should be complementary.
Where previous steps/considerations have not yet brought the
right people to an agreement an invitation might be extended to all partners
seeking expressions of interest. Where there are more expressions of interest
than there are shares available the nominated managing partner may choose or
the GBM may facilitate a vote by all partners.
It is neither practical nor desirable to force a managing
partner into ownership with people they would rather not be in business with;
for this reason it is recommended that the nominated managing partner has some
degree of veto over the choice of partners. As mentioned at the beginning of
this document, the process is a negotiation between interested/affected
There are multiple considerations and no definite rules. The
managing partner would (rightly) expect to have a substantial share. This varies
in our group from 10% to above 70%. The managing partner (or partners in some
cases) will be responsible for all aspects of running the pharmacy from day to
day. Longer-term strategic decisions would generally be made in conjunction
with all owners of the pharmacy.
There are situations where a holding of less than 20% may
have taxation implications. This is structure-dependant but it is important to
keep this in mind.
Shares below 10% are discouraged. The Capital model relies
on the pharmacy being used as security for finance with all owners
cross-guaranteeing business loans for all partners in that pharmacy – even
partners who do not have loans for that business. A share less than 10% might
not seem real or tangible but even small shares come with 100% of the risk from
the cross-guarantee process.
Ownership comes with responsibilities. All owners/potential
owners should have a conversation about roles, responsibilities and
expectations. The agreement between owners could be a handshake, or could
involve a written document. The written document could include a
partnership/shareholder agreement, and/or a buy-sell agreement.
Each ownership situation will require a slightly different
approach. CCHO can facilitate discussions with advisors (internal or external)
about the nature of these agreements. If issues arise we have access to a range
of tools to help mediate the problem, both in getting to the point of ownership
and after the structure is up and running.
It is never too early to think about the next stage. It is
recommended that all partners be kept appraised of the plans and expectations
of other partners – even if it is years before the event.
Agreements about future ownership changes and sell-downs can
be documented at any time to give certainty to all parties. CCHO can facilitate
this process if required.
CCMC cannot dictate or force ownership. CCMC are responsible
for deciding whether or not a store is part of the Capital Chemist group.
CCHO: Capital Chemist Head Office
CCMC: Capital Chemist Management Committee
GBM: Group Business Manager
The next step…
Come and talk to us at capital Chemist Head Office.