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Considerations when Selling a Pharmacy

By: Aaron Claxton and Mena Arsalai

Selling a California pharmacy is significantly more complicated than the sale of other businesses.  In addition to all of the typical business sale considerations, pharmacy sales require approval from the California Board of Pharmacy (the “Board”) of any transfer of 50% or more of the  beneficial interest in that license prior to the closing.  Additionally, due to the highly regulated nature of pharmacies, both on a state and federal basis, the pool of prospective buyers is dramatically smaller than with other businesses.  Below are a few of the most important areas to be considered by pharmacy owners before moving forward with selling their business:


It is critical for sellers to leave themselves a long runway to complete their transaction.  Licenses are not transferable to new owners.  Therefore, buyers must seek a new license before the close of a transaction.  The Board requires approval of changes in ownership before the change occurs.  Additionally, change of ownership applications must be filed with the Board at least 30 days prior to closing.  If a change of ownership application is not approved by the Board pre-closing, the Board may impose fines and issue citations to the parties.  A temporary license should be considered where closing timelines are compressed and may be issued at the discretion of the Board based on the specific facts of the transaction.


The sale of a pharmacy corporation can be structured as either an asset sale or a stock sale. An asset sale is where certain business assets are acquired by the buyer and the seller maintains ownership over the corporation and the remaining assets. In a stock sale the buyer acquires all of the shares of the corporation and takes over complete ownership of the business.  In general, a stock sale is preferrable to a seller because the buyer takes over responsibility for the entire business.  Conversely, buyers generally favor asset sales because they can pick and choose the assets they want and the seller remains responsible for any skeletons in the closet.  In either a stock or an asset sale, the parties will need to work together to clarify who is responsible for what after the sale.


It is important for sellers to understand that they remain on the hook for any pre-closing licensing issues with the Board.  For example, if a seller had failed to satisfy a required notification requirement to the Board and this failure comes to light post-closing, the Board may impose a fine on the seller.  Therefore, a careful review of any potential license issues is critical prior to any sale.

Tax and Legal Advisors

Sellers can find themselves with a surprise tax bill where taxes are not a primary focus of the transaction. Experienced tax advisors can be invaluable when sellers evaluate potential deal structures. Tax advisors should be brought into the mix early so that sellers can make fully informed decisions relative to the tax impact of the sale of their business.  Additionally, sellers should retain their own, independent legal advisors to guide them through the complex selling process. Too often sellers rely solely upon the buyer’s advisors for crucial legal advice.  It is a mistake to assume that buyer-paid attorneys, no matter how well-meaning, can fairly, and aggressively, represent sellers’ interests as well.


Like many businesses, a successful pharmacy is the result of years of work and relationships that the business owners and their teams have cultivated over time. Because of this, the hand-off period can be critical to the ongoing success of the business. The parties should work closely to clearly determine the post-closing role, if any, of the seller. Moreover, considerations should be made on whether there will be a change to the Pharmacist-in-Charge (“PIC”) position post-closing.  California law requires that the Board be notified within 30 days of when a PIC ceases to act as the pharmacist-in-charge, and a replacement PIC must be approved by the Board.  Additionally, consideration should be made as to whether the buyer will continue operating at the same location, or if a change of location will occur.  Under California law, a change of location must also be approved by the Board prior to any change.  Therefore, it is important to have these discussions early as the ultimate decision may be based on a third-party landlord. 


Who will buy your pharmacy? Current employees and business partners can make attractive prospective buyers as they already are up to speed on running the business.  Marketing to employees and partners is generally permissible.  Alternatively, you may consider selling to a large pharmacy chain.  Business brokers can be helpful in identifying additional buyers outside of a seller’s network.

            If you are considering selling your pharmacy, you are not alone. Contact the experienced health care attorneys at Wilke Fleury LLP to help navigate you through the sale of your business.

Wilke Fleury LLP Celebrates the Addition of Two New Partners

Wilke Fleury LLP is excited to announce the addition of two new partners – Kathryne E. Baldwin and Aaron R. Claxton!  Ms. Baldwin and Mr. Claxton are talented additions to the firm’s leadership.  Each of them brings unique capabilities to Wilke Fleury’s partnership.

Kathryne E. Baldwin’s practice focuses on corporate and business law with a specific focus on litigation and insurance coverage matters.  She obtained her undergraduate degree in Philosophy of Science & Logic at California State University, Sacramento.  While in college, Kathryne worked for her family’s Sacramento-based business, developing strong ties in the community and gaining a first-hand understanding of the operational issues facing corporations and businesses. Kathryne is a graduate of the University of Pacific, McGeorge School of Law.  During law school, Kathryne was a member of the nationally ranked McGeorge Mock Trial Competition Team and a semi-finalist finisher in the regional competition as a second year in 2015 and a finalist as a third year in 2016.  Kathryne also served as a board member to the McGeorge Women’s Caucus organization during all three years of law school, her final year as President.   Additionally, Kathryne was a member of the Federal Defender Clinic representing indigent clients charged with misdemeanors in federal court.

Click here to read more about Kathryne E. Baldwin.

Aaron R. Claxton provides creative solutions to complex problems in healthcare and corporate law.  Aaron’s practice focuses on Knox-Keene Act licensed health care service plans, insurance regulatory matters and healthcare transactions.  Additionally, he represents health care providers, including physicians, dentists, veterinarians, optometrists, pharmacists, DMEs, FQHCs, MSOs, IPAs and Employee Assistance Programs. He assists health care organizations with regulatory and compliance matters including licensing, contracting, policies, acquisitions and litigation. Aaron also counsels clients on issues pertaining to Medicaid, Medicare, HIPAA and antitrust laws in health care. 

Click here to read more about Aaron R. Claxton.

“We are really excited to welcome Kathryne and Aaron into the partnership. They are talented and thoughtful, and bring a wonderful energy and perspective to the table,” said Steve Williamson, Managing Partner. “They are excellent lawyers and great people. We are proud to have them onboard, and confident they will help the firm thrive as we begin our second century.”

Wilke Fleury LLP is a thriving mid‐sized general practice law firm located in California’s capitol. Our attorneys offer broad expertise, creativity, and strong ties to local businesses, families, and individuals, making Wilke Fleury LLP one of the region’s most respected and long‐standing law firms. Our support of local charitable organizations, universities, law schools, political interests and the community reveals the character of the firm and our sincere commitment to the Sacramento region.