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Clinical practice acquisition

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Evaluate what Dr Rose's practice is worth from the Medical Group CEO's perspective.
Determine a bidding strategy (opening bid, walk-away value)
Which valuation methodologies are most appropriate? (DCF, Market Multiple, Transaction Multiple, etc)
Comment on the key risks and key assumptions

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The solution discusses valuation issues in acquisition of clinical practice.

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Evaluate what Dr Rose's practice is worth from the Medical Group CEO's perspective.

As per the current trend, the practice in the area are commanding valuation between .5x-1x of revenues. Dr. Rose's practice should be valued on the higher side of this range because it is quite attractive for Medical group in terms of bringing HMO client business. Hence, Medical Group CEO may pay 1 times of revenues to Dr. Rose's practice due to the HMO business that it can bring to Medical group.

Determine a bidding strategy (opening bid, walk-away value)

Based on the valuation obtained via the chosen valuation methodology, the bidder should make a low opening bid and slowly increase bid by keeping in mind the realistic value of the ...

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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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