Write a 500 word case analysis for Case 24 using the case study and spreadsheet information.
Bloomington Clinics Practice Valuation Case Study. HAP, 2010.
This case illustrates the valuation of a medical practice, including cash flow estimation and
the use of both DCF and market multiple techniques. Furthermore, the DCF valuation
consists of both the free operating cash flow and cash flow to equity methods.
The model consists of a complete base case analysis--no changes need to be made
to the existing MODEL-GENERATED DATA section. However, all values in the student
version INPUT DATA section have been replaced with zeros. Thus, students must determine
the appropriate input values and enter them into the model. These cells are colored red.
When this is done, any error cells will be corrected and the base case solution will appear.
Note that the model does not contain any risk analyses, so students will have to create
their own if required by the case. Furthermore, students must create their own graphics
(charts) as needed to present their results.
Note that the instructor version of the model contains several tables that were used to create
the case solution. The student version model does not contain these tables.
1. As a matter of fact, the valuation of the Practice will vary depending on who will make the acquisition. The variation will come mainly on whether the acquirer will be able to take advantage of the Practice's status as an S corporation. The case specifically stated that the valuation was made on the assumption that the practice will file as a C corporation. Now, if the acquirer is a non-for-profit hospital, its valuation on the Practice would drastically differ from that of another for-profit group since the non-for-profit will not take into account taxes into its cash flow projections while the for-profit will have to.
2. The valuation can also differ depending on what assumptions the acquirer will take into account. For example, one potential acquirer may decide to use the worst case revenue growth rate estimates in projecting the Practice's cash flows over its future while another may prefer to use the average of the best, most likely and worst rates. Also, the tax status of the acquirer also plays a major role in ...
The Bloomington Clinics practice valuations case study is examined.