Valuation of a loss-making Healthcare service provider
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Assignment
We were recently approached by a regional healthcare provider to value a potential target comprising a hospital, clinics and pharmacies, some of them characterized by a drop in revenue and negative EBITDAs, largely caused by Covid-19.
Our Approach
Outcome
We reverted to the most recent pre-Covid year (which was EBITDA-positive) and made suitable adjustments to both revenues and costs - to cover environmental factors (population increases, additional specialties introduced, etc) and organizational improvements (additional management oversight). To this adjusted-EBITDA, we applied the comps to arrive at the enterprise value of the target. And thereon to the EV-to- Equity value bridge.
Our valuation guidance - supported by a thorough analysis of comparable private M&A transaction multiples and trading multiples - equipped the client with the necessary levers to confidently negotiate the transaction terms within the indicative valuation range.