Case | HBS Case Collection | May 2000 (Revised January 2003)

Health Development Corporation

by Richard S. Ruback

Abstract

Health Development Corp. (HDC) owns and operates health clubs in the Greater Boston area. HDC engaged a local investment banker to explore a sale of the company. The most likely buyer views HDC's prior purchase of real estate as a negative. HDC's management is convinced the purchase enhanced value, and a discounted cash flow analysis confirms that it was a substantially positive net present value decision. Nevertheless, the real estate reduces the valuation according to the approach used by the potential buyer. The challenge is to structure a transaction that allows HDC to realize its full value.

Keywords: Cash Flow; Property; Business Exit or Shutdown; Valuation; Value; Decisions; Health Industry; Boston;

Citation:

Ruback, Richard S. "Health Development Corporation." Harvard Business School Case 200-049, May 2000. (Revised January 2003.)