Medical Centre Valuation Mandate in a Strategic Partnership Context

Mandate Description

The objective of the mandate was to determine the fair economic value of a company operating a multidisciplinary medical centre dedicated to the treatment of musculoskeletal disorders.

The valuation was conducted in the context of a strategic partnership aimed at strengthening cooperation between the two organisations, notably through the sharing of medical resources, management functions and the development of a strengthened territorial healthcare network.

The assignment was carried out in the role of independent arbitrator, mandated by the acquiring party to assess the value of the target company based on a rigorous financial analysis and a detailed understanding of the operating model of a private medical centre in French-speaking Switzerland.

Key Issues

The main challenges of the mandate were to determine the fair value of a medical centre operating a highly human-capital-intensive service activity.

A key objective was to assess the sustainability of revenue streams generated from patient activity and medical partnerships.

The valuation also required measuring the organisational and financial impact of a merger on both quality of care and group profitability.

Ensuring an impartial value arbitration between the two entities was essential in order to guarantee economic coherence in the discussions.

Finally, the assignment aimed to provide a solid decision-making framework to support the governance of the merger project.

Approach and Results

The valuation relied on a set of complementary financial approaches adapted to the specific characteristics of medical services.

• A yield-based approach was applied, based on the capitalisation of standardised average earnings capacity.
• A discounted cash flow method was implemented, integrating expected management synergies, resource pooling effects and post-merger growth prospects.
• A market multiple approach was used, based on a panel of comparable medical centres in Switzerland and Europe.
• A listed multiples approach was also applied, drawing on publicly traded healthcare operators to establish sector valuation benchmarks.
• In addition, a net asset value approach was conducted to identify the substantial value of fixed assets and medical investments.
• Finally, the practitioners’ method was applied, combining earnings-based value and substantial value to derive a balanced assessment of the target company.

The cross-analysis of these approaches resulted in a coherent strategic valuation range, integrating both current economic fundamentals and medium-term value creation drivers.

This assignment helped objectify discussions between the parties by providing a balanced and well-reasoned assessment that reconciled financial, medical and human considerations.