Question 1

What are some reasons in favor of the acquisition of Sooner Clinics by UHSC? Are there concerns about the acquisition?

Question 2

As a baseline, what is the estimated value of Sooner Clinics using the free operating cash flow method, the free cash flow to equity holders method, and the market multiple method?

Explain any input data that you calculate.

Question 3

You should have found that the values produced by the five methods are relatively consistent, but there are differences.

a. What does each method assume about the source of value?

b. Which method(s) do you believe to be the best for Sooner Clinics? Justify your choice.

Question 4

Suppose another health system is interested in acquiring SoonerClinics. Does the value of Sooner Clinics depend on who makes the acquisition? Explain why or why not.

Question 5

a. Are taxes relatively important in determining the value of Sooner Clinics?

b. Suppose the Year 6+ revenue growth rate could be as low as 1 percent and as high as 3 percent.Is the 6+ revenue growth rate relatively important in determining the value of Sooner Clinics?

Question 6

Should all partners receive the same per share amount if the practice is sold? Explain.

Question 7

a. From the perspective of the target, how would the analysis change if the acquirer planned to finance half of the acquisition price with debt? No calculations are required.

b. From the perspective of the acquirer, how would the analysis change if the acquirer planned to finance half of the acquisition price with debt? No calculations are required.

c. Is the current percentage of debt in the capital structure of Sooner Clinics relatively high or low? Does this make it a more or less attractive acquisition target? Explain your answer.

Question 8

What is your single best estimate of the value of Sooner Clinics?

Question 9

In your opinion, what are three key learning points from this case?