Health Development Corp. (HDC) owns and operates fitness clubs in the Greater Boston area. HDC engaged a local investment bankers to explore a sale of the company. The most likely buyer sees HDC previous purchase of real estate as a negative. HDC management is convinced of the purchase value and increase confirms a discounted cash flow analysis, that it was about a substantially positive net present value decision. Nevertheless, the evaluation of the property according to the approach used reduces the … Read more »

Health Development Corp. (HDC) owns and operates fitness clubs in the Greater Boston area. HDC engaged a local investment bankers to explore a sale of the company. The most likely buyer sees HDC previous purchase of real estate as a negative. HDC management is convinced of the purchase value and increase confirms a discounted cash flow analysis, that it was about a substantially positive net present value decision. Nevertheless, the evaluation of the property according to the approach used reduces the potential buyer. The challenge is, a transaction that structure allows HDC to realize its full value.
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Richard S. Ruback
Source: Harvard Business School
6 pages.
Publication Date: May 04, 2000. Prod #: 200049-PDF-ENG
Health Development Corp. HBR case solution