Executive Summary – American Rehabilitation Centers & South Beach Health Partners

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Executive Summary – American Rehabilitation Centers American Rehabilitation Centers (ARC) is a leading provider of outpatient rehabilitative services. Their strategic goal is to use noninvasive treatments to lower direct costs and reduce recovery time to each patient. The company is looking to expand into sports medicine as it is a rapidly growing field, this case study is to examine two business opportunities to see which would be the better option given their goal. Proposal A is for one single large investment. Proposal B is a staged entry that would take place in two stages. Proposal A is for one single investment, ARC would purchase 500 facilities across the nation. Each facility would be renovated and fully equipped to open as a…show more content…
To take a closer look at the financing, the proposal to date is that the general partners will be made up of the group and the hospital. The general partners will contribute $500,000 and will retain 100% management control over the hospital. The limited partners will supply $500,000 but have no liability beyond the initial investment. The hospital will borrow $1 million from Miami National Bank for a five year term with interest rates of 8%. This initial $2 million will purchase and pay for the start up costs associated with the machine. As the current proposal stands the limited partners are to receive their initial investment the first two years of the project whether it is successful or not. In order to look at what that means the numbers are important. A cash flow analysis is important to determine feasibility of the project. So, three cash flow statements are prepared; best case scenario, most likely, and worst case scenario. In the best case scenario, the cash flow distribution would be $247,588 to the general partners and $577,294 to the limited partners. As you can see the limited partners are paid twice as much as the partners since in the proposal the limited partners are to receive their initial investment back first. However, after year one the cash flows are split 50/50 general partners to limited partners, this is good for all parties involved. In the most

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