Financial Model - ASC Turnaround
Typical project requirement: $2,500,000 investment, which includes the purchase price of the existing center.
Typical Financing: $1,400,000 on a limited recourse basis (guarantees limited to each partner's percentage interest).
Typical Equity/Capital: $1,100,000 with partner cash contributions.
Individual contribution (for 10% ownership in the center): Equity of $110,000 (10% x $1,100,000). Limited guarantee of $140,000 (10% x
$1,400,000).
Typical cost breakdown (purchase price, equipment, existing debt, and working capital reserves).
The total cost has four main components:
- The purchase price is dependent upon the past and current operating performance of an existing center and varies based on unique circumstances and the amount of liabilities assumed.
- Updating an existing center's equipment generally costs between $500,000 and $1,000,000, depending on the number of new specialties that are added to the project.
- Buyers are often required to accept a certain amount of the center's outstanding debt. As more debt is assumed, the purchase price is adjusted downward.
- A working capital injection of $300,000-$600,000 is common. These funds are necessary to pay regular operating expenses – rent, staff salaries,
utilities, etc. – until facility fee collection is sufficient to cover expenses(usually two to three months after the closing date of the acquisition).
Total cost: Between $1,300,000 and $3,300,000.