Health Development Corporation
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Mr. Paul Couturier, the CEO of Health Development Corporation (HDC), was negotiating the sale of his company in spring of 2000. HDC owned and managed health clubs in the Greater Boston area. The company had retained a local investment firm, Kaufman &Co., to solicit bids. They received several bids from health club companies seeking to establish themselves in the Boston area. The bids were lower than expected, largely because of the way the bidding companies considered HDC's ownership of Lexington Club's real estate. HDC generally leased their health club real estate but in 1999 HDC had taken advantage of the opportunity and purchased the Lexington Club at a very attractive price. However, surprisingly the HDC's ownership of the Lexington Club seemed to be reducing the company's offering price. In this case analysis, we have analyzed the reasons for the reduction in offer price and also the ways that the offer price can be increased...