Hospital acquisition advisory in India: value the land, the permissions and the operation separately.

Three assets in one

Buyers and sellers usually quote a hospital as one number, such as a value per bed. That hides what is being bought. We examine three layers, each on its own evidence, because each can fail independently of the others.

Valuation: two lenses, never one

Two measures are in common use. Enterprise value per bed compares hospitals by capacity. Enterprise value to earnings compares them by what they earn. Each misleads when used alone.

Use both, then look at what sits underneath: occupancy, revenue per occupied bed and length of stay, which our glossary defines, and how much of the earnings is repeatable. Check the multiple against the three layers above. A fair price for the operation does not rescue a weak lease or a lapsed licence.

How the deal is structured

The right structure turns on the tax position, the state of the permissions, and how much of the history the buyer is willing to take. Take tax and legal advice before choosing.

Where hospital deals stall

1. The property. Title or lease problems found late, or a building that does not match its approvals.
2. The permissions. A licence or registration that is held by another entity, has lapsed, or will not transfer with the business.
3. The doctors. A large share of revenue depends on a few consultants who have no long-term commitment to stay.
4. Related parties. The hospital buys services, supplies or space from entities connected to the promoters, on terms that are not at arm’s length.
5. Liabilities not on the books. Claims, statutory dues and equipment finance that surface in diligence.
6. Process. A seller who shares information in pieces, or parties who bypass the intermediary and then dispute fees.

Most of these can be found early with a short, structured first pass on the three layers. That pass is what an indicative offer should rest on.

How a buy-side or sell-side mandate runs

1. Authority. We confirm in writing who instructs us and who owns the asset before anything is shared.
2. First pass. A short review of the three layers, with each fact sourced and each gap listed.
3. Positioning or screening. For a seller, an information memorandum and a shortlist of buyers who fit. For a buyer, a shortlist of hospitals that fit the brief.
4. Agreement. A tripartite non-disclosure and non-circumvention agreement, and fee terms in writing, before an introduction.
5. Indicative offer. A letter of intent that sets out value, structure, conditions and timing.
6. Diligence and documentation. Full review of land, permissions and operation, and negotiation of the agreements.
7. Close. Process management through to completion, with the fee split on pre-agreed rules.

Hospitality and healthcare advisory is delivered by Asia Investors Society, which takes hospital acquisition mandates as sole intermediary where the principal’s authority is documented.