Academic journal article Journal of Case Studies

Mantras Ambulance Services, Inc. Case 2: A Buyer-Side Business Valuation Case

Academic journal article Journal of Case Studies

Mantras Ambulance Services, Inc. Case 2: A Buyer-Side Business Valuation Case

Article excerpt


"2017 is going to be an exciting year for your company, Daniel! I just received the requested information from that company that you are interested in buying. I'll forward the information to you by email attachment, and I will get started on the analysis." Penny knew that her boss, Daniel, would be anxious to review and discuss the new information on a potential acquisition, so she cleared her desk off to focus on the analysis.

Daniel Gustafson started his company, QRT Ambulance Services, Inc. in 2010. He wanted to quickly expand operations, so his business strategy was to buy existing companies in locations he wished to operate. To facilitate this process, Daniel hired Kim Wilson, a business broker. Kim was responsible for identifying and soliciting interested companies to evaluate preliminary financial information. She would then send the most promising companies to Daniel for further consideration. Mantras Ambulance Services, Inc. had been identified as a company that would meet the objectives that Daniel had previously identified to Kim.

Background Information

Daniel Gustafson began college as a pre-med student. His first job was working part-time in the emergency room (ER) at a local hospital. Although he enjoyed the up and down pace of the work and assisting patients, he came to realize that operations management in healthcare was what he wanted to pursue as a career. Thereafter, the hospital employed Daniel to manage the workflow in their ER. He had a knack for understanding the flow of business operations and could effectively communicate his ideas and suggestions with staff to improve the operational organization of the ER. From this experience, Daniel changed his major to Business Administration, and later completed an MBA degree with a focus on Leadership and Management from Boston College. Upon graduation, Daniel accepted a management position with a national, for-profit ambulance services company.

After working for the same company for almost 10 years, Daniel knew every aspect of the ambulance service business. He had been transferred to Vermont with the company and successfully transformed their Burlington division into an efficient and profitable operation. Daniel wanted more opportunities, challenges, rewards, and advancement opportunities than his employer was offering, so he decided to start his own company. Thus, Daniel founded QRT Ambulance Services, Inc. in Burlington, VT in 2010. QRT stood for Quick and Reliable Transport--a goal that Daniel envisioned for his company. To quickly increase his company's market presence, Daniel's strategy was to buy existing "mom-and-pop" type ambulance companies. At the outset, Daniel had successfully negotiated the purchase of a small struggling ambulance company in Burlington, VT and turned it into a thriving business. In late 2015, he purchased a second business, Capital Ambulance Company in Montpelier, VT, for $2,000,000. He also hired Penny Nicholson to be the company's Chief Financial Officer (CFO) to oversee the financial operations for his growing company.

Daniel's business strategy was to focus on acquisitions of ambulance companies located in the northeast region of the United States. He was especially interested in acquiring companies in New York State so that he could expand his operations into that potentially fruitful market. To protect citizens from unqualified and unscrupulous ambulance providers, New York law required that a new ambulance company obtain a Certificate of Need from the state before starting operations (NYS Department of Health, 2009). This certificate showed that the company was reputable, met the standards required by the state, and the service was needed in a specific geographic region. New applicants of a new Certificate of Need had to demonstrate "an absence, reduced availability or an inadequate level of care in ambulance or emergency medical service to a geographic area which is not readily correctable through the reallocation or improvement of existing resources" (NYS Department of Health, 2009) making successful new applications difficult. …

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