Valuation Case Study-American Dental Partners, Inc. (ADPI)

Here is a chance to test your valuation skills.   Remember there are two ways that are theoretically sound:

  1. Discounting ALL future cash flows back to their present value using an appropriate discount rate for risk (“DCF”). A DCF may be a theoretically correct method to value a company but extremely difficult in practice.  A slight change in assumptions and your method becomes similar to using the Hubbell Telescope, you are looking at a different galaxy. Small changes in discount rates and/or cash flows change your valuation drastically.
  2. A second method is what would the business trade for in a CASH transaction between two equally informed buyer and seller. Here you have a real transaction to anchor your valuation.

Do NOT look at the price of ADPI. Go to the documents and based on the financials try to figure out what you would pay for the entire business. Support your assumptions.

I will post the answer in a few days.

For an overview of ADPI go to the Value-Line here:

View the ADPI 2010 annual report here:

If you are lost, then you can view past research reports on the company here at You will have to become a member but it is free. Once you login, type in ADPI in the search box for companies and two research reports will pop up. The Value Investors’ Club (“VIC”) is highly recommended as a learning tool.

Good luck! Test your skills.



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