Technology Acquisition and Project Management Highlights

Valuation of acquisition target and associated project management for bringing acquired technology to market in the computer equipment manufacturing industry.

Issues

• VP in charge of acquisition would simply attempt to negotiate to 25% lower than asking price, rather than assessing shareholder value of the acquisition.
• Project manager would potentially overspend on high-priced consultants to ensure project “success” due to corporate incentive structure.
• History of product development continuing well after most of the revenue opportunity had passed.
• Point projection of future demand was used, ignoring uncertainty and learning.

Provisdom's Solution

• Required only 2 days for complete analysis.
• Modeled uncertainty and learning for future product demand and difficulty in bringing the product to market in a reasonable timeframe.
• Included options to switch engineering teams or quit development if costs were not justified by current expectations about demand.
• Strategic alignment between VP of acquisitions and project manager.

Results

• Shareholder value of acquisition target increased from $0.61 million to $1.49 million.
• Time required: 2 days.