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 risk-adjusted economic 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

Risk-adjusted economic value of acquisition target increased from $0.61 million to $1.49 million.

Time required: 2 days.