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How to analyze an acquisition

Daniel Rathburn is an editor at Investopedia who works on tax, accounting, regulatory, and cryptocurrency content.

Mergers and acquisitions allow businesses to increase their market share, expand their geographic reach and become larger players in their industries. However, when one company acquires another, it takes the good and the bad. If the target company is saddled with debt, ensconced in lawsuits or marred by disorganized financial records, these issues become the new company’s problems to deal with. The benefits from acquisitions are often outweighed when the acquiring company also acquires a list of costly problems.

Before making an acquisition, it is imperative for a company to evaluate whether its target is a good candidate. A good acquisition candidate is priced right, has a manageable debt load, minimal litigation and clean financial statements.

Evaluating an Acquisition

The first step in evaluating an acquisition candidate is determining whether the asking price is reasonable. The metrics investors use to place a value on an acquisition target vary from industry to industry; one of the primary reasons acquisitions fail to take place is that the asking price for the target company exceeds these metrics.

Investors should also examine the target company’s debt load. A company with reasonable debt at a high-interest rate that a larger company could refinance for much less often is a prime acquisition candidate; unusually high liabilities, however, should send up a red flag to potential investors.

While most businesses face a lawsuit once in a while—huge companies such as Walmart get sued quite often—a good acquisition candidate is one that isn't dealing with a level of litigation that exceeds what is reasonable and normal for its industry and size.

A good acquisition target has clean, organized financial statements. This makes it easier for the investor to do its due diligence and execute the takeover with confidence. It also helps prevent unwanted surprises from being unveiled after the acquisition is complete.

The catalysts for contemplating a merger or acquisition are multiple. You may want to increase your financial footprint or expand your market share by taking on a competitor’s customers. Bolting on a target’s know-how to expand a product catalogue is another motive.

The investment climate is showing signs of heating up in several key economies , fuelled by lower valuations and low interest rates, with a rebound of business investment in, software and IT equipment. But other opportunities will soon become evident as the habits customers began adopting at the start of the pandemic take hold. How can you prepare your company?

Does this acquisition really make sense?

Acquisitions – the thrill of the chase – are exciting events. But before rushing to launch a takeover or merger you should do your homework to make sure that the company in your sights fulfils several basic criteria:

  • Is it financially sound?
  • Is it a good fit with the rest of your activities?
  • Does it offer attractive and rewarding synergies?

Before making an offer, take a deep dive into your target’s financial statements to analyse its past performance, paying special attention to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation), working capital and debt levels.

How strong is the company’s balance sheet?

Now look closely at the target’s balance sheet. An excessive debt-to-equity ratio should be a red flag. How will this additional debt load impact your credit rating?

Next stop is the cash flow statement to give you an idea of the target’s capacity to service its debt. The income statement can provide a glimpse of the target’s profitability and top-line momentum. Be sure to scrutinise both historical and forward-looking financials.

Remember: numbers alone won’t provide adequate information. You want to check out a company’s reputation, its banking relationships, its relationships with customers and suppliers.

Another consideration is how the target and its ecosystem have been affected by the Covid-19 crisis. How has it adjusted its product lines, capacity or management philosophy due to shifts in its industry? Predictably, sectors such as IT and software are doing better than others, such as hospitality and travel.

Draw up a hypothetical post-merger income statement that takes into account potential synergies, estimating the positive impact of increased market share as well as potential benefits from synergies.

Broaden your investigation to include information on the company’s industry: what is the sector’s growth potential? Your target should be well-situated in comparison with its peers and competitors.

What impact will the acquisition have on your own company’s financials?

Any acquisition can have an impact on your company’s working capital. Expanded activity generates more costs and requires more cash. If you don’t have plenty of liquidity on hand, you must be able to increase your credit line. If you are selling 100 objects a month now and want to increase that number to 150, you must be able to increase your working capital by 50%.

In the same vein, consider how you will fund this acquisition. Taking on debt will affect your debt/equity ratio. Do the sales and profitability deltas of the combined operation justify the increased leverage?

Other less tangible factors to take into account include integration risk arising from the culture and practices of the target. Will it be plug-and-play, or will integration take 3, 5 or 10 years? Be prepared for a few glitches in your plans and be flexible.

Don’t imagine that the plans you created at the beginning of the year are still viable. Draw up alternative scenarios. Create a Plan B (or C), for instance if you’ve overestimated potential synergies. It’s better to be conservative early on than to find later you’ve put your company at risk.

Can you afford the time?

Finally, embarking on a merger/takeover is a huge distraction for management from running a firm’s day-to-day business. Undertaking precise analysis, verification and research required for a successful operation absorbs time and labour.

Trade credit insurance can protect your business against the risk of financial loss from non-payment of a commercial trade debt, a particularly important consideration in the uncharted operational field that can follow an acquisition or a merger.

For more tips and advice on business financial monitoring, download our ebook: Boost your financial performance analysis .

How to analyze an acquisitionStartupStockPhotos / Pixabay

Business acquisitions are an increasingly common way for large businesses to achieve more dominance and for growing businesses to grow faster or in new ways. That said, not all acquisitions are created equal. Some acquisitions can instantly multiply the value and efficiency of your company, while others can ultimately serve only to drag you down. So how can you tell the difference?

There are some high-level factors that can immediately attract you to a potential deal; for example, some business entities, like LLCs, are easier to acquire than others. But beyond that, you’ll have to do some digging to determine whether a particular business acquisition is worth your time and money.

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How to analyze an acquisition

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Why Seek an Acquisition?

There are many motivations to seek a company acquisition, but some archetypes are more likely to be successful than others. These are some of the most important ways you can acquire a business to make your own business more successful:

  • Improving performance or efficiency. Some acquisitions are meant to improve your performance or your efficiency, either by reducing your costs or allowing you to improve profit margins and cash flow. For example, you might acquire a company with a similar business model that has access to more advanced equipment and processes, which would allow you to refine your own processes and potentially multiply production.
  • Taking advantage of excess capacity. In other cases, you might acquire a company to take advantage of excess capacity that might otherwise be wasted. For example, if you own a chemical production plant, but some of your factories are unoccupied and unused 25 percent of the time, you could acquire a company that could potentially make use of those wasted hours, ultimately making you more efficient.
  • Expanding or accelerating market reach. This scenario is extremely useful for companies trying to expand as quickly or as far as possible. The idea here is to leverage a business’s geographical presence or demographic reach, acquiring them as a kind of shortcut to reach a bigger target audience with their core services.
  • Acquiring technologies or skills. Many big tech corporations (like Alphabet) pursue mergers and acquisitions for the purposes of acquiring technologies or skills that would take years to develop on their own. Startups are frequently better able to take big risks and innovate in novel ways, ultimately producing technologies that bigger companies can put to good use on larger scales.
  • Exploiting scalability or logistics. Some acquisitions are meant to improve scalability across one or more dimensions of the industry. For example, two different businesses may employ similar, but distinct product models; combining these platforms under one umbrella could allow for the development of products that can utilize both platforms.
  • Nurturing promising young businesses. Some companies acquire businesses that seem promising but are unable to grow on their own. This is half motivated by a desire to nurture the company to maturity and half motivated to exploit the promising business’s potential for the larger company’s gain.

Key Factors to Judge

Assuming you have one or more of these motivations in place, you can turn to various financial factors to see if an acquisition is worth your initial investment:

  • Obviously, you’ll need to know the relative value of the company you’re acquiring. This will often dictate your offer for the company. There are a few distinct potential approaches here, so make sure you’re relying on the average of multiple evaluations or you’re using the method that makes the most sense.
  • How much money is this company currently making? This is a factor of both revenue and cost, so it’s a good indication of how the company is performing. Startups focused on growth may neglect or postpone profitability intentionally, but otherwise, high profitability is a good sign. Of course, low profitability may serve as an entry point to secure a better acquisition deal.
  • Current and future growth. How fast has this company grown so far? How is it planning to grow in the near and distant future?
  • Acquiring a company typically means acquiring not just its assets, but also its liabilities. How much debt does this company have? How leveraged is it overall?
  • How big is this company currently? Small companies often make for better acquisitions because the logistics of integrating their current assets are easier. However, if you’re out to expand your reach or scale up your productivity, a bigger business may be better.
  • Finally, consider how liquid the business is. Could you easily sell off the assets of this business if push came to shove? How much cash does it currently hold?

These are just some of the most important financial factors you’ll want to use to evaluate the potential of an acquisition. You’ll also want to consider more subjective factors, depending on how you’re going to integrate the company, like the quality of their leadership and staff. Business acquisitions are complex, and impossible to concisely evaluate given the advice of a single article, but these descriptors should help you better understand their complex landscape.

Currently, there are a lot of good forensics commercial tools, can be used to perform a whole dfir workflow. However, several analyst anche companies cannot afford the purchase of those (awesome) tools.

For this reason, all my dfir tutorial are based only on opensource or free tools.
Today, I’d like to share a full list of this kind of tools.

Acquisition

CAINE

CAINE (Computer Aided INvestigative Environment) is an Italian GNU/Linux live distribution created as a Digital Forensics project and managed by Nanni Bassetti.

The main design objectives that CAINE aims to guarantee are the following:

  • an interoperable environment that supports the digital investigator during the four phases of the digital investigation
  • a user-friendly graphical interface
  • user-friendly tools

This environment can be used to perform, using DD utility, physical disk acquisition on local USB disk or over network.

References

FTK Imager Lite

FTK Imager is a free tool developed by The Access Data Group for creating disk images without making changes to the original evidence.

This tool is also useful for volatile memory acquisition: from my point of view, it creates better images than other windows tools.

References

AVML

AVML is a volatile memory acquisition tool written in Rust, intended to be deployed as a static binary.

AVML can be used to acquire memory without knowing the target OS distribution or kernel a priori. No on-target compilation or fingerprinting is needed.

References

LiME is a Loadable Kernel Module (LKM) developed for volatile memory acquisition from Linux and Linux-based devices, such as Android.

It also minimizes its interaction between user and kernel space processes during acquisition, which allows it to produce memory captures that are more forensically sound than those of other tools designed for Linux memory acquisition.

In order to use a LiME memory dump with volatility, a memory profile must be generated on target sistem.

References

MacPmem

MacPmem is a Osx Kernel Extension (kext, a dynamically loaded bundle of executable code that runs in kernel space) that, once loaded, exposes two new devices:

  • /dev/pmem: allows physical memory read access, but can be built also with write support.
  • /dev/pmem_info: Exposes informational dump.

Using this devices, a standard acquisition using DD can be simply accomplished.

References

Data extraction and analysis

The SleuthKit

The Sleuth Kit (TSK) is a library and collection of utilities for extracting data from disk drives and other storage so as to facilitate the forensic analysis of computer systems.
The collection is open source and protected by the GPL, the CPL and the IPL.

References

Photorec

PhotoRec is file data recovery software designed to recover lost files including video, documents and archives from hard disks and CD-ROMs. PhotoRec ignores the file system and goes after the underlying data, so it will still work even if your media’s file system has been severely damaged or reformatted.

TestDisk

TestDisk is a free data recovery tool primarily designed to help recover lost partitions and undelete files from FAT, exFAT, NTFS and Undelete files from FAT, exFAT, NTFS and ext2 filesystem filesystem.

References

VShadowInfo and VShadowMount

Shadow Copy (also known as Volume Snapshot Service, Volume Shadow Copy Service or VSS) is a technology included in Microsoft Windows that allows taking manual or automatic backup copies or snapshots of computer files or volumes, even when they are in use.

libvshadow is a library to access the Volume Shadow Snapshot (VSS) format.

ARSENAL Image Mounter

Arsenal Image Mounter mounts the contents of disk images as a real SCSI disks in Windows, allowing integration with Disk Manager, launching virtual machines (and then bypassing Windows authentication), managing BitLocker-protected volumes, mounting Volume Shadow Copies, and more.

ShadowCopyView

ShadowCopyView is tool developed by Nirsoft that lists the snapshots created by the ‘Volume Shadow Copy’ service of Windows 10/8/7/Vista.

References

Plaso

Plaso is a Python-based engine designed to extract timestamps from various files found on a typical computer system(s) and aggregate them, into a enhanced timeline, called super timeline.

The super timeline goes beyond the traditional file system timeline creation based on metadata extracted from acquired images by extending it with more sources, including more artifacts that provide valuable information to the investigation.

The technique was published in June 2010, on the SANS reading room, in a paper from Kristinn Gudjonssonas part of his GCFA gold certification.

References

Volatility

The well-known open source memory forensics framework for incident response and malware analysis.

About Volatility I’ve already written several posts and books.

References

Autopsy

Autopsy is a digital forensics platform and graphical interface to The Sleuth Kit and other digital forensics tools. It can be used to investigate what happened on a computer system, but also to recover and analyze files.

How to analyze an acquisition

M&A (mergers and acquisitions) should proceed in a way that increases the value of a company to the shareholders.

A corporate merger is a combination of assets and liabilities of two firms which form a single business entity. When the senior management decides to buy another company, it is mostly focused on increasing the value of a new company.

The synergy effect is expected to be the core driver to improve sales, profit margins and the market positioning of the company. Excluding any synergies resulting from the merger, the total post-merger value of the two firms is equal to the pre-merger value.

Nevertheless, synergies do exist.

Often the value creation is the motive for an acquisition. And it can result in several ways from the transaction’s synergy.

Value creation through M&A

Value can be created, for example, through revenue enhancement, cost reductions, increased operating cash flow, improved managerial decision making, or the sale of redundant assets. However, the value created from proposed synergies also may have an additional investment cost as well.

Acquisition target‘s total value is comprised of the assets in place and the value of merging companies’ combined with real options.

In other words, a buying company that views synergies as real options can profit from acquisitions even though it paid a premium over the market price.

Post-acquisition strategic real options are considered as the value adding real options (which we defined broadly as synergies) that are unlikely fully priced in the market because they can be exclusively available only for a specific acquiring company.

How to analyze an acquisition

Synergy takes the form of revenue enhancement and cost savings.

When two companies in the same industry merge, such as two banks, combined revenues tend to decline to the extent that the businesses overlap in the same market and some customers become alienated.

For the merger to benefit shareholders, there should be cost-saving opportunities to offset the revenue decline. In other terms, the synergies deriving from the merger must exceed the initially lost value.

As a rule of thumb, synergy is a business combination where 2+2 = 5. Or here is another way we can calculate synergies in M&A:

Synergy = NPV (Net Present Value) + P (premium),

NPV – net present value of a newly created company.

Synergy benefits can come from four potential sources:

  1. Revenue increase. This can be done by selling more different goods and services using a broadened product distribution. This will help the new company to compete for customers which originally were not the clients.
  2. Expenses reduction. Because of a merger or acquisition, many companies optimize internal positions and introduce more responsibilities to the existing roles.
  3. Process optimization. It is done by introducing enhanced marketing tactics and strategies, branding, better technologies, and more effective distribution.
  4. Financial economy. United enterprise from the legal prospective can get better tax benefits, state support etc. But the buyers should remember: financial economy alone can’t optimize the strategic position of a company. So it should not be the only value driver in the deal.

To calculate synergies in M&A, the evaluation should be focused on three parameters:

  • Benefit impact from synergy effect. This basically means that each forecast component should be critically reviewed. However, consultants tend to make overly-optimistic cash flows and costs.
  • The probability of achieving. Here we can consider three scenarios: optimistic, pessimistic and the realistic for achieving. The Monte-Carlo simulation method helps with finding the range of possible results.
  • Time of benefit generation. History of M&A deals has a lot of cases when speeding up with a purpose of increasing acquisition attractiveness lead to overestimated synergy value. Doing this M&A team cheat on themselves.

These parameters can have a huge impact on the accuracy of the synergy evaluation.

When synergies are considered?

M&A professionals often solely focus on the benefits of synergies during a pricing analysis for an acquisition.

However, acquirers often must make incremental investments before realizing the return on capital generated by synergies.

Many analysts, however, do not consider these incremental investments or “hidden” costs when performing a pricing analysis or valuation of a potential target. Failure to consider the hidden costs often causes the overvaluation of a potential target, which may lead to destroying value rather than creating it.

Synergy appeared due to acquisition should include higher results then it was originally expected.

Acquisition process should be well-planned. Mark Sirower, the US leader of the Merger & Acquisition Strategy and Commercial Diligence practice, named 4 components which should take place in order to achieve successful synergies:

  • Strategic vision
  • Operating strategy
  • Systems integration
  • Power and culture

The buyer should pay out the premium to shareholders of merged company. The higher the premium, the lower the potential benefit for the buyer. Therefore, synergies should not be intangible. It should be carefully forecast and discounted from net cash flows which are feasible within the chosen time frame.

Post-merger integration issues, as well as competitors’ reactions, can contribute to the hidden costs of an acquisition.

Besides the positive impact of revenue enhancements, cost reductions, and other efficiencies, valuation analysts need to price them in, too.

How do you find the article? Was it helpful? Let me know what you think in the comments below.

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All, I work at a middle-market fund (started about 8 months ago here) and wanted to learn from someone qualified (associate level or above) who works on the buyside what the best and most efficient way to analyze a CIM is (Confidential Information Memorandum, for those who’re not aware is a 40-50+ pg book that basically markets a company to potential strategic/financial buyers and is usually put together by an investment bank working on behalf of the client, the company.

It contains critical confidential information on the company’s history, business model, operations, financials, management etc. i.e. anything an investor would need to learn about the company to be able to make an informed decision and submit a non-binding initial letter of intent if they’re interested in buying the company.

Mod Note (Andy): Throwback Thursday, this was originally posted 3/3/2012, user @Sil” pointed out this week that the comments in this thread are very high quality / helpful so I thought it would be good to add this to the frontpage.

How to Analyze a CIM in PE?

When working in private equity as an analyst one your main jobs will be looking through proposals for buyouts that you firm will evaluate as potential buyout candidates. These proposals are called CIMs .

What is a CIM?

What to Look for in a CIM – Financials

Our users shared financial thresholds and metrics that they look at. Typically, analysts look at EBITDA figures and cash on cash returns.

  • Low capex – usually less than 5% of revenues
  • Strong EBITDA margins –

What Makes a Good Take Out Target – Qualitative?

User @red08″ shared a good sniff test look through of a CIM:

  1. Company and the industry
  2. Financial metrics (rev and EBITDA growth, margins, capex, cash flow gen); quick comps for valuation range
  3. How they cycled
  4. Value-prop (reason to exist)
  5. Mgmt team

User @johndoe89″ shared a detail review based on multiple years of PE experience:

  1. Financial Fit:I recommend starting from the financials in the back. If your fund is anything like mine, you will be pretty restricted in terms of the size of the cos. you can invest in. For eg, in our case, if the co. as below $5M in EBITDA , we would only consider it if the story was really really compelling (an industry or management team we knew well or had invested in before). This helps screen out a lot of companies that you’re gonna be on the fence about if you start reading CIMs the traditional way from the front.
  2. Transaction Structure: Look at the transaction structure section next and jot down what type of deal is on the table. Generally its some generic crap like they’ll consider all kinds of proposals but in some cases they’ll explicitly say they’re only looking for a majority buyout or only looking to bring on a minority investor. That can help save time if your fund doesn’t do it.
  3. FCF Generation Ability: Always do a back of the envelope to compute the company’s FCF profile (EBITDA-Capex). Shitty companies won’t give you this calc but it’ll only take 2 mins for you to realize from the EBITDA and capex numbers that the company doesn’t generate much free cash, in which case you won’t be able to put on too much leverage. You should generally have EBITDA and Capex given. If Capex isn’t available, ask the bankers.
  4. Industry Tailwinds (or Headwinds): Spend some time reading through the industry and make sure the industry has strong tailwinds/ is growing at a high single digit rate. A lot of times you could be looking at a growing asset but in a shitty industry. In that case you really have to spend time figuring out the secret sauce because a shitty industry can bring down even the best company along with it. Generally stay away from those.
  5. Organic vs Acquisition Driven Growth: On that note, really scrutinize organic vs acquisition driven growth. A lot of companies (especially those previously owned by PE) make several acquisitions over the course of the fund’s investment. Try to figure out what is the true organic growth rate for the platform company and attempt to segregate performance of the add-ons.
  6. Call w/ Bankers: Generally we always did a call with the bankers after going through the CIM and jotting down our questions. This quickly helped kill opportunities due to transaction dynamics that weren’t discussed in the CIM . Not sure how it works at your fund but try to get these calls in asap after reading the CIM . It ll help you not waste time.

Distressed Asset Confidential Information Memorandum

Slightly different perspective, but as a distressed guy, I usually see these after the company’s debt starts being offered at attractive levels. I usually model the company’s capital structure and LTM financials quickly, then if interesting break out a few prior year financials for like for like comparisons.

After this, I tend to quickly flick through the CIM when I realise I don’t actually know what the company does yet. It’s very easy for me to read as I can just skip past all the growth assumptions and focus on the company’s key value drivers and market positioning. I rarely spend more than 1 hour looking at a CIM .

In the business world, companies merge all the time. Today startups are doing the same to expand and change the way they do business. An acquisition involves buying a company and changing it to fit the way you do business. The goal is to create a new company made of the best parts of your business and the proven parts of another.

A startup would buy another business for various reasons. These reasons include access to new technology and access to new markets. Buying a company can mean being able to make new products and having access to new resources or fresh management talent. However, if you handle an acquisition poorly, your business could take on the mistakes of a broken organization and heavy losses.

Here is a step-by-step guide of how a startup acquires another company.

1. Make a Plan

Look at the reasons to buy a company:

Finding new markets

Industry roll-up strategy

Getting advanced technology

Market window strategy

Product supplementation strategy

Getting new personnel

Geographic growth strategy

Increasing market share

Vertical integration strategy

Increase supply chain pricing power

Adjacent industry strategy

Consider which of these resources you need. Find out why the business is worth buying. Develop an acquisition plan that gets the most out of the enterprise while spending the least. Focus on the aspect of the company that is most valuable to you and shape your offer around that benefit.

2. Build an Acquisition Team

Build a team that fills the following roles:

An executive manages the team to ensure the success of the acquisition. This person also reports progress to the board of directors. Your CEO is the best candidate for this position.

An investment banker handles your finances and looks into the stability of the company you are acquiring.

An acquisitions lawyer understands the rules of transferring ownership.

A human resources expert organizes the staff from the new company.

An IT specialist merges your technical infrastructure with that of the new company.

A public relations officer promotes the merger to the public. This person informs your business partners and customers about the new merger.

These people will work to provide useful information on the company. They will determine what can become a part of your business and what should not.

3. Do Your Research and Due Diligence

This process has two phases:

First Phase

Check the public information about the company. Check job listings, Web pages, blog entries, conference proceedings, news stories, SEC filings and any other data that you can use when drafting the contract. Look to see if the company fits your plans and for any issues that may devalue the company. This research will be useful during negotiations.

Second Phase

After contacting the company, tour its corporate facilities. Meet the management and check the essential elements of the company. Use this information to answer questions like these:

What are the actual numbers?

How successful and sound are the company's products?

What is the staff like and how can they improve your company?

Does the corporate culture match your company's culture?

Common documents needed

Summary of business owner requirements

Three-five years of financial data (P&L and balance sheet)

Annual review of owner's benefits

Summary of top customers

Prepare documents

Non-Disclosure Agreement

This document makes sure all information considered confidential will be treated carefully and not shared. It also means the information has to be returned upon request.

Letter of Intent

This document states that you intend on buying the company after signing the NDA and after considering the business is worth.

  • Confidential information memorandum

This document provides the prospective buyer with information for the initial offer. It is commonly referred to as the "book" and will typically include: a summary of business operations, summary of industry and market opportuntiies, financial information, and summary of auction process.

Indication of Interest

With this you express an interest in making a deal in vague but formal written offer.

Purchase Agreement

You and the seller formalize the agreement in a binding legal contract.

4. Make Your First Offer

If you like what you have found, make an offer. Make a good first impression with clear positive negotiations by offering a fair price. Because you are attempting to buy this company, you need to make the first offer. Remember that the merger working is your responsibility. Also, keep in mind that you are buying more than a company. You are buying the brand, the company's goodwill, and its people. Be flexible and make an offer between 75 and 90 percent of the company’s worth.

5. Negotiate the Terms

Reach an agreement that ends in the happy merger of two companies. Be firm but don't undermine your success by being too harsh. Try not to overpay and work toward an agreement that benefits both parties.

If things go well, you will settle on a price, but this process is about more than money. This is about understanding why the owners are making their counteroffer.

Find out why the company is incentivizing the sale. See if there might be something wrong with the company. This will give you a clearer idea of what you are buying.

After you have settled on a price, work over the soft issues. Figure out who stays with the company and who you will have to let go. This part can be emotional, so be sensitive and try to keep as much of the talent in the company as possible.

6. Write Up (and Then Sign) a Contract

Contracts are not the end of a negotiation. They are where things get complicated. The deals don't end when you go to contract. Having a lawyer recording the negotiation makes things easier. A contract lawyer will find anything you need to talk about.

If you need a lawyer to help you with an acquisition, post a job through UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Don’t believe me? Then let me ask you a question: How much money do you spend just to attract one attendee? You likely have no idea, and that’s understandable. After all, your job is to plan events, not pretend you’re a marketing professional or an accountant.

How to analyze an acquisition

Imagine how much easier and efficient your work would be if you knew how exactly your efforts impacted your results.

“Is this even possible, to evaluate how much we spend just to attract one attendee?” I hear you wondering.

It’s more than possible, and not so difficult.

But let’s try to understand things gradually.

Tracking the right things

As you probably know, lots of companies and brands launch different Facebook, Google AdWords, and LinkedIn campaigns to promote their services, products, workshops, and events.

They usually spend big money on designing attractive advertising campaigns, trying to drive high-quality traffic to their website and then convince these people to take actions (aka convert) such as fill out a demo or registration form, schedule a meeting, download content, etc.

Considering the resources they invest into these activities, professionals are interested in proving the ROI (Return on Investment) and gathering the necessary data on how people behave after clicking on these ads.

Let’s break down these steps a little bit.

Brand X creates an advertising campaign for Facebook to get people to try a free demo of their software.

The company is pretty confident this will work, so it invests a good amount of money into the advertising and makes sure the ads will reach the right leads. Once people start seeing the ad, they click on it, landing on the brand X website or one-pager.

Once there, they scroll through the copy and decide whether or not to take action (aka try the free demo).

Chances are that most visitors will close the page and forget about brand X all together.

Others, however, will take action and try the demo. This sole action will increase the probability of these people eventually becoming brand X customers. But things don’t end there—brand X marketers are smart, and they’re using a conversion pixel. What’s that?

What is a conversion pixel?

Roughly speaking, a conversion pixel is a JavaScript code used to track the actions users take when landing on your website.

As marketer Barbara Santos explains:

“This means that the conversion pixel can show you actions such as redirection to other pages, an additional product added to the cart, a product actually bought, among other kinds of conversion. This tracking is only possible because of the invisible image added to your website when you inserted the conversion pixel. What happens is that, every time someone performs the action there’s a conversion pixel acting, the invisible image sends a message to the server of the channel you use to advertise. After these messages are sent, you can have access to information such as the type of audience who was interested in that offer, which campaigns generate more sales, which ads work best with each persona, etc.”

How to calculate the acquisition costs

How exactly do conversion pixel work for evaluating acquisition costs?

Here’s a quick example.

Let’s say you’re spending USD 3,000 on a Facebook campaign. This campaign sends 300 people to your site. Of those 300 people, 30 will take a desired action (schedule a meeting, fill out a form, download a book, etc.).

This means that your acquisition cost is 3,000 divided by 30, or in other words, USD 100 per person.

Let’s say that you’re also spending USD 3,000 for the same marketing campaign, but this time on LinkedIn. This time, however, you’re getting 500 visitors, and 100 take the desired action. In this case, your acquisition cost is USD 30 (remember, 3,000 divided by 100).

Having this data, you can see that LinkedIn is more efficient, and instead of spending half your money on Facebook and getting poor results, you can double your money on your LinkedIn campaign.

Specific data, better decisions.

“That sounds great, but what does that have to do with events?” you might be asking.

Let’s check it out.

How conversion pixel work for events

While different companies or brands might want to get people to download an eBook, schedule a meeting with someone from the sales team, or try a free demo of their product, you, as an organizer, may want to get your website visitors to register for your event.

To make this happen, you decide to launch a marketing campaign via Facebook and attract as many visitors as you can to your event website.

As in the examples mentioned above, the conversion pixel will help you understand what your attendee acquisition costs are and what marketing strategy works best.

Just apply the same formula, experiment with your marketing strategy, and decide the most efficient way to increase your attendance rate.

The more data you have, the smarter your decisions will be about how to spend your marketing money more resourcefully and get better results.

The only problem is that if you don’t add the conversion pixel, LinkedIn, Facebook, or Google AdWords can’t show you the amount of traffic they’ve sent to your page or the conversion rates.

But don’t worry: Our mission is to make your life and the lives of other event professionals easier.

That’s why you can now add the conversion pixel by using Eventtia.

Step 1. Click on the Registration module, then click on Types and select the attendee type.

How to analyze an acquisition

Step 2. Click on the Messages tab.

How to analyze an acquisition

Step 3. From the Success Registration Message, click on Source.

How to analyze an acquisition

Step 4. Paste the conversion pixel code (Facebook, LinkedIn, or Google AdWords) and save it.

How to analyze an acquisition

Now you know how to set up conversion pixels that will help you not only measure your ROI, but also make better decisions to improve the attendance rate.

Digital forensics evidence is volatile and delicate. As such, the inappropriate handling of this evidence can mar your entire investigative effort. Due to the fragility and volatility of forensic evidence, certain procedures must be followed to make sure that the data is not altered during its acquisition, packaging, transfer, and storage (that is, data handling). These specified procedures outline the phases of data handling and the protocols to be followed during data acquisition.

The continuously developing field of digital forensics has become its own field of scientific proficiency, with complementary training and certification programs such as Computer Hacking Forensic Investigation (CHFI). Join our community of professionals in the digital forensics industry by partaking in our certification programs today!

What is acquisition in digital forensics?

Data acquisition in digital forensics encompasses all the procedures involved in gathering digital evidence including cloning and copying evidence from any electronic source. It involves producing a forensic image from digital devices including CD ROM, hard drive, removable hard drives, smartphones, thumb drive, gaming console, servers, and other computer technologies that can store electronic data.

In digital forensics investigation, data acquisition is perhaps the most critical stage and it involves a demanding, thorough, and well-crafted plan for acquiring digital evidence. Thorough information must be stored and preserved, as well as all software and hardware provisions, the computer media applied during the investigation process, and the forensic evidence being considered.

Data acquisition methods

There are different types of data acquisition methods including logical disk-to-disk file, disk-to-disk copy, sparse data copy of a file or folder, and disk-to-image file. There are also different approaches used for data acquisition. This will depend on the type of digital device you’re applying to. For instance, the approach you’ll utilize for retrieving evidence from a smartphone will be different from the technique needed to acquire digital evidence from a computer hard drive.

Except you’re performing a live acquisition, the forensics evidence is typically obtained from the digital media seized and stored at the forensics lab (static acquisition). The seized digital forensics evidence is regarded as the primary source of evidence during a forensics investigation. It is called an ‘exhibit’ in legal vocabulary. Although, the digital forensics professional does not obtain data directly from the primary source so as not to corrode or compromise the evidence.

What is cybercrime investigation?

A cybercrime or a digital crime refers to the application of computers, networks, and other digital devices to commit a crime. The digital tools used for cybercrimes have two motives; to launch a cyberattack, or to function as the victim by receiving the cyberattack from other malicious sources.

Following the above logic, a cybercrime investigation involves all the strategies of examining, evaluating, and retrieving vital digital forensics data from the local networks or internet to discover the identities of the authors of the digital crime and their real motives.

The people who conduct cybercrime investigations must be professionals with an understanding of incident response processes, computer hacking, software and hardware, operating systems, and file systems. The computer forensics examiner must also understand how these components interact together, to have a full picture of the why, what, how, who, and when of the cyberattack.

To learn more about cybercrime investigations, sign up today for our CHFI certification program and course.

What is the first step in forensic analysis at a cybercrime scene?

The first step in any forensic analysis is the validation of the entire software and hardware specifications so that the digital forensic analyst can ascertain if they are properly working. Nevertheless, the investigation begins long before the digital forensics examiner arrives at a cybercrime scene.

As the CHFI expert approaches the cybercrime scene, the first obligation is to ‘switch on’ his/her observation powers and senses. Performing investigations in any crime scene are no simple task. A certified computer examiner has a better chance of detecting anomalies since he/she has gone through rigorous computer forensic courses. With any luck, the first responders haven’t mishandled or caused irreparable damage to the digital evidence.

Your data acquisition must be based on the volatility of your forensic evidence. This means that you need to collect your digital forensics evidence based on their level of fragility. The most fragile evidence must be collected first, and later the least fragile evidence. The reason for this is to minimize any form of damage or data modification.

For example, in an order of the most to the least fragile evidence, you should collect forensic evidence from registers, cache, routing tables, process table, kernel statistics, temporary file systems, CDs, remote logging and monitoring data that is relevant to the system in question, physical configuration, network topology, and finally from archival media.

Data acquisition in the private sector

Besides, the response to cybersecurity incidents in the private sector comprises of precise practices that must be observed for optimum data acquisition, and to contain, examine, and/or mitigate the incident. There are two basic approaches for data acquisition during a cybercrime, which varies from one organization to the other. Nevertheless, these approaches are not restricted to the private sector alone.

The first step is to recover quickly. At the stage, the digital forensic analyst is not bothered with the collection or preservation of data, but how to quickly contain the cybersecurity incident to lessen the potential damages or costs. Priority is given to immediate incidence response and recovery. However, critical digital evidence can be overlooked or damaged through this approach

The second approach is to gather digital forensic evidence and information regarding the incident. Here, the digital forensic professional keenly observes the cybersecurity incident and concentrates all their efforts on how to use the available digital forensics tools to gather evidence and clues about the incident. Since the major objective is to gather vital evidence, there is often a delay in the retrieval of significant digital evidence.

What is the correct order of processing evidence and analysis of a crime scene?

With the increase in mobile users and internet dependency, computers and networks are typically the targets of cyberattacks. While there have been efforts to develop a process model for processing and analyzing evidence at a cybercrime scene, there is yet to be a universally accepted methodology.

This may be due to the varying environments where these incidents occur, including law enforcement, national agencies, or incidence response. However, the investigator must first assess and protect the crime scene, seize critical evidence at the crime scene, and then make preparation to begin a detailed investigation.

How is a digital forensic investigation conducted?

The aim of a digital forensic investigation is to recover information from the seized forensic evidence during a cybercrime investigation. Forensic IT investigators use a systematic process to analyze evidence that could be used to support or prosecute an intruder in the courts of law. Forensics investigation could include all or some of the following steps:

Merger & Acquisition cases are best practiced using mock interviews

Many growth strategy case studies eventually lead to M&A questions. For instance, companies with excess funds, searching for ways to grow quickly might be interested in acquiring upstream or downstream suppliers (vertical integration), direct competitors (horizontal integration), complementary businesses, or even unrelated businesses to diversify their portfolio. The most important requirement for an M&A is that it must increase the shareholders’ value and it must have a cultural fit even when the decision financially makes sense.

Analogous to making a purchase at a grocery store, M&A can be viewed as a “buying decision”. In general, we know that a consumer first determines the “need” to buy a product followed by analyzing whether he or she can afford the product. After analyzing the first 2 critical factors, the consumer might look at the long/short term benefits of the product. Applying similar logic in M&A cases:

  1. Why does the company want to acquire?
  2. How much is the target company asking for its purchase price & is it fair (see cost-benefit analysis)? Can the acquiring company afford to pay the valuation? Financial valuation will generally include industry & company analysis.
  3. Benefits – potential synergies.
  4. Feasibility and risks (cultural and economical).

Key areas to analyze: assets, target, industry, and feasibility

When you are sure that it is an M&A case, proceed with the following analyses after structuring the case as discussed above:

Analyze the client’s company

  • Why does the client want to acquire? Potential reasons could be the following:
    • (a) Strategic (market position, growth opportunities, diversification of product portfolio)
    • (b) Defensive (acquisition by another competitor could make the competitor unconquerable)
    • (c) Synergies/value creation (cost-saving opportunities such as economies of scale, cross-selling, brand)
    • (d) Undervalued (ineffective management, unfavorable market, and the client has the power to bring the target company to its potential value)

    Analyze the target industry

    Once it’s clear why the client is interested in acquiring a particular company, start by looking at the industry the client wants to buy. This analysis is crucial since the outlook of the industry might overshadow the target’s ability to play in it. For instance, small/unprofitable targets in a growing market can be attractive in the same way as great targets can be unattractive in a dying market.

    Potential questions to assess are:

    • Can the market be segmented and does the target only play in one of the segments of the market?
    • How big is the market?
    • What are the market’s growth figures?
    • What is the focus? Is it a high volume/low margin or a low volume/high margin market?
    • Are there barriers to entry?
    • Who are the key competitors in the market?
    • How profitable are the competitors?
    • What are possible threats?

    Analyze the target company

    After analyzing the target industry, understand the target company. Try to determine its strengths and weaknesses (see SWOT analysis) and perform a financial valuation to determine the attractiveness of the potential target. You are technically calculating the NPV of the company but this calculation likely is not going to be asked in the case interview. However, having the knowledge of when it is used (e.g., financial valuation) is crucial. Analyze the following information to determine the market attractiveness:

    • The company’s market share
    • The company’s growth figures as compared to that of competitors
    • The company’s profitability as compared to that of competitors
    • How can current businesses from the client leverage revenues and profitability from the business to be acquired (keyword synergies)?
      1. Does the company possess any relevant patents or other useful intangibles (see Google purchasing Motorola)?
      2. Which parts of the company to be acquired can benefit from synergies?
    • The company’s key customers
    • Valuation

    Analyze the feasibility of the M&A

    Finally, make sure to investigate the feasibility of the acquisition.

    Important questions here are:

    • Is the target open for an acquisition or merger in the first place? If not, can the competition acquire it?
    • Are there enough funds available (have a look at the balance sheet or cash flow statement)? Is there a chance of raising funds in the case of insufficient funds through loans etc?
    • Is the client experienced in the integration of acquired companies? Could a merger pose organizational/management problems for the client?
    • Are there other risks associated with a merger? (For example think of political implications and risks of failure, like with the failed merger of Daimler and Chrysler.)

    Conclusion

    You should now be able to evaluate the venture’s financial and qualitative attractiveness for the client. If you conclude that the client should go on with the M&A, make sure to structure your conclusions in the end. Your suggestions should also include:

    How to analyze an acquisition

    FIGURE 1

    In Google Analytics, acquisition reports let you know where your visitors originated from? What does this mean, exactly? There are several ways a visitor can reach your website: directly, organically, referral, social media, email, and paid search. Essentially, having access to an acquisition report will allow you to understand how, and often times why, users found your site. A simple acquisition graph looks similar to this Fig.1. As you can see, this graph breaks down the channels by which someone visited a site. For a digital marketer working on SEO, this can be helpful in many ways.

    How Can Reports Help Us?

    For starters, if you are working on a client’s SEO (search engine optimization), one of the tasks at hand is to create, update, and revise content on a website. Another important objective is to increase visitors on the site; and moreover, hopefully get these visitors to interact with your business somehow. Therefore, having a clear idea of what channel these visitors are coming through to click on a page, and what percentages these channels are being used is imperative to building content, and creating a digital marketing plan.

    For instance, as Fig. 1 explains, 34.2% of the visitors that logged on to the site during an allotted time came organically. Visiting a channel organically means finding the site via a natural search engine like Google, Yahoo, or Bing. Typically, the higher organic percentage is the consequence of quality content on a site. On the contrary, paid channels are defined as PPC (pay per click) which are generated from Google Ads and Bing Ads. A direct channels means the user typed in the url and/or business name and came directly to the site.

    Social media marketing has definitely changed the landscape of digital marketing because millions of potential customers are surfing their favorite social media site every day and more posts lead to more visibility. Finally, reaching a site from a referral ultimately is due to backlinks. In other words, backlinks are generated via link building. This means a potential customer visited your site because they accessed a link from another site. For instance, this blog alone refers you, the reader, to semrush.com with the ‘backlinks’ internal link which is a reputable SEO blog.

    How Our Team Can Help

    Team WTI uses acquisition reports in order to create quality content for all of our clients. In addition, we use this analysis to investigate how visitors join a client’s site, how to broaden a client’s organic visitors, explore link building, and decipher how we are doing with our social media campaigns.

    How to analyze an acquisition

    In the paid acquisition world, clicks can seem like the holy grail. But if you really think about it, clicks only tell you if people arrive to your content. They don’t reveal whether they stayed or not.

    But how do you know if your content is engaging and emotionally resonant enough to persuade your audience to stay and ultimately buy your product or service? A metric that’s arguably the most indicative of this is conversions — if your creative convinced someone to download or even buy something, then it was worth consuming.

    In your advertising campaigns, the best way to measure your content’s converting capabilities and, in turn, its resonance is cost per acquisition. Read on to learn more about what exactly it is, the formula for calculating it, how its bidding process works, and some principles for crafting creative and convincing ad copy.

    Cost Per Acquisition (CPA)

    When brands choose the cost per acquisition pricing model while advertising on online advertising platforms, they pay for every acquisition, like a sale or form submission, their advertisement campaign generates.

    Most acquisition marketers prefer the cost per acquisition pricing model because they can set their definition of an acquisition before they start advertising and only have to pay when their desired acquisition or action happens.

    Cost Per Acquisition Bidding

    Cost per acquisition auctions aren’t like your typical auction for antiques. Advertising platforms, like Google, want to level the playing field when it comes to leveraging the size of their reach, so instead of the highest bidder always winning the auction, the bidder with the highest Ad Rank always wins.

    AdRank is calculated by multiplying your maximum cost per acquisition bid with the quality score of your ad, which is calculated by measuring your page’s relevance to the keyword, user experience, and click-through-rate. This means organizations can’t acquire the top ranking for any keyword they want just because they have the biggest ad budgets. Their content has to be engaging.

    How to analyze an acquisition

    Google wants to incentivize the best advertisers to advertise the best content on their search engine results pages, so they reward ads that have high quality scores with higher ad rankings and lower cost per acquisition.

    In the same vein, they also want to discourage bad advertisers from advertising bad content, so advertisers with low quality scores will usually only acquire a high ad position if they pay a huge cost per acquisition bid. If they want to pay lower a cost per acquisition bid, they’ll have to settle with stooping at the bottom of the ad rankings.

    To generate as many conversions as possible within the limits of your advertising budget, consider using Google’s target CPA bidding. Target CPA bidding leverages machine learning to analyze your campaign’s historical conversion data, recommend an optimal average target CPA, and automatically optimize all your eligible bids to meet the average target CPA you set for all your campaigns.

    If you use target CPA bidding, some of your conversions may cost more than others because your quality score or the competition in your ad auction might fluctuate, but Google will try its hardest to keep your cost per acquisition as close to your average target CPA as possible.

    Cost Per Acquisition Formula

    To calculate your advertising campaign’s cost per acquisition, take your total advertising spend and divide it by the number of acquisitions generated.

    How to Optimize Your Cost Per Acquisition Costs

    Since your quality score, which is a metric that measures how positive and relevant of an experience your content provides, is the most influential determinant in securing a top ad ranking and, in turn, generating more conversions, the best way to optimize your cost per acquisition costs is crafting compelling ad and landing page copy.

    When you sit down to write ad or landing page copy, your goal should be to write something so captivating that it can grab the attention of a distracted millennial slouched in front of the TV, with their smartphone in one hand and a slice of pizza in the other.

    So what’s the process for persuading your audience to ignore that pizza, click on your ad, and convert on your landing page? Check out this three-step process for crafting compelling ad and landing page copy.

    1. Pique your audience’s curiosity

    A little intrigue goes a long way in marketing. Humans are biologically driven to investigate our world rather than respond to it. And if you can evoke enough curiosity in your audience so they can’t help but satisfy it, they’ll click on your ad. So don’t reveal too much about your offer — but make sure to highlight its benefits in a clear and convincing way.

    2. Sell a feeling

    Psychology tells us that emotions drive our behavior, while logic justifies our actions after the fact. Marketing confirms this theory — humans associate the same personality traits with brands as they do with people. Choosing between two alternatives is like choosing your best friend or significant other. The people we decide to live our lives with make us feel something.

    This is also the reason why pitching a product’s features is a lousy attempt at persuasion. Features only appeal to the logical part of your brain, which science suggests doesn’t drive action nearly as well as appealing to the emotional part of your brain does. So don’t just get creative with your copy — get emotional too.

    3. Design a simple yet convincing landing page.

    Just because you’ve grabbed someone’s attention with your ad doesn’t mean your work is done. You still need to design a compelling landing page that clearly conveys the value of our offer.

    In order to do this, consider piquing your audience’s curiosity with an intriguing headline and subheading, scrapping any external links from your landing page so visitors can only leave your paid acquisition funnel if they exit the page or convert, and test out video, which can explain the value of your offer in a more engaging way than text can.

    If you want to learn how HubSpot creates landing pages that convert at 35% rate, check out this blog post.

    Instead of chasing clicks, pursue conversions.

    Marketers will chase vanity metrics until the end of time, and you might feel pressured to do the same, especially when your peers clamor on about their astronomical growth in views or clicks.

    But if you ever feel tempted to jump on that train, remember, in marketing, the goal is to persuade someone to take your desired action. So incentivize your brand to resonate with your audience — that’s the thing that actually keeps people on your content and prompts them to act. And make conversions, not clicks, your carrot.

    Haggling over the price is usually one of the main hurdles in negotiating a business purchase. This is made more difficult by the complexity of business valuation; determining a fair value isn’t possible without carefully studying the company’s financial information, sales trends, customer and supplier base, and much more.

    This is why it’s generally a good idea to hire a professional business valuator to produce an independent valuation. Their report can uncover hidden financial issues and provide a good basis for negotiations.

    “Valuation is a qualitative exercise. It’s not formulaic. Many aspects go into the value,” says Dennis Leung, a chartered business valuator with accounting and advisory firm Grant Thornton and chair of the communications committee of the Canadian Institute of Chartered Business Valuators.

    Here are the three steps Leung follows to determine the value of a company.

    1. Decide the level of valuation

    The first step is to determine the level of complexity and assurance needed in the valuation report. A valuator can prepare three different levels of report ranging from basic to highly detailed.

    The more thorough the report, the greater the cost and assurance that the valuation accurately reflects the company’s true worth.

    Calculation report

    This is the simplest level of valuation report. It is typically a top-level report that provides limited details—for example, only a minimal breakdown of sales data. Such a report may be suitable to establish a preliminary valuation assessment.

    Estimate report

    An estimate report provides a mid-range level of detail and gives a higher level of assurance than a calculation report. It typically involves some review and corroboration of company information and may contain sales breakdowns by service line or division. It is often used for acquisitions.

    Comprehensive report

    A comprehensive report offers the highest level of detail and assurance. It involves thorough review and corroboration of information and may include market and economic research and detailed breakdowns of figures. It is common in more complex acquisitions and situations involving litigation or regulatory scrutiny.

    2. Get business information

    Once an engagement letter has been signed with the subject company, the valuator will be able to access the financial documents and other information they need to prepare the valuation report. The amount of information depends on the type of report they must prepare. It typically includes:

    • financial statements for the past three to five years
    • the prior year’s tax return
    • a list of discretionary and non-recurring or one-time expenses
    • management compensation
    • business location, square footage and ownership or rental status of facilities
    • number of employees
    • patents, bylaws, and shareholder agreements

    In some cases, especially if a more detailed report is being prepared, a valuator may also ask for:

    • a sales breakdown by customer for the past three to five years (in order to determine customer concentration, which can affect value)
    • information on supplier concentration
    • product margins by service line

    The valuator may also follow up with:

    • clarifying questions to the company and an on-site visit
    • independent research on market conditions, business trends and risk factors

    “It’s a collaborative approach,” Leung says. “We always tell the client we need to understand the business. They have the knowledge that makes the valuation possible.”

    3. Apply appropriate valuation method

    Three main methods are available to determine the value of a company. A valuator chooses the method or combination of methods best suited to the type of business and the information available to them.

    Keep in mind that the valuator determines a company’s stand-alone fair market value to an arm’s-length party. This means the company’s value without any potential synergies or strategic considerations from the buyer.

    The purchase price of the business may differ from the fair market value determined by a valuator because of various factors, such as the buyer’s strategic interests or expected synergies, the owner’s eagerness to sell, due diligence, available financing and the company’s capacity to smoothly transition to new ownership.

    Earnings-based methods

    These approaches are commonly used for businesses that generate reasonable profits and whose value is greater than that of their net assets alone.

    A valuator determines the company’s value by reviewing past results and forecasted cash flow or earnings. They may also assess how reasonable the the company’s projections are.

    “Valuation is usually forward-looking,” Leung says. “A buyer isn’t buying what the business earned in the past, but what it will earn in the future. Historic results provide guidance, but they aren’t necessarily indicative of future results.”

    A variety of income-based approaches is available.

    • Capitalized cash flow: Used when cash flow is expected to remain stable in future years.
    • Discounted cash flow: Used when cash flow is expected to fluctuate substantially in future years, such as when a company is growing rapidly.

    Market-based methods

    These approaches calculate a valuation by applying a valuation multiple, which may be based on EBITDA (earnings before interest, taxes, depreciation and amortization), revenue or other metrics. The specific figure used and type of ratio vary greatly depending on many factors, including:

    • industry and location
    • market conditions
    • sales trends
    • multiples used by comparable businesses
    • size and maturity of the company
    • past and forecasted earnings and cash flow stability
    • customer and supplier diversification
    • goodwill and intellectual property
    • dependence on owners and key employees
    • workforce engagement

    Asset-based methods

    Asset-based approaches are typically used for businesses whose value is asset-related rather than operations-related—for example in the real estate sector. They are also applied when a business doesn’t generate a sufficient return on the assets employed or is expected to be liquidated. The valuator may in some cases need to call in a real estate or equipment appraiser for additional input.

    Once a merger or acquisition deal is signed and moving forward, how do you measure success? And how long does it take to achieve that success?

    These are excellent questions — and we hope you are asking them early in the process. They don’t, however, have simple answers. After all, your situation may be very different from someone else’s: the sizes of the companies involved in the transaction, the delta between their cultures, differences in business models and the procedures an organization puts in place to handle the transition can dramatically affect the outcome and timeframe of an integration.

    Let’s begin with the question of time.

    How Long Will it Take?

    Assuming the two engaged organizations are able to coalesce and coexist, how long before they are cooperating and working as one? If the deal is a simple acquisition of a smaller firm that does essentially the same thing as the larger firm (for instance, a regional law firm that buys a small practice in another town), the culture shift may be fairly small and the friction minimal. The two firms could be working together with relative cohesion within a couple of months.

    If, however, the differences are larger, or if the companies involved are complex, it can take up to three years for all the dust to settle. But even in the most complicated circumstances, some order should be emerging in the first 90 days, and the new organization should be seeing tangible progress within six months. In the majority of cases, the integration will be producing the expected efficiencies and synergies by the end of the second year, if not sooner.

    Next, let’s discuss what metrics you might monitor to determine how your merger or acquisition is performing.

    10 Measures of M&A Success

    To a large degree, how you define success going into a deal will determine the way you measure it. So much depends on what you expect out of the merger or acquisition. For instance, if your expected outcome is access to a new market, you’ll likely want to keep an eye on regional sales and indicators of increased visibility in that region. If, on the other hand, you bought a firm to add new expertise to your portfolio, you’ll obviously want to monitor interest in, and sales of, those services. But you also might also want to look at utilization in that practice area, as well as overall firm profitability.

    No matter what you expect from your merger or acquisition, you’ll want to track multiple metrics—beyond your primary objectives. Here are 10 common ways you can assess the success of your integration:

    1. Number of clients. Consider tracking this number across your entire firm (in case there is a halo effect that benefits multiple practice areas), as well as for the specific area of your business that has changed.
    1. Revenue. There is no reason to go through the significant trouble of M&A if it doesn’t make you money. Again, look at both the whole firm and the affected business unit(s). With so much change in the organization, it’s easy to take your eye off of the business development ball.
    1. Revenue per client. Are you now able to attract larger, more valuable clients?
    1. Run rate savings. Your run rate is simply an extrapolation of your current revenues and expenses into the future. Plot your actual and expected run rates on a synergy curve and track the results over time. How quickly are you seeing the benefits of synergy? Most successful integrations completely realize these efficiencies within two to three years.
    1. Cross selling of services. A well integrated firm will be able to upsell and cross sell services. How often are your other practices referring and selling the new services?
    1. Cash flows. Has the merger or acquisition facilitated or impeded your flow of cash? A successful integration should have a very positive effect once you have achieved synergy.
    1. Client complaints. M&A activity can wreak havoc in a once-smoothly running organization. Keeping a log of client complaints is a good way to understand the scope of the problem — and pinpoint the areas you need to address most urgently.
    1. Quality of new clients. Quality can be a subjective measure, but it can give you a sense of which direction your M&A activity is taking you, especially if you have a pre-M&A benchmark to compare against. One way to measure quality is to score a client on a 1-5 scale across a handful of factors, such as: 1) Do they pay on time?, 2) Are they easy to work with?, 3) Do they allow you to do exceptional work?
    1. Level of staff stress. Has the merger or acquisition made working at your firm more difficult on your staff? Are managers and HR fielding more internal complaints? Are people taking more sick days? Are they working longer hours to compensate for the distractions of an evolving organization? Is the office atmosphere more tense than usual? It’s not unusual for the level of stress to increase in the months following a deal, but you should be taking measures to mitigate those issues over time.
    1. Staff turnover. Depending on the nature of the integration, you may or may not expect people to leave the organization. If the merger or acquisition created redundancies, then staff departures were probably part of the plan from the beginning. The worst outcome, however, is when unforeseen circumstances — often clashing cultures — compel top talent to leave the firm. Closely monitor this trend from the very beginning. It can sink a promising integration like a torpedo.

    Whatever your reason for considering a merger or acquisition, be sure to define clear expectations for the deal. Set quantifiable goals — objectives that can be measured and monitored along the way. Then track your progress as you roll out your integration plan. Do you need to make adjustments? Is there a major problem (like the departure of key staff) that requires emergency triage? If you aren’t looking, you will miss many of the early warning signals. And if you are a firm that plans to grow through acquisitions, measurement helps you learn from your mistakes.

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    Aaron Taylor A partner and co-founder of Hinge, Aaron brings over 20 years of marketing strategy experience to every client engagement. In his career, he’s conceived and implemented engaging brand strategies for scores of professional services firms. In his role as Creative Director, Aaron oversees Hinge’s award-winning creative team.

    How Hinge Can Help

    Hinge has developed a comprehensive plan, The Visible Firm® to address these issues and more. It is the leading marketing program for delivering greater visibility, growth, and profits. This customized program will identify the most practical offline and online marketing tools your firm will need to gain new clients and reach new heights.

    From a forensics perspective, the less impact made to the running system while snapshotting memory, the better. Best case scenario is to obtain a memory dump from a virtualized machine, in which the host takes a memory dump of a guest without the guest (and any malware running on it) being able to detect it and without any modification to the RAM or file contents. Less ideal are memory dumps of a running system taken from within the system, since this requires code to the run (and potentially the output to be stored) on the machine itself, which modifies the system state and potentially overwrites evidence.

    Following are four methods of obtaining memory snapshots from running systems, in rough descending order of preference.

    Capture a Hyper-V Linux Guest

    Hyper-V memory snapshots are virtual machine runtime state (VMRS) files. To take a snapshot of a virtual machine’s memory in Hyper-V, you need to use the Checkpoint functionality, either via the Hyper-V Manager or PowerShell.

    Prior to doing so, we recommend that you ensure the VM has checkpoints enabled and that they are configured as Standard checkpoints, rather than Production. As the UI indicates, we want to "capture the current state of applications". Also take note of the Checkpoint File Location path, as that’s the location to which the VMRS file will be written.

    How to analyze an acquisition

    Via the Hyper-V Manager

    To create a checkpoint using the Hyper-V Manager, locate the appropriate Linux VM, right-mouse click, and select Checkpoint.

    How to analyze an acquisition

    Via PowerShell

    To create a checkpoint using PowerShell, use the Checkpoint-VM command and pass in the Linux VM name as an argument:

    This will instruct Hyper-V to take the checkpoint:

    Upload the Image

    Once extraction is complete via either method, browse to the checkpoint directory for the given VM:

    How to analyze an acquisition

    Identify the VMRS file and submit it to Project Freta for analysis.

    Capture a Linux Instance using AVML

    AVML is an X86_64 usermode volatile memory acquisition tool written in Rust. It can be used to acquire memory without knowing the target OS distribution or kernel, and no on-target compilation or fingerprinting is needed.

    AVML leverages the /proc/kcore interface present on several Linux distributions. Unlike other on-instance memory capture methods, this is a lighter touch as no modification to the kernel (e.g., loading of a kernel module) is required. However, /proc/kcore is not universal, so this tool is not always an option.

    AVML is open source and available on GitHub. Compiled binaries are located under the releases folder, or you may opt to build it yourself.

    Building AVML

    Clone the AVML repo and browse to the src folder

    If needed, install MUSL and Build the source according to the following from the AVML notes:

    The result should be a new avml file (or similar) in the target/x86_64-unknown-linux-musl/release folder.

    You should build AVML on a different machine than the one on which you use it.

    Using AVML

    To obtain a memory snapshot using AVML, take the following steps.

    Copy the avml file to the target Linux machine (via USB or otherwise) and execute the following command, providing the flags, options, and filename as appropriate. Note that this can take a while to run, depending on the hardware characteristics of the target machine.

    Retrieve the file and submit it to Project Freta for analysis.

    Convert a VMWare Snapshot

    Project Freta can ingest VMWare snapshots that have been converted for GDB using the vmss2core tool with the -M flag.

    Please take the following steps as detailed in the VMWare docs:

    1. Create a snapshot or suspend the virtual machine
    2. Locate the snapshot (.vmsn) or suspend file (.vmss) in the virtual machine directory; the vmss2core tool also accepts monolithic or non-monolithic memory (.vmem) files
    3. Run the vmss2core tool with the -M flag to create a core file (vmss.core) with a physical memory view suitable for the Gnu debugger gdb the file to Project Feta

    Capture a Linux Instance using LiME

    The Linux Memory Extractor (LiME) Loadable Kernel Module (LKM) is designed to acquire a full volatile memory (i.e., RAM) dump of the host system for forensic analysis or security research. It does it all in kernel space and can dump an image either to the local file system or over TCP. It’s designed to give you as close of a copy of physical memory as possible while minimizing its interaction with (and therefore impact on) the host system, but it does require kernel modification via loading the kernel module.

    The LiME LKM is open source and available on GitHub.

    Building LiME

    Clone the LiME repo

    If needed, install the GNU build tools to enable the make command

    Browse to the src folder and run the make command

    The result should be a new lime-5.4.0-26-generic.ko file (or similar) in the current directory.

    You should build the LiME LKM on a different machine than the one on which you use it.

    The Walt Disney Company (DIS) bought out Marvel Entertainment, Inc. (MVL) in a deal valued at $4 billion in 2009. The purchase price was originally a mix of $30 in cash and .745 of a share of Disney for each share of Marvel. The closing prices at the time of the deal meant that Marvel shareholders would have received $49.3998 per share in value for their stock at closing. However, prior to the merger’s completion the share price of Marvel Entertainment, Inc was only $48.37 – a full point below the merger value.

    This happens regularly in mergers but why does this discount exist and is there a way traders can take advantage of it?

    One of the things we look for when watching for a market bottom is an increase in merger and acquisition (M&A) activity. This merger – along with several others – in the second quarter of 2009 were a big tip that the bull market was likely to re-emerge. Similarly, when deal-activity begins to slow it is a signal that prices in the market may begin to move lower. M&A activity is common at a market bottom because lower stock prices are attractive to potential acquirers as they look to consolidate competitors and grab more market share.

    [VIDEO] How Mergers and Acquisitions Affect Stock Prices

    Stock Prices Can Change Even After A Merger Is Announced

    A common question relative to M&A activity and its affect on stock prices is why the acquisition target’s stock price does not equal the value the acquirer will be paying. In other words – if company A is buying Company B’s stock for $10 a share in a few months, why doesn’t Company B’s stock equal $10 immediately following the announcement?

    Uncertainty Can Lower Prices

    The differential between an M&A target’s acquisition price per share and its current trading price accounts for the uncertainty around the merger. If the purchase never actually happens, the target’s stock will likely drop significantly. In the video, I will cover another case study of a stock that was going through a deal of its own at the time of recording.

    Hostile Takeovers Are Even More Uncertain

    The more uncertain the actual merger is, the wider this delta or differential will be. For example, if the target company is being subjected to a hostile or unsolicited takeover the difference between the acquisition stock price and the current stock price will be very wide as management works to fend off the acquirer or attract a “white knight” to rescue it from the larger firm.

    Sometimes the Acquisition Target’s Stock Will Rise Above the Takeover Offer

    This can happen when traders believe that there is likely to be another bidder that will offer more for the firm. This is a more unusual situation but it will happen from time to time when the deal would give the winning bidder a significant competitive advantage.

    Think Before Trading

    It may be tempting to take advantage of the differential by buying the target’s stock and shorting the proper ratio of the acquirer’s stock. That strategy has a very poor risk/reward ratio as the downside can be many times the possible upside. Long Term Capital Management (the trillion dollar hedge fund bailed out by the Fed in the late 1990’s) famously built a problematic portfolio of highly-leveraged versions of this trade.

    Options May be a Better Alternative

    Alternatively, buying long term puts on the target’s stock may be another way to approach the opportunity. This strategy is extremely speculative but the upside could be very large should the merger not occur. If you decide to test a strategy like this it would be a good idea to start with paper trading. Option premiums can be extremely inflated before a merger is consummated, which will make losses much larger.

    A merger occurs when two separate entities combine forces to create a new, joint organization. An acquisition refers to the takeover of one entity by another. The two terms have become increasingly blended and used in conjunction with one another.

    Mergers and acquisitions both refer to the joining of two or more business entities that entails a restructuring of their corporate order. They are aimed at achieving better synergies within the organization in order to increase their competence and efficiency. However, there are key differences between a merger vs. acquisition in terms of initiation, procedure, and outcome.

    Apply the concepts learned throughout this course to an analysis of a merger or an acquisition. Much of the information you will need to complete this analysis can be found in the company's annual report. You may choose any recent merger or acquisition (within the last 5 years). Using the concepts from this course, you will analyze the success of the merger or acquisition.The completed project should include the information listed below.

    • Provide an introduction to the companies involved in the merger or acquisition. Include the companies’ background information and the reasons for the merger.
    • Evaluate the financial statements of both companies (balance sheet, income statement, cash flow statement).
    • Evaluate the potential and actual risks that occurred during the merger and what the companies could have done differently to mitigate these risks.
    • Discuss the companies’ management of human capital in the merger or acquisition.
    • Evaluate the soundness of the company’s financial policies after the merger (e.g., capital structure, debt, leverage, dividend policy, enterprise risk management, and others.) based on the material covered during class.
    • Include a synopsis of your findings, including your recommendations and rationale for whether the merger or acquisition was beneficial to both companies and your recommendation on best practices for moving forward.

    This analysis should be at least three pages in length, not counting the title and reference pages. Support your findings and recommendations with evidence from the annual report and at least five scholarly sources, such as the textbook, industry reports, and articles from the CSU Online Library. Use APA format to cite and reference all sources, including any websites that were used to access company information.

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    Ultrasonic flaw detectors record complete A-scan information and can use it to create a two-dimensional C-scan map.

    C-scan mapping is the best ultrasonic testing method to rapidly inspect large surfaces.

    Ultrasonic NDT technology can acoustically examine material and create complete inspection maps. The process is called C-scan mapping. Illustrated by comprehensive colour palettes, these volumetric integrity reports are as easy to interpret as a traditional X-Ray.

    Basics of C-scan mapping

    How to analyze an acquisition

    Ultrasonic flaw detectors record complete A-scan information and can use it to create a two-dimensional C-scan map. Using a gate within the A-scan, each pixel of a C-scan map depicts the depth (time-of-flight) or amplitude of the echoes crossing that gate. Using vivid colour palettes to represent % or mm values, it is then possible to rapidly analyse the complete volumetric integrity of the part.

    Linear Array Technology is particularly efficient when performing high-resolution C-scan mapping and inspecting large surface areas. The technique is useful for assessing composite parts or to assess the thickness or level of corrosion on a metallic slab/sheet.

    Amplitude or Depth Method?

    As we can see below, the depth and amplitude-based C-Scan may reveal complementary information and both mapping methods have advantages and must be well understood to properly support the NDT professional in his task.

    How to analyze an acquisition

    Amplitude C-scan is generally used to monitor the behaviour of a specific section of the part. Monitoring the backwall (BW) amplitude can give information on the presence of small mid-wall porosities (BW drops). On the other hand, monitoring a specific composite section can help to spot weak bonding (BW peaks) from the adhesive process between two composite layers.

    Depth C-scan is generally used to monitor the thickness of a part by giving information on the remaining wall thickness or by precisely positioning an anomaly like a disbond, a large porosity or a flaw within the material.

    With the use of an advanced ultrasonic flaw detector, like the Sonatest RSflite, Veo+ or Prisma, it is possible to record complete high-quality A-scan information and as a result, within a single scan (data set), both amplitude and depth C-scan mapping information can be generated. This saves significant scanning time for the technician as there is no need to scan the part twice to make a complete analysis using both modes.

    Data Analysis Step

    Once the acquisition is made, and the proper analysis mode has been chosen, the data analysis step is often considered laborious because of the interpretation of the data and report writing. Fortunately, there are solutions like the Sonatest UTmap software that are designed and developed to simplify the examination process.

    Data alignment and overlapping

    A C-scan map is generally made up of many strips. Before proceeding to analyse the data, it is important to make sure that all of the strips are properly aligned and that any overlap between strips has been accounted for. These adjustments are necessary but can be very time consuming. However, Sonatest UTmap offers the possibility to create a T-scan (Tiled Scan) where every strip can be individually rotated, translated and overlapped to easily form the correct arrangement. Once assembled, the T-Scan represents a meaningful image for analysis and reporting.

    To improve data alignment precision, UTmap also offers the unique possibility to import 2D CAD drawings of the part (or a simple picture) in the T-scan workspace. The C-scan strips can then be precisely applied with opacity option on the CAD overlay to create even more comprehensive inspection reports.

    Software Gain and Re-Gating Adjustment

    Compared to other software solutions, UTmap allows post-acquisition C-scan re-gating and sensitivity adjustment of each strip of data. This granular software adjustment feature is especially useful to deal with thickness changes and more importantly when dealing with amplitude assessment-based C-scan mapping. Indeed, this mode is more sensitive to coupling or pressure variations that it is unfortunately often difficult to avoid during the acquisition step.

    Real-Time Automatic Measurements

    When all the strips are aligned, and the gates and gain sensitivity have been harmonised, the real-time automatic annotation feature is a key tool to expedite the analysis and reporting process. When activated, the annotation box automatically contours with a specific colour code discontinuity based on a selectable amplitude criteria, depth criteria or both at the same time. These measurements are performed in real-time wherever the box is positioned in the T-scan.
    The benefits of this automatic annotation box are dimension precision improvement, repeatability as well as a fast and reliable process.

    How to analyze an acquisition

    C-scan Mapping Reporting

    In a single step, a report summarises the inspection. Thus, the defect (or the absence of defects) in the parts is highlighted with images as well as the basic inspection data: ultrasound device, probe, materials and thickness. The automated report is available in PDF format, saves time and increases overall productivity.

    For the more advanced users, the UTmap software offers the possibility to export the results of the C-scan mapping information into a CSV format. This is especially useful for end-users who want to analyse in depth with advanced algorithms.

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    Analyze your acquisition

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    Frequently Asked Questions

    • What is an acquisition analysis?

    An acquisition analysis is when you look at your referrers and acquisition channels and identify areas of opportunity and growth.

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    How to analyze an acquisition

    Malware analysis and Malicious process identification is a major and important aspect of digital forensic analysis. It is necessary to analyze the Random Access Memory (RAM) along with the storage disks (Secondary Storage) for evidence. It helps to identify the processes and activities which were active during the certain time period.

    In this article, let’s see how to analyze RAM using Volatility Framework

    Volatility Framework provides open collection of tools implemented in Python for the extraction of digital artifacts from volatile memory (RAM) samples. It is the world’s most widely used memory forensics platform for digital investigations. It supports memory dumps from all major 32- and 64-bit Windows, Linux and Mac operating systems. Check github page for further details.

    Memory Dump Acquisition

    Memory dump acquisition is the first step in Memory analysis. Use tools like dumpit for windows and dd command for Linux operating system to get memory dump. dumpit is utility to generate physical dump of windows machine, works for both x86 (32-bits) and x64 (64-bits) machines.

    Usually, a memory dump size is same as that of the size of RAM. For an example Windows XP SP2 machine with a volatile memory of 512 MB would have memory dump 512 MB size.

    After getting the memory dump a hash values should be checked. To do so sha256sum can be used. There exists hash calculating tools such as md5sum, sha1sum. But as both of these things are broken by now it is much safer and acceptable under the court of law if a tool based on SHA256 is used. However, these sum tools are specific for Linux. For Windows-based systems, there exists a number of tools. But hashcalc would be a better and an obvious choice considering it’s simplicity.

    Memory Dump Analysis

    For the analysis of the acquired memory dump, Volatility Framework can be used. Volatility is a python based framework which can be used on different operating systems for memory analysis. You can download volatility using its GitHub repository. There are a number of things that can be analyzed via volatility framework. We will be discussing them late in this blog.

    Methodology

    Windows

    Initially, run dumpit.exe within the operating system (If it is windows).

    How to analyze an acquisition

    Figure 1: Memory Image dumping

    Linux

    use dd command for memory acquisition from /dev/mem of /dev/fmem. Here root privileges would be required. Figure 2: Memory image dumping Linux

    You can find some interesting facts about types of memories that can be acquired in Linux systems by [5].

    After getting the memory images (dd/raw), get the hash values of these images to check the integrity and to confirm that nothing has changed in the image.

    After getting the disk image and getting the hash values, we can directly move to the analysis procedure.This is the instance where the role of Volatility comes in to play.

    Initially, run volatility with the attribute imageinfo in order to find about the available information in the memory image.

    How to analyze an acquisition

    Figure 3: Memory image analysis with volatility

    With the use of volatility.exe, the memory image can be acquired as,

    After getting the analyzed details,details such as possible OS profiles, number of Processors in the given system, etc. can be derived.

    In most of the cases volatility suggests multiple profiles with the volatility framework. In order to select the best memory profile for further analysis a kdbgscan is used. Here by removing dummy profiles in which the number of processes and number of modules become a non-realistic value (0) the correct profile can be selected.

    For demonstration purpose I have used a profile named WinXPSP2 here.

    After selecting the correct profile it can be moved in to the next steps of analysis.

    Bu using the following command, a list of processes can be obtained which were there within the memory.

    Figure 4: Process analysis of a Memory Image

    A parent-child relationship in between the processes can be obtained using the pstree attribute.

    There exists a number of optional attributes that can be used to specify various details [1].

    A list of network connections can be recovered via ,

    How to analyze an acquisition

    Figure 5: Network connection scan for a memory image

    Except for these direct information retrieval, there exists a number of mechanisms in which data can be retrieved (Malware dumps) and analyzed.

    The command history too can be scanned by using the cmdhistory attribute.

    Then how to detect malicious files

    In volatility, there exists an attribute named malfind. This is actually an inbuilt plugin and can be used for malicious process detection.

    If the above command doesn’t generate a result then it can be defined as non-malicious. However, if detailed memory analysis is found it can be classified as a malicious process. Figure 6: Malicious process identification

    Acquisition valuation involves the use of multiple analyses to determine a range of possible prices to pay for an acquisition candidate. There are many ways to value a business, which can yield widely varying results, depending upon the basis of each valuation method. Some methods assume a valuation based on the assumption that a business will be sold off at bankruptcy prices, while other methods focus on the inherent value of intellectual property and the strength of a company’s brands, which can yield much higher valuations. There are many other valuation methods lying between these two extremes. The following are examples of business valuation methods.

    Liquidation Value

    Liquidation value is the amount of funds that would be collected if all assets and liabilities of the target company were to be sold off or settled. Generally, liquidation value varies depending upon the time allowed to sell assets. If there is a very short-term “fire sale,” then the assumed amount realized from the sale would be lower than if a business were permitted to liquidate over a longer period of time.

    Real Estate Value

    If a company has substantial real estate holdings, they may form the primary basis for the valuation of the business. This approach only works if nearly all of the assets of a business are various forms of real estate. Since most businesses lease real estate, rather than owning it, this method can only be used in a small number of situations.

    Relief from Royalty

    What about situations where a company has significant intangible assets, such as patents and software? How can you create a valuation for them? A possible approach is the relief-from royalty method, which involves estimating the royalty that the company would have paid for the rights to use an intangible asset if it had to license it from a third party. This estimation is based on a sampling of licensing deals for similar assets. These deals are not normally made public, so it can be difficult to derive the necessary comparative information.

    Book Value

    Book value is the amount that shareholders would receive if a company’s assets, liabilities, and preferred stock were sold or paid off at exactly the amounts at which they are recorded in the company’s accounting records. It is highly unlikely that this would ever actually take place, because the market value at which these items would be sold or paid off might vary by substantial amounts from their recorded values.

    Enterprise Value

    What would be the value of a target company if an acquirer were to buy all of its shares on the open market, pay off any existing debt, and keep any cash remaining on the target’s balance sheet? This is called the enterprise value of a business, and it is the sum of the market value of all shares outstanding, plus total debt outstanding, minus cash. Enterprise value is only a theoretical form of valuation, because it does not factor in the effect on the market price of a target company’s stock once the takeover bid is announced. Also, it does not include the impact of a control premium on the price per share. In addition, the current market price may not be indicative of the real value of the business if the stock is thinly traded, since a few trades can substantially alter the market price.

    Multiples Analysis

    It is quite easy to compile information based on the financial information and stock prices of publicly-held companies, and then convert this information into valuation multiples that are based on company performance. These multiples can then be used to derive an approximate valuation for a specific company.

    Discounted Cash Flows

    One of the most detailed and justifiable ways to value a business is through the use of discounted cash flows. Under this approach, the acquirer constructs the expected cash flows of the target company, based on extrapolations of its historical cash flow and expectations for synergies that can be achieved by combining the two businesses. A discount rate is then applied to these cash flows to arrive at a current valuation for the business.

    Replication Value

    An acquirer can place a value upon a target company based upon its estimate of the expenditures it would have to incur to build that business “from scratch.” Doing so would involve building customer awareness of the brand through a lengthy series of advertising and other brand building campaigns, as well as building a competitive product through several iterative product cycles. It may also be necessary to obtain regulatory approvals, depending on the products involved.

    Comparison Analysis

    A common form of valuation analysis is to comb through listings of acquisition transactions that have been completed over the past year or two, extract those for companies located in the same industry, and use them to estimate what a target company should be worth. The comparison is usually based on either a multiple of revenues or cash flow. Information about comparable acquisitions can be gleaned from public filings or press releases, but more comprehensive information can be obtained by paying for access to any one of several private databases that accumulate this information.

    Influencer Price Point

    A potentially important point impacting price is the price at which key influencers bought into the target company. For example, if someone can influence the approval of a sale, and that person bought shares in the target at $20 per share, it could be exceedingly difficult to offer a price that is at or below $20, irrespective of what other valuation methodologies may yield for a price. The influencer price point has nothing to do with valuation, only the minimum return that key influencers are willing to accept on their baseline cost.

    IPO Valuation

    A privately-held company whose owners want to sell it can wait for offers from potential acquirers, but doing so can result in arguments over the value of the company. The owners can obtain a new viewpoint by taking the company public in the midst of the acquisition negotiations. This has two advantages for the selling company. First, it gives the company’s owners the option of proceeding with the initial public offering and eventually gaining liquidity by selling their shares on the open market. Also, it provides a second opinion regarding the valuation of the company, which the sellers can use in their negotiations with any potential acquirers.

    Strategic Purchase

    The ultimate valuation strategy from the perspective of the target company is the strategic purchase. This is when the acquirer is willing to throw out all valuation models and instead consider the strategic benefits of owning the target company. For example, an acquirer can be encouraged to believe that it needs to fill a critical hole in its product line, or to quickly enter a product niche that is considered key to its future survival, or to acquire a key piece of intellectual property. In this situation, the price paid may be far beyond the amount that any rational examination of the issues would otherwise suggest.

    In regard to data acquisition systems for karts, let’s make it clear, the world is divided into three macro groups of users.
    There are those who buy a dashboard and just look at lap times, exhaust gas and water temperatures, split times and engine revolutions on small LCD screens.
    Then there are those who, with a mania for monitoring everything (as if adding sensors to a kart would automatically lower the lap time) buy all types of sensors, from those for the temperature of the tyres to those on steering wheels and pedals, but then they don’t know what to do with them (by the way: if you want some tips on which sensors to buy, read “Expert advice – Data acquisition for karts: which sensors should you buy?”).
    Finally, there are the most “daring”, those who download the data collected by the acquisition system to a computer or tablet (depending on the acquisition system you have) and analyse, study and process it using special software.
    The latter case is the only approach to the world of “data logging” that really allows you to improve your driving style and better analyse the parameters collected by the GPS system included in the dashboard as well as by the various sensors installed on a kart.
    To understand how to take the first steps in this direction, we have examined one of the most popular data acquisition systems, the AiM MyChron5s, and the related PC software that allows you to display, manage and examine all the numerous data that the MyChron5s records. The software is called Race Studio 3 and the brand-new Beta version, still partially under development, allows you to analyse all the information collected during track sessions and put them in sync with the images recorded by the Smartycam HD Rev.2.1, the stabilised camera with integrated accelerometer. It must be said that it takes experience to use software of this complexity to its full potential. This is why we have described the main activities to be carried out to become familiar with a data acquisition system.

    How to analyze an acquisition

    First you need to connect to the AiM website, go to the SW/FW download section and, next to the software you are interested in, in this case Race Studio 3 with Analysis 3 included (the latest software evolution at the time of writing this article, editor’s note), click on the “download page” button. The software in question can be used with all available AiM TECH dashboards, even the older ones. The only difference is that the new MyChron5s allows you to download data to your PC directly via Wi-Fi while the previous dashboards required you to connect via cable or download the data on a special key. Another element to bear in mind is that AiM TECH software works only on 64-bit Windows systems and not on Mac. Therefore, amateur kart drivers who have a computer with the “Apple” logo, must create a system partition or use a virtual machine that runs 64-bit Windows to use it.

    How to analyze an acquisition

    This table shows the compatibility of the software on Windows systems based on the version you have.

    Definition: According to BusinessDictionary.com, metrics are defined as standards of measurement by which efficiency, performance, progress, or quality of a plan, process, or product can be assessed. Acquisition management metrics are specifically tailored to monitor the success of government acquisition programs.

    Keywords: acquisition metrics, leading indicators, program success

    MITRE SE Roles & Expectations: Within the role of providing acquisition support, MITRE systems engineers (SEs) are tasked with understanding technical risk and assessing success. Management metrics are used as a mechanism to report progress and risks to management. MITRE staff should understand how these metrics influence and relate to acquisition systems engineering.

    The use of metrics to summarize a program’s current health, identify potential areas of concern, and ability to be successful are common practice among government departments, agencies, and industry. Metrics range from detailed software metrics to more overarching program-level metrics. Some of the following examples are derived primarily from the Department of Defense (DoD) program practice, but the principles are applicable to any program.

    Probability of Program Success Metrics

    As an aid in determining the ability of a program to succeed in delivering systems or capabilities, the military services developed the Probability of Program Success (PoPS) approach. PoPS standardizes the reporting of certain program factors and areas of risk. Each service measures a slightly different set of factors, but all the tools use a similar hierarchy of five factors at the top level. These factors are Requirements, Resources, Execution, Fit in Vision, and Advocacy. Associated with each factor are metrics, as indicated in Figure 1. These tools are scoring methodologies where metric criteria are assessed by the program office, a metric score/point is determined, and metric scores are weighted and then summed for an overall program score. The summary score is associated with a color (green, yellow, or red), which is the primary way of communicating the result. It is at the metric level and the criteria used to assess the metric where the biggest differences between the tools exist. Each tool weighs metrics differently, with Air Force and Navy varying these weights by acquisition phase. Furthermore, each service uses different criteria to assess the same or similar metric. Consult with the references [1, 2, 3, 4] for each service tool at the end of this paper to better understand how metrics are scored.

    Best Practices and Lessons Learned: Determining the value of each metric is the responsibility of the acquisition program team. System engineering inputs are relevant to most of the reporting items; some are more obvious than others. With respect to staffing/resources, it is important to understand the right levels of engineering staffing for the program management office and the prospective development contractor to ensure success. At the outset of an acquisition, a risk management process should be in place (see the Risk Management section within this guide); the ability of this process to adequately identify and track risks is a major component of the PoPS tool. All technical risks should be incorporated in this assessment, including those that may be included in the technical maturity assessment. Immature technology can be a considerable risk to program success if not managed appropriately; it also can be scheduled for insertion into the program delivery schedule upon maturation. For more detail on technology maturity, see the article Assessing Technical Maturity in this section.

    Figure 1. Generic Representation of Metrics Considered in PoPS Tools

    Note: This structure is generic and meant to closely represent what the services capture in their respective PoPS tools and where.

    Although a metric name may be different or absent when comparing one tool to another, same or similar qualities may be captured in a different metric. Conversely, metrics may have the same or similar name but capture different qualities of the program. Refer to the individual service’s PoPS operations guide for details [1, 2, 3, 4].

    Earned Value Management (EVM) Metrics

    A subset of program management metrics is specific to contractor earned value. Typical EVM metrics are the Cost Performance Index and the Schedule Performance Index; both are included in each of the service’s PoPS tool [5, 6]. Although EVM is mostly considered a monitoring tool for measuring project performance and progress, it is also a planning tool. Using EVM effectively requires the ability to define, schedule, and budget the entire body of work from the ground up. This is something to be considered in the planning phase of an acquisition program (see the article Integrated Master Schedule/Integrated Master Plan Application in this section) because it is closely linked to the Work Breakdown Structure (WBS).

    Best Practices and Lessons Learned: Fundamental to earned value is linking cost and schedule to work performed. However, work performed is often specified at too high a level to identify problems early. This is linked back to the generation of the WBS during the initial program planning and whether it was created at a detailed enough level (i.e., measureable 60 day efforts) to clearly define work performed or product developed. In cases where the detail is insufficient, EVM is unlikely to report real problems for several months. It is usually program engineers and acquisition analysts who are able to identify and report technical and schedule problems before the EVM can report them. Another method is the use of Technical Performance Measures (TPMs). TPMs are metrics that track key attributes of the design to monitor progress toward meeting requirements [7, 8]. More detailed tracking of technical performance by contractors is becoming popular as a way to measure progress and surface problems early using Technical Performance Indices at the lowest product configuration item (i.e., Configuration Item, Computer Software Configuration Item) [9].

    Appropriate insight into evaluating the work performed for EVM can be challenging. It often requires close engineering team participation to judge whether the EVM is accurately reporting progress. A case where this is particularly challenging is in large programs requiring cross-functional teams and sub-contracts or associate contracts. Keeping the EVM reporting accurate and timely is the issue. To do this, the contractor’s team must have close coordination and communication. Check that forums and methods are in place to accurately report EVM data for the entire program.

    Systems Engineering Specific Metrics—Leading Indicators

    Several years ago, MITRE engineers assisted in the development of a suite of “leading indicators” to track more detailed systems engineering activities for a DoD customer. Table 1 summarizes some of these metrics (expanded to generically apply here), which were to be assessed as red, yellow, or green, according to specified definitions. An analysis of the overlap of the leading indicators with PoPS metrics was conducted. Although several metrics have similar names, the essence of what is captured is different, and there is very little overlap.

    The term language acquisition refers to the development of language in children.

    By age 6, children have usually mastered most of the basic vocabulary and grammar of their first language.

    Second language acquisition (also known as second language learning or sequential language acquisition) refers to the process by which a person learns a “foreign” language—that is, a language other than their mother tongue.

    Examples and Observations

    "For children, acquiring a language is an effortless achievement that occurs:

    • Without explicit teaching,
    • On the basis of positive evidence (i.e., what they hear),
    • Under varying circumstances, and in a limited amount of time,
    • In identical ways across different languages.

    . Children achieve linguistic milestones in parallel fashion, regardless of the specific language they are exposed to. For example, at about 6-8 months, all children start to babble . that is, to produce repetitive syllables like bababa. At about 10-12 months they speak their first words, and between 20 and 24 months they begin to put words together. It has been shown that children between 2 and 3 years speaking a wide variety of languages use infinitive verbs in main clauses . or omit sentential subjects . although the language they are exposed to may not have this option. Across languages young children also over-regularize the past tense or other tenses of irregular verbs. Interestingly, similarities in language acquisition are observed not only across spoken languages, but also between spoken and signed languages.” (María Teresa Guasti, Language Acquisition: The Growth of Grammar. MIT Press, 2002)