Abstract:
A user enters search criteria for comparable transactions into a computer system and the computer system generates a scatter plot of deals meeting the search criteria from a transaction database. A computer cache, data tray, or “shopping cart” can be used to save relevant deals which then can be automatically incorporated into an electronically generated comps report.

Description:
TECHNICAL FIELD 
       [0001]    This disclosure relates to computer technology useful in evaluating business, investment, and financial transactions, such as mergers and acquisitions transactions. More specifically, this disclosure relates to computer technology that generates information about comparable prior transactions useful to those involved in evaluating proposed new transactions. 
       BACKGROUND 
       [0002]    People involved in business, investment, and financial transactions, such as businessmen, investment bankers, lawyers, financial advisors and consultants, and others working in the field of mergers and acquisitions transactions, need a way to accurately and quickly evaluate the transactions on which they are working. For any given transaction, they need to be able to accurately value the transaction in terms of how much to pay (e.g., whether the payment constitutes a percent premium) and how to pay (e.g., is it advisable to use stock, debt, cash, or some other payment vehicle to make the acquisition). This is usually done by analyzing similar transactions that closed in the past and comparing the characteristics of those past transactions with the proposed transaction being evaluated. Transactions that are similar to the transaction being evaluated, known as comparables or comps, can be used as a guide to evaluate or set the terms of the transaction being evaluated. 
         [0003]    Previously, computer systems were used to search a computer database containing information about past transactions. The search results were then manually reviewed and researched one at a time to find the comparables. New searches were made until a sufficient number of useable deals were obtained (i.e., enough comparables had been found that could be used to justify certain numbers). As the comparables were identified, they were manually inserted into reports such as those created with spreadsheet or presentation software. This is a manual, tedious process which needs to be streamlined. 
       SUMMARY 
       [0004]    The solution to the problems in generating comparables in the mergers and acquisitions area and other financial, investment, and business transactions is to have a computer system in which the user enters search criteria and the computer generates a scatter plot of deals meeting the search criteria from a transaction database. A computer cache, data tray, or “shopping cart” can be used to save relevant deals which then can be automatically incorporated into an electronically generated report. 
         [0005]    In one embodiment of the invention, an appropriately programmed computer evaluates a proposed mergers and acquisitions transaction by generating comparables information for the proposed transaction from a mergers and acquisition database. The method involves entering a first set of one or more search criteria into a computer, the search criteria representing one or more characteristics of a completed mergers and acquisition transaction. A transactions data base containing data representing a set of completed mergers and acquisitions transactions is searched to identify a first set of one or more transactions in the data base meeting the search criteria. A multidimensional scatter plot of the first set of identified transactions is displayed on a computer display. A selected subset of the first set of transactions representing potentially comparable transactions may be stored in a data cache for later examination and analysis. Further searching may be performed using different search criteria and further transactions returned by the additional searching may be added to the cache. The contents of the cache may be entered into an electronically generated comparables report or displayed in a scatter plot for further analysis. 
     
    
     
       BRIEF DESCRIPTION OF THE DRAWINGS 
         [0006]      FIG. 1  is schematic diagram of an example of a computer system that implements one embodiment of the invention of this application. 
           [0007]      FIG. 2  is a screen shot from the display of  FIG. 1  illustrating an example of a scatter plot produced in accordance with one example of the invention. 
           [0008]      FIG. 3  is another screen shot from the display of  FIG. 1  illustrating a filtered subset of the data in the scatter plot of  FIG. 2 . 
           [0009]      FIG. 4  is an additional screen shot from the display of  FIG. 1  illustrating the selection of one of the transactions to be added to a shopping cart or data cache in accordance with one example of the invention. 
           [0010]      FIG. 5  is another screen shot that illustrates the graphical user interface after the addition of the selected transaction to the data cache or shopping cart. 
           [0011]      FIG. 6  is a screen shot of a scatter plot of the contents of the shopping cart after a number of comparable transactions have been stored therein. 
           [0012]      FIG. 7  is a screen shot showing illustrative summary of the filter settings that produce a typical scatter plot. 
       
    
    
     DETAILED DESCRIPTION 
       [0013]      FIG. 1  shows an illustrative computer architecture in accordance with one implementation of the invention. The architecture of  FIG. 1  comprises a computer  10  configured for access to a mergers and acquisitions web site  12  through the Internet  14 . The computer  10  may be a stored program computer containing the usual central processing unit (CPU), random access memory, read only memory, and hard drive or other non-volatile storage device. The computer  10  is connected to a local mergers and acquisition transaction database  21  which may be located on the aforementioned hard drive. The local transaction data base  21  contains the information about prior transactions downloaded from the web site  12  in this example of the invention. The computer  10  also includes one or more data input devices  15 , such as a mouse, a touch screen, and/or a keyboard, for entering search criteria and other information into the computer  10 . The computer  10  also has network interface circuitry needed to access the Internet  14 . 
         [0014]    The computer also contains a browser  16  that is used to access selected web sites on the Internet  14 , such as web site  12  in  FIG. 1 . A search engine  18  allows the computer  10  to search the Internet  14  and other devices contained in or connected to the computer  10 , such as the local database  21 . A graphical user interface  20  in the computer  10  is connected with the computer display  17  to display the visual features described in connection the description of the screen shots in  FIGS. 2-7  below. Application software  22  in the computer  10  may include spread sheet software, such as Microsoft Excel, and presentation software, such as Microsoft PowerPoint, that are useful in preparing reports of comparable transactions. 
         [0015]    Application software  22  also includes transaction evaluation software that comprises a set of instructions invoked by a user and executed by the computer  10  to build a set of comparable transactions that can be displayed as a multidimensional scatter plot and stored in a shopping cart-like data cache. The comparable transactions are useful in evaluating a proposed mergers and acquisition transaction in accordance with one example of the invention. More specifically, the comparable transactions may be transactions that were consummated in the past that have characteristics similar to those of a transaction being evaluated. The characteristics of the comparables can be used as evidence to assess the appropriateness of the terms of the transaction under consideration, such as whether the purchase price is appropriate. The detailed operation of the evaluation software in the application software  22  will be apparent to those skilled in the art from the discussion of  FIGS. 2-7  below. The evaluation software may be supplied to the computer  10  in any manner, for example, by way of any suitable computer readable medium, for example, a CD, DVD, or flash drive. The computer readable medium contains instructions that are executable by the computer to search a transaction database to build a set of comparable transactions, to display those transactions in a multidimensional scatter plot, and to store those transactions in a data cache in accordance with the principles of this invention. 
         [0016]    The computer  10  may be a personal computer, such as a desktop PC, a laptop computer, or a net book computer. It may also be a workstation, or other kind of computer, a personal digital assistant, mobile telephone, or other handheld device, or any other device capable of searching a transactions database like databases  21  or  26 , displaying the search results in the form of a multidimensional scatter plot like the ones shown in  FIGS. 2-7 , and providing the capability of storing the search results in a data cache or shopping cart. Transaction database  21  may be located in the computer  10  or may be outside the computer  10 . Access to transaction databases outside the computer  10  can be provided via a wired or wireless communication link, the computer  10  and the transaction database being either directly connected together or through a network such as a local-, wide area-, private-, or virtual-private network. 
         [0017]    The web site  12  comprises a web server  24  which provides information about completed mergers and acquisitions transactions, a subset of which will be identified a set of comparables related to a potential transaction being evaluated by a user of the computer system of  FIG. 1 . The information about prior transactions is stored in a host mergers and acquisition transaction data base  26 . That information may include a variety of financial and business data about the parties and the transaction, such as the date of the transaction, earnings and sales data relating to the acquiring and target companies, how much the acquiring company paid for the target company, how the purchase price was paid, and any other business or financial data pertinent to the valuation of a mergers and acquisitions transaction, such as the acquisition of one company by another company. 
         [0018]    In one example of the invention involving valuation of a mergers and acquisitions transaction, for example, a transaction involving the sale of a target company to an acquiring company, a user of the computer  10  can request that the entirety of the mergers and acquisition data in the transaction data base  26  be downloaded from the web site  12  to the computer  10  and stored in the local transaction data base  21 , where it can be searched for comparable transactions by using the search engine  18  in the computer  10 . In another embodiment of the invention, the transaction information in the transaction database  26  can be searched without downloading it to the computer  10 . Those skilled in the art will realize that there are other methods of storing the transaction information and supplying it to a user for searching, for example, a CD-ROM loaded into the computer  10 . 
         [0019]    In order to evaluate a mergers and acquisition transaction, the computer system of  FIG. 1  is used identify the comparables for that transaction. In this example of the invention, the universe of transactions in database  26  that might be comparables have been downloaded from the database  26  to data base  21 . A user of computer  10  first enters one or more search criteria into the computer  10  through the data input device  15 . The search criteria represent one or more characteristics of completed mergers and acquisition transactions, namely, one or more of the pieces of data in the database  26  that have been copied into database  21 , that are associated with respective transactions stored in the databases  21  and  26 . The transactions database  21  then is searched by the search engine  18  to identify a first set of one or more transactions in the data base  21  meeting the search criteria. A multidimensional scatter plot  28  shown in  FIG. 2  of the first set of identified transactions is displayed by the graphical user interface  20  on the computer display  17 . 
         [0020]      FIG. 2  is a screen shot that illustrates what the graphical user interface  20  displays to a user as a result of a search of the local transactions database  21 . The screen shot of  FIG. 2  shows the aforementioned multidimensional scatter plot  28  which depicts each transaction satisfying the search criteria as a data point on a two dimensional Cartesian coordinate plane. In this example of the invention, the Cartesian coordinate plane is a representation of (a) the ratio of the deal enterprise value to the earnings of the target company before interest, taxes, depreciation, and amortization (EBITDA) on the x-axis versus (b) the ratio of the deal enterprise value to the sales of the target company on the y-axis. Search criteria in this example of the invention may be a range of values of the parameters (a) and (b) above. They can be set by manipulating a filter pane  30  shown in  FIG. 2 . The filter pane  30  comprises a list of search criteria extending vertically along the right hand edge of the screen shot of  FIG. 2 . One or more of the search criteria is associated with a slider underneath each search criterion that can be manipulated back and forth by performing a drag or point operation with a mouse that is part of the data input device  15  in  FIG. 1 . Manipulation of the sliders sets the range of the criteria that will be used in the search. For example, manipulation of the sliders may define a search of the data base  21  for transactions involving target companies sized between defined upper and lower bounds. The list of search criteria may include the parameters (a) and (b) above, and any other relevant business or financial parameters associated with the transactions in the database  21 . The search engine  18  identifies the transactions in the database  21  that have parameters (a) and (b) that fall within the specified ranges and creates a scatter plot by placing a circular dot in the appropriate places on the Cartesian coordinate plane of  FIG. 2 . In some embodiments, the size, shape, or color of the dots may also indicate additional characteristics of the respective transaction, for example, the size of each dot may indicate the size of the transaction associated with the dot. Those skilled in the art will appreciate that there are other multimedia indicators or differentiators that may be associated or linked with each dot to provide information beyond the two dimensional information provided by a dot&#39;s position on the Cartesian coordinate plane. For example, placing the computer&#39;s cursor on a dot of interest may open a window with additional information about the transaction associated with that dot. 
         [0021]    Statistical information about the scatter plot may be displayed in a statistics pane  32  at the bottom of the screen shot of  FIG. 2 . In the example of the invention shown in  FIG. 2 , bar graphs indicating the number of acquiring companies in the scatter plot that are in certain industries appear in the left hand column of the statistics pane  32 . The middle column of the statistics pane  32  shows how many target companies in the scatter plot are in certain industries. The right hand column in the statistics pane  32  indicates how many transactions in the scatter plot were in certain indicated countries. 
         [0022]    The scatter plot of  FIG. 2  may be filtered by refining the search that produced the scatter plot. The search may be refined by narrowing the search criteria or applying new search criteria to the data in the scatter plot. The screen shot of  FIG. 3  shows the result of filtering the data of  FIG. 2 .  FIG. 3  shows a scatter plot  33  which is a subset of the data in the scatter plot  28  of  FIG. 2  reflecting restricted search criteria. In this example of the invention, the sizes of the dots representing each transaction vary in accordance with the size of the transaction they represent, in this case the deal enterprise value. See, for example, the large dot  34  that represents a transaction involving the purchase of a relatively large company, as indicated by the relatively large size of the dot  34 . The transaction represented by the dot  34  in  FIG. 3  may be selected by way of data input device  15 , such as by clicking on the dot  34 , typing the selection on a keyboard, or contacting a touch screen. Some indication is sent to the display  17  by the graphical user interface  20  that the transaction  32  has been selected, for example, by changing the color or shading of the dot  34 , as shown in  FIG. 4 . The data associated with dot  34  may then be stored in a data cache, shopping cart, or data tray for further use later. In  FIG. 5 , the transaction associated with dot  34  has been entered into the data cache  19  in computer  10 . A count of the number of transactions in the data cache  19  is shown in the upper left hand corner of the screen shot of  FIG. 5  at reference numeral  36  and also in the upper right hand corner of that Figure at reference numeral  38 . A comparison of the screen shots of  FIGS. 4 and 5  will reveal that the count of transactions in the data cache has been incremented by one as a result of placing the transaction associated with dot  34  in the data cache  19 . 
         [0023]    Additional transactions from the filtered set of transactions in the scatter plot of  FIG. 3  may be identified and placed in the data cache  19 . Additional searches of the transaction database  21  using new search criteria and additional filtering of the results may be made, and new additions to the data cache  19  may be made until a desired number of comparables have been found. The number and nature of the searches and filtrations are not critical as long as a sufficient number of comparable transactions have been identified to provide a confidence level that the numbers of the transaction being analyzed are justified. 
         [0024]    The transactions in the data cache  19  may be displayed as a scatter plot as shown in  FIG. 6  by clicking on an appropriate button on the computer display which invokes a display of the scatter plot  39  in  FIG. 6 . As is apparent from reference numerals  40 ,  41  and  42  in  FIG. 6 , an illustrative number of 85 transactions reside in the data cache  19  and are plotted on the scatter plot  39 . In addition to being displayed on a scatter plot, the data in the data cache  19  may also be processed by the application software  22  in the computer  10  to prepare spread sheets and presentations, such as Microsoft Excel spreadsheets and Microsoft PowerPoint presentations. 
         [0025]    The computer  10  in accordance with this example of the invention keeps track of all of the filter parameters that have been applied to the data returned by a search and displayed as a scatter plot.  FIG. 7  illustrates a screen shot which illustrates a running tab  44  of all the filters that have been applied to the data in a scatter plot  46 . 
         [0026]    Although a specific example of the invention is described above, involving evaluation of a mergers and acquisition transaction, more particularly, involving evaluation of an acquisition of one company by another company, the principles of the invention are also applicable to analysis of other financial, investment, and business transactions. These transactions may be new equity offerings, such as initial public offerings (IPO&#39;s) and secondary equity offerings (SEO&#39;s). Fixed income offerings, such as bonds, money markets, CDO&#39;s, and CMO&#39;s, are also able to be analyzed in accordance with the principles of the invention. Options, mutual fund composition and performance, equity ownership activity (buying and selling by holders), private equity investments and performance, and analyst estimates, recommendations and rankings, league table rankings, and company fundamental, estimate and ratio data may also be analyzed in accordance with the invention.