The 
Transform tool  performs geometric transformations using displacement links that specify origin and destination paths for selected features or layers. The result is a best-fit transformation between the links. This tool is available in the Modify Features pane.
  performs geometric transformations using displacement links that specify origin and destination paths for selected features or layers. The result is a best-fit transformation between the links. This tool is available in the Modify Features pane.
The amount of distortion made to the shape, area, distance, and direction of the selected features depends on the transformation method and the number and location of the displacements links you choose to utilize.

Tip:
To perform projective transformations using four or more links, for example if you need to transform data captured directly from aerial photography, use the Transform Features geoprocessing tool.
Transform selected features or layers
To transform features, select the features or layers and draw the displacement links.
- On the Edit tab, turn off topology, choose your snapping preferences, and show the Modify Features pane.- In the Manage Edits group, click the topology arrow and choose No Topology  . .
-  In the Snapping group, click the   Snapping drop-down menu  and enable your snapping preferences. and enable your snapping preferences.To temporarily turn snapping off while you edit a feature, press and hold the Spacebar. 
- In the Features group,  click Modify  . .
 
- In the Manage Edits group, click the topology arrow and choose No Topology 
- Expand  Alignment  and click Transform  . .
-  Select the features using one of the following methods:- To transform selected features, click the Selected Features tab, click Select  and select the features. and select the features.- To refine the selection, right-click a feature in the tree view, and click Unselect  or Only Select This or Only Select This . . 
 
- To refine the selection, right-click a feature in the tree view, and click Unselect 
- To transform all features on one or more layers, click the Layers tab and choose the layers.
 
- To transform selected features, click the Selected Features tab, click Select 
- Click the Transformation Method drop-down arrow and choose an transformation method.- Affine— Differentially scales, rotates, translates, reflects, and skews features. This method requires a minimum of three displacement links. 
- Similarity— Uniformly scales, rotates, translates, and reflects features. This method requires a minimum of two displacement links. It is a good choice for CAD drawings and other file-based feature data that is generally not skewed. 
 
- Affine— Differentially scales, rotates, translates, reflects, and skews features. 
-  Draw a suitable number of two-point displacement links that define the origin and destination path for the features you are transforming. There is no limit to the  number of links you can draw.Note:The RMS error appears at the top of the pane when you draw the minimum number of displacement links required by the active method. - Click Add new links  . .The segment construction toolbar appears at the bottom of the map.  
- Snap the origin point to an edge or a vertex on the feature you are transforming.
- Snap the endpoint to the new destination location.
 
- Click Add new links 
- To delete  a displacement  link, click Select   , select the link, and press the Delete key or right-click and click Delete. , select the link, and press the Delete key or right-click and click Delete.- To delete all displacement links, in the pane, click Delete all links  . .
 
- To delete all displacement links, in the pane, click Delete all links 
- Click Transform.The features transform, and the displacement links are automatically deleted. 
Load links from a file
 You can save time from drawing links by clicking Load links from file  and loading predefined links contained in a link file created with ArcMap.
 and loading predefined links contained in a link file created with ArcMap. 
You can load four-column or five-column link files. A four-column link file contains a pair of source and destination coordinate values. A five-column link file contains an ID column (string or numeric) that precedes the columns containing the coordinate values.
Link files are TAB delimited ASCII text files containing two pairs of XY coordinate values per row for each link. Example contents for a five-column link file.3	1032507.603691	1865947.186470	1032507.207115	1865926.170407
2	1032508.350801	1865986.785187	1032509.079486	1866025.405116
1	1032388.666424	1865961.179459	1032361.009572	1865981.280533
Root mean square (RMS) errors
The RMS error reports the overall fitness of the transformation based on the number and location of your displacement links. Each link generates a residual error that measures the fit between the location of the destination control point and the actual transformed location.

The RMS error shown in the pane is the calculated sum of the residual errors generated by each link using the following formula.

RMS errors vary depending on the accuracy of the original data and the scale of the source map. In some cases, a high RMS error can indicate a large amount of stretching or skewing of your data will occur.
Your particular requirements ultimately determine what an acceptable RMS error is. When an RMS error is determined to be too high, you can adjust the error by removing links and adding new control points.
Equations
Affine
x’ = Ax + By + C
y’ = Dx + Ey + Fwhere:
A = Sx cos rB = (Sy / cos s) sin(s - r)
C = DxD = Sx sin rE = (Sy / cos s) cos(s - r)
F = DySx, Sy = Scaling factors (can be negative)
Dx, Dy = Translation distances in x and y directions (can be negative)
s = Skew angle of shearing along x-axis, measured from y-axis (-pi/2 < s < pi/2)
r = Rotation angle in radians, measured counterclockwise from x-axis (- pi < r <= pi)Similarity
x' = Ax + By + C 
y' = -Bx + Ay + Fwhere:
A = s * cos tB = s * sin tC = Translation in x direction
F = Translation in y direction
s = Scale change (same in x and y directions)
t = Rotation angle, measured counterclockwise from the x-axisProjective
x' = (Ax + By + C) / (Gx + Hy + 1)
y' = (Dx + Ey + F) / (Gx + Hy + 1)