Valuation Multiples of Internet Company Transactions Continue to Surge During 1999

Washington, D.C., September 10, 1999—The price companies are willing to pay to purchase Internet-related businesses continues to be strong, according to Bond & Pecaro, a consulting firm that specializes in Internet company valuations. The company has analyzed 224 transactions from the first half of 1999. Although the stock prices of publicly held Internet-related businesses have pulled back recently, the broad conclusion is that, across the board, companies demand, and buyers continue to pay, a premium for Internet companies.

As this industry evolves at lightning speed, everyone from senior management to shareholders, industry analysts, and individual investors are clamoring to make sense of it all. Since publishing their initial CyberValuation report in June, which analyzed almost 600 transactions over the past four years, Bond & Pecaro has distributed over 2500 books to corporate America. "I've talked to a lot of people who have inquired about the study," says partner Jeff Anderson, "There is a real demand for a set of valuation tools for this emerging field. Every industry establishes guidelines to compare, contrast and identify trends across transactions. Obviously, we're working fast and furious to stay ahead of this one."

The company's research examines four industry segments: Internet Service Providers (ISP), portals, Internet retail and business-to-business. The key benchmarks include valuation multiples for revenue, subscribers, and unique monthly visitors. These "multiples" are a ratio of the value commanded in the marketplace divided by actual performance indicators at the time of the transaction. The report also profiles transaction structure where available and includes abridged financial statements for selected companies within each sector.

While the value of Internet companies appears to most of us to be guided only by mass hubris, Bond & Pecaro illustrates that there is a roadmap of trends and benchmarks to follow. To CFO's and other senior management this should be welcome news. But Jeff Anderson admits that some corporations, even major ones, are determined to close deals without the normal valuation and quantitative analysis. In some cases the buyers have decided that strategically they must acquire this company, and price really isn't the greatest concern.

If you can't wait another day before making your next major acquisition or investment, the full CyberValuation report is available for $695. Reach Bond & Pecaro at 202-775-8870 or online at www.cybervaluation.com.

About Bond & Pecaro

Bond & Pecaro provides valuation and financial consulting services to major players in the television, radio, cable television, media, technology, and newspaper industries. In recent years, the firm has focused on emerging technologies, such as new media and Internet-based businesses. Bond & Pecaro's professionals have appraised over 3,000 media and technology concerns. Firm members have extensive experience in market research, valuation-related tax matters, financial and economic analysis, and litigation support