Agile Equity managing partner David Cummings agrees, observing that "there is now at least a pulse in the market." He notes an improvement in corporate confidence and said that the "availability of capital is loosening up a bit, from venture capitalists starting to crank it up again to the credit markets and even the ability of some public companies floating secondary offerings." Says Cummings, "More liquidity certainly bodes well."
There is no illusion, though, about the return of more sane multiples. Sellers and buyers both "realize that the days of the five-times, 10-times, 25-times 12-month trailing revenue multiples are gone," says Bender, Ken Bender.
Interestingly, buyers are reluctant to use undervalued shares as currency, Bender says. But even companies with large cash holdings are earmarking only a fraction of it for acquisitions. That spells more modest deals.
Among transactions announced recently: PeopleSoft's purchase of CRM providers Annuncio Software and Calico Commerce, Adobe Systems' acquisition of Accelio Corp., and WatchGuard Technologies's stock acquisition of Rapid Stream Inc. "Due diligence and internal discussions about these deals are taking twice as long as in the past," Bender told The Deal.com. "The emphasis on how the technology fits and the ease of integration is much higher. The buyers are many more times careful about making acquisitions now."
Is Holly Becker a Giant Killer?
Lehman Brothers analyst Holly Becker has taken on another Goliath, downgrading AOL Time Warner Inc. to "market perform" from "buy." Her reasons? Lower projections for AOL, once the company's main growth unit. Indeed, Becker expects a decline in 0.9 percent decline in Ebitda at the media giant in 2002. Becker also to see "anemic" growth in the company's Ebitda figure through 2005
"While the inherent value and long-term growth potential of the AOL business is unquestionably strong," Becker said, "this slowdown has impacted the company's value and largely explains the stock's recent weakness."
Becker's pronouncement didn't do the stock any good, either. The share price of AOL Time Warner stock fell $1.32 yesterday, down to $24.20.
As you recall, Becker gained earlier fame in July 2000 when she downgraded Amazon.com to "neutral." At the time, many analysts were still boosting the online retailer.
Reader Comments» Post a comment