Trends in Technology Company Valuations

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Trends in Technology Company Valuations

• November 8, 2004

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General Valuation TrendsKey Valuation Drivers
for Technology Companies

• Market-specific drivers
• Valuations of overall public markets
• Valuations of peer companies
• Availability of IPO as exit strategy
• Volume of MA activity
• Company-specific drivers
• Unique and compelling intellectual property
  (workforce)
• Demonstrated ability to generated growth and
  positive cash flow
• Significant growth prospects
• Adequate capital to execute the business plan
• Sarbanes-Oxley as a valuation factor?
• No direct impact (yet)
• Private companies need to be familiar with SOX
  and be prepared to conform
• No material effect on IPO process
• Stretching out due diligence in MA process

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General Valuation TrendsMajor Market
Performance for Twelve Months
SP 500 (6.4)
DJIA (1.5)
Nasdaq (-0.3)
Source Bloomberg
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General Valuation TrendsComposite Valuation
Statistics for Industry Groups
Source Yahoo! Finance.
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General Valuation TrendsShifting Mix of IPO and
MA as Exit Method
Source Dow Jones VentureOne.
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IPO DataVolume of IPOs and Valuation Profit
Source Dow Jones VentureOne.
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IPO DataLatest Performance of the Class of 2004
Source Hooverss IPO Central.
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IPO DataNumber of IPOs by Industry Group
Source Dow Jones VentureOne.
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MA DataVolume of MAs and Valuation Profit
Source Dow Jones VentureOne.
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MA DataNumber of MAs by Industry Group
Source Dow Jones VentureOne.
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MA DataConflicting Trends in Company Maturity
Source Dow Jones VentureOne.