Acquisition Pricing Takes a Big Hit

Pricing slipped to the lowest level during the past 12 months, based on key measures used in calculating m&a values. The trends suggest that buyers still have the upper hand in the marketplace. Willing sellers ran into cautious buyers eager to maintain pricing discipline and only scattered bidding contests – both of which helped contract multiples. On a market-wide basis, the average purchase price multiple of EBITDA narrowed to 13.3 in the three months ended February 29, down sharply from 18.5 in the September 1 to November 30, 2003 period. That contraction tracked a slippage in premiums over stock prices that are applicable only to public targets but usually are derivatives of EBITDA multiples. In addition to the influence of internal multiples, the reduced premiums for public companies reflected continued strength in the stock market during the first two months of 2004. Copyright 2004 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.majournal.com