Internet Firms Cost Less in 3rd Quarter

Internet companies got even cheaper in the last quarter when buyers paid $7.4 billion for 300 Web companies, reflecting a more than 30% decline from the prior quarter, a report said.

Prospective buyers of Internet companies have been out bargain hunting, according to the report by Webmergers.com, an online hub for buyers and sellers of Internet companies.

The San Francisco-based company said the average price of an Internet company during the third quarter was about $25 million, down 32% from about $37 million in the second quarter.

“General valuations have come down. Also, there were not any real blockbuster deals that would pull prices up,” said Webmergers.com President Tim Miller.

The valuations of Internet companies have been steadily eroding for about a year, helping to drag down sentiment toward other kinds of technology companies.

Also, the report said venture capitalists are likely to further cut funding, forcing some start-ups into mergers instead of trying to press on toward initial public offerings so their backers can recoup some of their investments.

Year to date through the third quarter, a total of 969 Internet companies have been sold for just more than $31 billion, according to Webmergers.com.