2002 was a difficult year for internet businesses in the US and a new report from Webmergers claims that little more than $23 billion was spent on acquisitions, a decline of 70% on the previous year.
Increased consolidation in the sector ensured that dealmaking remained active with 1,087 internet companies changing hands. This was equivalent to approximately half of the technology-related transactions recorded in the study. By comparison, 1,238 internet deals were concluded in 2001 and it is estimated that over 4,800 internet companies have been purchased or shut down since the dotcom boom of 2000.
While the number of transactions declined by just 15% last year, total spending by acquirers slipped from $78 billion to $23.3 billion, reflecting the falling value of web businesses. However, Webmergers identified a significant number of healthy deals which point to the fact that there is now a greater understanding of what is effective on the internet.
In particular, firms are keen to invest in infrastructure and certain segments of ecommerce. Websites which offer ‘soft’ services such as travel, employment, ticketing and financial products are regarded as having the most potential.
