Best Small Cos. Lower valuations are bad news for shareholders but could be good news for companies looking to acquire technology assets on the cheap. Depressed technology stocks could also set off a wave of privatization, as company managers try to preempt hostile attacks. This should be a pretty good year for merger and acquisition activity, given that valuations could hit rock bottom. Ditech has an enterprise multiple of 3, quite low for a technology company.
Enterprise value is a firm's market value plus debt outstanding, minus cash.
Think of it as the minimum amount that an acquirer would have to pay to buy a company. A cheap stock price and strong growth prospects could attract an acquirer. In December, Silicon acquired privately held Agate Technology, which designs specialty memory. Silicon Storage, which has an enterprise multiple of 5, could be a tempting acquisition candidate. Earnings per share.