Data points: 1994 company valuation.

The conventional wisdom says that when a PC software company is sold, the acquisition price is typically about 1.5 times trailing revenues. But the latest data from Broadview Associates, a leading merger and acquisition broker, suggests that the conventional rule of thumb no longer works. "There was absolutely no bell-shaped curve in 1994," Says Broadview managing director Alec Ellison; instead, acquisition prices last year were scattered across a wide range of valuations.

Broadview, which tracks merger and acquisition activity throughout the information services industry, identified 43 PC software deals that were announced during the year (plus three mega-mergers of companies with sales greater than $125 million). "Despite a couple of headline grabbers," Ellison points out, "the bulk of these deals were in the middle market," most often in the $1-$10 million annual sales range. In this range, the price a company commands is likely to depend more on its technology and strategic market position than on any multiple of actual sales revenues, he says.

Overall, Ellison adds, valuations of PC software companies have been creeping upward (the median valuation-to-sales ratio for 1994 was 2.0). "The main reason is that more companies are being bought with stock, or with a combination of stock and cash. Three or four years ago, most of what we saw were cash deals, and that kept the valuations lower."

Alec Ellison, managing director, Broadview Associates, One Bridge Plaza, Ft. Lee, N.J. 07024; 201/346-9000.