FORRESTER RESEARCH INC, 424B4, 1996-11-27

FORRESTER RESEARCH INC
424B4, 1996-11-27
BUSINESS SERVICES, NEC

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<PAGE> 1
Filed pursuant to
Rule 424(b)(4)
(File No. 333-12761)

2,000,000 SHARES

[FORRESTER LOGO]

FORRESTER RESEARCH, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)

---------------------

All of the 2,000,000 shares of Common Stock offered hereby are being sold
by Forrester Research, Inc. Prior to this offering, there has been no public
market for the Common Stock of the Company. For factors considered in
determining the initial public offering price, see "Underwriting".

SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE COMMON STOCK.

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "FORR".

---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

---------------------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
-------------- ------------ -----------
<S> <C> <C> <C>
Per Share................................ $16.00 $1.12 $14.88
Total(3)................................. $32,000,000 $2,240,000 $29,760,000
<FN>
- ---------------

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting".

(2) Before deducting estimated expenses of $950,000 payable by the Company.

(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 300,000 shares at the initial public offering price per
share, less the underwriting discount, solely to cover over-allotments. If
such option is exercised in full, the total initial public offering price,
underwriting discount, and proceeds to the Company will be $36,800,000,
$2,576,000, and $34,224,000, respectively. See "Underwriting".

</TABLE>

---------------------

The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York, on or about
December 3, 1996 against payment therefor in immediately available funds.

GOLDMAN, SACHS & CO. ROBERTSON, STEPHENS & COMPANY
---------------------
The date of this Prospectus is November 26, 1996.
<PAGE> 2

[A Graphic of three intertwined elipses illustrates
Forrester Research, Inc.'s three main research
areas -- Corporate IT, New Media, and Strategic Management]

Our goal at Forrester is to give our clients confidence that they're
putting attention, time, and resources where they will have the greatest
benefit. Forrester's innovative research services, which are topically
organized around Strategic Management, Corporate IT, and New Media research
themes, add insight and perspective to a business-focused review of emerging
technology.

Forrester is about change. In particular, how new technology will change
large companies, consumers, and society - and what our clients should be doing
about it.

- --------------------------------------------------------------------------------

Forrester Research, Inc. intends to furnish to its stockholders annual
reports containing audited financial statements and quarterly reports containing
unaudited interim financial information for the first three fiscal quarters of
each fiscal year of the Company.

---------------------------

"Forrester Research, Inc." and all of the Company's logos and product and
service names are trademarks of the Company and are used throughout this
Prospectus as such. The Prospectus also contains trademarks of other companies.

---------------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

2
<PAGE> 3
- --------------------------------------------------------------------------------
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Financial Statements and Notes thereto appearing elsewhere
in this Prospectus. Except as otherwise noted, all information in this
Prospectus (i) assumes no exercise of the Underwriters' over-allotment option,
and (ii) reflects the filing of a Restated Certificate of Incorporation
immediately prior to the completion of this offering.

THE COMPANY

Forrester Research, Inc. ("Forrester" or the "Company") is a leading
independent research firm offering products and services that help its clients
assess the effect of technology on their businesses. The Company provides
analysis and insight into a broad range of technology areas such as computing,
software, networking, the Internet, and telecommunications, and projects how
technology trends will impact businesses, consumers, and society. Forrester's
clients, which include senior management, business strategists, and information
technology ("IT") professionals within large enterprises, use Forrester's
prescriptive research to understand and benefit from current developments in
technology and as support for their development and implementation decisions.

Forrester offers its clients annual memberships to any of its 10 research
services. Each research service focuses on a particular area of technology and
explores business issues relevant to clients' decision-making. These issues
include the impact that the application of technology may have on financial
results, investment priorities, organizational effectiveness, and staffing
requirements. Forrester also provides advisory services to a limited number of
clients to help them explore in greater detail the topics covered by the core
research.

Forrester targets its products and services to both large enterprises and
technology vendors. As of September 30, 1996, Forrester's research was delivered
to more than 860 client companies. Approximately 72% of Forrester's client
companies with memberships expiring during the nine-month period ended September
30, 1996 renewed one or more memberships for the Company's products and
services.

The Company was incorporated in Massachusetts on July 7, 1983 and was
reincorporated in Delaware on February 21, 1996. The Company's executive offices
are located at 1033 Massachusetts Avenue, Cambridge, Massachusetts 02138, and
its telephone number is (617) 497-7090.

<TABLE>
THE OFFERING

<S> <C>
Common Stock offered by the Company................. 2,000,000 shares
Common Stock to be outstanding after the offering... 8,000,000 shares(1)
Approved Nasdaq National Market symbol.............. FORR
Use of proceeds..................................... For working capital and other general
corporate purposes, including possible
acquisitions.
<FN>

- ---------------

(1) Based on the number of shares of Common Stock outstanding at September 30,
1996. Does not include 3,100,000 shares of Common Stock reserved under the
Company's stock plans, of which 772,691 shares were subject to outstanding
options at September 30, 1996.
</TABLE>

RISK FACTORS

Certain risk factors should be considered in evaluating the Company and its
business before purchasing the Common Stock offered by this Prospectus. Such
factors include, among others, the Company's need to attract and retain
professional staff, the Company's ability to manage growth, possible variations
in the Company's quarterly operating results, possible volatility of the market
price for the Company's Common Stock, the Company's dependence on renewals of
its membership-based research services and on key personnel, risks associated
with the Company's ability to anticipate market trends and to offer new products
and services, competition in the market for research products and services, and
concentration of control of the Company after this offering. For a discussion of
these and certain other factors, see "Risk Factors".
- --------------------------------------------------------------------------------
3
<PAGE> 4
- --------------------------------------------------------------------------------
<TABLE>

SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------------------ ------------------------
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Core research................ $ 1,637 $ 2,626 $ 4,691 $ 6,363 $ 10,150 $ 7,036 $ 12,585
Advisory services and
other...................... 1,337 2,139 2,608 3,336 4,439 2,080 3,789
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues............... 2,974 4,765 7,299 9,699 14,589 9,116 16,374
Income from operations....... 424 586 947 1,487 1,784 742 2,154
Net income................... 480 654 980 1,539 2,027 962 2,382
Pro forma income tax
adjustment(1).............. 192 262 365 583 739 364 918
Pro forma net income(1)...... 288 392 615 956 1,288 598 1,464
Pro forma net income per
common share(2)............ $ .05 $ .06 $ .10 $ .15 $ .20 $ .10 $ .23
Weighted average common
shares outstanding(2)...... 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449

<CAPTION>
SEPTEMBER 30, 1996
-------------------------------------
PRO FORMA
PRO AS
FORMA ADJUSTED
ACTUAL (3)(4) (3)(4)(5)
------- ------- ---------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents and marketable securities.......................... $10,848 $ 7,248 $36,058
Working capital.............................................................. 2,094 (2,006) 26,804
Total assets................................................................. 23,323 19,723 48,533
Total stockholders' equity................................................... 4,242 142 28,952

<FN>
- ---------------
(1) The Company has elected to be taxed, since January 1, 1987, under subchapter
S of the Internal Revenue Code of 1986, as amended (the "Code"), whereby the
sole stockholder is liable for individual federal and state income taxes on
the Company's taxable income. Upon the completion of this offering, the
Company will terminate its S corporation election and will be subject to
corporate-level federal and state income taxes. Accordingly, the pro forma
income tax adjustments represent the income taxes that would have been
recorded if the Company had been a C corporation for the periods presented.
See Note 3 of Notes to Financial Statements.

(2) Pro forma net income per common share is computed by dividing pro forma net
income by the weighted average number of shares of common stock and common
stock equivalents outstanding during the period. See Note 1 of Notes to
Financial Statements.

(3) Pro forma to give effect to the (i) distribution of previously undistributed
S corporation earnings taxed or taxable to the Company's sole stockholder of
approximately $3,600,000 based on earnings through September 30, 1996, and
(ii) termination of the Company's S corporation election and the recognition
of a net deferred income tax liability of approximately $500,000 as of
September 30, 1996. See Notes 1 and 3 of Notes to Financial Statements.

(4) Does not include an adjustment for the distribution to be made to the sole
stockholder of the Company after completion of this offering in an amount
equal to the Company's undistributed S corporation earnings from October 1,
1996 through the termination of the Company's S corporation election.

(5) Adjusted to reflect the sale of 2,000,000 shares of Common Stock offered
hereby after deducting the underwriting discount and estimated offering
expenses payable by the Company.
</TABLE>
- -------------------------------------------------------------------------------

4
<PAGE> 5

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered in evaluating the Company and its
business before purchasing the Common Stock offered by this Prospectus.

NEED TO ATTRACT AND RETAIN PROFESSIONAL STAFF

The Company's future success will depend in large measure upon the
continued contributions of its senior management team, research analysts, and
experienced sales personnel. Accordingly, future operating results will be
largely dependent upon the Company's ability to retain the services of these
individuals and to attract additional qualified personnel from a limited pool of
qualified candidates. The Company experiences intense competition in hiring and
retaining professional personnel from, among others, producers of information
technology products, other research firms, management consulting firms, print
and electronic publishing companies, and financial services companies. Many of
these firms have substantially greater financial resources than the Company to
attract and compensate qualified personnel. The loss of the services of key
management and professional personnel or the inability to attract such personnel
could have a material adverse effect on the Company's business, financial
condition, and results of operations.

MANAGEMENT OF GROWTH

The Company's growth has placed significant demands on its management and
other resources. The Company's revenues increased approximately 50% to $14.6
million in 1995 from $9.7 million in 1994 and increased 80% to $16.4 million in
the nine months ended September 30, 1996 from $9.1 million in the nine months
ended September 30, 1995. The Company's staff increased from 61 full-time
employees on January 1, 1995 to 119 full-time employees on September 30, 1996
and further increases are expected during the remainder of 1996. The Company's
ability to manage growth, if any, effectively will require it to continue to
develop and improve its operational, financial, and other internal systems, as
well as its business development capabilities, and to train, motivate, and
manage its employees. In addition, the Company may acquire complementary
businesses, products, or technologies, although it currently has no commitments
or agreements to do so. The Company's management has limited experience
integrating acquisitions. If the Company is unable to manage its growth
effectively, such inability could have a material adverse effect on the quality
of the Company's products and services, its ability to retain key personnel and
its business, financial condition, and results of operations.

VARIABILITY OF QUARTERLY OPERATING RESULTS; POSSIBLE VOLATILITY OF STOCK PRICE

The Company's revenues and earnings may fluctuate from quarter to quarter
based on a variety of factors including the timing and size of new and renewal
memberships from clients, the timing of revenue-generating events sponsored by
the Company, the utilization of its advisory services, the introduction and
marketing of new products and services by the Company and its competitors, the
hiring and training of new analysts and sales personnel, changes in demand for
the Company's research, and general economic conditions. As a result, the
Company's operating results in future quarters may be below the expectations of
securities analysts and investors which could have a material adverse effect on
the market price for the Company's Common Stock. In addition, the stock market
recently has experienced volatility which has affected the market price of
securities of many companies and which has sometimes been unrelated to the
operating performance of such companies. Factors such as announcements of new
services or offices or strategic alliances by the Company or its competitors, as
well as market conditions in the information technology services industry, may
have a significant impact on the market price of the Common Stock. The market
price for the Company's Common Stock may also be affected by movements in prices
of stocks in general.

5
<PAGE> 6

DEPENDENCE ON RENEWALS OF MEMBERSHIP-BASED RESEARCH SERVICES

The Company's success depends in part upon renewals of memberships for its
core research products. Approximately 70% and 77% of the Company's revenues in
1995 and the first nine months of 1996, respectively, were derived from the
Company's membership-based core research products. A decline in renewal rates
for the Company's core research products could have a material adverse effect on
the Company's business, financial condition, and results of operations.

DEPENDENCE ON KEY PERSONNEL

The Company's future success will depend in large part upon the continued
services of a number of key employees. The loss of key personnel, in particular
George F. Colony, the Company's founder and Chairman of the Board of Directors,
President, and Chief Executive Officer, would have a material adverse effect on
the Company's business, financial condition, and results of operations. The
Company has entered into a registration rights and non-competition agreement
with Mr. Colony which provides that if Mr. Colony's employment with the Company
is terminated he will not compete with the Company for the one-year period
following his termination. See "Business -- Employees" and "Management --
Registration Rights and Non-Competition Agreement".

RISKS ASSOCIATED WITH ANTICIPATING MARKET TRENDS

The Company's success depends in part upon its ability to anticipate
rapidly changing technologies and market trends and to adapt its core research
to meet the changing information needs of the Company's clients. The technology
sectors that the Company analyzes undergo frequent and often dramatic changes,
including the introduction of new products and obsolescence of others, shifting
strategies and market positions of major industry participants, paradigm shifts
with respect to system architectures, and changing objectives and expectations
of users of technology. The environment of rapid and continuous change presents
significant challenges to the Company's ability to provide its clients with
current and timely analysis, strategies, and advice on issues of importance to
them. Meeting these challenges requires the commitment of substantial resources,
and any failure to continue to provide insightful and timely analysis of
developments, technologies, and trends in a manner that meets market needs could
have a material adverse effect on the Company's business, financial condition,
and results of operations.

NEW PRODUCTS AND SERVICES

The Company's future success will depend in part on its ability to offer
new products and services that successfully gain market acceptance by addressing
specific industry and business organization sectors, changes in client
requirements, and changes in the technology industry. The process of internally
researching, developing, launching, and gaining client acceptance of a new
product or service, or assimilating and marketing an acquired product or
service, is inherently risky and costly. There can be no assurance that the
Company's efforts to introduce new, or assimilate acquired, products or services
will be successful.

COMPETITION

The Company competes in the market for research products and services with
other independent providers of similar services. Several of the Company's
competitors have substantially greater financial, information-gathering, and
marketing resources than the Company. In addition, the Company's indirect
competitors include the internal planning and marketing staffs of the Company's
current and prospective clients, as well as other information providers such as
electronic and print publishing companies, survey-based general market research
firms, and general business consulting firms. The Company's indirect competitors
may choose to compete directly against the Company in the future. In addition,
there are relatively few barriers to entry into the Company's market and new
competitors could readily seek to compete against the Company in one or more
market segments addressed by the Company's products and services. Increased
competition could

6
<PAGE> 7

adversely affect the Company's operating results through pricing pressure and
loss of market share. There can be no assurance that the Company will be able to
continue to compete successfully against existing or new competitors. See
"Business -- Competition".

CONCENTRATION OF CONTROL

Upon completion of this offering, Mr. Colony will beneficially own
approximately 74% of the Company's outstanding Common Stock. As a result, he
will have the ability to elect the Company's directors and to determine the
outcome of corporate actions requiring stockholder approval. This concentration
of ownership may have the effect of delaying or preventing a change in control
of the Company. See "Management" and "Description of Capital Stock".

INTERNATIONAL OPERATIONS

Revenues attributable to customers outside the United States represented
approximately 18% and 21% of the Company's total revenues for the year ended
December 31, 1995 and for the nine months ended September 30, 1996,
respectively. The Company expects that international revenues will continue to
account for a substantial portion of total revenues and intends to continue to
expand its international operations. Expansion into new geographic territories
requires considerable management and financial resources and may negatively
impact the Company's near-term results of operations. The Company's
international operations are subject to numerous inherent challenges and risks,
including developing and managing relationships with international sales
representative organizations, reliance by the Company on sales entities which it
does not control, greater difficulty in maintaining direct client contact,
political and economic conditions in various jurisdictions, tariffs and other
trade barriers, longer accounts receivable collection cycles, difficulties in
protecting intellectual property rights in international jurisdictions, and
potentially adverse tax consequences. There can be no assurance that such
factors will not have a material adverse effect on the Company's business,
financial condition, and results of operations.

POTENTIAL EFFECT OF ANTI-TAKEOVER PROVISIONS

The Company's Board of Directors has the authority, without action by the
Company's stockholders, to fix the rights and preferences of and to issue shares
of the Company's Preferred Stock, which may have the effect of delaying,
deterring, or preventing a change in control of the Company. The Company has
also imposed various procedural and other requirements that could make it more
difficult for stockholders to effect certain corporate actions. In addition, the
classification of the Board of Directors of the Company could have the effect of
delaying, deterring, or preventing a change in control of the Company. See
"Description of Capital Stock".

NO PRIOR PUBLIC MARKET

Before this offering, there was no public market for the Common Stock, and
there can be no assurance that an active trading market will develop or be
sustained. The initial public offering price was determined by negotiation
between the Company and the representatives of the Underwriters based on several
factors, including prevailing market conditions and recent operating results of
the Company, and may not be indicative of the market price of the Common Stock
after this offering. See "Underwriting".

SHARES ELIGIBLE FOR FUTURE SALE

Sales of Common Stock in the public market after this offering could
adversely affect the market price of the Common Stock. The 2,000,000 shares
offered hereby will be freely tradeable in the open market. The remaining
6,000,000 shares, all of which Mr. Colony owns, are subject to a 180-day lock-up
agreement with the representatives of the Underwriters. Following the expiration
or earlier termination of the lock-up agreement, these shares will be eligible
for sale in the open market

7
<PAGE> 8

pursuant to Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"). Upon completion of this offering, options to purchase 157,376
shares of Common Stock will be immediately exercisable, 106,595 of which shares
are subject to 180-day lock-up agreements with the representatives of the
Underwriters. The Company intends to register an aggregate of 200,000 shares of
Common Stock reserved for issuance under its employee stock purchase plan upon
consummation of this offering, which shares will not be issuable until June
1997. In addition, the Company intends to register an additional 2,900,000
shares of Common Stock reserved for issuance under its stock option plans 90
days after completion of this offering. See "Management -- Stock Plans" and
"Description of Capital Stock -- Shares Eligible for Future Sale".

ABSENCE OF DIVIDENDS

The Company does not anticipate paying any cash dividends on the Common
Stock in the foreseeable future other than distributions to the Company's sole
stockholder in connection with the termination of the Company's S corporation
election. See "Termination of S Corporation Election and S Corporation
Distribution" and "Dividend Policy".

DILUTION

Purchasers of the Common Stock offered hereby will suffer an immediate
dilution of $12.38 per share in the net tangible book value per share of the
Common Stock from the initial public offering price. To the extent that
outstanding options to purchase Common Stock are exercised, there will be
further dilution. See "Dilution".

8
<PAGE> 9

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company hereby (at an initial public offering price
of $16.00 per share and net of the underwriting discount and estimated offering
expenses) are estimated to be approximately $28,810,000 ($33,274,000 if the
Underwriters' over-allotment option is exercised in full). The Company expects
to use the net proceeds of this offering for working capital and general
corporate purposes, including possible acquisitions. The Company currently has
no commitments or agreements with respect to any specific acquisition. Pending
such uses, the Company intends to invest the net proceeds primarily in short-
and intermediate-term interest-bearing obligations of investment grade.

TERMINATION OF S CORPORATION ELECTION
AND S CORPORATION DISTRIBUTION

The Company has operated as an S corporation since January 1, 1987. As a
result of its S corporation election, the income of the Company has been taxed,
for federal and state income tax purposes, directly to the sole stockholder of
the Company, except for certain state income taxes imposed at the corporate
level. Upon the completion of this offering, the Company will terminate its S
corporation election and will be subject to federal and state income taxes at
prevailing corporate rates. Termination of this election will result in a net
deferred tax liability being recorded as a charge to operations during the
quarter in which this offering is completed. This deferred tax liability is
approximately $500,000 as of September 30, 1996.

In addition, the Company will declare a distribution to its current
stockholder in an amount equal to the Company's undistributed S corporation
earnings. This distribution will be paid out of the Company's cash balances and
proceeds from the sale of marketable securities. See "Dividend Policy" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources". The Company and Mr. Colony also
have entered into a Tax Indemnification Agreement. See "Certain Transactions".

DIVIDEND POLICY

The Company paid cash dividends of $1,750,000, $1,121,342, and $169,893 to
Mr. Colony, the sole stockholder of the Company, in the years ended December 31,
1994 and 1995 and the nine months ended September 30, 1996, respectively. In
addition, the Company will make a distribution to Mr. Colony equal to the
Company's undistributed S corporation earnings through the termination of the
Company's S corporation election. This distribution is estimated to be
$3,600,000 based on earnings through September 30, 1996. This estimate does not
include the amount to be distributed for S corporation earnings from October 1,
1996 through the termination of the Company's S corporation election. The
Company anticipates that following completion of this offering and the
distribution of S corporation earnings to the Company's sole stockholder, future
earnings, if any, will be retained for the development of its business, and the
Company does not anticipate paying any cash dividends on the Common Stock in the
foreseeable future. See "Termination of S Corporation Election and S Corporation
Distribution" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources".

9
<PAGE> 10

DILUTION

<TABLE>
The pro forma net tangible book value of the Company as of September 30,
1996 was approximately $(81,000), or $(0.01) per share of common stock. Pro
forma net tangible book value per share of common stock is determined by
dividing the Company's tangible net worth (tangible assets less liabilities) by
the number of shares of Common Stock outstanding after giving effect to the (i)
distribution of previously undistributed S corporation earnings taxed or taxable
to the Company's sole stockholder of approximately $3,600,000 through September
30, 1996, and (ii) termination of the Company's S corporation election and the
recognition of a deferred income tax liability of approximately $500,000 as of
September 30, 1996, both to occur upon completion of this offering, but not
giving effect to the distribution to be made to the sole stockholder upon
completion of this offering in an amount equal to the Company's undistributed S
corporation earnings from October 1, 1996 through the date of termination of the
Company's S corporation election. After giving effect to the sale of 2,000,000
shares of Common Stock at an initial public offering price of $16.00 per share
(less the underwriting discount and estimated offering expenses) resulting in
estimated net proceeds of $28,810,000, the pro forma net tangible book value of
the Company as of September 30, 1996 would have been approximately $28,952,000,
or $3.62 per share. This represents an immediate increase of $3.63 per share to
the existing stockholder and an immediate dilution of $12.38 per share to new
investors. The following table illustrates this per share dilution:

<S> <C> <C>
Initial public offering price per share.................................. $16.00
Pro forma net tangible book value per share as of September 30,
1996............................................................... $(0.01)
Increase per share attributable to new investors.................... 3.63
------
Pro forma net tangible book value per share after this offering.......... 3.62
------
Dilution per share to new investors...................................... $12.38
======
</TABLE>

<TABLE>
The following table summarizes on a pro forma basis as of September 30,
1996 the total consideration paid, and the average price per share paid by the
existing stockholder and new investors purchasing shares offered hereby before
deducting the underwriting discount and estimated offering expenses, and
assuming the Underwriters' over-allotment option is not exercised.

<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE PAID
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Existing stockholder(1)........... 6,000,000 75.0% $ 60,000 0.2% $ 0.01
New investors..................... 2,000,000 25.0 32,000,000 99.8 $16.00
--------- ----- ----------- ----- ------
Total........................ 8,000,000 100.0% $32,060,000 100.0%
========= ===== =========== =====

<FN>
- ---------------
(1) Excludes 772,691 shares of Common Stock issuable upon exercise of certain
options held by executive officers, directors, and certain employees of the
Company that were outstanding as of September 30, 1996. To the extent any
outstanding options are exercised, there will be additional dilution to new
investors. See "Management -- Stock Plans" and Note 6 of Notes to Financial
Statements.
</TABLE>

10
<PAGE> 11

CAPITALIZATION

<TABLE>
The following table sets forth the capitalization of the Company as of
September 30, 1996 (i) on an actual basis, (ii) on a pro forma basis after
giving effect to (a) the distribution of previously undistributed S corporation
earnings taxed or taxable to the Company's sole stockholder of approximately
$3,600,000 through September 30, 1996, and termination of the Company's S
corporation election and the recognition of a deferred income tax liability of
approximately $500,000 as of September 30, 1996, both to occur upon completion
of this offering, and (b) certain amendments to the Company's Certificate of
Incorporation increasing the number of authorized shares of common stock to
25,000,000 and establishing a class of Preferred Stock consisting of 500,000
shares, and (iii) on a pro forma as adjusted basis to reflect the sale of
2,000,000 shares of common stock at an initial public offering price of $16.00
per share (less the underwriting discount and estimated offering expenses). This
table should be read in conjunction with the Company's Financial Statements and
Notes thereto included elsewhere in this Prospectus.

<CAPTION>
AS OF SEPTEMBER 30, 1996
----------------------------------------
(IN THOUSANDS)
PRO FORMA AS
ACTUAL PRO FORMA(1) ADJUSTED(1)
------- ------------ -------------
<S> <C> <C> <C>
Stockholders' equity:
Preferred stock, $.01 par value, per share:
500,000 shares authorized; none issued.. $ -- $ -- $ --
Common stock, $.01 par value, per share:
7,000,000 shares authorized; 6,000,000
shares issued and outstanding at
September 30, 1996; 25,000,000 shares
authorized and 6,000,000 shares issued
and outstanding on a pro forma basis;
and 8,000,000 shares issued and
outstanding on a pro forma as adjusted
basis(2).............................. 60 60 80
Additional paid-in capital................... -- -- 28,790
Retained earnings............................ 4,178 78 78
Unrealized gain on marketable securities..... 4 4 4
------ ---- -------
Total stockholders' equity................... 4,242 142 28,952
------ ---- -------
Total capitalization.................... $4,242 $142 $28,952
====== ==== =======

<FN>
- ---------------
(1) Does not include an adjustment for the distribution to be made to the sole
stockholder of the Company after completion of this offering in an amount
equal to the Company's undistributed S corporation earnings from October 1,
1996 through the termination of the Company's S corporation election.

(2) Excludes 772,691 shares of common stock issuable upon exercise of certain
options held by executive officers, directors, and certain employees of the
Company as of September 30, 1996.
</TABLE>

11
<PAGE> 12

SELECTED FINANCIAL DATA

<TABLE>
The selected financial data presented below as of and for each of the three
years ended December 31, 1993, 1994, and 1995, and for the nine months ended
September 30, 1996 have been derived from the Company's financial statements,
which have been audited by Arthur Andersen LLP, independent public accountants.
The selected financial data as of and for the years ended December 31, 1991 and
1992 and for the nine-month period ended September 30, 1995 have been derived
from the unaudited financial statements of the Company. In the opinion of
management, the unaudited financial statements have been prepared on the same
basis as the audited financial statements and include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial position and the results of operations as at and
for these periods. Operating results for the nine months ended September 30,
1996 are not necessarily indicative of the results that may be expected for the
full year or any other period. The financial information set forth below is
qualified by and should be read in conjunction with the Financial Statements of
the Company and the Notes thereto included elsewhere in this Prospectus and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".

<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------------------ -------------------------
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Core research.............. $ 1,637 $ 2,626 $ 4,691 $ 6,363 $ 10,150 $ 7,036 $ 12,585
Advisory services and
other.................... 1,337 2,139 2,608 3,336 4,439 2,080 3,789
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues............. 2,974 4,765 7,299 9,699 14,589 9,116 16,374
Operating Expenses:
Cost of services and
fulfillment.............. 1,308 1,866 2,406 3,424 5,486 3,550 5,911
Selling and marketing...... 721 1,645 2,693 3,593 5,643 3,730 6,234
General and
administrative........... 485 599 1,148 1,045 1,389 887 1,715
Depreciation and
amortization............. 36 69 105 150 287 207 360
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from
operations........... 424 586 947 1,487 1,784 742 2,154
Interest income........ 56 68 79 125 339 266 354
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before state income
tax provision............ 480 654 1,026 1,612 2,123 1,008 2,508
State income tax
provision(1)............. -- -- 46 73 96 46 126
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............. $ 480 $ 654 $ 980 $ 1,539 $ 2,027 $ 962 $ 2,382
========== ========== ========== ========== ========== ========== ==========
Pro forma income tax
adjustment(1)............ 192 262 365 583 739 364 918
---------- ---------- ---------- ---------- ---------- ---------- ----------
Pro forma net income(1).... $ 288 $ 392 $ 615 $ 956 $ 1,288 $ 598 $ 1,464
========== ========== ========== ========== ========== ========== ==========
Pro forma net income per
common share(2).......... $ .05 $ .06 $ .10 $ .15 $ .20 $ .10 $ .23
Weighted average common
shares outstanding(2).... 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449

<CAPTION>
SEPTEMBER 30, 1996
DECEMBER 31, -------------------------
------------------------------------------------------------------ PRO FORMA
1991 1992 1993 1994 1995 ACTUAL (3)(4)
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents
and marketable
securities............... $ 883 $ 2,385 $ 3,111 $ 4,764 $ 7,518 $ 10,848 $ 7,248
Working capital............ 160 409 901 528 991 2,094 (2,006)
Total assets............... 2,275 4,964 6,367 8,784 15,426 23,323 19,723
Stockholders' equity....... 331 696 1,331 1,120 2,047 4,242 142
</TABLE>

12
<PAGE> 13

- ---------------

(1) The Company has elected to be taxed, since January 1, 1987, under subchapter
S of the Code, whereby the sole stockholder is liable for federal and state
income taxes on the Company's taxable income. Upon the completion of this
offering, the Company will terminate its S corporation election and will be
subject to corporate-level federal and state income taxes. Accordingly, the
pro forma income tax adjustments represent the income taxes that would have
been recorded if the Company had been a C corporation for the periods
presented. See Note 3 of Notes to Financial Statements.

(3) Pro forma to give effect to the (i) distribution of previously undistributed
S corporation earnings taxed or taxable to the Company's sole stockholder of
approximately $3,600,000 through September 30, 1996, and (ii) termination of
the Company's S corporation election and the recognition of a deferred
income tax liability of approximately $500,000 as of September 30, 1996. See
Notes 1 and 3 of Notes to Financial Statements.

13
<PAGE> 14

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

Forrester has experienced year-to-year revenue growth every year since its
inception in 1983. Over the last five years, the Company's revenues have
increased to $14.6 million in 1995 from $3.0 million in 1991. The Company's
revenues were $16.4 million in the first nine months of 1996. Forrester
attributes this growth to the Company's continuing reputation for quality
research and timely, accurate analysis of technology industry developments; the
introduction of new products and services; and the expansion of the Company's
sales and marketing organization. In addition, the Company believes the speed of
technology change and the increasingly participatory nature of technology
decisions have led to a growing market need for independent research and
analysis on the impact of technology on large enterprises, consumers, and
society.

Revenues from core research also increased over the last five years, to
$10.1 million in 1995 from $1.6 million in 1991, and increased as a percentage
of total revenues to 70% in 1995 from 55% in 1991. Revenues from core research
were $12.6 million for the first nine months of 1996, or 77% of total revenues.
Forrester attributes this growth to, in addition to the factors cited above, an
increase in total Strategy Research Services offered -- from three in 1991 to
four in 1994, to six in 1995, and to a total of 10 Strategy Research Services as
of September 30, 1996.

Memberships to Forrester's Strategy Research Services are renewable
contracts, typically annual and payable in advance. Accordingly, a substantial
portion of the Company's billings are initially recorded as deferred revenue and
recognized pro rata on a monthly basis over the contract period. The Company's
other revenues are derived from advisory services rendered pursuant to
Forrester's Partners Program and Strategy Review Program, and from the Forrester
Technology Management Forum (the "Forum"). The Company's advisory service
clients purchase such services in conjunction with the purchase of core research
memberships to Strategy Research Services, and the contracts for such purchases
are also generally payable in advance. Billings attributable to advisory
services are initially recorded as deferred revenues and recognized as revenue
when performed. Similarly, Forum billings are initially recorded as deferred
revenues and are recognized upon completion of the event.

The Company's operating expenses consist of cost of services and
fulfillment, selling and marketing expenses, general and administrative
expenses, and depreciation and amortization. Cost of services and fulfillment
represent the costs associated with production and delivery of the Company's
products and services, and include the costs of salaries, bonuses, and related
benefits for research personnel, and all associated editorial, travel, and
support services. Selling and marketing expenses include salaries, employee
benefits, travel expenses, promotional costs, and sales commissions, which are
deferred when paid and expensed as the related revenue is recognized. General
and administrative expenses include the costs of the finance, operations, and
corporate IT groups, and other administrative functions of the Company.

The Company has had income from operations in each of the last five years
from 1991 through 1995 and in the first nine months of 1996. Income from
operations rose 321% to $1.8 million in 1995 from $423,665 in 1991. Income from
operations was $2.2 million for the nine-month period ended September 30, 1996.

The Company has elected to be taxed, since January 1, 1987, under
subchapter S of the Code whereby the sole stockholder is liable for individual
federal and certain state income taxes on the Company's taxable income. As such,
the Company has not paid federal income taxes and paid reduced state income
taxes. Upon completion of this offering, the Company will terminate its S
corporation election and will be subject to corporate-level federal and state
income taxes. Termination of this election will result in a deferred income tax
liability being recorded as a charge to operations during the quarter in which
this offering is completed. This deferred tax liability is approximately
$500,000 as of September 30, 1996. The combination of the state income tax
provision and the pro forma income tax adjustment in the Company's historical
financial statements

14
<PAGE> 15

reflects the federal and state income taxes which would have been recorded if
the Company had been treated as a C corporation during the periods presented.
The Company has calculated these amounts based upon an estimated effective tax
rate for the respective periods.

The Company believes that the "agreement value" of contracts to purchase
core research and advisory services provides a significant measure of the
Company's business volume. Forrester calculates agreement value as the
annualized fees payable under all core research and advisory services contracts
in effect at a given point in time, without regard to the remaining duration of
such contracts. Agreement value increased 74% to $17.8 million at December 31,
1995 from $10.2 million at December 31, 1994. At September 30, 1996 agreement
value was $25.9 million. The Company's experience is that a substantial portion
of client companies renew expiring contracts for an equal or higher level of
total core research and advisory service fees each year. Approximately 71% and
72% of Forrester's client companies with memberships expiring during 1995 and
the first nine months of 1996, respectively, renewed one or more memberships for
the Company's products and services, although these renewal rates are not
necessarily indicative of the rate of future retention of the Company's revenue
base. The number of client companies increased to more than 860 at September 30,
1996 from 799 at December 31, 1995, and no single client company accounted for
over 4% of the Company's revenue in 1995 or over 3% of the Company's revenue in
the nine months ended September 30, 1996.

RESULTS OF OPERATIONS

<TABLE>
The following table sets forth certain financial data as a percentage of
total revenues for the periods indicated:

<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------- -------------
1993 1994 1995 1995 1996
--- --- --- --- ---
<S> <C> <C> <C> <C> <C>
Core research.............................. 64% 66% 70% 77% 77%
Advisory services and other................ 36 34 30 23 23
--- --- --- --- ---
Total revenues............................. 100 100 100 100 100
--- --- --- --- ---
Cost of services and fulfillment........... 33 35 37 39 36
Selling and marketing...................... 37 37 39 41 38
General and administrative................. 16 10 9 10 11
Depreciation and amortization.............. 1 2 2 2 2
--- --- --- --- ---
Income from operations..................... 13 16 13 8 13
Interest income............................ 1 1 2 3 2
--- --- --- --- ---
Income before state income tax provision... 14 17 15 11 15
Provision for state income tax............. 1 1 1 1 1
--- --- --- --- ---
Net income................................. 13% 16% 14% 10% 14%
==== ==== ==== ==== ====
Pro forma income tax adjustment............ 5 6 5 4 6
--- --- --- --- ---
Pro forma net income....................... 8% 10% 9% 6% 8%
==== ==== ==== ==== ====
</TABLE>

NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995

REVENUES. Total revenues increased 80% to $16.4 million in the nine months
ended September 30, 1996 from $9.1 million in the corresponding period of 1995.
Revenues from core research increased 79% to $12.6 million in the nine months
ended September 30, 1996 from $7.0 million in the corresponding period in 1995.
The increases in total revenues and revenues from core research were primarily
attributable to an increase in the number of clients, the introduction of new
Strategy Research Services, and continued expansion and increased productivity
of the Company's sales force.

15
<PAGE> 16

Advisory services and other revenues increased 82% to $3.8 million in the
nine months ended September 30, 1996 from $2.1 million in the nine months ended
September 30, 1995. This increase was primarily attributable to demand for the
Partners and Strategy Review Programs.

Revenues attributable to customers outside the United States increased 102%
to $3.4 million in the nine months ended September 30, 1996 from $1.7 million in
the nine months ended September 30, 1995, and also increased as a percentage of
total revenues to 21% for the nine months ended September 30, 1996 from 18% for
the nine months ended September 30, 1995. The increase was due primarily to the
addition of direct international sales personnel. The Company invoices its
international clients in U.S. dollars.

Agreement value grew to $25.9 million at September 30, 1996 from $13.7
million at September 30, 1995. No single client company accounted for more than
2% of agreement value or 3% of revenues for the nine months ended September 30,
1996.

COST OF SERVICES AND FULFILLMENT. Cost of services and fulfillment
decreased as a percentage of total revenues to 36% in the nine months ended
September 30, 1996 from 39% in the nine months ended September 30, 1995. These
costs increased 67% to $5.9 million in the nine months ended September 30, 1996
from $3.5 million in the nine months ended September 30, 1995. The expense
increase in this period was principally due to increased analyst staffing for
new Strategy Research Services and related compensation expense.

SELLING AND MARKETING. Selling and marketing expenses decreased as a
percentage of total revenues to 38% in the nine months ended September 30, 1996
from 41% in the nine months ended September 30, 1995. These expenses increased
67% to $6.2 million in the nine months ended September 30, 1996 from $3.7
million in the nine months ended September 30, 1995. The increase in expense was
principally due to the addition of direct salespersons and increased sales
commission expense associated with increased revenues. The decrease as a
percentage of total revenues was principally due to increased productivity of
the Company's direct sales force.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
as a percentage of total revenues to 11% in the nine months ended September 30,
1996 from 10% in the nine months ended September 30, 1995. These expenses
increased 93% to $1.7 million in the nine months ended September 30, 1996 from
$887,037 in the nine months ended September 30, 1995. The increase in expenses
was principally due to staffing increases in operations and IT and higher costs
associated with the Company's new Cambridge headquarters.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased 73% to $359,531 in the nine months ended September 30, 1996 from
$207,347 in the nine months ended September 30, 1995. The increase in this
expense was principally due to purchases of computer equipment, software, and
office furnishings to support business growth, and the Company's move to its new
Cambridge headquarters and expansion thereof.

INTEREST INCOME. Interest income increased to $353,915 in the nine months
ended September 30, 1996 from $266,252 in the nine months ended September 30,
1995 due to an increase in the Company's cash balances resulting from positive
cash flows from operations.

YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993

REVENUES. Total revenues increased 50% to $14.6 million in 1995 from $9.7
million in 1994, and 33% from $7.3 million in 1993. Revenues from core research
increased 59% to $10.1 million in 1995 from $6.4 million in 1994, and 36% from
$4.7 million in 1993. The increases in total revenues and revenues from core
research were primarily attributable to an increase in the number of clients,
the introduction of new Strategy Research Services, continued expansion and
increased productivity of the Company's sales force, and growing market
acceptance of the Company's products. The Company introduced two new Strategy
Research Services in 1995, one new Strategy Research Service in 1994, and did
not start any new Strategy Research Services in 1993.

Advisory services and other revenues increased 33% to $4.4 million in 1995
from $3.3 million in 1994, and 28% from $2.6 million in 1993. The increase in
advisory services and other revenues was

16
<PAGE> 17

primarily attributable to demand for the Company's advisory services. The
decrease of these revenues as a percentage of total revenues to 30% in 1995 from
34% in 1994 and 36% in 1993 reflects the results of the Company's strategy to
expand sales of its core research. See "Business -- Strategy".

Revenues attributable to sales to customers outside the United States
increased 61% to $2.6 million in 1995 from $1.6 million in 1994, and 43% from
$1.1 million in 1993. International sales represented 18%, 16%, and 15% of total
revenue for 1995, 1994, and 1993, respectively. The increase was due primarily
to the Company's creation and growth of a direct international sales force from
one employee in 1993 to eight employees at December 31, 1995.

Agreement value grew 74% to $17.8 million at December 31, 1995 from $10.2
million at December 31, 1994, and 75% from $5.8 million at December 31, 1993.

COST OF SERVICES AND FULFILLMENT. Cost of services and fulfillment
increased as a percentage of total revenues to 37% in 1995 from 35% in 1994 and
33% in 1993. These costs increased 60% to $5.5 million in 1995 from $3.4 million
in 1994, and 42% from $2.4 million in 1993. These increases were principally due
to investment in new Strategy Research Services and resultant increased analyst
staffing and related compensation expense.

SELLING AND MARKETING. Selling and marketing expenses increased as a
percentage of total revenues to 39% in 1995 from 37% in 1994 and 1993. These
expenses increased 57% to $5.6 million in 1995 from $3.6 million in 1994, and
33% from $2.7 million in 1993. The increase in expenses was principally due to
the addition of direct salespersons and marketing personnel and increased sales
commissions resulting from increased revenues.

GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased
as a percentage of total revenues to 9% in 1995 from 10% in 1994 and 16% in
1993. These expenses increased 33% to $1.4 million in 1995 from $1.0 million in
1994, and decreased 9% from $1.1 million in 1993. The increase in expenses from
1994 to 1995 was principally due to staffing increases in operations and IT,
higher costs associated with the Company's new Cambridge headquarters, and
investment in the Company's internal IT systems.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased 91% to $286,705 in 1995 from $150,067 in 1994, and 43% from $105,120
in 1993. The increase in this expense was principally due to purchases of
computer equipment, software, and office furnishings to support business growth
and the Company's move to its new Cambridge headquarters and expansion thereof.

INTEREST INCOME. Interest income increased 171% to $339,569 in 1995 from
$125,115 in 1994, and 58% from $79,343 in 1993. This increase resulted primarily
from an increase in the Company's cash balances resulting from positive cash
flows from operations.

17
<PAGE> 18

QUARTERLY RESULTS OF OPERATIONS

<TABLE>
The following tables set forth certain quarterly financial data for each of
the seven quarters in the period ended September 30, 1996, together with such
data as a percentage of total revenues. The quarterly information presented is
unaudited and, in the opinion of management, has been prepared on the same basis
as the annual audited statements and includes all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of the
information for the periods presented, when read in conjunction with the
Financial Statements of the Company and the Notes thereto included elsewhere in
this Prospectus. Operating results for any quarter are not necessarily
indicative of results for any future period.

<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1995 1995 1995 1995 1996 1996 1996
--------- -------- ------------- ------------ --------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Core research.......... $2,049 $2,344 $2,643 $3,114 $3,646 $4,128 $4,811
Advisory services and
other................ 659 529 892 2,359 1,100 1,188 1,501
------ ------ ------ ------ ------ ------ ------
Total revenues......... 2,708 2,873 3,535 5,473 4,746 5,316 6,312
Cost of services and
fulfillment.......... 1,058 1,105 1,387 1,936 1,736 2,010 2,165
Selling and
marketing............ 1,106 1,255 1,369 1,913 1,841 2,104 2,289
General and
administrative....... 270 288 329 502 618 516 581
Depreciation and
amortization......... 65 63 80 79 92 120 148
------ ------ ------ ------ ------ ------ ------
Income from
operations....... 209 162 370 1,043 459 566 1,129
Interest income.... 75 102 89 73 110 121 123
------ ------ ------ ------ ------ ------ ------
Income before state
income tax
provision............ 284 264 459 1,116 569 687 1,252
State income tax
provision............ 13 12 21 50 30 35 61
------ ------ ------ ------ ------ ------ ------
Net income......... $ 271 $ 252 $ 438 $1,066 $ 539 $ 652 $1,191
====== ====== ====== ====== ====== ====== ======
Pro forma income tax
adjustment........... 103 95 166 375 200 243 475
------ ------ ------ ------ ------ ------ ------
Pro forma net income... $ 168 $ 157 $ 272 $ 691 $ 339 $ 409 $ 716
====== ====== ====== ====== ====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1995 1995 1995 1995 1996 1996 1996
--------- -------- ------------- ------------ --------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF TOTAL
REVENUES:
Core research............. 76% 82% 75% 57% 77% 78% 76%
Advisory services and
other................... 24 18 25 43 23 22 24
--- --- --- --- --- --- ---
Total revenues............ 100 100 100 100 100 100 100
Cost of services and
fulfillment............. 39 38 39 35 37 37 34
Selling and marketing..... 41 44 39 35 38 40 37
General and
administrative.......... 10 10 9 9 13 10 9
Depreciation and
amortization............ 2 2 2 1 2 2 2
--- --- --- --- --- --- ---
Income from
operations.......... 8 6 11 20 10 11 18
Interest income....... 3 4 3 1 2 2 2
--- --- --- --- --- --- ---
Income before state income
tax provision........... 11 10 14 21 12 13 20
State income tax
provision............... 1 1 1 1 1 1 1
--- --- --- --- --- --- ---
Net income............ 10% 9% 13% 20% 11% 12% 19%
=== === === === === === ===
Pro forma income tax
adjustment.............. 4 3 5 7 4 4 8
--- --- --- --- --- --- ---
Pro forma net income...... 6% 6% 8% 13% 7% 8% 11%
=== === === === === === ===
</TABLE>

18
<PAGE> 19

Revenues generally increased each quarter during the seven quarters ended
September 30, 1996, reflecting the overall growth in the Company's business.
Historically, total revenues in the fourth quarter have reflected the
significant positive contribution of revenues attributable to the Forrester
Forum. As a result, the Company has typically experienced a decline in total
revenues from the quarter ended December 31 to the quarter ended March 31. In
addition, cost of services and fulfillment and sales and marketing expense has
typically decreased as a percentage of revenues during the fourth quarter. Sales
and marketing expenses increased as a percentage of revenues during the quarter
ended June 30, 1995 due to additional costs related to new collateral material
printed in connection with the Company's move into its new Cambridge offices.
General and administrative expenses increased as a percentage of revenues during
the quarter ended March 31, 1996 compared to the quarter ended December 31, 1996
due to increased hiring of operations personnel and the increased revenues
during the quarter ended December 31, 1995 attributable to the Forum. The
Company's quarterly operating results have fluctuated in the past and may
continue to fluctuate in the future.

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations to date through funds generated
from operations. Memberships for core research, which constituted approximately
77% of the Company's revenues for the nine months ended September 30, 1996, are
annually renewable and are generally payable in advance. These up-front payment
terms together with historical year-to-year revenue growth have allowed the
Company to generate positive cash flows each year since 1984, one year after its
inception in 1983. The Company generated $4.6 million in cash from operating
activities during 1995, $3.7 million during 1994, and $1.3 million during 1993.
In the nine months ended September 30, 1996, the Company generated $4.8 million
in cash from operating activities.

In 1995, the Company used $5.2 million of cash in investing activities,
consisting of $751,850 for the purchase of property and equipment and $4.5
million for net purchases of marketable securities. The Company regularly
invests excess funds in short- and intermediate-term interest-bearing
obligations of investment grade. In 1995, the Company used $1.1 million in
financing activities, consisting solely of a distribution to the stockholder
primarily to pay income taxes on the Company's net income. See "Termination of S
Corporation Election and S Corporation Distribution" and "Dividend Policy"
above.

In the nine months ended September 30, 1996, the Company used $4.4 million
of cash in investing activities. The primary uses were the purchase of $1.5
million of property and equipment and the net purchase of $2.9 million of
marketable securities.

As of September 30, 1996, the Company had cash and cash equivalents of $1.3
million and $9.6 million in marketable securities. This amount will be reduced
by a distribution to the sole stockholder of the Company after completion of
this offering as described in "Termination of S Corporation Election and S
Corporation Distribution". The Company does not have a line of credit and does
not anticipate the need for one in the foreseeable future. The Company currently
has no material capital commitments and does not foresee that capital
expenditures will increase substantially during the next two years. The Company
believes that its current cash balance, marketable securities, and cash flows
from operations, together with the net proceeds from the offering, will satisfy
working capital, financing activities, and capital expenditure requirements for
at least the next two years.

The Company will declare a distribution to its current stockholder in an
amount equal to the Company's undistributed S corporation earnings of
approximately $3,600,000 through September 30, 1996. The estimated distribution
through September 30, 1996 does not include the amount to be distributed for S
corporation earnings from October 1, 1996 through termination of the Company's S
corporation election. These distributions will be paid out of the Company's cash
balances and proceeds from the sale of marketable securities.

19
<PAGE> 20

BUSINESS

Forrester is a leading independent research firm offering products and
services that help its clients assess the effect of technology on their
businesses. The Company provides analysis and insight into a broad range of
technology areas such as computing, software, networking, the Internet, and
telecommunications, and projects how technology trends will impact businesses,
consumers, and society. Forrester's clients, which include senior management,
business strategists, and IT professionals within large enterprises, use
Forrester's prescriptive research to understand and benefit from current
developments in technology and as support for their development and
implementation decisions.

Forrester offers its clients annual memberships to any of its 10 research
services ("Strategy Research Services"). Each Strategy Research Service focuses
on a particular area of technology and explores business issues relevant to
clients' decision-making. These issues include the impact that the application
of technology may have on financial results, investment priorities,
organizational effectiveness, and staffing requirements. Forrester also provides
advisory services to a limited number of clients to help them explore in greater
detail the topics covered by the core research.

Forrester targets its products and services to both large enterprises and
technology vendors. As of September 30, 1996, Forrester's research was delivered
to more than 860 client companies. No single client company accounted for more
than 3% of the Company's revenues during the nine-month period ended September
30, 1996. Approximately 72% of Forrester's client companies with memberships
expiring during the nine-month period ended September 30, 1996 renewed one or
more memberships for the Company's products and services.

INDUSTRY BACKGROUND

Businesses increasingly depend on technology for competitive advantage and
success. Technology is being used as a strategic tool to develop innovative
products, services, and distribution channels, as well as to create more
efficient internal business processes. Decisions about how to deploy networks,
software, and other systems are increasingly participatory, with
line-of-business managers, marketing executives, and corporate leaders joining
IT professionals in the technology review and decision-making process. Together,
these individuals must develop a coherent strategy that leverages innovative
systems to reach new markets, gain competitive advantage, and develop high
customer service and loyalty levels. Developing such a strategy is difficult,
however, as the rate of technology change accelerates. Increased complexity and
the proliferation of vendors and solutions have increased the challenges in
anticipating and understanding emerging technologies.

The strategic use of technology, the widening scope of decision-making, the
speed of change, and the complexity of decisions make it difficult for
organizations to efficiently generate research and analysis on their own. Costly
incremental resources -- time and expertise -- are required for successful
analysis and implementation of technology. Poor decisions can be costly and
detrimental to an organization's competitive position. Consequently, demand is
growing for external sources of expertise that provide independent,
vendor-neutral business advice on how to benefit from technology change.
Research firms that provide tactical product assessment or customized consulting
are often too narrow in their perspective to satisfy this demand. Business
leaders as well as technology users require comprehensive research that can
anticipate, assess, and interpret major trends. Forrester believes there is a
growing need for thematic, prescriptive analysis of technology that appeals to
senior management, business strategists, and IT professionals, and helps
organizations improve their strategic planning processes, leverage technology
change, and gain competitive advantage.

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<PAGE> 21

THE FORRESTER SOLUTION

Forrester addresses the growing demand for thematic, prescriptive analysis
of technology by providing business-focused research to senior management,
business strategists, and IT professionals. The Company's research methodology
analyzes complex technology issues and delivers prescriptive analysis and advice
through each of its 10 Strategy Research Services. This research helps large
enterprises make informed decisions that positively affect competitive strategy
and business performance, reduce risk, and manage cost. Although Forrester's
research is user-focused, IT vendors also use Forrester's research for
marketing, product positioning, and market planning.

Forrester differentiates its products and services from those offered by
other research firms by:

ADDRESSING NEEDS OF BUSINESS EXECUTIVES. Forrester's core research
and advisory services blend analysis of technology with related business
issues to enable senior management to better use technology for competitive
advantage. Unlike narrowly focused, tactically based research that assesses
products and components, Forrester's research provides a strategic view of
the impact of technology on long-term business plans.

DELIVERING VALUABLE, STAND-ALONE WRITTEN RESEARCH. Forrester's
research distills the abundance of information, activities, and
developments in the IT industry into a concise, easy-to-read guide for
decision-making. In contrast to research that requires interactive
consulting support, Forrester's research is designed to provide valuable,
prescriptive analysis that stands on its own without requiring ongoing
analyst interaction.

TAKING A STAND ON DIFFICULT TECHNOLOGY ISSUES. Forrester's research
and analysts challenge conventional viewpoints; the Company does not expect
clients to agree with every prediction or conclusion presented. However,
the Company does believe that strong opinions and recommendations will
enable clients to more thoroughly consider the use of technology to gain
competitive advantage. Forrester, unlike many other research firms,
provides concrete, actionable business advice.

PROVIDING A BROAD VIEW OF TECHNOLOGY CHANGE. Forrester's research
approach provides an integrated, cross-disciplinary view of technologies
and their impact throughout organizations and industries. The Company's
cross-service collaboration ensures that a coherent, thematic analysis is
consistently delivered to clients. Forrester's broad perspective can be
contrasted with narrowly defined, specifically tailored technology
assessments.

FOCUSING ON EMERGING TECHNOLOGIES IN CONSUMER AND BUSINESS
MARKETS. Forrester's research methodology is designed to identify
fundamental shifts in technology before these changes appear on the
horizons of most users, vendors, and other research firms. Forrester's
interview-based research approach combines input from early adopters of new
technologies, vendors, and consumers to gauge the likelihood of a
technology's success and its potential impact on various markets.

STRATEGY

Forrester seeks to capitalize on the growing demand for technology
research, analysis, and advice. To achieve this goal, Forrester has adopted the
following strategies:

LEVERAGE CORE RESEARCH. By focusing on sales of its stand-alone core
research, the Company can deliver value to its clients and can increase its
revenues without having to provide ongoing and direct analyst support. In
addition, Forrester's current and developing electronic delivery options
make it easier to disseminate research within an organization while
providing greater ease of use, including the ability to search, customize,
and sort information according to individual preferences. Finally, the
Company intends to continue to introduce new Strategy Research Services and
to provide advisory services that build upon the analysis and
recommendations set forth in the core research to enhance sales of that
core research.

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<PAGE> 22

EXPAND CLIENT BASE AND PENETRATE EXISTING ACCOUNTS. The Company
believes that its current offerings of products and services, and
anticipated new products and services, can continue to be successfully
marketed and sold to new client companies, as well as to new organizations
within existing client companies. Forrester currently targets senior
management, business strategists, and IT professionals within Fortune 1,000
companies. The Company seeks to expand its international audience by
targeting select geographic markets. The Company also aims to increase the
number of Strategy Research Services that each client purchases through
increased marketing of new and current products and services.

IDENTIFY AND DEFINE NEW TECHNOLOGY MARKETS. Forrester seeks to
position itself ahead of other research firms by delivering strategic
research and analysis on new and emerging technologies. Forrester believes
its methodology and culture allow it to focus on areas of technology change
and enable it to expand its product and service offerings to address new
technology issues.

ATTRACT AND RETAIN HIGH-QUALITY RESEARCH PROFESSIONALS. The knowledge
and experience of Forrester's analysts are critical elements of the
Company's ability to provide high-quality products and services. The
Company seeks to attract, develop, and retain outstanding research
professionals by providing a creative corporate environment and culture, a
competitive compensation structure, training and mentoring programs for
individual development, and recognition and rewards for excellent
individual and team performance.

EXPAND AND LEVERAGE SALES FORCE. The Company is expanding its current
direct sales force and is seeking to increase the average sales volume per
sales representative. The Company believes that this increase can be
achieved as the average tenure of the Company's sales representatives
lengthens and marketing initiatives shorten the sales cycle. Initiatives
include the improvement of existing and the development of new methods for
obtaining highly qualified sales leads, targeted use of third-party
telemarketing firms, and hosting of regional marketing events around the
world.

PRODUCTS AND SERVICES

Forrester's principal products are annually renewable memberships to 10
Strategy Research Services in three main research areas: Corporate IT, New
Media, and Strategic Management. Corporate IT Research services analyze how
technology change impacts IT's infrastructure, tactics, and mission; New Media
Research services provide insight into how companies can leverage emerging
technology to deliver content and services to consumers; and Strategic
Management Research assists senior executives in understanding the long-term
implications of technology change on organizational and business strategies.
Each Strategy Research Service delivers monthly Reports and biweekly Briefs,
except the Leadership Strategies service which delivers Reports on a bimonthly
basis and Executive Takes on a biweekly basis. Additionally, Forrester provides
advisory services to select clients through the Partners Program and Strategy
Review Program. The Company holds one major event each year, the Forrester
Technology Management Forum, a two-day conference devoted to leading technology
issues.

STRATEGY RESEARCH SERVICES

The Company's Strategy Research Services provide ongoing research and
analysis on the developments, information, and activities in the technology
industry. Each service is staffed by a team of research analysts and associates
with substantial experience in the technology area covered by that service. The
services employ a consistent research methodology to analyze technology issues,
address related business issues, and offer recommendations and action plans.
While each service addresses a specific technology area, collectively they
present complementary, consistent research themes and provide comprehensive
coverage of relevant technology issues faced by the Company's clients.
Businesses are able to supplement and extend internal resources with current,
thorough, and focused analysis and recommendations. In addition, technology
vendors are able to augment and test competitive, new product, marketing, and
sales plans against Forrester's independent analysis and advice.

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<PAGE> 23

The following table summarizes the coverage areas of Forrester's Strategy
Research Services:

<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CORPORATE IT RESEARCH SAMPLE TOPICS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
COMPUTING STRATEGY SERVICE -- introduced in November 1983, analyzes the rollout - Systems and network management
and management of large-scale client/server systems, the impact of the Internet - Directories
on computing architectures, and the changing IT organization - Operating systems
- Servers, PCs, workstations
- Internet Computing
- --------------------------------------------------------------------------------------------------------------------------------
NETWORK STRATEGY SERVICE -- introduced in December 1986, analyzes high- - ATM
performance network services and guides companies to build advanced networks - Video
that support client/server applications, link mobile workers, and connect - EDI
business partners and customers - Internetworking equipment
- Networking protocols and services
- Internet/Intranet
- --------------------------------------------------------------------------------------------------------------------------------
PACKAGED APPLICATION STRATEGIES -- introduced in April 1996, analyzes the - Cost of ownership analysis
impact of emerging technologies on application strategy and helps clients - eCommerce packages
acquire, manage, and leverage packaged software applications - Suite vs. best-of-breed
- Application data warehousing
- Impact of Internet/Intranet
- --------------------------------------------------------------------------------------------------------------------------------
SOFTWARE STRATEGY SERVICE -- introduced in April 1990, analyzes and defines - Object-oriented technology
strategies for the overall software architecture needed to meet business - Internet/Intranet software
objectives, including strategic use of data, documents, and development - Document management
- Data warehousing
- Web servers
- --------------------------------------------------------------------------------------------------------------------------------
TELECOM STRATEGIES -- introduced in June 1996, analyzes the strategic use of - Wide area networking
communications technologies and helps clients use telecommunications to gain - Wireless communications
competitive advantage and cut costs - Internet access
- Deregulation
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
NEW MEDIA RESEARCH SAMPLE TOPICS
- --------------------------------------------------------------------------------------------------------------------------------
INTERACTIVE TECHNOLOGY STRATEGIES -- introduced in March 1996, analyzes - Multimedia development
interactive development and delivery technologies that affect consumers - CD-ROM
- Web site development tools
- Web site management
- Search engines
- --------------------------------------------------------------------------------------------------------------------------------
MEDIA & TECHNOLOGY STRATEGIES -- introduced in September 1996, analyzes - Internet advertising
electronic media business models for publishers, broadcasters, and information - On-line magazines
service providers and helps clients build technology-based media franchises - Electronic yellow pages
- Future of business information
services
- --------------------------------------------------------------------------------------------------------------------------------
MONEY & TECHNOLOGY STRATEGIES -- introduced in September 1995, analyzes - eCommerce
consumer financial services, focusing on technology's impact on how consumers - Integrated financial services
spend, save, and invest - Smart cards
- On-line retailing
- On-line banking
- Web strategies for financial firms
- --------------------------------------------------------------------------------------------------------------------------------
PEOPLE & TECHNOLOGY STRATEGIES -- introduced in May 1994, analyzes how emerging - Consumer demographics
technologies affect consumer lifestyles and behavior - On-line services and the Internet
- On-line business models
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
STRATEGIC MANAGEMENT RESEARCH SAMPLE TOPICS
- --------------------------------------------------------------------------------------------------------------------------------
LEADERSHIP STRATEGIES -- introduced in September 1995, analyzes how executives - Strategic planning
can maximize the business benefits of technology and guides them in making - IT cost management
effective decisions about strategic direction, investment properties, and - Best practices/benchmarking
resource management - Strategic vendor selection
- High Performance IT
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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<PAGE> 24

Each client that purchases a membership to a Strategy Research Service
receives the following written materials:

FORRESTER REPORTS are created monthly by the services in Corporate IT
and New Media Research, and bimonthly by the Leadership Strategies service.
These Reports deliver analysis on current technology issues in a concise
format.

FORRESTER BRIEFS AND TAKES offer timely analysis on industry events,
issues, technology, or other specific research topics. Corporate IT and New
Media clients receive 24 Briefs per year, and Leadership Strategies clients
receive 26 Executive Takes per year.

JOURNAL ENTRIES are presented at the end of every Forrester Report and
offer Forrester's inside perspective on current events in the industry.

In addition to printed reports, Strategy Research Service core
research deliverables are available in the following electronic delivery
formats:

FORRESTER INTERNET gives clients access to a full archive of
Forrester's research from 1993 to the present via the World Wide Web.
Extensive search capabilities and end user customization allow clients to
tailor document viewing to their particular needs.

FORRESTER INTRANET delivers the same research archive as Forrester
Internet, can be purchased with or without a search engine, and is
compatible with any client's Intranet environment.

FORRESTER RESEARCH FOR LOTUS NOTES USERS provides access to
Forrester's full research archive from 1993 to the present via replication
to Forrester's Lotus Notes server. Documents can be viewed and sorted by
Strategy Research Service, analyst, technology, product, company, people,
or date.

ADVISORY SERVICES AND EVENTS

Forrester provides advisory services to a limited number of clients through
its Partners Program and Strategy Review Program. These programs leverage
Forrester's research expertise to address clients' long-term planning issues and
align Forrester's core research and insight with specific business goals. As of
September 30, 1996, 68 client companies were members of the Partners Program and
196 client companies were members of the Strategy Review Program. In addition to
core research, each client purchasing a membership to the Partners Program and
Strategy Review Program receives the following deliverables, respectively:

THE PARTNERS PROGRAM provides clients with a proactive relationship
with Forrester analysts to address long-range planning, technology
decision-making, and strategic management best practices. The base program
includes a series of one-day meetings and conference calls with Forrester
analysts.

THE STRATEGY REVIEW PROGRAM gives clients access to Forrester analysts
in a series of quarterly two-hour conference calls or meetings in order to
apply the research to business strategies.

The Company also hosts the Forrester Forum each year. The Forum brings
together more than 500 senior executives for a two-day conference to network
with their peers and hear major figures from the technology industry and leaders
from other business sectors discuss the impact of technology change on business.

PRICING

The prices for Forrester's core research are a function of the number of
services purchased, the number of research recipients within the client
organization, and the delivery format (i.e., printed or electronic). The average
contract for annual memberships sold to Forrester clients for core

24
<PAGE> 25

research, excluding annual memberships for core research in connection with
Forrester's Partners and Strategy Review Programs, for the year ended December
31, 1995 was approximately $10,200 and for the nine months ended September 30,
1996 was approximately $13,600. The prices for Forrester's Partners and Strategy
Review Programs are also a function of the number of services purchased, the
number of research recipients within the client organization, delivery format,
and amount and type of advisory services. All Partners Program and Strategy
Review Program memberships sold include core research. The average contract for
annual memberships sold to Forrester clients for the Partners Program for the
year ended December 31, 1995 was approximately $65,700 and for the nine months
ended September 30, 1996 was approximately $86,600. The average contract price
of annual memberships sold to Forrester clients for the Strategy Review Program,
for the year ended December 31, 1995 was approximately $33,300 and for the nine
months ended September 30, 1996 was approximately $35,700.

Forrester believes that the agreement value of contracts to purchase core
research and advisory services provides a significant measure of the Company's
business volume. Forrester calculates agreement value as the annualized fees
payable under all core research and advisory services contracts in effect at a
given point in time, without regard to the remaining duration of the contracts.
Agreement value at December 31, 1994 was $10.2 million and grew to $17.8 million
at December 31, 1995. At September 30, 1996, agreement value was $25.9 million.

RESEARCH AND ANALYSIS

Forrester employs a structured and consistent research methodology across
the Company's 10 Strategy Research Services. Each service is managed by a
service director who is responsible for implementing the Company's research
methodology and maintaining research quality in the service's particular
technology coverage area. Forrester's methodology enables the Company to
identify and analyze emerging technology trends, markets, and audiences, and
ensures consistent research quality and recommendations across all services. The
Company's research is thematic in approach: Forrester Reports are composed
around major technology trends, not isolated technology review and assessment.
Research themes apply throughout different research Reports, within services,
and across research services.

Forrester's research process subjects initial ideas to research, analysis,
and rigorous validation, and produces conclusions, predictions, and
recommendations. Forrester employs several different primary research methods:
confidential interviews with early adopters of new technology, technology
vendors, consumers, and users and vendors in related technology areas; regular
briefings with vendors to review current positions and future directions; and
input from clients and third parties gathered during advisory sessions.

Reports begin with cross-service discussion sessions with analysts.
Cross-service testing of an idea continues throughout the Report process at
informal and weekly research meetings. At the final stage of the research
process, senior analysts meet to test the conclusions of each Report. Also, each
Report is reviewed by an analyst outside the research service as an additional
quality check and to ensure clarity and readability by all clients -- especially
those lacking strong technology backgrounds. All research is reviewed and graded
by Forrester's senior research directors.

The knowledge and experience of Forrester's analysts are critical elements
of the Company's ability to provide high-quality research and analysis.
Forrester analysts average approximately 10 years of industry experience, with
varied backgrounds mirroring all facets of the industry -- vendor and user
marketing and development, entrepreneurs, financial services, and journalism.
The Forrester culture and compensation system foster a dedication to
high-quality research across all research services.

All members of Forrester's research staff participate in the Company's
incentive compensation bonus plan. Each employee's performance against
individual and team goals determines an eligible bonus that is funded by the
Company's overall performance against key business objectives. Individual and
team goals include on-time delivery of high-quality research, core research
bookings,

25
<PAGE> 26

and advisory services support to Partners and Strategy Review Program clients.
Senior analysts and research directors are eligible to receive equity awards
under the Company's stock plans.

SALES AND MARKETING

Forrester has made a substantial investment in its direct sales force to
better serve clients and address additional markets. The Company's direct sales
force, comprised of 38 sales representatives as of September 30, 1996, consists
of business development managers who are responsible for maintaining and
leveraging the current client base by renewing and selling additional Strategy
Research Services to existing clients, corporate account managers who develop
new business in assigned territories, and regional sales directors who focus on
high-level client contact and service.

Forrester sells its products and services through its headquarters in
Cambridge, Massachusetts, and a regional sales office in San Francisco.
Forrester also uses six local independent sales representatives to market and
sell its products and services internationally. These independent third-party
representatives cover the following territories: Australia, Brazil, France,
Japan, Spain, and South Africa.

The Company has developed and will continue to implement products and
programs to support the sales representatives in their effort to differentiate
Forrester and define the value derived from the Company's research and analysis.
These products and programs include extensive worldwide press relations, direct
mail campaigns, telemarketing, and a worldwide events program. In addition, the
Company uses its Web site as a strategic tool to increase the quality and speed
of lead development for the sales force. All Forrester sales representatives
participate in the Company's annual commission and bonus plan. Commissions are
paid monthly based upon attainment of net bookings against established quotas;
quarterly bonuses are paid for exceeding quota levels.

As of September 30, 1996, Forrester's research was delivered to over 860
client companies, including 57 of the 1996 Fortune 100 companies and 157 of the
1996 Fortune 500 companies. No single client company accounted for over 3% of
the Company's revenues for the nine months ended September 30, 1996.

COMPETITION

Forrester believes that the principal competitive factors in its industry
include quality of research and analysis, timely delivery of information, the
ability to offer products that meet the changing needs of organizations for
research and analysis, independence from vendors, and customer service and
price. The Company believes it competes favorably with respect to each of these
factors. Additionally, the Company believes that its business-focused review of
emerging technologies and high-level, easy-to-read research format distinguish
it from its competitors.

The Company competes in the market for technology research products and
services with other independent providers of similar services. Forrester's
principal direct competitor in IT research is Gartner Group, Inc., which has a
substantially longer operating history, is significantly larger, and has
considerably greater financial resources and market share than the Company.
Numerous other companies, including META Group, Inc., provide IT research and
analysis. In addition, the Company's indirect competitors include the internal
planning and marketing staffs of the Company's current and prospective clients,
as well as other information providers such as electronic and print publishing
companies, survey-based general market research firms, and general business
consulting firms. The Company's indirect competitors could choose to compete
directly against the Company in the future. In addition, there are relatively
few barriers to entry into the Company's market and new competitors could
readily seek to compete against the Company in one or more market segments
addressed by the Company's Strategy Research Services. Increased competition
could adversely affect the Company's operating results through pricing pressure
and loss of market share. There can be no assurance that the Company will be
able to continue to compete successfully against existing or new competitors.

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<PAGE> 27

EMPLOYEES

Forrester's culture emphasizes certain key values -- quality, cooperation,
and creativity -- that it believes are critical to its continued growth. To
encourage achievement of the Company's key values, the Company places great
emphasis on individual excellence, and employees at all levels of the
organization are encouraged to take initiative and lead individual projects that
enhance Forrester's effectiveness. Forrester regularly recognizes and rewards
excellent performance in all areas of the Company. The Company's balanced
emphasis on individual achievement and teamwork is reflected in its compensation
structure. Each employee's performance is measured against individual and team
goals that determine an eligible bonus funded by the Company's overall
performance against key business objectives. This structure gives employees a
vested interest in the Company's overall success and performance while still
promoting individual excellence.

As of September 30, 1996, Forrester employed a total of 119 persons,
including 55 research staff, 44 sales and marketing personnel, and 20 operations
personnel. Of these employees, 118 are located at the Company's headquarters in
Cambridge, Massachusetts and one is located at another domestic facility. None
of the Company's employees is represented by a collective bargaining
arrangement, and the Company has experienced no work stoppages. The Company
believes that its relations with its employees are good.

As of September 30, 1996, there were options to purchase 748,691 shares of
the Common Stock of the Company granted to employees under the Company's 1996
Amended and Restated Equity Incentive Plan. Upon completion of this offering,
options to purchase 149,376 shares of the Company's Common Stock held by
employees of the Company will become immediately exercisable.

Forrester's continued growth depends in large part on its ability to
attract, retain, and motivate highly skilled research analysts, sales and
marketing personnel, and operations staff. Competition for highly skilled
personnel in the Company's market is intense, and many of the companies with
which Forrester directly competes for such personnel have substantially greater
financial and other resources than the Company. In addition, competition for
highly skilled personnel can be expected to become more intense as competition
in the Company's industry increases. Although the Company expects to continue to
attract sufficient numbers of highly skilled employees and to retain and
motivate its existing research analysts, sales and marketing personnel, and
operations staff for the foreseeable future, there can be no assurance that the
Company will be able to do so. The loss of any of the Company's senior
management personnel or any failure to attract, retain, and motivate a
sufficient number of qualified personnel would have a material adverse effect on
the Company's business, financial condition, and results of operations. The
Company has entered into non-competition agreements with each of its group
directors, service directors, senior analysts, and certain other employees which
provide that such persons will not compete with the Company for the one-year
period after the date of termination of employment with the Company.

FACILITIES

The Company's headquarters are located in approximately 30,000 square feet
of office space in Cambridge, Massachusetts. This facility accommodates
research, marketing, sales, IT, and operations personnel. The initial lease term
of this facility expires in January 2001. The Company has the option to extend
this lease for up to two additional terms of five years each. The Company also
leases office space in San Francisco to support its sales functions. The Company
believes that its existing facilities are adequate for its current needs and
that additional facilities are available for lease to meet future needs.

LEGAL PROCEEDINGS

The Company is not currently a party to any material legal proceedings.

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<PAGE> 28

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>

The executive officers and members of and nominees to the Board of
Directors of the Company are as follows:

<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
George F. Colony.............................. 43 Chairman of the Board, President,
and Chief Executive Officer

William M. Bluestein, Ph.D. .................. 39 Group Director, New Media Research

Paul D. Callahan.............................. 47 Group Director, Corporate IT Research

Ruth Habbe.................................... 41 Director, Marketing

Mary A. Modahl................................ 34 Group Director, New Media Research

David H. Ramsdell............................. 45 Director, Finance

Jon D. Schwartz............................... 36 Director, Worldwide Sales

Paul J. Warren................................ 31 Director, IT

Susan M. Whirty, Esq.......................... 39 Director, Operations, General Counsel,
Secretary, Treasurer

Stuart D. Woodring............................ 36 Group Director, Corporate IT Research

Robert M. Galford(1).......................... 44 Member of the Board of Directors

George R. Hornig(1)........................... 42 Member of the Board of Directors

Christopher W. Mines(1)....................... 42 Member of the Board of Directors

Michael H. Welles(1).......................... 42 Member of the Board of Directors
<FN>

- ---------------
(1) Elected to serve as members of the Board of Directors commencing immediately
following the completion of this offering.
</TABLE>

George F. Colony, founder of the Company, has served as President and Chief
Executive Officer since its inception in July 1983.

William M. Bluestein, Ph.D., currently serves as Group Director, New Media
Research. He was previously Director and Senior Analyst with the Company's
People & Technology Strategies from 1994 to 1995, and Director and Senior
Analyst with the Company's Computing Strategy Service from 1990 to 1993.

Paul D. Callahan currently serves as Group Director, Corporate IT Research.
He was previously with the Company's Network Strategy Service where he served as
Director from 1995 to 1996, Senior Analyst from 1993 to 1995, and Analyst from
1992 to 1993. Prior to joining the Company, Mr. Callahan was a manager with
Digital Equipment Corporation's networks business from 1987 to 1992.

Ruth Habbe has served as the Company's Director, Marketing since 1994.
Prior to joining the Company, Ms. Habbe was Vice President, Marketing at Imagery
Software, Inc. from 1992 to 1994 and Document Imaging Segment Manager at Digital
Equipment Corporation from 1990 to 1992.

Mary A. Modahl currently serves as Group Director, New Media Research. She
was previously Director and Senior Analyst with the Company's People &
Technology Strategies from 1994 to 1995, Senior Analyst with the Company's
Computing Strategy Service from 1993 to 1994, and Director of the Network
Strategy Service from 1990 to 1993.

David H. Ramsdell became the Company's Director, Finance in October 1996.
Mr. Ramsdell was Vice President, Finance at Virus Research Institute, Inc., a
developer of vaccine delivery systems, from August 1993 through September 1996.
He also served as Chief Financial Officer at ISI Systems, Inc., a data
processing and software development company, from 1987 to August 1993.

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<PAGE> 29

Jon D. Schwartz currently serves as the Company's Director, Worldwide
Sales. He was previously Director of the Company's North American Sales from
1993 to 1995, and Partners Manager from 1990 to 1993.

Paul J. Warren has served as the Company's Director, IT since 1995. Before
joining the Company, Mr. Warren was Manufacturing Systems Manager for Malden
Mills, a textile manufacturer, from 1993 to 1995. He also served as a
Manufacturing Systems Analyst for Malden Mills from 1991 to 1993.

Susan M. Whirty, Esq. has served as the Company's Director, Operations and
General Counsel since March 1993 and has served as the Company's Secretary and
Treasurer since February 1996. Prior to joining the Company, Ms. Whirty was
Corporate Counsel at Cognos Corporation, a software development and application
company, from 1989 to 1993.

Stuart D. Woodring currently serves as Group Director, Corporate IT
Research. He was previously Director of the Company's Corporate IT Research
services from 1994 to 1995 and Director of the Software Strategy Service from
1990 to 1994.

Robert M. Galford has been elected to serve as a Director of the Company
commencing immediately following this offering. Mr. Galford has been a member of
the Faculty of the Executive Programs at Columbia University's Graduate School
of Business since 1994. Before joining Columbia's Executive Programs, he taught
at Boston University from 1993 to 1994. Prior to his work in executive
education, Mr. Galford was a Vice President of the MAC Group from 1986 to 1991
and its successor firm, Gemini Consulting, from 1991 to 1994.

George R. Hornig has been elected to serve as a Director of the Company
commencing immediately following this offering. Mr. Hornig has been Managing
Director and Member of the Management Committee of Deutsche Morgan Grenfell, an
investment banking firm, from 1993 to the present. From 1991 to 1993, Mr. Hornig
was President and Chief Operating Officer of Dubin & Swieca Holdings, Inc., an
investment management firm. He is also Director of Unity Mutual Life Insurance
Company and SL Industries, Inc., a manufacturer and distributor of engineered
products.

Christopher W. Mines has been elected to serve as a Director of the Company
commencing immediately following this offering. Mr. Mines currently serves as a
Principal of GeoPartners Research, Inc. Prior to joining GeoPartners in 1992, he
was an analyst at Cowen & Company from 1983 to 1991 and at the Yankee Group from
1980 to 1983.

Michael H. Welles has been elected to serve as a Director of the Company
commencing immediately following this offering. Mr. Welles has been General
Manager, Next Generation Products for Lotus Development Corporation since 1994.
From 1991 to 1994, he was General Manager of Lotus' Improv development team.

BOARD OF DIRECTORS

The Company's Bylaws provide for a Board of Directors of three or more
directors, and the number of directors is currently fixed at five. Under the
terms of the Company's Certificate of Incorporation and Bylaws, the Board of
Directors is composed of three classes of similar size, each elected in a
different year, so that only approximately one-third of the Board of Directors
is elected in any single year. Mr. Colony is designated as a Class I director
elected for a term expiring in 1999 and until his successor is elected and
qualified; Mr. Hornig and Mr. Mines are designated Class II directors elected
for a term expiring in 1998 and until their successors are elected and
qualified; and Mr. Welles and Mr. Galford are designated Class III directors
elected for a term expiring in 1997 and until their successors are elected and
qualified.

The Board of Directors of the Company will have an Audit Committee
consisting of two members (Messrs. Hornig and Mines) and a Compensation
Committee consisting of two members (Messrs. Galford and Welles). The purpose of
the Audit Committee is to review the results of

29
<PAGE> 30

operations of the Company with officers of the Company who are responsible for
accounting matters and, from time to time, with the Company's independent
auditors. The Compensation Committee recommends annual compensation arrangements
for the Company's executive officers and reviews annual compensation
arrangements for all other officers and significant employees.

DIRECTOR COMPENSATION

Members of the Board of Directors of the Company are reimbursed for their
expenses incurred in connection with attending any meeting. In addition, in
September 1996, the Board of Directors adopted and the sole stockholder approved
the 1996 Stock Option Plan for Non-Employee Directors (the "Director Option
Plan") pursuant to which each of the non-employee directors who have agreed to
serve as directors of the Company received, on the date that the Company first
filed a registration statement under the Securities Act covering the Common
Stock, an option to purchase 6,000 shares of the Company's Common Stock at an
exercise price of $13.00. Such options will vest in three equal installments
commencing on the date of completion of the initial public offering of the
Common Stock and on the first and second anniversaries of such date. See "Stock
Plans -- 1996 Stock Option Plan for Non-Employee Directors".
<TABLE>

SUMMARY COMPENSATION TABLE

<CAPTION>
ANNUAL COMPENSATION
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
--------------------------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
George F. Colony.............................. 1995 $135,000 $ 0 $19,129
Chairman of the Board,
President, and Chief
Executive Officer

Jon D. Schwartz............................... 1995 $177,444 $20,400 $ --
Director, Worldwide Sales

Stuart D. Woodring............................ 1995 $125,000 $43,827 $ --
Group Director, Corporate IT Research

Paul D. Callahan.............................. 1995 $120,000 $44,608 $ --
Group Director, Corporate IT Research

William M. Bluestein, Ph.D.................... 1995 $110,000 $46,476 $ --
Group Director, New Media Research
<FN>

- ---------------
(1) No named Executive Officer other than Mr. Colony received other annual
compensation in excess of the lesser of $50,000 or 10% of his salary and
bonus. Other annual compensation paid to Mr. Colony includes approximately
$7,000 for life insurance and $4,700 for health insurance and excludes
distributions to Mr. Colony based on the Company's S corporation earnings.
See "Dividend Policy".
</TABLE>

STOCK PLANS

1996 EQUITY INCENTIVE PLAN

The Company's Amended and Restated 1996 Equity Incentive Plan (the "Equity
Incentive Plan"), which was originally approved by the Board of Directors and
the sole stockholder of the Company in February 1996 and amended and restated in
September 1996, provides for grants of incentive stock options within the
meaning of Section 422 of the Code, non-qualified stock options, and restricted
and nonrestricted shares to employees and other persons who are important to the
success of the Company. As of September 30, 1996, a total of 2,750,000 shares of
Common Stock have been reserved for issuance under the Equity Incentive Plan,
subject to adjustment for stock splits and similar events, of which 2,001,309
remained available for future grants. The exercise price of all incentive stock
options granted under the Equity Incentive Plan must be at least equal to the
fair market value of the shares of Common Stock on the date of grant. The
exercise price of all non-

30
<PAGE> 31

qualified options granted under the Equity Incentive Plan is determined by the
Compensation Committee of the Board of Directors. The Compensation Committee may
reduce the exercise price of any outstanding options. With respect to any
participant who owns stock possessing more than 10% of the voting power of all
classes of stock of the Company, the exercise price of any incentive stock
option granted must equal at least 110% of the fair market value on the grant
date and the maximum term of the option must not exceed five years. The term of
all other options granted under the Equity Incentive Plan may not exceed 10
years. Unless terminated sooner, the Equity Incentive Plan will terminate in
February 2006. The Board of Directors has authority to amend or terminate the
Equity Incentive Plan, provided no such action may impair the rights of the
holder of any outstanding options without the written consent of such holder.

1996 EMPLOYEE STOCK PURCHASE PLAN

The Company's 1996 Employee Stock Purchase Plan (the "Stock Purchase
Plan"), which was approved by the Board of Directors and by the sole stockholder
of the Company in September 1996, is intended to qualify under Section 423 of
the Code. A total of 200,000 shares of Common Stock has been reserved for
issuance under the Stock Purchase Plan. Purchases under the Stock Purchase Plan
will occur at the end of each option period. The first option period will
commence on the date of this Prospectus and will end on June 30, 1997.
Thereafter, each option period will be successive six-month purchase periods. An
employee who both has completed six months or more of continuous service in the
employ of the Company and whose customary employment is more than 20 hours per
week is eligible to participate.

The Stock Purchase Plan permits eligible employees to purchase Common Stock
through payroll deductions that may not exceed 10% of an employee's base
compensation, including commissions, bonuses, and overtime, at a price equal to
85% of the fair market value of the Common Stock at the beginning or the end of
a purchase period, whichever is lower. Unless terminated sooner, the Stock
Purchase Plan will terminate 10 years from its effective date. The Board of
Directors has authority to amend or terminate the Stock Purchase Plan, provided
no such action may adversely affect the rights of any participant.

1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

The Director Option Plan was approved by the Board of Directors and by the
sole stockholder of the Company in September 1996. Pursuant to the Director
Option Plan, non-employee directors who have agreed to serve as a director of
the Company have each received, on the date that the Company first filed a
registration statement under the Securities Act covering the Common Stock, an
option to purchase 6,000 shares of the Company's Common Stock at an exercise
price of $13.00. Such options will vest in three equal installments commencing
on the date of completion of the initial public offering of the Common Stock and
on the first and second anniversaries of such date. Each non-employee director
elected thereafter shall be awarded an option to purchase 6,000 shares of Common
Stock at an exercise price equal to the fair market value of the Common Stock
upon his or her election as director, which will vest in three equal
installments commencing on the date of grant and on the first and second
anniversary of the date of grant. Each non-employee director will also receive
an option to purchase 4,000 shares of Common Stock at an exercise price equal to
the fair market value of the Common Stock each year immediately following the
Company's annual stockholders meeting, which will vest in three equal
installments on the first, second, and third anniversaries of the date of grant.
The Compensation Committee also has the authority under the Director Option Plan
to grant options to non-employee directors in such amounts and in such terms not
inconsistent with the Director Option Plan as it shall determine at the time of
grant. All such options will be granted at fair market value. Each option will
be non-transferable except upon death and will expire 10 years after the date of
grant. A total of 150,000 shares of Common Stock has been reserved for issuance
under the Director Option Plan, 126,000 of which remain available for future
grants.

31
<PAGE> 32

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 1995, Mr. Colony was responsible for compensation decisions,
although he consulted as to such decisions with an outside compensation
consultant. Following this offering the Company will have a Compensation
Committee consisting of Messrs. Galford and Welles, neither of whom is an
employee of the Company.

REGISTRATION RIGHTS AND NON-COMPETITION AGREEMENT

The Company and Mr. Colony have entered into a registration rights and
non-competition agreement (the "Registration Rights and Non-Competition
Agreement") which provides that if Mr. Colony's employment with the Company is
terminated he will not compete with the Company for the one-year period after
the date of such termination. The Registration Rights and Non-Competition
Agreement also provides Mr. Colony with certain registration rights with respect
to his Common Stock, described under "Description of Capital Stock".

CERTAIN TRANSACTIONS

The Company and Mr. Colony have entered into an indemnification agreement
relating to their respective income tax liabilities. Mr. Colony will continue to
be liable for personal income taxes on the Company's income for all periods
prior to the time the Company ceases to be an S corporation, while the Company
will be liable for all income taxes subsequent to the time it ceases to be an S
corporation. The agreement generally provides that the Company will indemnify
Mr. Colony for any increase in his taxes (including interest and penalties)
resulting from adjustments initiated by taxing authorities and from payments to
him under the agreement, and Mr. Colony will pay to the Company an amount equal
to any decrease in his tax liability resulting from adjustments initiated by
taxing authorities. The agreement also provides that, if the Company is
determined to have been a C corporation for tax purposes at any time it reported
its income as an S corporation, Mr. Colony will make a capital contribution to
the Company in an amount necessary to hold the Company harmless from any taxes
and interest arising from such determination up to the amount of distributions
made by the Company to Mr. Colony prior to the termination of the Company's S
corporation election less any taxes and interest attributable to such
distributions.

32
<PAGE> 33

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's outstanding Common Stock as of September 30, 1996 by
(i) each person or entity who is known by the Company to beneficially own 5% or
more of the Company's voting capital stock, (ii) each of the executive officers
named in the Summary Compensation Table, (iii) each of the Company's directors
(including persons who have consented to be directors), and (iv) all of the
Company's directors and executive officers as a group.

<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENTAGE BENEFICIALLY OWNED(1)
COMMON STOCK
BENEFICIALLY -----------------------------------
NAME OF BENEFICIAL OWNER OWNED(1) BEFORE OFFERING AFTER OFFERING
- -------------------------------------------------- ------------------- --------------- --------------
<S> <C> <C> <C>
George F. Colony.................................. 6,000,000 100% 74%
William M. Bluestein, Ph.D.(2).................... 14,727 * *
Paul D. Callahan(2)............................... 6,927 * *
Jon D. Schwartz(2)................................ 8,182 * *
Stuart D. Woodring(2)............................. 14,727 * *
Robert M. Galford(2).............................. 2,000 * *
George R. Hornig(2)............................... 2,000 * *
Christopher W. Mines(2)........................... 2,000 * *
Michael H. Welles(2).............................. 2,000 * *
Directors and executive officers
as a group (13 persons)(2)...................... 6,083,927 100% 75%

<FN>
- ---------------

* Less than 1%.

(1) Assumes that the Underwriters' over-allotment option is not exercised.

(2) Reflects shares issuable upon exercise of options which vest upon the
completion of this offering. If options to purchase shares that are not
immediately exercisable are included, the number of shares of Common Stock
beneficially owned by Messrs. Bluestein, Callahan, Schwartz, and Woodring
would be 70,926, 45,994, 70,019, and 69,699, respectively.

</TABLE>

33
<PAGE> 34

DESCRIPTION OF CAPITAL STOCK

The following summary describes the Certificate of Incorporation of the
Company, as restated in its entirety immediately prior to the consummation of
this offering.

GENERAL

The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, par value $.01 per share, and 500,000 shares of Preferred
Stock, par value $.01 per share (the "Preferred Stock"). As of September 30,
1996, there were 6,000,000 shares of Common Stock outstanding, held of record by
one stockholder, and no shares of Preferred Stock outstanding.

COMMON STOCK

As of September 30, 1996, there were 6,000,000 shares of Common Stock
outstanding, all of which were held by Mr. Colony. Each holder of Common Stock
is entitled to one vote per share for the election of directors and for all
other matters to be voted on by the Company's stockholders. Subject to
preferences that may be applicable to any outstanding series of Preferred Stock,
the holders of Common Stock are entitled to share ratably in such dividends, if
any, as may be declared from time to time by the Board of Directors, from funds
legally available therefore. See "Dividend Policy". Upon liquidation or
dissolution of the Company, subject to preferences that may be applicable to any
then outstanding Preferred Stock, the holders of Common Stock are entitled to
receive in all assets available for distribution to stockholders. There are no
preemptive or other subscription rights, conversion rights, or redemption or
sinking fund provisions with respect to shares of Common Stock. All of the
outstanding shares of Common Stock are fully paid and nonassessable.

PREFERRED STOCK

The Company's Restated Certificate of Incorporation (the "Certificate")
provides that the Company may, by vote of its Board of Directors, designate the
numbers, relative rights, preferences, and limitations of one or more series of
Preferred Stock and issue the securities so designated. Such provisions may
discourage or preclude certain transactions, whether or not beneficial to
stockholders, and could discourage certain types of tactics that involve an
actual or threatened acquisition or change of control of the Company. This
provision does not prevent stockholders from obtaining injunctive or other
relief against the directors, nor does it shield directors from liability under
federal or state securities laws.

The Company has no current intention to issue any of its unissued,
authorized shares of Preferred Stock. However, the issuance of any shares of
Preferred Stock in the future could adversely affect the rights of the holders
of Common Stock.

REGISTRATION RIGHTS

The Company and Mr. Colony have entered into a Registration Rights and
Non-Competition Agreement, which provides that in the event the Company proposes
to file a registration statement under the Securities Act with respect to an
offering by the Company for its own account or the account of another person, or
both, Mr. Colony shall be entitled to include shares held by him (the
"Registrable Shares") in such a registration, subject to the right of the
managing underwriter of any such offering to exclude some or all of such
Registrable Shares from such registration if and to the extent the inclusion of
the shares would adversely affect the marketing of the shares to be sold by the
Company. The agreement also provides that, at any time following the closing of
an initial public offering of Common Stock, Mr. Colony may require the Company
to register under the Securities Act shares having a fair market value of at
least $5.0 million, except that the Company is not required to effect such
registration more than twice or at certain times described in the agreement. The

34
<PAGE> 35

agreement also provides that the Company will pay all expenses incurred in
connection with such registration.

DELAWARE LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS

Section 203 of the General Corporation Law of Delaware prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder", other than an "interested stockholder" who is an
"interested stockholder" at the time the corporation becomes subject to Section
203, for a period of three years after the date of the transaction in which the
person became an interested stockholder, unless the business combination is
approved in a prescribed manner. A "business combination" includes mergers,
asset sales, and other transactions resulting in a financial benefit to the
interested stockholder. Subject to certain exceptions, an "interested
stockholder" is a person who, together with affiliates and associates, owns, or
within three years did own, 15% or more of the corporation's voting stock. The
Certificate provides that the Company will not be subject to the provisions of
Section 203.

The Certificate and Bylaws provide for the division of the Board of
Directors into three classes as nearly equal in size as possible with staggered
three-year terms. See "Management". In addition, the Certificate of
Incorporation and Bylaws provide that directors may be removed only for cause by
the affirmative vote of the holders of two-thirds of the shares of capital stock
of the Company entitled to vote generally in the election of directors. Under
the Certificate and Bylaws, any vacancy on the Board of Directors, however
occurring, including a vacancy resulting from an enlargement of the Board, may
only be filled by vote of a majority of the directors then in office. The
classification of the Board of Directors and the limitations on the removal of
directors and filling of vacancies could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
acquiring, control of the Company.

The Certificate and Bylaws also provide that any action required or
permitted to be taken by the stockholders of the Company at an annual meeting or
special meeting of stockholders may only be taken if it is properly brought
before such meeting and may not be taken by written action in lieu of a meeting.
The Certificate and Bylaws further provide that special meetings of the
stockholders may only be called by the Chairman of the Board of Directors, the
Chief Executive Officer, or, if none, the President of the Company or by the
Board of Directors. Under the Company's Bylaws, in order for any matter to be
considered "properly brought" before a meeting, a stockholder must comply with
certain requirements regarding advance notice to the Company. The foregoing
provisions could have the effect of delaying until the next stockholders'
meeting stockholder actions which are favored by the holders of a majority of
the outstanding voting securities of the Company. These provisions may also
discourage another person or entity from making a tender offer for the Common
Stock, because such person or entity, even if it acquired a majority of the
outstanding voting securities of the Company, would be able to take action as a
stockholder (such as electing new directors or approving a merger) only at a
duly called stockholders' meeting, and not by written consent.

The General Corporation Law of Delaware provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's Certificate of Incorporation or Bylaws, unless
a corporation's Certificate of Incorporation or Bylaws, as the case may be,
require a greater percentage. The Company's Certificate and the Bylaws require
the affirmative vote of the holders of at least 75% of the shares of capital
stock of the Company issued and outstanding and entitled to vote generally for
directors to amend, alter or repeal the Bylaws or to adopt new Bylaws.

The Certificate contains certain provisions permitted under the General
Corporation Law of Delaware relating to the liability of directors. The
provisions eliminate a director's liability to the Company or its stockholders
for monetary damages for a breach of fiduciary duty, except to the extent that
exculpation from liability is not permitted under the General Corporation Law of
Delaware as in effect at the time the liability is determined. The Certificate
also contains provisions obligating

35
<PAGE> 36

the Company to indemnify its officers and directors to the fullest extent
permitted by the General Corporation Law of Delaware. The Company believes that
these provisions will assist the Company in attracting and retaining qualified
individuals to serve as directors.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is The First National
Bank of Boston, Boston, Massachusetts.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have approximately
8,000,000 shares of Common Stock outstanding. Of these shares, the 2,000,000
shares sold in the offering will be freely tradeable without restriction or
further registration under the Securities Act, except for any shares purchased
by an "affiliate" of the Company, as that term is defined in Rule 144 under the
Securities Act (an "Affiliate"). Any shares purchased in the offering by an
Affiliate of the Company may not be resold except pursuant to an effective
registration statement filed by the Company or an applicable exemption from
registration, including the exemption under Rule 144. The remaining 6,000,000
shares will be subject to a 180-day lock-up agreement. After the 180-day period,
these shares will be eligible for sale subject to compliance with Rule 144 under
the Securities Act.

In general, a person (or persons whose shares are aggregated for purposes
of such rule) effecting sales under Rule 144 is entitled to sell, within any
three-month period, a number of such securities that does not exceed the greater
of 1% of the then outstanding shares of the Company's Common Stock
(approximately 80,000 shares immediately after the offering) or the average
weekly trading volume in the Company's Common Stock on the Nasdaq National
Market or reported through the automated quotation system of a registered
securities association during the four calendar weeks preceding such sale. Sales
under Rule 144 are also subject to certain restrictions on the manner of sale,
notice requirements, and the availability of current public information about
the Company. The Company, Mr. Colony, who prior to the completion of this
offering is the sole stockholder of the Company, and directors, certain
executive officers and employees of the Company who hold options to purchase
592,945 shares of Common Stock, have agreed not to offer or sell or otherwise
dispose of any Common Stock with certain limited exceptions until the expiration
of 180 days following the date of this Prospectus without the prior written
consent of the Representatives of the Underwriters. See "Underwriting".

No precise prediction can be made as to the effect, if any, that market
sales of shares or the availability of shares for sale will have on the market
price of the Common Stock prevailing from time to time. The Company is unable to
estimate the number of shares that may be sold in the public market pursuant to
Rule 144, since this will depend on the market price of Common Stock, the
personal circumstances of the sellers, and other factors. Nevertheless, sales or
anticipated sales of significant amounts of the Common Stock of the Company in
the public market could adversely affect the market price of the Company's
Common Stock.

In addition, from time to time after the expiration of the 180-day lock-up
period, Mr. Colony may sell shares of the Company's Common Stock pursuant to a
registration statement filed in the future by the Company pursuant to the
Registration Rights and Non-Competition Agreement between the Company and Mr.
Colony. See "Description of Capital Stock -- Registration Rights".

As of September 30, 1996, options to purchase a total of 772,691 shares of
Common Stock were outstanding, of which options to purchase 157,376 shares will
become exercisable upon completion of this offering. Of the total shares
issuable pursuant to such options 106,595 shares are subject to 180-day lock-up
agreements with the representatives of the Underwriters.

The Company intends to file a registration statement on Form S-8 under the
Securities Act covering 200,000 shares of Common Stock reserved for issuance
under the Stock Purchase Plan upon consummation of this offering, although
shares will not be issuable under the plan until June

36
<PAGE> 37

30, 1997. In addition, the Company intends to file registration statements on
Form S-8 covering 2,900,000 shares of Common Stock reserved for issuance under
the Equity Incentive Plan and the Director Option Plan. See "Management -- Stock
Plans". Such registration statements are expected to be filed 90 days after the
date of this Prospectus and will automatically become effective upon filing.
Accordingly, shares issued pursuant to such registration statements will,
subject to Rule 144 volume limitations applicable to Affiliates, be available
for sale in the open market. As of September 30, 1996, options to purchase
772,691 shares were granted and outstanding. Of the total shares issuable
pursuant to such options, 582,945 shares are subject to the lock-up agreements
discussed above.

VALIDITY OF SHARES

The validity of the shares of Common Stock offered by the Company hereby
will be passed upon for the Company by Ropes & Gray, Boston, Massachusetts.
Certain legal matters in connection with this offering will be passed upon for
the Underwriters by Hale and Dorr, Boston, Massachusetts.

EXPERTS

The Financial Statements of the Company and the Financial Statement
Schedule included in this Prospectus and elsewhere in the Registration Statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports thereto, and are included herein in reliance upon the
authority of such firm as experts in giving said reports.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto, certain parts of which have been omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is
hereby made to the Registration Statement, including exhibits, schedules, and
reports filed therewith. Statements made in this Prospectus as to the contents
of any contract, agreement, or other document referred to above are necessarily
incomplete. With respect to each such contract, agreement, or other document
filed as an exhibit to the Registration Statement reference is hereby made to
the exhibit for a more complete description of the matter involved, and each
statement shall be deemed qualified in its entirety by such reference. The
Registration Statement, including exhibits and schedules thereto, may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Offices at Seven World Trade Center, Thirteenth Floor,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and copies may be obtained at the prescribed
rates from the Public Reference Section of the Commission at its principal
office in Washington, D.C. In addition, material that the Company files
electronically with the Commission is available at the Commission's Web site,
http://www.sec.gov, which contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the
Commission.

37
<PAGE> 38

FORRESTER RESEARCH, INC.

<TABLE>
INDEX TO FINANCIAL STATEMENTS

<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.............................................. F-2
Balance Sheets as of December 31, 1994 and 1995 and September 30, 1996 ............... F-3
Statements of Income for the years ended December 31, 1993, 1994, and 1995 and the
nine months ended September 30, 1995 and 1996 ...................................... F-4
Statements of Stockholder's Equity for the years ended December 31, 1993, 1994, and
1995 and the nine months ended September 30, 1996 .................................. F-5
Statements of Cash Flows for the years ended December 31, 1993, 1994, and 1995 and the
nine months ended September 30, 1995 and 1996 ...................................... F-6
Notes to Financial Statements......................................................... F-7
</TABLE>

F-1
<PAGE> 39

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholder of
Forrester Research, Inc.:

We have audited the accompanying balance sheets of Forrester Research, Inc.
(a Delaware corporation) as of December 31, 1994 and 1995 and September 30, 1996
and the related statements of income, stockholder's equity, and cash flows for
each of the three years in the period ended December 31, 1995 and for the
nine-month period ended September 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Forrester Research, Inc. as
of December 31, 1994 and 1995 and September 30, 1996 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 and for the nine-month period ended September 30, 1996, in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
October 22, 1996

F-2
<PAGE> 40
<TABLE>

FORRESTER RESEARCH, INC.

BALANCE SHEETS

<CAPTION>
DECEMBER 31, PRO FORMA
------------------------- SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996
---- ---- ------------- ------------
(UNAUDITED)
(NOTE 1)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............ $2,778,725 $ 997,567 $ 1,265,827 --
Marketable securities................ 1,985,355 6,520,481 9,581,843 7,247,670
Accounts receivable, net of allowance
for doubtful accounts of
approximately $88,000, $120,000,
and $179,000 in 1994, 1995, and
1996, respectively................. 2,872,238 5,882,980 8,661,589 8,661,589
Deferred commissions................. 495,215 891,967 1,227,470 1,227,470
Prepaid expenses and other current
assets............................. 60,960 76,542 437,874 437,874
---------- ----------- ----------- -----------
Total current assets............ 8,192,493 14,369,537 21,174,603 17,574,603
---------- ----------- ----------- -----------
Property and equipment, at cost:
Machinery and equipment.............. 707,388 965,435 1,356,776 1,356,776
Furniture and fixtures............... 191,510 288,532 471,462 471,462
Computer software.................... 35,409 206,324 303,032 303,032
Vehicles............................. 30,098 30,098 30,098 30,098
Leasehold improvements............... 38,580 59,262 581,575 581,575
---------- ----------- ----------- -----------
Total property and equipment.... 1,002,985 1,549,651 2,742,943 2,742,943
Less-Accumulated depreciation and
amortization....................... 411,855 493,376 595,017 595,017
---------- ----------- --------------- -------------
Property and equipment, net..... 591,130 1,056,275 2,147,926 2,147,926
---------- ----------- ----------- -----------
Total assets.................... $8,783,623 $15,425,812 $23,322,529 $19,722,529
========== =========== =========== ===========

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable..................... $ 41,394 $ 377,344 $ 689,765 $ 689,765
Customer deposits.................... -- 97,329 123,004 123,004
Accrued expenses..................... 525,052 1,544,815 2,005,576 2,005,576
Deferred revenue..................... 7,097,574 11,359,101 16,262,166 16,262,166
Deferred income tax liability........ -- -- -- 500,000
---------- ----------- ----------- -----------
Total current liabilities....... 7,664,020 13,378,589 19,080,511 19,580,511
---------- ----------- ----------- -----------
Commitments (Note 4)
Stockholder's equity:
Common stock, $.01 par value
Authorized -- 7,000,000 shares
Issued and outstanding-- 6,000,000
shares.......................... 60,000 60,000 60,000 60,000
Retained earnings.................... 1,059,603 1,965,527 4,177,886 77,886
Unrealized gain on marketable
securities......................... -- 21,696 4,132 4,132
---------- ----------- ----------- -----------
Total stockholder's equity...... 1,119,603 2,047,223 4,242,018 142,018
---------- ----------- ----------- -----------
Total liabilities and
stockholder's equity.......... $8,783,623 $15,425,812 $23,322,529 $19,722,529
========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE> 41
<TABLE>

FORRESTER RESEARCH, INC.

STATEMENTS OF INCOME

<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------- ------------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Core research............... $4,690,572 $6,363,335 $10,149,514 $7,036,129 $12,585,114
Advisory services and
other..................... 2,608,545 3,335,467 4,439,298 2,079,503 3,788,876
---------- ---------- ----------- ---------- -----------
Total revenues......... 7,299,117 9,698,802 14,588,812 9,115,632 16,373,990
---------- ---------- ----------- ---------- -----------
Operating expenses:
Cost of services and
fulfillment............... 2,406,311 3,423,844 5,486,346 3,549,669 5,911,226
Selling and marketing....... 2,693,442 3,592,853 5,643,196 3,729,649 6,234,373
General and
administrative............ 1,147,589 1,045,340 1,388,868 887,037 1,714,523
Depreciation and
amortization.............. 105,120 150,067 286,705 207,347 359,531
---------- ---------- ----------- ---------- -----------
Total operating
expenses............. 6,352,462 8,212,104 12,805,115 8,373,702 14,219,653
---------- ---------- ----------- ---------- -----------
Income from
operations........... 946,655 1,486,698 1,783,697 741,930 2,154,337
Interest income, net............. 79,343 125,115 339,569 266,252 353,915
---------- ---------- ----------- ---------- -----------
Income before state
income tax
provision............ 1,025,998 1,611,813 2,123,266 1,008,182 2,508,252
State income tax provision....... 46,000 73,000 96,000 46,000 126,000
---------- ---------- ----------- ---------- -----------
Net income............. 979,998 1,538,813 2,027,266 962,182 2,382,252
Pro forma income tax adjustment
(Note 3)....................... 365,000 583,000 739,000 364,000 918,000
---------- ---------- ----------- ---------- -----------
Pro forma net income............. $ 614,998 $ 955,813 $ 1,288,266 $ 598,182 $ 1,464,252
========== ========== ============ ========== ============
Pro forma net income per common
share.......................... $ 0.10 $ 0.15 $ 0.20 $ 0.10 $ 0.23
========== ========== ============ ========== ============
Weighted average common shares
outstanding.................... 6,293,449 6,293,449 6,293,449 6,293,449 6,293,449
========== ========== ============ ========== ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE> 42
<TABLE>

FORRESTER RESEARCH, INC.

STATEMENTS OF STOCKHOLDER'S EQUITY

<CAPTION>
COMMON STOCK UNREALIZED
---------------------- GAIN ON TOTAL
NUMBER RETAINED MARKETABLE STOCKHOLDER'S
OF SHARES $.01 PAR EARNINGS SECURITIES EQUITY
--------- -------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992......................... 6,000,000 $60,000 $ 635,792 $ -- $ 695,792
Distributions.................................. -- -- (345,000) -- (345,000)
Net income..................................... -- -- 979,998 -- 979,998
--------- ------- ---------- -------- -----------
Balance, December 31, 1993......................... 6,000,000 60,000 1,270,790 -- 1,330,790
Distributions.................................. -- -- (1,750,000) -- (1,750,000)
Net income..................................... -- -- 1,538,813 -- 1,538,813
--------- ------- ---------- -------- -----------
Balance, December 31, 1994......................... 6,000,000 60,000 1,059,603 -- 1,119,603
Distributions.................................. -- -- (1,121,342) -- (1,121,342)
Net income..................................... -- -- 2,027,266 -- 2,027,266
Unrealized gain on available-for-sale
securities................................... -- -- -- 21,696 21,696
--------- ------- ---------- -------- -----------
Balance, December 31, 1995......................... 6,000,000 60,000 1,965,527 21,696 2,047,223
Distributions.................................. -- -- (169,893) -- (169,893)
Net income..................................... -- -- 2,382,252 -- 2,382,252
Unrealized loss on available-for-sale
securities................................... -- -- -- (17,564) (17,564)
--------- ------- ---------- -------- -----------
Balance, September 30, 1996........................ 6,000,000 60,000 4,177,886 4,132 4,242,018
Pro forma adjustments (Note 1)(Unaudited):
Distribution of undistributed earnings to S
corporation stockholder...................... -- -- (3,600,000) -- (3,600,000)
Recognition of deferred income tax liability
upon termination of S corporation status
(Note 3)..................................... -- -- (500,000) -- (500,000)
--------- ------- ---------- -------- -----------
Pro forma balance, September 30, 1996
(Unaudited)...................................... 6,000,000 60,000 $ 77,886 $ 4,132 $ 142,018
========= ======= ========== ======== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE> 43
<TABLE>

FORRESTER RESEARCH, INC.

STATEMENTS OF CASH FLOWS

<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------- -------------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income.................................... $ 979,998 $ 1,538,813 $ 2,027,266 $ 962,182 $ 2,382,252
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization............ 105,120 150,067 286,705 207,347 359,531
Accretion of discount on marketable
securities............................. -- (24,935) (60,377) (73,869) (149,269)
Unrealized gain (loss) on
available-for-sale securities.......... -- -- 21,696 -- (17,564)
Changes in assets and liabilities --
Accounts receivable.................. (478,464) (455,965) (3,010,742) (2,316,995) (2,778,609)
Deferred commissions................. (61,610) (158,244) (396,752) (306,174) (335,503)
Prepaid expenses and other current
assets............................. (5,766) 5,113 (15,582) (137,583) (362,222)
Accounts payable..................... (15,618) 28,748 335,950 201,794 312,421
Customer deposits.................... -- -- 97,329 244,539 25,675
Accrued expenses..................... (99,021) 330,913 1,019,763 814,784 460,761
Deferred revenue..................... 883,018 2,268,001 4,261,527 3,242,935 4,903,065
---------- ----------- ----------- ----------- -----------
Net cash provided by operating
activities.................... 1,307,657 3,682,511 4,566,783 2,838,960 4,800,538
---------- ----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchases of property and
equipment................................... (236,314) (304,736) (751,850) (684,348) (1,450,292)
Purchase of marketable securities............. -- (1,960,420) (9,171,880) (6,928,235) (6,874,001)
Proceeds from sales and maturities
of marketable securities.................... -- -- 4,697,131 3,000,000 3,961,908
---------- ----------- ----------- ----------- -----------
Net cash used in investing
activities.................... (236,314) (2,265,156) (5,226,599) (4,612,583) (4,362,385)
---------- ----------- ----------- ----------- -----------
Cash flows used in financing activities:
Distributions to stockholder.................. (345,000) (1,750,000) (1,121,342) (348,655) (169,893)
---------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents..................................... 726,343 (332,645) (1,781,158) (2,122,278) 268,260
Cash and cash equivalents, beginning of period.... 2,385,027 3,111,370 2,778,725 2,778,725 997,567
---------- ----------- ----------- ----------- -----------
Cash and cash equivalents, end of period.......... $3,111,370 $ 2,778,725 $ 997,567 $ 656,447 $ 1,265,827
========== =========== =========== =========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for income
taxes....................................... $ 42,320 $ 18,961 $ 44,893 $ 41,393 $ 84,669
========== =========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE> 44

FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(1) OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Forrester Research, Inc. (the Company) creates, publishes, and sells
technology research reports and provides advisory services and technology
conferences. The Company is incorporated under the laws of the State of Delaware
and grants credit to its customers with locations throughout the world.

The preparation of the accompanying financial statements required the use
of certain estimates by management in determining the Company's assets,
liabilities, revenues, and expenses. Actual results could differ from these
estimates.

The accompanying financial statements reflect the application of certain
significant accounting policies as described below and elsewhere in the
accompanying financial statements and notes.

Interim Financial Statements

The accompanying statements of income and cash flows for the nine months
ended September 30, 1995 are unaudited, but in the opinion of management,
include all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of results for these interim periods. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted, although the Company believes that the disclosures included are
adequate to make the information presented not misleading. The results of
operations for the nine months ended September 30, 1996 are not necessarily
indicative of the results to be expected for the entire fiscal year.

Pro Forma Presentation (Unaudited)

The unaudited pro forma balance sheet, as of September 30, 1996, reflects
(i) the distribution of previously undistributed S corporation earnings taxed or
taxable to the Company's sole stockholder of approximately $3.6 million based on
earnings through September 30, 1996, but does not include the amount to be
distributed for S corporation earnings from October 1, 1996 through the
termination of the Company's S corporation election upon completion of this
offering, and (ii) termination of the Company's S corporation election and the
recognition of a deferred income tax liability of approximately $500,000 as of
September 30, 1996 (see Note 3).

Upon completion of an initial public offering, the Company will no longer
be treated as an S corporation and will be subject to federal and state income
taxes at prevailing corporate rates. Accordingly, the accompanying statements of
income include a pro forma income tax adjustment reflecting the Company's income
tax expense assuming the Company had been a C corporation (see Note 3).

Revenue Recognition

The Company invoices its core research, advisory, and other services when
an order is received. The gross amount is recorded as accounts receivable and
deferred revenue when the client is legally obligated to pay the invoice. Core
research, which represents monthly distribution of research reports, is recorded
as revenue ratably over the term of the agreement as the research is delivered.
Advisory and other services are recognized during the period in which the
services are performed.

F-7
<PAGE> 45

FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

Deferred Commissions

Commissions incurred in acquiring new or renewal contracts are deferred and
amortized as the related revenue is recognized. The Company evaluates the
recoverability of deferred commissions at each balance sheet date based on the
status of the related contract.

Pro Forma Net Income Per Common Share

Pro forma net income per common share is computed by dividing pro forma net
income (reflecting the pro forma income tax adjustment discussed in Note 3) by
the weighted average number of shares of common stock and common stock
equivalents outstanding during the period, adjusted for the reincorporation
discussed in Note 6. Common stock equivalents consist of common stock issuable
on the exercise of outstanding options. In accordance with Securities and
Exchange Commission requirements, all common stock and common stock equivalents
issued during the 12 months preceding the proposed date of the Registration
Statement relating to an initial public offering have been included in the net
income per share computation as if they were outstanding for all periods using
the Treasury Stock method.

Depreciation
<TABLE>

The Company provides for depreciation, computed using the straight-line
method, by charges to income in amounts that allocate the costs of these assets
over their estimated useful lives as follows:

<CAPTION>
ESTIMATED
USEFUL LIFE
-----------
<S> <C>
Machinery and equipment.................................... 3 to 5 Years
Furniture and fixtures..................................... 7 Years
Computer software.......................................... 3 Years
Vehicles................................................... 5 Years
Leasehold improvements..................................... Life of lease
</TABLE>

Product Development

All costs incurred in the development of new products and services are
expensed as incurred.

Concentration of Credit Risk

Statement of Financial Accounting Standards (SFAS) No. 105, Disclosure of
Information About Financial Instruments with Off-Balance-Sheet Risk and
Financial Instruments with Concentrations of Credit Risk, requires disclosure of
any significant off-balance-sheet and credit risk concentrations. Financial
instruments, which potentially subject the Company to concentrations of credit
risk, are principally cash and cash equivalents, marketable securities, and
accounts receivable. The Company places its investments in highly rated
institutions. No single customer accounted for greater than 10% of revenues in
any of the periods presented.

Financial Instruments

SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
requires disclosure about fair value of financial instruments. Financial
instruments consist of cash equivalents, marketable securities, and accounts
receivable. The estimated fair value of these financial instruments approximates
their carrying value and, except for accounts receivable, is based primarily on
market quotes. The Company's cash equivalents and marketable securities are
generally obligations of the federal

F-8
<PAGE> 46

FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

government or municipal issuers. The Company, by policy, limits the amount of
credit exposure to any one financial institution.

(2) CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

The Company considers all short-term, highly liquid investments with
original maturities of 90 days or less to be cash equivalents.

The Company accounts for investments in accordance with SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities. Under SFAS No.
115, securities that the Company has the positive intent and ability to hold to
maturity are reported at amortized cost and are classified as held-to-maturity.
At December 31, 1994 and 1995 and September 30, 1996, held-to-maturity
securities consisted of investments in U.S. treasury bills. These investments
are classified as current as they mature within one year. Securities purchased
to be held for indefinite periods of time and not intended at the time of
purchase to be held until maturity are classified as available-for-sale
securities. At December 31, 1995 and September 30, 1996, these securities
consisted of investments in federal and state government obligations, which were
recorded at fair market value, with any unrealized gains and losses reported as
a separate component of stockholder's equity. These investments were classified
as marketable securities at December 31, 1995 and September 30, 1996 as it is
the Company's intent to hold these securities less than one year. There were no
available-for-sale securities as of December 31, 1994. Securities that are
bought and held principally for the purpose of selling in the near term are
classified as trading securities. There were no trading securities as of
December 31, 1994 and 1995 and September 30, 1996.

<TABLE>
At December 31, 1994 and 1995 and September 30, 1996 marketable securities
consisted of the following:

<CAPTION>
DECEMBER 31,
-------------------------- SEPTEMBER 30,
1994 1995 1996
---- ---- -------------
<S> <C> <C> <C>
U.S. treasury bills..................... $1,985,355 $3,876,100 $2,951,200
U.S. treasury notes..................... -- 613,456 2,491,410
Federal agency obligations.............. -- 309,255 847,945
State and municipal bonds............... -- 1,721,670 3,291,288
---------- ---------- ----------
$1,985,355 $6,520,481 $9,581,843
========== ========== ==========
</TABLE>

<TABLE>
The following table summarizes the maturity periods of marketable
securities as of September 30, 1996:

<CAPTION>
LESS THAN 1 1 TO 5 5 TO 10
YEAR YEARS YEARS TOTAL
----------- ------ ------- -----
<S> <C> <C> <C> <C>
U.S. treasury bills............... $2,951,200 $ -- $ -- $2,951,200
U.S. treasury notes............... -- 1,994,300 497,110 2,491,410
Federal agency obligations........ -- 443,201 404,744 847,945
State and municipal bonds......... -- 1,725,199 1,566,089 3,291,288
---------- ---------- ---------- ----------
$2,951,200 $4,162,700 $2,467,943 $9,581,843
========== ========== ========== ==========
</TABLE>

Gross realized gains and losses on sales of marketable securities for the
years ended December 31, 1994 and 1995 and the nine months ended September 30,
1995 and 1996, which were calculated based on specific identification, were not
material.

F-9
<PAGE> 47

FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(3) INCOME TAXES

The Company has elected to be taxed, since January 1, 1987, under
Subchapter S of the Internal Revenue Code of 1986, as amended, whereby the sole
stockholder is liable for individual federal and state income taxes on the
Company's taxable income. Payments to the stockholder to cover the tax
liabilities as a result of the Company's taxable income are recorded as
distributions in the accompanying statements of stockholder's equity.

The Company's state income tax provision for each of the periods presented
consists of corporate-level state income taxes that are levied against the
Company as an S corporation.

The Company accounts for income taxes, including pro forma computations, in
accordance with SFAS No. 109, Accounting for Income Taxes. SFAS No. 109
prescribes an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the financial statement carrying amounts and the
tax bases of assets and liabilities. Deferred state taxes as of December 31,
1994 and 1995 and September 30, 1996 were immaterial.

Upon completion of an initial public offering, the Company will terminate
its S corporation election and will be subject to federal and state income taxes
at prevailing corporate rates. Accordingly, the accompanying statements of
income for each of the three years in the period ended December 31, 1995 and the
nine months ended September 30, 1995 and 1996 include a pro forma income tax
adjustment for the income taxes that would have been recorded if the Company had
been a C corporation for the periods presented.
<TABLE>

The pro forma income tax adjustment is computed as follows:

<CAPTION>
YEAR ENDED NINE MONTHS
DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------- -----------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Pro Forma provision for income
taxes:
Current-
Federal..................... $229,000 $482,000 $592,000 $262,000 $ 740,000
State....................... 71,000 149,000 183,000 81,000 229,000
-------- -------- -------- -------- ----------
300,000 631,000 775,000 343,000 969,000
-------- -------- -------- -------- ----------
Deferred-
Federal..................... 85,000 19,000 46,000 51,000 57,000
State....................... 26,000 6,000 14,000 16,000 18,000
-------- -------- -------- -------- ----------
111,000 25,000 60,000 67,000 75,000
-------- -------- -------- -------- ----------
Total required provision
for income taxes....... 411,000 656,000 835,000 410,000 1,044,000
Less: Actual State income tax
provision........................ 46,000 73,000 96,000 46,000 126,000
-------- -------- -------- -------- ----------
Pro forma income tax adjustment.... $365,000 $583,000 $739,000 $364,000 $ 918,000
======== ======== ======== ======== ==========
</TABLE>

The pro forma tax provisions do not materially differ from the Company's
combined federal and state statutory rate of 40%.

Upon termination of the S corporation election, deferred income taxes will
be recorded for the tax effect of cumulative temporary differences between the
financial reporting and tax bases of certain assets and liabilities, primarily
deferred commissions, accrued expenses, and cumulative tax depreciation in
excess of financial reporting allowances. If the S corporation election had been

F-10
<PAGE> 48

FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

terminated at September 30, 1996, these temporary differences would have
resulted in a net deferred income tax liability of approximately $500,000. The
Company will record this tax liability as a one-time increase in the tax
provision in the period in which the S corporation election is terminated. As
this is a nonrecurring charge it has been excluded from the pro forma income tax
adjustment.

(4) COMMITMENTS

The Company leases its office space under an operating lease. The Company
will also make lease payments on its previous facility through January 1997. The
excess of the payments on its old facility over anticipated sublease income has
been accrued as of December 31, 1995 and September 30, 1996.

<TABLE>
At September 30, 1996, approximate future minimum rentals due for the three
months ended December 31, 1996 and the years ending December 31 thereafter are
as follows:

<CAPTION>
PERIOD ENDING AMOUNT
------------- ------
<S> <C>
1996...................................................... $ 313,000
1997...................................................... 1,011,000
1998...................................................... 1,001,000
1999...................................................... 1,007,000
2000...................................................... 1,012,000
Thereafter................................................ 262,000
----------
Total minimum lease payments...................... $4,606,000
==========
</TABLE>

Rent expense was approximately $257,000, $369,000, $663,000, $482,000, and
$509,000 for the years ended December 31, 1993, 1994, and 1995 and the nine
months ended September 30, 1995 and 1996, respectively.

In connection with its facility leases, the Company has outstanding letters
of credit of approximately $73,000.

(5) 401(k) PLAN

The Company has a 401(k) savings plan covering substantially all eligible
employees. The Plan is a qualified defined contribution plan in accordance with
Section 401(k) of the Internal Revenue Code and is funded entirely through
employee contributions.

(6) STOCKHOLDER'S EQUITY

(a) Reincorporation

In February 1996, in connection with the Company's reincorporation in
Delaware, the Company increased the number of authorized shares of common stock
to 7,000,000, and each outstanding share of common stock was exchanged for 6,000
shares of common stock in the reincorporated entity. The accompanying financial
statements and notes have been retroactively adjusted to reflect this
transaction. The Board of Directors has voted to amend the Company's Certificate
of Incorporation to increase the number of authorized shares of common stock to
25,000,000 immediately prior to completion of an initial public offering.

(b) Stock Option Plans

In February 1996, the Company adopted the Forrester Research, Inc. 1996
Equity Incentive Plan, which was amended in September 1996 (the Plan). The Plan
provides for the issuance of

F-11
<PAGE> 49

FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

incentive stock options (ISOs) and nonqualified stock options (NSOs) to purchase
up to 2,750,000 shares of common stock. Under the terms of the Plan, ISOs may
not be granted at less than fair market value on the date of grant (and in no
event less than par value). ISO grants to holders of 10% of the combined voting
power of all classes of Company stock must be granted at an exercise price of
not less than 110% of the fair market value at the date of grant. The fair
market value of $5.50 per share for the options granted in February 1996 was
based on an independent appraisal. Options vest ratably over three years and
expire after 10 years. Options granted under the Plan immediately vest upon
certain events, as defined.

<TABLE>
Stock option activity since the Plan's inception to September 30, 1996 was
as follows:

<CAPTION>
NUMBER EXERCISE PRICE
OF SHARES PER SHARE
---------- --------------
<S> <C> <C>
Granted.................................... 780,046 $5.50-12.00
Canceled................................... 31,355 5.50
------- -----------
Outstanding at September 30, 1996.......... 748,691 $5.50-12.00
======= ===========
Exercisable at September 30, 1996.......... -- $ --
======= ===========
</TABLE>

Upon consummation of the proposed offering, 149,376 ISOs will vest
immediately. As of September 30, 1996, options available for future grant under
the Plan are 2,001,309.

In September 1996, the Company adopted the 1996 Stock Option Plan for
Non-Employee Directors (the Director's Plan) which provides for the issuance of
options to purchase up to 150,000 shares of common stock. The Director's Plan
provides that the four non-employee directors who have agreed to serve as
directors of the Company will receive, on the date that the Company first files
a registration statement under the Securities Act of 1933 covering the common
stock, an option to purchase 6,000 shares of the Company's common stock at an
exercise price of $13.00 per share. Such options will vest in three equal
installments commencing on the date of completion of the initial public offering
of the common stock and on the first and second anniversaries of such date. Each
non-employee director elected thereafter shall be awarded options to purchase
6,000 shares of common stock, at an exercise price equal to the fair market
value of the common stock, upon his or her election as a director, which will
vest in three equal installments commencing on the date of grant and on the
first and second anniversaries of the date of grant. Each non-employee director
will also receive an option to purchase 4,000 shares of common stock, at an
exercise price equal to the fair market value of the common stock, each year
immediately following the Company's annual stockholders meeting, which will vest
in three equal installments on the first, second and third anniversaries of the
date of grant. The Compensation Committee of the Board of Directors also has the
authority under the Director's Plan to grant options to non-employee directors
in such amounts and on such terms as set forth in the Director's Plan as it
shall determine at the time of grant.

F-12
<PAGE> 50

FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

<TABLE>
In October 1995, the Financial Accounting Standards Board (FASB) issued
SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123 requires the
measurement of the fair value of stock options or warrants to be included in the
statement of income or disclosed in the notes to financial statements. The
Company has determined that it will continue to account for stock-based
compensation for employees under Accounting Principles Board Opinion No. 25 and
elect the disclosure-only alternative under SFAS No. 123. The Company has
computed the pro forma disclosures required under SFAS No. 123 for options
granted in 1996 using the Black-Scholes option pricing model prescribed by SFAS
No. 123. The weighted average assumptions used for 1996 are:

<S> <C>
Risk free interest rate...................................... 6.21%
Expected dividend yield...................................... --
Expected lives............................................... 7.5 Years
Expected volatility.......................................... 0%-64%
</TABLE>

<TABLE>
The total value of options granted during the nine months ended September
30, 1996 was computed as approximately $2,614,000. Of this amount approximately
$252,000 would be charged to operations for the nine months ended September 30,
1996 and the remaining amount, approximately $2,362,000, would be amortized over
the related vesting periods. There were no options or warrants issued prior to
1996. The pro forma effect of SFAS No. 123 for the period ended September 30,
1996 is as follows:

<CAPTION>
AS REPORTED PRO FORMA
------------ ----------
<S> <C> <C>
Pro forma net income........................ $1,464,252 $1,313,252
========== ==========
Pro forma net income per share.............. $ 0.23 $ 0.21
========== ==========
</TABLE>

Upon completion of the initial public offering of common stock 157,376
options will vest resulting in a pro forma after tax charge of approximately
$177,000.

In September 1996, the Company adopted the 1996 Employee Stock Purchase
Plan (the Stock Purchase Plan) that provides for the issuance of up to 200,000
shares of common stock. The Stock Purchase Plan is administered by the Board of
Directors. The Stock Purchase Plan consists of semiannual offerings on January 1
and July 1 of each year. The first offering under the Stock Purchase Plan will
commence on the first day the Company's common stock is publicly traded on the
Nasdaq National Market and will end on June 30, 1997. Each subsequent offering
under the Stock Purchase Plan will be six months in length and will commence on
each successive July 1 and January 1. During each offering under the Plan, the
maximum number of shares of common stock that may be purchased by an employee is
determined on the first day of the offering period under a formula whereby an
amount equal to that percentage of the employee's regular salary that he or she
has elected to have withheld is divided by 85% of the market value of a share of
common stock on the first day of the offering period. An employee may elect to
have up to a maximum of 10% deducted from his or her regular salary for the
purpose of purchasing shares under the Stock Purchase Plan. The price at which
the employee's shares are purchased is the lower of (a) 85% of the closing price
of the common stock on the day that the offering commences, or (b) 85% of the
closing price of the common stock on the day that the offering terminates. No
shares have been purchased under the Stock Purchase Plan.

F-13
<PAGE> 51

FORRESTER RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(d) Preferred Stock

In September 1996, the Board of Directors voted to amend the Company's
Certificate of Incorporation to permit the issuance of up to 500,000 shares of
$.01 par value preferred stock. The Board of Directors has full authority to
issue this stock and to fix the voting powers, preferences, rights,
qualifications, limitations or restrictions thereof, including dividend rights,
conversion rights, redemption privileges and liquidation preferences and the
number of shares constituting any series or designation of such series.

(7) NET SALES BY GEOGRAPHIC DESTINATION
<TABLE>

Net sales by geographic destination and as a percentage of total sales are
as follows:

<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
United States......... $6,180,336 $8,103,708 $12,025,529 $7,432,945 $12,967,440
Europe................ 357,365 629,208 1,066,314 670,622 1,766,041
Other................. 761,416 965,886 1,496,969 1,012,065 1,640,509
---------- ---------- ----------- ---------- -----------
$7,299,117 $9,698,802 $14,588,812 $9,115,632 $16,373,990
========== ========== =========== ========== ===========
United States......... 85% 84% 82% 82% 79%
Europe................ 5 6 8 7 11
Other................. 10 10 10 11 10
---------- ---------- ----------- ---------- -----------
100% 100% 100% 100% 100%
========== ========== =========== ========== ===========
</TABLE>

(8) ACCRUED EXPENSES
<TABLE>

Accrued expenses consist of the following:

<CAPTION>
DECEMBER 31,
---------------------- SEPTEMBER 30,
1994 1995 1996
---- ---- -------------
<S> <C> <C> <C>
Payroll and related.............. $ 23,709 $ 802,673 $1,102,668
Other............................ 501,343 742,142 902,908
-------- ---------- ----------
$525,052 $1,544,815 $2,005,576
======== ========== ==========
</TABLE>

F-14
<PAGE> 52

UNDERWRITING

<TABLE>
Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the Underwriters named below, and each of
such Underwriters, for whom Goldman, Sachs & Co. and Robertson, Stephens &
Company LLC are acting as representatives, has severally agreed to purchase from
the Company, the respective number of shares of Common Stock set forth opposite
its name below:

<CAPTION>
NUMBER OF SHARES
UNDERWRITER OF COMMON STOCK
----------- ----------------
<S> <C>
Goldman, Sachs & Co.................................. 687,500
Robertson, Stephens & Company LLC.................... 687,500
Adams, Harkness & Hill, Inc. ........................ 125,000
Advest, Inc.......................................... 125,000
William Blair & Company, L.L.C. ..................... 125,000
Hambrecht & Quist LLC................................ 125,000
Unterberg Harris..................................... 125,000
---------
Total........................................... 2,000,000
=========
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.

The Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and in part to certain securities dealers at such
price less a concession of $.61 per share. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $.10 per share to certain
brokers and dealers. After the shares of Common Stock are released for sale to
the public, the offering price and other selling terms may from time to time be
varied by the representatives.

The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an aggregate of 300,000
additional shares of Common Stock to cover over-allotments, if any. If the
Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 2,000,000 shares of Common
Stock offered.

The Company, Mr. Colony, who prior to the completion of the offering is the
sole stockholder of the Company, and directors, certain executive officers, and
other employees of the Company who hold options to purchase 592,945 shares of
Common Stock have agreed that with certain limited exceptions, during the period
beginning from the date of this Prospectus and continuing to and including the
date 180 days after the date of this Prospectus, they will not offer, sell,
contract to sell, or otherwise dispose of any securities of the Company (other
than pursuant to employee stock option plans existing, or on the conversion or
exchange of convertible or exchangeable securities outstanding, on the date of
this Prospectus) which are substantially similar to the shares of Common Stock
or which are convertible into or exchangeable for securities which are
substantially similar to the shares of Common Stock without the prior written
consent of the representatives, except for the shares of Common Stock offered in
connection with this offering.

The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed 5% of the total number of shares of Common
Stock offered by them.

Prior to this offering, there has been no public market for the shares. The
initial public offering price was negotiated among the Company and the
representatives. Among the factors considered in determining the initial public
offering price of the Common Stock, in addition to prevailing market conditions,
was the Company's historical performance, estimates of the business potential
and earnings prospects of the Company, an assessment of the Company's
management, and the consideration of the above factors in relation to market
valuation of companies in related businesses.

U-1
<PAGE> 53

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "FORR".

The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act.

U-2
<PAGE> 54

[Corporate Logo]

<PAGE> 55

================================================================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

--------------------------

<TABLE>
TABLE OF CONTENTS

<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 3
Risk Factors......................... 5
Use of Proceeds...................... 9
Termination of S Corporation
Election and S Corporation
Distribution....................... 9
Dividend Policy...................... 9
Dilution............................. 10
Capitalization....................... 11
Selected Financial Data.............. 12
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 14
Business............................. 20
Management........................... 28
Certain Transactions................. 32
Principal Stockholders............... 33
Description of Capital Stock......... 34
Shares Eligible for Future Sale...... 36
Validity of Shares................... 37
Experts.............................. 37
Additional Information............... 37
Index to Financial Statements........ F-1
Underwriting......................... U-1
</TABLE>

THROUGH AND INCLUDING DECEMBER 21, 1996 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
================================================================================
================================================================================

2,000,000 SHARES

FORRESTER RESEARCH, INC.

COMMON STOCK
(PAR VALUE $.01 PER SHARE)

----------------------
LOGO
----------------------

GOLDMAN, SACHS & CO.

ROBERTSON, STEPHENS & COMPANY

REPRESENTATIVES OF THE UNDERWRITERS

================================================================================