The massive sell-off of technology growth stocks in 2022 to date may see an acceleration of opportunistic buyouts from private equity funds flush with cash.

On 9 May, compliance and regulation software supplier Ideagen (IDEA:AIM) agreed a takeover deal from private equity outfit firm Hg worth £1.09 billion, while also opening its books to Hg’s counterpart Astorg.

‘Following initial reports of take private interest in Ideagen last month, we emphasised the fact that this could be the start a wave of take privates in the coming months on the back of the broad sell-off of technology stocks,’ says Megabuyte analyst Cameron Naylor.

‘Hg’s offer for Ideagen highlights that despite the downward pressure on public market valuations, private equity is prepared to pay similar prices to before the sell-off for the high quality, recurring revenue-based businesses in which they like to invest.’

This could potentially draw private equity buyers for companies such as GB Group (GBG:AIM), Craneware (CRW:AIM) and CentralNic (CNIC:AIM), which all benefit from high levels of recurring income. Telecoms billing software firm Cerillion (CER:AIM) and online compliance training firm Skillcast (SKL:AIM), which only listed in December 2021, are smaller companies with growing recurring revenue bases.

‹ Previous2022-05-12Next ›