Eight Capital Seeing a high probability for its definitive agreement to be acquired by an affiliate of U.S. private equity firm Symphony Technology Group to close as announced, Eight Capital analyst Christian Sgro moved MediaValet Inc. to “tender” from a “buy” recommendation” previously, citing shareholder support, valuation and the strategic rationale.
Before the bell on Wednesday, the Toronto-based digital asset management firm announced the deal for $1.71 per share, which represents a 30-per-cent premium to its previous closing price.
“Considering the $80-million transaction value, we calculate a 3.8 times 2024 estimated revenue takeout multiple that we think is reasonable in this environment,” said Mr. Sgro. “In our coverage, Canadian SaaS peer Q4 (TENDER, TP: $6.05) was recently announced to be acquired for 2.5 times. Larger high-quality North American SaaS companies trade around 4-5 times; MediaValet’s acquisition price is reasonable if not attractive to us.
“Based in Palo Alto, STG Partners recently reported US$10-billion of AUM [assets under management] and its portfolio is focused on mid-market software and software-enabled services. The rationale is strategic in that STG has consolidated adjacent companies including Wrike, a key partner of MediaValet’s, as well as SurveyMonkey. STG now has the opportunity to invest in MediaValet’s growth, where as a public company MediaValet was previously managing overhead prudently to achieve cash flow breakeven.”
The analyst moved his target to $1.71 to reflect the deal from $2.50. The average is $1.73.
“In our coverage, we think Wishpond (BUY, TP: C$1.30) has a highly comparable software and financial profile and is a likely Private Equity takeout candidate,” he said. “Other redeployment opportunities include Canadian software companies D2L (BUY, TP: C$13.00) and Vitalhub (BUY, TP: C$5.00), our top picks from 2023"