The most likely takeover candidates for strategic buyers include Couchbase (BASE), Dropbox (DBX), Fastly (FSLY), New Relic (NEWR), Nutanix, Qualys (QLYS), Smartsheet (NYSE:SMAR), Splunk (SPLK), Sumo Logic (SUMO) and Zoom Video (ZM), RBC analyst Rishi Jaluria wrote in a note on Wednesday.
The most likely companies to be targeted by private equity firms include Box Inc. (BOX) Coupa Software (COUP), Duck Creek Technologies (DCT), N-able (NABL), New Relic (NEWR), SolarWinds (SWI) and Teradata (TDC).
RBC's Jaluria sees potential M&A in the software space as software multiples remain under pressure. The RBC ALL-Saas index is down 39% year-to-date vs the Nasdaq is down 34%. Jaluria added though that PE deals may he hard to come by due to current debt markets.
"Although private equity has been active in the past week with Thoma-FORG and Vista- KNBE, we would point out both were all-cash deals as debt is becoming increasingly difficult to raise (especially at reasonable rates)," Jaluria wrote. "In other words, we believe larger scale debt-financed private equity takeouts could be unlikely in the near-term."
Jaluria highlighted PE firm Thoma Bravo's deal to purchase ForgeRock (FORG) for $2.3 billion, or $23.$25/share in cash announced on Tuesday as well as Vista Equity's agreement to purchase KnowBe4 (KNBE) for $4.6 billion, or $24.90/share, on Wednesday.
The RBC prediction for a potential Nutanix (NASDAQ:NTNX) takeout comes amid a Friday report from Bloomberg that the cloud-computing firm is exploring a sale after getting takeover interest. Nutanix expects to target private-equity and strategic buyers. A Piper Sandler analyst on Friday estimated that Nutantix may see $27-$30/share in a potential sale.
RBC's Jaluria is updating a software takeover list that he originally published in April. Duck Creek Technologies (DCT) is a new edition to the list as he sees an increased chance of a PE takeout considering the recent pullback in shares, though he noted that DCT bylaws and shareholder agreement includes some provisions that may make an unsolicited offer "difficult or expensive" without cooperation from its biggest holders APAX and Accenture.
The RBC analyst also removed DocuSign (DOCU) from the list of potential strategic takeout candidates as he sees a near-term acquisition unlikely following the hiring of a permanent CEO and a restructuring, including a 9% workforce reduction.
SmartSheet (SMAR) may be a name to look at, especially this week, after activist hedge fund Sachem Head disclosed a stake in the company in its latest 13-F filing in August. Sachem Head Managing Partner Scott Ferguson is set to speak at the 13-D Monitor Active-Passive Investor Summit in New York City on Tuesday and is expected to present an investment idea.
Also see from las month, Splunk Inc. agreed to a standstill agreement with private equity firm Hellman & Friedman.