Dropbox (NASDAQ:DBX), New Relic (NYSE:NEWR), Coupa Software (NASDAQ:COUP) are potential acquisition candidates for strategic and private equity firms, according to a RBC analyst.
Dropbox (DBX) could be a target for a Adobe (ADBE) or Salesforce (CRM), while New Relic and Coupa Software may see private equity interest, RBC analyst Rishi Jaluria said in an interview on Thursday on CNBC.
Tech giants like Microsoft (MSFT), SAP (SAP) and Oracle (ORCL) “are looking at some of these multiples coming down so much and saying, hey this is a great time to consolidate some IT spend and really take advantage of the major pullback we’re seeing here,” Jaluria said.
Zoom Video (NASDAQ:ZM) and Docusign (DOCU) “are big beneficiaries of the pandemic and remote work, but they’ve pulled back to such low levels and trade at such cheap multiples on profitability that we think they are attractive to some big acquirers, namely Salesforce,” Jaluria added.
Other possible targets may include Box Inc. (BOX) Couchbase (BASE), Fastly (FSLY), N-Able (NABL), NortonLifeLock (NLOK), Nutanix (NTX), Qualys (QLYS), Smartsheet (SMAR), Splunk (SPLK), SolarWinds (SWI) and Teradata (TDC).
Jaluria doesn’t see regulatory issues such as antitrust concerns preventing software acquisitions.
“The regulatory bodies don’t seem to care as much about enterprise software as they do about consumer technology,” Jaluria said. “While the regulators will come down on Facebook or Google or Amazon trying to buy someone, it doesn’t seem to be the case with anything related to enterprise software and especially with someone like Salesforce or SAP or Oracle buying a midcap software name I don’t think that regulatory is going to be major hurdle to making that happen.”
Jaluria sees the most likely strategic candidates as Couchbase (BASE), Dropbox (DBX), Docusign (DOCU), Fastly (FSLY), New Relic (NEWR), Nutanix (NTNX), Qualys (QLYS), Smartsheet (SMAR), Splunk (SPLK) and Zoom Video (ZM), according an RBC note from April 11 written by Jaluria and analyst Matthew Hedberg.
The most likely targets for private equity takeout are Box Inc. (BOX), Coupa Software (COUP), N-able (NABL), New Relic (NEWR), NortonLifeLock (NLOK), Solarwinds (SWI) and Teradata (TDC).
In late March a prominent venture capital said Anaplan’s (PLAN) $10.7 billion sale to private equity powerhouse Thoma Bravo may user in a spate of deals in the software space.