Bid Activity in the Sector

M&A activity is providing an increasingly important backdrop for the UK smaller technology sector, where public-market valuations can still sit some way below those which strategic and private-equity buyers are prepared to pay.  Some Techinvest buy recommendations have attracted bids recently.  Eleco Group is a particularly striking example. The construction and built-environment software specialist has agreed a recommended 235p-a-share cash offer from technology-focused private-equity investor Accel-KKR, valuing its fully diluted equity at around £208m. The price represents a 75% premium to Eleco’s previous closing price and an enterprise value of around 20 times 2025 EBITDA. That is a substantial valuation for a relatively small AIM company and highlights the attraction to buyers of specialist software businesses combining high recurring revenues, established market positions and opportunities for further consolidation.

Tribal Group provides another example, although the proposed transaction is more complicated. Private-equity group Main Capital Partners has agreed to acquire Tribal’s operating businesses for £189.3m in cash (roughly 88p per share), after which the quoted parent is intended to return the net proceeds to shareholders through a members’ voluntary liquidation. At the same time, Tribal revealed that it had rejected a separate, conditional 95p-a-share proposal from SilverTree Equity Partners, which now has until 9 October to decide whether to make a firm offer. The presence of competing private-equity interest is significant. Together with the Eleco deal, it reinforces the point that specialist UK software companies with meaningful recurring revenues can possess strategic value considerably greater than that previously being recognised by relatively illiquid smaller-company markets — and suggests that corporate activity is likely to remain an important source of value realisation across the sector.