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Chris Hughes

Don’t Let Private Equity Make a Fool of You

Buyout firms are fishing around the stock market’s rejects. Cheap valuations are where things start — but needn’t be where they end — for targets like Temenos

A spider waiting to catch a tasty morsel in its web. 

A spider waiting to catch a tasty morsel in its web. 


Where stock-market investors see digital disruption, buyout firms see opportunity. The cheap valuations of strategically challenged stocks are proving a draw to private equity firms. But the corporate prey are hardly soft targets: Traditional takeover premiums are — rightly — proving inadequate for some beaten-down shares. 

The latest example is Temenos AG. U.S. buyout firm Thoma Bravo has approached the Swiss financial-software provider about a potential deal, Bloomberg News revealed last week. Prior to that, Temenos’s share price had almost halved since June amid fears the company’s core banking customers could defect to new rivals that rent software online.