Drawn-out battle for Aussie tech stock highlights inscrutable market

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If document software firm Nitro can shift its revenue up soon, its current $US360 million price tag would be a veritable bargain for its potential buyers when the next IPO window eventually opens, writes Adir Shiffman.

Potentia suddenly found itself shut out of due diligence and facing a Nitro board recommending Alludo’s offer., where chairwoman Yasmin Allen’s three-person committee declined to intervene. Regardless, Alludo’s scheme failed anyway and Potentia further demands due diligence access.predilection for beaten down ASX-listed tech businessesLocal investors have abandoned these burners, but the buyout specialists fixate on their proximity to material free cashflow and smell a bargain.

This growth would have pleased most investors, but the $US15 million cash outflow was more divisive. Those now allergic to cash burn considered it a big red flag, while others noted that operating outflow had improved steadily to almost breakeven in the December quarter. Potentia and Alludo likely view Nitro through this latter prism, with a clear if painful path to $US100 million of revenue, $US15 million or more of free cash, and sustainable revenue growth of at least 20 per cent.

Hitting these numbers is no sure thing but if Nitro could do it soon, the current $US360 million price tag would be a veritable bargain when the next IPO window eventually opens.Right now, Alludo is in the diplomacy phase as its tries to convince more shareholders to sell. If successful, it will then face the next problem of what to do with a 50 per cent stake, particularly if Potentia is still in there and seeks to maximise disruption.

Alternatively, small shareholders can stay in the middle of the perilous road hoping for a higher bid while at risk of being squashed by the same price collapse bulldozer confronting directors.is executive chairman of Catapult Sports and a serial investor and entrepreneur.

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