Elmo’s US owner K1 Investment Management tests buyer appetite, two years on from $486m buy

, the human resources software business plucked off the ASX boards by California’s K1 Investment Management for $486 million two years ago.Street Talk understands K1 is preparing to test buyer appetite for Elmo, which made $108.2 million annualised recurring revenue and $7.1 million underlying EBITDA for the 2022 financial year. Its bread and butter business is selling software as subscriptions to HR managers and payroll officers at companies in Australia, New Zealand and the UK.

Sources said K1 had spoken to a handful of investment banks in recent weeks, asking them for ideas around exit options at Elmo. K1 did not respond to Street Talk’s request for comment on Tuesday, while a spokeswoman for Elmo declined to comment.its bankers helped Elmo co-founder and then-CEO, Danny Lessem, take suitors through the data room.

That came after Elmo’s share price nosedived nearly 40 per cent over a 12-month period despite revenue rising 30 per cent.It’s early days, and K1 and UBS can be expected to spend the coming months thrashing out the private capital investor’s options. Should it culminate in a sale, K1 is expected to draw a decent crowd of prospective acquirers.

K1 may also be encouraged by similar transactions that have signed this year. Fellow US tech investor Battery Ventures has just locked in Swedish giant EQT Partners as a buyer for its stake inhas co-edited Street Talk since 2009, specialising in private equity, investment banking, M&A and equity capital markets stories. Prior to that, she spent 10 years in London as a markets and M&A reporter at Bloomberg and Dow Jones.is a co-editor of the Street Talk column.

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