ReadyTech is a software provider servicing education, workforce and government clients, underpinned by strong recurring revenue and low customer churn. The share price has suffered on a few fronts in recent times:
- RDY has been caught up in the broader software/AI disruption trade over the past six months.
- While revenue growth remains solid, tracking ~60% higher in FY26 versus five years ago, earnings have come under pressure, mirroring trends seen in Bapcor.
- In February, ReadyTech reported 1H FY26 revenue of $61.6m, missing expectations and pulling guidance, triggering a sharp ~27% one-day share price decline.
However, RDY now firmly ticks two classic M&A boxes in our opinion:
- The business was previously subject to a Pacific Equity Partners approach at $4.50 in 2022, but major shareholders Pemba Capital and Micro Equities did not want to sell.
- Pemba, who hold ~29% of RDY have a typical 6-10 year lifecycle, putting it today well past its expected exit horizon, making a takeover/”take private” the likely cleanest exit available.
We can see RDY experiencing some M&A activity in the next 12-months: MM owns RDY in its Emerging Companies Portfolio.
MM is bullish towards RDY around $1.30
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