Checkit Plc has put itself up for sale out of frustration at its public valuation.
Checkit, an augmented workflow and smart sensor automation company for frontline workers based in Cambridge, has been listed on the public markets since 1997 and its share price peaked at 64 pence in 2021.
Recently it has been trading around 14p, although the news this morning that it has commenced a formal sale process has seen it leap 26% in early trading to 18p (writing at 8.15am).
Last year its bid to acquire fellow PLC Crimson Tide collapsed following a long-running all-share takeover saga. The required majority of shareholders in Checkit did not back the deal, with 51% voting in favour and 49% against.
Following the news, Checkit conducted a review of its operations and cost base. It settled upon a restructuring which resulted in a raft of redundancies and has shaved £4m off its annual cost base.
It recently reported break-even of adjusted EBITDA for FY26, ahead of market expectations. Revenue for the year was £13.7m, a fall of 2%.
CEO Kit Kyte (pictured) said last week: “FY26 was a pivotal year for Checkit. We completed a structural reset of the business, delivered adjusted EBITDA break-even ahead of market expectations and generated cash in the second half.
“Importantly, we have strengthened the quality of our recurring revenue base through long-term renewals and disciplined commercial decision-making. With a lower cost base and a strong pipeline, we enter FY27 positioned to pursue growth.”
However its share price barely moved on the news – and Checkit, it seems, has had enough and is ready to be taken private.
This morning it revealed that it has received six expressions of interest from a range of credible international parties, including both private equity sponsors and strategic acquirers, in the last nine months.
“The board of the company has been conducting a review of the various strategic options available to the group and has determined that it would be appropriate to investigate a sale of the company,” it stated.
“The board believes, as outlined below, that there is a disparity between the company’s improving performance and its valuation on AIM and therefore believes that the formal sale process is the best course of action.”
Discussions to date with the various interested parties have focused on an asset sale outside the remit of the takeover code.
However the board believes that a formal sale process will widen the audience of potential acquirers, enable more flexibility in discussions and provide a basis from which to maximise shareholder value from any sale.
“Checkit has evolved into a high-quality, subscription-led operational intelligence platform, combining connected hardware infrastructure with software, workflow and data-driven insights to serve enterprise customers operating in complex, regulated and multi-site environments,” it said.
“The group has demonstrated a repeatable land-and-expand model across enterprise customers, with increasing penetration across sites, regions and use cases. It has customers in the UK, US, Ireland, Australia, New Zealand and continental Europe.
“The board believes the business now represents a scaled, differentiated platform asset with strong foundations for accelerated growth.
“The board has been increasingly focused on the disconnect between the company’s operational progress and its public market valuation.”
It said the current cost base reflects public company overhead, while “the current emphasis on short-term profitability expected by public markets is a constraint on expenditure that would stimulate growth”.
It added: “The board is of the view that, under private ownership, a combination of cost normalisation (including removal of public company costs), operational leverage from platform scaling, and strategic and revenue synergies could support a substantial profitable growth in the near to medium term.
“The board believes this creates a compelling opportunity for acquirers which is not currently reflected in the company’s valuation.”