By this, one should understand the pursuit of large-scale acquisitions - relative to their usual targets - of software companies in distress or facing strategic drift, which also happen to be publicly traded.

Following Constellation's stake building in Sabre and Lumine's takeover of Synchronoss, news broke this morning that Topicus - Constellation's European spearhead - is pursuing Australia's ReadyTech, a specialist in custom mission-critical application development.

ReadyTech boasts a well-diversified business portfolio - one-third government services, one-third education, and one-third human resources - and an excellent growth track record, with revenue increasing sixfold over the last decade.

Largely equity-funded, the 2021 acquisition of OpenOffice has served as the catalyst for this growth. That said, given the nature of its business - the Australian firm sells a service rather than a unified platform - operating margins are thin and, more importantly, showing signs of underlying erosion.

The situation bears a striking resemblance to the Sabre or Synchronoss cases: an acquisition target with an established position but management or positioning issues weighing on margins, and modest cash generation entirely absorbed by various acquisitions, which have also forced ReadyTech to take on some debt in recent years.

Topicus has proposed a partial buyout at AUD 250m, representing a price of AUD 1.75 per share, compared to AUD 1.34 today - multiples of twice revenue and 14x EBITDA.

Furthermore, Constellation's Dutch subsidiary has proposed a full takeover at AUD 2 per share, while ReadyTech's stock price, though jumping today, remains significantly lower at just AUD 1.63.

MarketScreener analysts believe that the Australian company's board - whose capital is controlled by investment funds - is being overly fastidious. They argue that it would be a mistake to forgo the powerful synergies and market opportunities offered by Topicus and the broader Constellation galaxy.

In this respect, a plausible arbitrage opportunity is emerging here.