Uptime, an Estonia-headquartered software development company, is in contact with potential acquisition targets, CEO Eero Tohver told Mergermarket.

The company is holding “closer discussions” with some seven or eight companies, Tohver said, adding these conversations are not yet at a formal negotiation phase, nor has due diligence begun on any of them. The CEO declined to elaborate on those targets in more detail.

Uptime is comfortable with making one or two deals every one or two years, but its pace can be either slower or faster depending on available opportunities, Tohver said.

The company, which generated sales of EUR 18m in 2023 with an EBITDA of EUR 3.6m, hopes to be able to close its next deal within the next 12 months, Tohver said.

Uptime has its internal team that looks around for potential acquisition targets in certain markets, contacts and visits them, Tohver said.

It is interested in acquisitions of custom software developers, and looks for targets with teams between 20 to 60 employees, Tohver said.

The company is interested in acquisitions in western European markets, he said. For example, it has been looking around for acquisition opportunities in the DACH region, he added. Uptime would also look at acquisition targets in countries like Sweden or the Netherlands, and it does not exclude assessing targets in the Baltics, he added.

“Finding [a target with] the right match in terms of its team and management is more important to us than a certain geography,” Tohver said.

Uptime, which is owned by its management, funded its previous acquisitions from its own resources, Tohver said. The debt-free company can also use bank loans to fund its future acquisitions in case it finds “more [acquisition] opportunities than we have cash”, he said, but declined to elaborate on the amount it could consider spending. The company does not expect to go for “aggressive deals” that would require it to raise any external equity funding, Tohver added.

The company is not looking to raise capital or sell, but it has been approached by private equity players that were interested in taking a part in its journey, Tohver said, adding that it declined such approaches.

The CEO told this news service in October 2022 that the company was looking for acquisitions to support its organic growth, after making a few deals that year and in 2020. Uptime typically buys a majority stake, leaving a minority stake in the hands of the target’s management, also as reported.

Uptime announced earlier this month that it acquired a majority-stake in Unatec ICT, a Spanish software development company, for an undisclosed consideration, according to a company press release. The EUR 2.5m-turnover (FY23) target adds around 40 employees to Uptime’s current team of more than 200 employees, according to Tohver and the press release.

Uptime handled M&A work internally, and a law firm Ellex assisted it with contracts and documentation, Tohver said. The company will probably rely on the same set up in the event of a new deal, he added.

Currently, there is more interest in M&A in the IT space than some 12 or 24 months ago, Tohver said. This is driven by a slower market caused by a more cautious IT spending in certain sectors due to the overall macroeconomic environment, he added.

Founded in 1992, Uptime operates in Estonia, Spain, Poland, Denmark, Norway and Switzerland, according to its website.