By Jacob Sonenshine

A batch of technology companies appear to be candidates to attract buyout offers. Investors could profit when deals are announced.

Suitors can now buy software companies with smaller market capitalizations at lower prices than several months ago. There's no shortage of such names: The $1.8 billion C3.ai, whose stock has fallen 90% since the company went public in 2022, is one example. The $2.6 billion nCino, down 69% since its 2020 initial public offering, is another.

Those stocks are suffering because companies such as OpenAI and Anthropic are creating artificial-intelligence models that could steal the lunches of many niche software providers. The little guys may not have the scale, financing, expertise, or intellectual property to sustainably compete with the heavy-hitters.

The resulting drop in the small-cap stocks opens the door to potential deals. Private-equity firm Thoma Bravo's founder Orlando Bravo told the Financial Times this week that he sees clear buying opportunities in small-cap software.

Others agree. Roy Behren, co-chief investment officer of Westchester Capital, which seeks to capture gains from mergers and acquisitions, said he expects many deals to successfully close this year, given recently loosened regulations from the Trump administration.

Already, deals are trickling in. Stock in OneStream, a $5.8 billion provider of AI platforms meant to help financial companies unify functions and data, has risen 33% from near a record low in December to more than $23. Private-equity firm Hg Capital is buying it for $24 a share.

Other companies aren't succeeding on their own, and could be up for sale at lower prices. They could fit with larger tech companies looking for AI or other assets to enhance their businesses.

While private-equity firms will acquire companies at a premium to prices in public markets, the ideal is a sale to a strategic buyer -- another company that thinks it can save money, or attract more revenue than the sum of the totals from the two companies, via a deal. That can compel it to pay even more.

Many of the potential deals that have surfaced represent opportunities for traders because shares of the companies for sale are trading for less than they were when news that they might be bought emerged in the first place. That kind of move suggests the market is no longer pricing in a deal.

The flip side is that the stocks can pop if buyout negotiations resume.

One buyout candidate is the $1.3 billion C3.ai. Reuters reported Nov. 10 that the company was exploring a sale. The stock popped almost 4% to just over $16 that day, but has dropped to below $12 as the talk about a potential transaction faded away. Now, any deal announcement would lift the stock.

C3.ai didn't respond to a request for comment.

Bill Holdings, which also didn't respond, is a $4.6 billion software provider that simplifies and automates financial companies' invoices and receipts. The stock is down 87% from a record high hit in late 2021. Reuters reported on Nov. 12 that it was exploring a sale, sending the shares up over 11% that day to almost $52. They're now at just over $45.

GitLab, a $5.7 billion platform provider, helps organizations get more out of their software developers and reduce security risk. Its stock is down 71% since the company went public in 2021.

StreetInsider wrote in October about the possibility that $46 billion Datadog, which sells an analytics platform for developers, wanted to buy GitLab for $60 a share. Neither company has confirmed any talks, and neither responded to a request for comment.

The stock surged on the news, quickly gave back those gains, and now trades at $33, near a record low. If deal talks surface, the shares would pop.

Jefferies trading analyst Jeff Favuzza highlighted a list of other software companies that have followed a similar pattern. They include PagerDuty, Ambarella, and Qualys, a $4 billion cybersecurity company that competes in a crowded industry and could conceivably fit under the roof of one of the larger providers. PagerDuty declined to comment; the others didn't respond to requests for comment.

Take a flier on a bunch of these stocks. Chances are, one or more will spike.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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January 22, 2026 16:31 ET (21:31 GMT)

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