What happened

Shares of ForgeRock (FORG) are having an amazing week. The stock rose 42.4% from last Friday's closing bell to the end of trading on Thursday, according to data from S&P Global Market Intelligence. There's no big mystery behind this move. The provider of digital identity services is going private, accepting a $2.3 billion buyout offer from private investment firm Thoma Bravo on Tuesday morning. Share prices rose 48.4% that day alone.

So what

Thoma Bravo is paying $23.25 per share in cash for ForgeRock. That's a 44% premium over the stock's average price in the 30 days before the offer was unveiled. It's not unusual for buyout targets to trade slightly below the final offer price for a while, since investors have to consider the risk that the deal might fall through for some reason. In this case, ForgeRock's stock is roughly 3% below Thoma Bravo's agreed buyout price.

Now what

The stock is also trading 38% below the closing price on Sept. 16, 2021, which was ForgeRock's first day as a publicly traded company. Notably, Thoma Bravo is buying its third identity services expert in six months, following the $2.8 billion deal for Ping Identity (NYSE: PING) and the $6.9 billion takeover of SailPoint.

It should be noted that Thoma Bravo's digital identity deals aren't always smooth sailing. A group of large shareholders is planning to vote against the pending Nearmap deal and Thoma Bravos talks with Darktrace fell apart before the two sides could agree on terms.

The slim risk discount points to a less fraught process in the ForgeRock buyout, though. The deal is scheduled to close in the first half of 2023, assuming that ForgeRock shareholders and the usual collection of regulators approve of it. At that point, ForgeRock will join forces with the likes of SailPoint and Ping Identity, building an impressive cybersecurity group under Thoma Bravo's wing.

Therefore, ForgeRock's stock is not likely to move much until the buyout is either completed or canceled. If you expect a positive outcome, you might as well sell the ForgeRock shares you have today, because the real upside is just 3% and many better investments are available in today's market. And if you don't believe that Thoma Bravo is able to finalize this deal, it's hard to say how far ForeRock's stock could fall if and when that news breaks. Inflation-based market fears have already weighed heavily on this stock, and I don't see much value in a bearish bet today.