EngageSmart (ESMT) is seeing big gains in Monday's trading. The software specialist's share price was up 12% as of 3 p.m. ET according to data from S&P Global Market Intelligence.
EngageSmart published a press release before the market opened this morning that it was on track to be acquired by Vista Equity and bought out for approximately $4 billion, working out to a price of $23 per share.
EngageSmart is poised to be bought in an all-cash deal
Vista Equity's buyout price of $23 per share for EngageSmart represented a 14% premium compared to the software-as-a-service (SaaS) specialist's valuation at Friday's market close. The all-cash deal is expected to close in next year's first quarter. Based on EngageSmart's current share price, investors who bought the stock right now would see a gain of approximately 1.6% upon the buyout's completion.
Is now the time to buy EngageSmart stock?
The chances of any antitrust issues blocking the acquisition are seemingly nonexistent. While it's very likely that Vista Equity will complete its buyout, now is not the time to buy EngageSmart stock. If you already own the stock, now could be a good time to take profits.
At its current price, EngageSmart offers minimal upside. On the other hand, the stock could see substantial sell-offs in the unlikely event that the buyout were to be called off or delayed.
The deal will almost certainly be completed, but investors can probably put their money to better use. Low-risk bonds and some savings accounts can provide similar or better rates of return with far lower downside risk. So even investors who are looking for small, short-term gains have better options at their disposal right now.