The founder of software and technology provider Essensys, Mark Furness, has made a move to potentially acquire the entire company, as it grapples with significant financial headwinds and a plummeting share price.
Takeover Proposal Details
Mark Furness, who originally established Essensys back in 2006, has submitted a preliminary proposal to take the company private. This comes just six years after its initial listing on the London Stock Exchange. The proposed deal is an all-cash offer of 20 pence per share for the entire issued share capital.
While discussions are still in the early phases, Furness has a deadline of 26 December to confirm a firm intention to make a formal offer. This potential buyout emerges against a backdrop of severe financial strain for the company.
Mounting Financial Pressure
Essensys has faced a challenging period, with its share price reflecting the company's struggles. The stock has nosedived 50.9 per cent since the start of the year, landing at 15.70p. The announcement of the founder's takeover interest did little to reassure the market, with shares falling a further 3.1 per cent to 15p.
The company's revenue for the first quarter reached £4.1 million, which was broadly in line with internal forecasts. This performance was primarily driven by its core Essensys platform. However, the rollout of its new product, Elumo—a booking and access control platform—has been sluggish, which the group attributes to a tough macroeconomic environment.
A major blow came with the news that a key customer will not be renewing its Essensys platform contract in December. This contract alone generates £0.9 million in annual revenue, leading the board to warn that full-year results will be materially below expectations.
Strategic Shifts and Cost-Cutting
In response to these challenges, Essensys is shifting its strategy to focus on improving its financial performance. Key initiatives include pushing for higher sales of the Elumo platform and enhancing the customer experience on its main Essensys platform.
The Board is also in active discussions to secure a debt facility to provide the capital needed for future growth. Furthermore, the company has completed the shutdown of 10 data centres, a move expected to yield total cost reductions of £1.5 million.
Despite the current setbacks, the company anticipates that customer interest in Elumo will recover in the medium term, buoyed by a gradual recovery in the flexible working space market as more employees return to offices.
