Private equity firms have been shopping among small public software companies with slumping share prices, and today one of them bid for a well-known name. Transom Capital Group, a Los Angeles buyout firm, agreed to acquire SoundThinking, Inc. (NASDAQ: SSTI), the company behind the ShotSpotter gunshot detection system. If the deal goes through, the stock will stop trading on Nasdaq and the business will become privately owned.
SoundThinking sells public safety technology built on artificial intelligence and data analysis. ShotSpotter uses networks of acoustic sensors to detect gunfire and alert police. SafePointe uses artificial intelligence to screen people for weapons, and CrimeTracer works like a search engine built for investigators. The company counts more than 300 customers and says it has worked with roughly 2,100 agencies.
Shareholders would receive $8.00 in cash per share, plus a contingent value right, or CVR, worth up to another $3.00. The stock closed at $5.47 yesterday, so the cash alone represents a 46% premium. If the CVR pays out in full, the total reaches $11.00, roughly 101% above that close. The deal implies an upfront enterprise value (the price of the entire business after accounting for its debt and cash) of about $114 million, rising to about $159 million if the maximum CVR is paid.
The low starting price has a clear backstory. On August 13th, SoundThinking reported second quarter revenue of $23.9 million, down 8% from $25.9 million a year earlier. It cut its full year revenue forecast to between $99 million and $100 million, down from between $109 million and $111 million. It also lowered its expected adjusted EBITDA margin from between 16% and 18% to between 8% and 9%. Management blamed customer non-renewals, delayed renewals and slower purchasing decisions. The chief financial officer said about 70% of the shortfall was revenue pushed into later periods rather than lost.
In late July, before the forecast cut, the shares traded above $8. The cash portion therefore roughly returns shareholders to where they stood two months ago.
A CVR is essentially a promise of extra money if a specific goal is met. This one depends only on 2027 revenue from ShotSpotter and SafePointe. If those two products bring in less than $73.5 million, the CVR pays nothing. At $73.5 million, it pays $0.50 per share. The payment then climbs by $0.05 for every additional $0.5 million of revenue up to $75.5 million. After that, it climbs by $0.05 for every additional $0.25 million, reaching the full $3.00 at $87 million. Holders cannot sell or transfer it.
Public figures make the odds hard to judge. The company’s revenue forecast covers every product it sells, not just these two, and a private SoundThinking will disclose far less.
The deal is structured as a tender offer, meaning Transom will ask shareholders to sell their shares directly rather than holding a traditional vote. It needs a majority of shares tendered to succeed. Two large holders have already committed: Veradace Partners with about 16%, and Gary M. Lauder and affiliated entities with about 17%. Lauder has also agreed to invest in the private company and keep his CVRs. Any shares not tendered would be bought out later at the same price, and closing is expected in the fourth quarter of 2026.
Shares rose more than 51% in early trading today, which put the price slightly above the $8.00 cash offer. In most cash buyouts, a stock trades a little below the offer price. That gap reflects the time until closing and the risk that the deal falls apart. Trading above $8.00 suggests the market is assigning some value to the CVR. Where the share price sits relative to $8.00 is the number worth watching as the tender offer unfolds.
For SoundThinking’s leadership, the appeal is room to operate away from public markets. Chief executive Ralph Clark said private ownership would bring greater flexibility. For shareholders, the decision to tender comes down to a fixed $8.00 at closing plus a bet on 2027 revenue that may or may not pay.
