Advanced Medical Solutions Group (AIM:AMS), the surgical and wound care group, faces uncomfortable questions after TA Associates became the third private equity firm to walk away without making a formal offer.
TA announced after market close on Friday that it does not intend to bid, offering no further explanation.
Panmure Liberum described the company as "jilted again" and said the pattern of failed approaches is "not a good look", warning that investors will inevitably ask why private equity keeps declining to pull the trigger.
The broker said the explanation could be as simple as pricing expectations, which would be benign, or it could reflect something PE firms do not like in the business, which would be more troubling.
Panmure also noted that AMS's response to the withdrawal did not specifically confirm that trading remains in line with expectations, an omission that may attract scrutiny ahead of an AGM statement due towards the end of June.
The broker suggested a capital markets day could help rebuild confidence by setting out the investment case in detail, and said building value from the current level will require the company to reassure investors that trading is on track.
Peel Hunt, which rates AMS as 'add' with a 240p target price, said it was surprised by TA's decision, having expected discussions to continue.
The broker noted that AMS traded at around 195p to 200p in the month before the possible offer was first disclosed on 18 April, and said a retreat to the 200p to 205p range would not be surprising given that several medtech peers, including ConvaTec, Coloplast and Smith & Nephew have weakened by around 10% during the offer period.
Indeed, that assertion was prophetic, given the shares fell 16% to 208p on Monday.
Results in March showed revenue of £228.9 million, up 29% at constant exchange rates, driven by strong growth in the surgical business following the integration of the Peters Surgical acquisition.
Peel Hunt acknowledged catalysts ahead, including operational synergies from Peters Surgical due in 2027, but said the market is likely to take a longer-term view before pricing those in.