Olo's Buyout Crossroads: Legal Battles and Undervalued Shares?

The proposed $2 billion Thoma Bravo buyout of Olo Inc. (NYSE: OLO) has reignited debates over corporate governance, shareholder fairness, and the true value of SaaS-driven enterprise software. At $10.25 per share, the all-cash offer represents a 65% premium over Olo's April 30 price—a figure the board calls “fair”—but it sits below a $11.00 price target from Piper Sandler. Beneath the surface of this deal lies a labyrinth of fiduciary obligations, regulatory risks, and strategic questions that could redefine Olo's trajectory.

The Analyst Price Target: A Sign of Undervaluation?

The $10.25 offer contrasts sharply with Piper Sandler's $11.00 price target, which the firm reaffirmed post-announcement. While Piper aligned its target with the buyout price, the $0.75 gap raises eyebrows. Olo's Q1 2025 revenue of $80.7 million (up 21% YoY) and its 88,000-location network suggest a business primed for growth. At 6.4x CY26E EV/Gross Profit, the valuation seems conservative for a SaaS company with such scale.

The stock's post-announcement surge to $10.15—a near-term high—hints at investor skepticism about the buyout's adequacy. If the board's premium is meant to reflect Olo's intrinsic value, why does the market price still hover below the analyst's target? The disconnect suggests shareholders see unacknowledged upside—or a missed opportunity.

Fiduciary Duties: A Board Under Scrutiny

The board's unanimous approval of the deal has drawn criticism. Kaskela Law's investigation into potential fiduciary breaches centers on whether directors adequately shopped the company or explored alternatives. For instance, Olo's partnership with Red Lobster for catering solutions and its Card-Present Olo Pay initiative—both under development—could unlock untapped revenue streams. If the board accepted an offer without evaluating these growth levers, it may have failed its duty to maximize shareholder value.

Critics argue that the 65% premium over April's price ignores Olo's recovery since then. By July 2025, shares had already rebounded to $10.12, narrowing the gap between the offer and the market. A board that bases its decision on a stale reference point risks accusations of negligence.

Legal Investigations: A Catalyst for Higher Offers?

Kaskela Law's probe into the buyout's fairness is a double-edged sword. On one hand, it could pressure Thoma Bravo to raise the offer or face protracted litigation. On the other, it might delay the deal's closing, exposing Olo to operational risks. The company's forward-looking guidance—$338.5–340 million in full-year revenue—depends on maintaining client retention and innovation. Delays could erode confidence, making a higher bid harder to justify.

Investors should monitor the proxy statement's disclosure of “confidentiality agreements” between Olo and Thoma Bravo. If the board restricted discussions with other suitors, it could strengthen the case for a breach of fiduciary duty.

Risks of Accepting the Current Terms

• Undervaluation Risk: The $10.25 offer sits below Piper's target and Olo's July trading price. If the company's post-buyout performance outperforms expectations, shareholders who accepted the deal would miss out on potential upside.
• Operational Uncertainty: Thoma Bravo's history of cost-cutting—often at the expense of long-term innovation—could stifle Olo's growth. The firm's $11.00 price target assumes sustained expansion; a post-merger pivot to short-term savings might invalidate that.
• Litigation Costs: Prolonged legal battles could divert management attention and financial resources, harming both Olo's valuation and the buyout timeline.

Opportunities for Shareholder Advocacy

• Leverage the Analyst Target: Piper Sandler's $11.00 price target isn't arbitrary—it reflects Olo's current trajectory. Shareholders should demand the board explain why this figure was ignored.
• Demand Transparency: The proxy statement must detail all valuation models, alternative bids (if any), and the rationale behind rejecting higher offers.
• Support Litigation: While costly, Kaskela's investigation could force Thoma Bravo to negotiate. Even a modest increase to $10.50 would validate investor concerns.

Investment Implications

For current shareholders: Hold out for clarity. The board's actions and the proxy statement's disclosures will determine whether $10.25 is a floor or a fair price. Monitor the $11.00 target's validity as Q2 results roll in—weak revenue could justify the offer, but growth could reignite a bidding war.

For new investors: Avoid the stock near the offer price. The buyout's certainty removes upside potential, while litigation risks and valuation disputes add volatility.

Conclusion

The Olo buyout is a test of corporate accountability in the SaaS sector. While the board defends $10.25 as fair, the data—analyst targets, stock performance, and strategic opportunities—suggests otherwise. Shareholders must demand transparency, and activists should push for higher terms. In an era where private equity often prioritizes short-term gains, Olo's future hinges on whether its leadership honors its fiduciary duty or settles for less.

Investors would be wise to proceed with caution—and keep an eye on those legal filings.