Progress Software is considering a sale as part of an exploration of alternative business strategies, and has spoken to private equity firms about a potential deal, according to people familiar with the matter.
Progress Software is working with investment bank JPMorgan Chase & Co on a limited auction process that was open to only a small number of buy-out firms, the people said this week.
A leveraged buy-out would be challenging because of the choppy debt markets, and there is no certainty the company's negotiations with potential buyers will lead to any deal, the people said.
The sources asked not to be identified because the sale process is confidential. Progress Software and JPMorgan declined to comment.
Shares of Progress Software, which has a market capitalisation of around US$1.2 billion (A$1.7 billion), rose as much as 17 percent on the news. They were up 9 percent at US$25.32 in early afternoon Nasdaq trading.
A deal would make Progress Software the latest in a string of business software companies to explore a sale. SolarWinds, Solera and Informatica were among those that chose to go private last year to accelerate their transition to cloud computing.
Based in Bedford, Massachusetts, Progress Software develops tools to manage business applications.
The company's stock has declined 20 percent in the last six months, compared with an 11 percent decline in the Nasdaq Composite Index.
Earlier this week, Progress Software said it had revenue of US$377.6 million in its fiscal 2015 year, compared with US$332.5 million in fiscal 2014. Income from operations was US$14.8 million, down from US$80.7 million in the prior fiscal year.