A large shareholder that has been eyeing Captaris, Inc. (NDAQ:CAPA) since late August is one step closer to making its move, according to an 8-K filing with the SEC. Vector Capital Corporation entered into a confidentiality and non-disclosure agreement last week to review a possible purchase of the software company, which has many shareholders excited.

Vector Capital Corporation (VCC), which owns a 9.9 percent stake in the company, urged the company to consider maximizing shareholder value through a possible merger, sale of the company's assets consolidation, business combination or a recapitalization or refinancing in a Schedule 13D filing with the SEC in late August. The hedge fund believes that such a transaction could be executed at a "significant premium" to $4 per share.

Now, Vector Capital has successfully entered into a confidentiality and non-disclosure agreement with Captaris presumably to obtain more information before submitting an offer to purchase the company, according to an 8K filing with the SEC. Shareholders are hoping that this bid will materialize and unlock value in a stock that has remained stagnant for some time now.

Have shares gone too high since this announcement? After all, shares are up over 25 percent since early August when all of this began. Well, if we move back to early 2007 it becomes clear that the stock dropped over thirty percent. This means that many shareholders are likely sitting on substantial losses, which makes it difficult for some buyers to come in and offer an extremely cheap price. Therefore, many are expecting a possible buyout offer to come in above $6/share in order to attract any real interest from shaerholders.

In the end, CAPA is definitely a stock worth watching because it remains undervalued with a catalyst in place to unlock that value. If an acquisition is made, shareholders stand to make a significant sum of money in the short-term. However, if management holds onto the company and makes an effort to unlock value on its own through recapitalizations or refinancings, then shareholders could see some long-term value being unlocked.

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