Alphyra's  management team will not be in a position to table its buyout offer before Christmas because it must first complete due diligence.

It is understood that the due diligence is being carried out at the request of the management buyout team's financial backers. They include Benchmark Capital Europe, the US-owned venture capital company headed by the former chief executive of Esat Digifone, Mr Barry Maloney.

Sources close to the company said the exercise, which is being carried out by KPMG, would take weeks.

It is now five weeks since Alphyra's senior management, led by the chief executive, Mr John Nagle, and the finance director, Mr John Williamson, announced they had approached the company about a possible management buyout (MBO).

The announcement was made prematurely after news of the planned offer leaked.

Early indications were that the management buyout team would offer around €2.00 per share for the company but market sources dismissed this, saying an offer of around €2.50 would be needed to win the support of institutional shareholders.

However, Alphyra shares, which traded up to €2.45 in late November following news of the MBO and amid rumours of a rival offer, have since slipped back amid general weakness in equity markets worldwide.

They closed two cents lower at €2.08 on Friday.

Among those the management buyout team needs to win over are Newton Asset Management, the company's largest shareholder with a stake of 10.5 per cent, Prudential which owns 8.2 per cent and Capital Group which holds 6 per cent.

With 10 members of Alphyra's management team involved in the MBO, shareholder interests are being represented by the company's two non-executive directors, Mr Nick Koumarianos and Mr Grant Wilkinson.

Alphyra, formerly known as ITG, became the first firm to list on the Developing Companies Market when it floated in May 1997.

Shares in the company, which provides electronic transactions, services, hit a high of €22.10 at the height of the technology boom in February 2000.

But they have fallen steadily since, reaching a low of 81 cents in August this year. They were trading at €1.55 before the proposed MBO was announced.

The company is well established in Ireland and Britain but at an early stage of development in Europe.

Analysts believe that being private might better suit the company at this early stage of its development.