Dayforce's stock wasn't getting enough love, so Thoma Bravo stepped in with $12 billion

Private equity firm Thoma Bravo is acquiring human resources software company Dayforce for $12.3 billion, or $70 per share, a significant premium given Dayforce's 27% year-to-date stock underperformance relative to peers. Thoma Bravo cited Dayforce's stronger recurring revenue growth, differentiated platform, and global scale as justification for the 17x estimated 2026 EBITDA valuation, which is higher than some comparable deals. This acquisition underscores private equity's strategy of capitalizing on public market undervaluation of companies with robust underlying fundamentals and growth potential, with the deal expected to close early next year.

Analysis

Thoma Bravo's $12.3 billion acquisition of Dayforce at $70 per share highlights a significant valuation disconnect recognized by private equity. Prior to the deal announcement, Dayforce's stock had declined 27% year-to-date, substantially underperforming peers such as Automatic Data Processing (+3.1%) and Paychex (-1.4%). The acquisition price represents a 29.6% premium to the pre-rumor stock price and values the company at approximately 17 times its estimated 2026 EBITDA. According to a William Blair analyst, this valuation multiple, though higher than the 15.5x multiple in the comparable Paycor deal, is justified by Dayforce's superior recurring revenue growth, larger scale, and better client retention metrics. Thoma Bravo's stated intention is to leverage Dayforce's 'differentiated platform' to accelerate global growth, indicating a strategic move to unlock value away from the pressures of public market sentiment. The deal is expected to close early next year, marking a significant take-private transaction in the HR software space.

Key Decisions for Investors

• For existing Dayforce shareholders, the $70 per share cash offer provides a certain and significant premium, effectively capping near-term upside at the deal price pending regulatory approval and closure.
• Investors in the broader HR software sector should see this as a valuation floor, prompting a re-evaluation of peers like Workday and Paychex whose public market values may not fully reflect their underlying fundamentals, particularly recurring revenue strength.
• Event-driven and arbitrage funds should assess the spread between Dayforce's current trading price and the $70 offer, weighing the potential return against deal-related risks and the timeline extending to early next year.
• The transaction signals continued private equity appetite for take-private opportunities in the software-as-a-service (SaaS) domain, especially for companies with strong fundamentals that have been punished by recent market dynamics.