Thoma Bravo Acquires Dayforce for $12.3 Billion

Thoma Bravo, a prominent private equity firm, has announced its plan to take Dayforce, a human resources software provider, private in a deal valued at $12.3 billion, inclusive of debt. This acquisition, confirmed on Thursday, reflects a significant premium of 32.4 percent based on Dayforce’s stock closing price on August 15, 2023, when initial discussions regarding the buyout were reported.

Under the terms of the agreement, Dayforce shareholders will receive $70 per share in cash, which translates to an equity value of approximately $11.18 billion, as calculated by Reuters. The move comes at a time when the software sector has attracted considerable investment interest, driven by the resilience of subscription services and recurring revenue, particularly amid economic challenges such as a weakening labor market and fluctuating consumer spending.

In early trading, Dayforce’s stock experienced a modest increase of around 2 percent, recovering slightly from a decline of about 7 percent earlier this year, which saw the company underperform compared to its industry peers. Previously known as Ceridian HCM Holding, Dayforce faces formidable competition, with larger enterprises often favoring established firms with extensive operations.

Shifting Landscape in Human Capital Management

The ongoing trend of consolidation in the human capital management sector indicates a shift towards AI-driven, integrated solutions. Recent acquisitions reflect this movement, as companies aim to enhance the tools available to their clients. For instance, Paychex completed its acquisition of rival Paycor for $4.1 billion earlier this year, while Automatic Data Processing acquired WorkForce Software for approximately $1.2 billion in 2022.

The transaction between Thoma Bravo and Dayforce includes minority investment from a subsidiary of the Abu Dhabi Investment Authority. It is anticipated that the deal will close in early 2024. Analysts have noted that the buyout could alleviate Dayforce’s debt burden, while Thoma Bravo’s extensive resources will likely accelerate the company’s development in artificial intelligence and its international expansion efforts.

Thoma Bravo is recognized as one of the largest software-focused investment firms globally, managing around $184 billion in assets as of March 31, 2023. The firm has a history of acquiring and investing in over 530 technology and software companies, positioning itself as a significant player in the market. This acquisition of Dayforce is expected to further strengthen its portfolio within the evolving landscape of human capital management and software solutions.