Thoma Bravo Acquires Dayforce for $12.3 Billion in Deal

Dayforce, a leading human resources software provider, announced on Thursday that it will be acquired by buyout firm Thoma Bravo for $12.3 billion. This acquisition includes debt and represents a premium of 32.4 percent based on Dayforce’s stock closing price on August 15, when news of the discussions first emerged. Under the terms of the agreement, Dayforce shareholders will receive $70 per share in cash, translating to an equity value of approximately $11.18 billion, as calculated by Reuters.

The software sector, particularly human capital management, has increasingly attracted investor attention. As economic conditions fluctuate, characterized by a weakening labor market and shifting consumer spending, companies offering resilient subscription services are in high demand. Dayforce’s stock saw a 2 percent increase in early trading following the announcement, although it has experienced a decline of about 7 percent in value this year, underperforming compared to its industry peers.

Strategic Shift in Human Capital Management

Originally known as Ceridian HCM Holding, Dayforce is navigating a competitive landscape where larger, more established firms are often favored by enterprises. A series of recent acquisitions in the human capital management industry indicates a trend towards AI-driven, all-in-one solutions. For instance, Paychex announced its acquisition of rival Paycor for $4.1 billion earlier this year, while Automatic Data Processing acquired WorkForce Software for about $1.2 billion last year.

The acquisition by Thoma Bravo, which manages approximately $184 billion in assets as of March 31, 2023, is expected to close early next year. The deal includes a minority investment from a subsidiary of the Abu Dhabi Investment Authority. Analysts suggest that this buyout will alleviate some of Dayforce’s debt burden, while Thoma Bravo’s extensive resources could accelerate Dayforce’s artificial intelligence initiatives and facilitate international expansion.

Thoma Bravo has established itself as one of the largest software-focused investors globally, having acquired or invested in over 530 software and technology companies. This acquisition of Dayforce reflects a growing confidence in the potential of the software sector to deliver sustained revenues through innovative technology solutions.

In summary, Thoma Bravo’s acquisition of Dayforce marks a significant move in the software landscape, positioning both companies for future growth amidst an evolving economic backdrop.