Private-equity giant Thoma Bravo has struck a deal to acquire human-resources software provider Dayforce Inc. in a transaction valued at $12.3 billion, including debt, marking one of the largest take-private deals in the tech sector this year. The agreement, announced Thursday, comes as Dayforce’s shares have lagged behind broader market gains, reflecting pressures from a softening U.S. jobs market that has crimped demand for HR tools. Under the terms, Thoma Bravo will pay $70 per share in cash, a 32% premium over Dayforce’s closing price before talks surfaced, sending the stock surging more than 25% in premarket trading.

Dayforce, formerly known as Ceridian, specializes in cloud-based platforms for payroll, workforce management and talent acquisition, serving over 6,000 customers globally. The Minneapolis-based company has positioned itself as a leader in AI-infused HR solutions, with recent quarterly results showing 23% revenue growth to $417 million, driven by its Dayforce Wallet product that enables on-demand pay. However, economic headwinds, including rising unemployment and slower hiring, have weighed on its outlook, with shares down 15% year-to-date prior to the deal buzz.

Thoma Bravo’s Aggressive Push into Software Buyouts

This acquisition fits Thoma Bravo’s playbook of snapping up undervalued software firms and optimizing them for higher margins through operational tweaks and bolt-on deals. The Chicago-based firm, managing over $150 billion in assets, has a storied history in the space, having taken private companies like RealPage and Qlik, often transforming them into more efficient entities. Sources familiar with the matter, as reported by Bloomberg, indicate Thoma Bravo outbid other suitors in advanced negotiations, valuing Dayforce at about 19 times its projected 2025 EBITDA.

Industry insiders note that the deal underscores a broader trend of private-equity firms capitalizing on depressed public valuations in enterprise software. Dayforce’s enterprise value of around $11 billion (net of cash) aligns with multiples seen in recent transactions, such as Thoma Bravo’s own $10.7 billion purchase of Coupa Software in 2022. Analysts point to Dayforce’s sticky recurring revenue—over 90% from subscriptions—as a key attraction, even as the firm grapples with integration challenges from past acquisitions.

Implications for the HR Tech Sector Amid Economic Uncertainty

The buyout arrives against a backdrop of labor-market cooling, with U.S. job openings at their lowest since early 2021, per government data. This has prompted HR software providers to pivot toward cost-saving features like automation and analytics, areas where Dayforce excels with its AI-driven predictive tools for employee retention. According to Reuters, the transaction could accelerate consolidation in the fragmented HR market, where competitors like Workday and UKG vie for dominance.

For Thoma Bravo, the move bolsters its portfolio in human capital management, complementing holdings like Frontline Education. Executives at Dayforce, led by CEO David Ossip, are expected to remain, signaling continuity. Posts on X from industry watchers, including private-equity analysts, express optimism about Thoma Bravo’s ability to scale Dayforce internationally, potentially through add-on acquisitions in Europe and Asia.

Market Reactions and Future Outlook

Investors reacted positively, with Dayforce’s Toronto-listed shares mirroring the New York gains, as per trading data. The deal, subject to shareholder and regulatory approval, is slated to close by year-end, financed through a mix of equity and debt from banks like JPMorgan. Critics, however, warn of integration risks in a high-interest-rate environment, where leveraged buyouts face scrutiny.

Looking ahead, this acquisition could reshape competition, pushing public peers to enhance efficiencies or seek partnerships. As detailed in a recent Axios report, the weakening labor market has made HR firms ripe for private-equity intervention, with Thoma Bravo poised to extract value by streamlining operations and expanding AI capabilities. Insiders believe this could set a precedent for more mega-deals in software, as firms navigate economic volatility toward sustained profitability.