Private-equity giant Thoma Bravo is engaging in advanced discussions to acquire Dayforce Inc., a prominent provider of human-resources software, in a potential deal that could value the company at around $9 billion, sources familiar with the matter told Bloomberg. The talks, which aim to take the publicly traded firm private, come amid a broader wave of consolidation in the software sector, where firms like Thoma Bravo have been aggressive in snapping up undervalued assets.

Dayforce, formerly known as Ceridian, specializes in AI-driven human capital management tools that handle payroll, workforce management, and employee engagement for large enterprises. Listed on both Nasdaq and the Toronto Stock Exchange, the company has seen its shares plummet more than 25% over the past six months, closing Friday with a market capitalization of about $8.4 billion. News of the potential buyout sent shares surging as much as 26% in premarket trading on Monday, reflecting investor enthusiasm for a premium offer in a sluggish market.

Strategic Fit for Thoma Bravo’s Portfolio

Thoma Bravo, a Chicago-based firm with a storied history in software investments, views Dayforce as a natural addition to its roster of tech holdings, which includes companies like Qlik and RealPage. Insiders note that the private-equity player has been particularly active in HR tech, betting on the sector’s resilience amid economic uncertainties. The Information reported that the deal aligns with Thoma Bravo’s strategy of privatizing firms to streamline operations away from public scrutiny.

Despite reporting a 10% revenue growth in its latest quarter, Dayforce has grappled with valuation pressures, including competition from rivals like Workday and UKG. A take-private transaction could provide the breathing room for strategic overhauls, such as bolstering AI integrations, without the quarterly earnings glare. Analysts suggest the enterprise value, including debt, could exceed $9 billion, making this one of Thoma Bravo’s larger bets in recent years.

Market Reactions and Industry Implications

The stock pop underscores a rebound in investor sentiment toward software deals, with Investopedia highlighting how Dayforce’s shares jumped amid speculation of a premium bid. This isn’t Thoma Bravo’s first rodeo in HR software; the firm has previously invested in platforms that enhance employee data analytics, positioning it to consolidate market share.

Broader industry observers see this as part of an accelerating trend in private-equity-led acquisitions, especially in sectors hit by post-pandemic slowdowns. Nasdaq noted that advanced talks could culminate in a deal announcement soon, potentially reshaping competition in human capital management. For Dayforce, based in Minneapolis, going private might unlock investments in innovation, but it also raises questions about job impacts and integration challenges.

Challenges Ahead in a Competitive Field

Negotiations remain fluid, with no guarantee of closure, as representatives from both Thoma Bravo and Dayforce declined to comment when approached by multiple outlets. If successful, the acquisition would mark another chapter in Thoma Bravo’s playbook of transforming public companies into private powerhouses, often through aggressive cost-cutting and tech upgrades.

For industry insiders, this deal highlights the allure of HR software amid labor market shifts, where tools for remote work and compliance are in high demand. Yet, regulatory scrutiny on large private-equity deals could pose hurdles, especially with antitrust concerns in tech. As talks progress, stakeholders will watch closely for how this influences valuations across the sector, potentially spurring more buyout activity in undervalued software firms.