Assessing Shareholder Value in High-Profile Tech Acquisitions: The Dayforce-Thoma Bravo Deal Under Scrutiny

The $12.3 billion acquisition of Dayforce by Thoma Bravo has ignited a firestorm of debate among investors, legal experts, and industry analysts. At the heart of the controversy lies a fundamental question: Does the $70-per-share offer truly reflect Dayforce's intrinsic value, or is it a case of underpayment masked by private equity's appetite for high-growth SaaS assets? To answer this, we must dissect the deal through the lenses of valuation fairness, fiduciary responsibility, and the long-term implications of legal scrutiny.

Valuation Metrics: A Tale of Two Models

Dayforce's intrinsic value, as calculated by discounted cash flow (DCF) analysis, suggests the stock is significantly undervalued. The DCF model estimates a fair value of $98.11 per share, a 31.3% premium to the $70 offer. This gap is driven by Dayforce's projected free cash flow growth, terminal value assumptions, and a risk-adjusted discount rate. However, the company's historical earnings volatility complicates this picture.

Relative valuation metrics tell a different story. Dayforce's Price-to-Sales (P/S) ratio of 5.8x is higher than the US Professional Services industry average of 1.3x but competitive with peers like Paycom Software (6.5x) and Paylocity Holding (6.3x). This suggests Dayforce is reasonably priced relative to its direct competitors, despite its premium P/E ratio of 56.64. Analysts argue that the $70 offer reflects Thoma Bravo's confidence in Dayforce's AI-driven HCM platform and its potential to dominate a market increasingly reliant on cloud-based solutions.

Fiduciary Duty and Legal Scrutiny: A Board Under Fire

Rowley Law PLLC's investigation into the Dayforce-Thoma Bravo deal has raised red flags about the board's adherence to fiduciary duties. The firm alleges that the board failed to secure the best possible consideration for shareholders, neglected to assess whether Thoma Bravo was underpaying, and omitted material disclosures that could affect the merger's fairness. These claims are not baseless—similar lawsuits in tech acquisitions (e.g., Tesla's FSD-related class action) have shown how governance lapses can erode investor trust and trigger stock price declines.

The board's defense hinges on the argument that the $70 offer provides liquidity and shields Dayforce from the volatility of public markets. CEO David Ossip has emphasized that going private will accelerate AI innovation and international expansion. Yet, critics counter that the board's decision to accept a cash offer without exploring alternative bids—such as a strategic acquisition by a larger HCM player—may have prioritized short-term gains over long-term value creation.

Investor Sentiment and Precedents: Lessons from the Tech Sector

Legal investigations in high-profile tech deals often act as a double-edged sword. Tesla's recent class-action lawsuit over its autonomous driving claims caused a 6% stock price drop in two days, illustrating how governance risks can swiftly translate into market volatility. Similarly, Fiserv's lawsuits over misleading growth metrics have led to heightened scrutiny of its financial reporting. These cases underscore a growing investor demand for transparency and accountability in tech M&A.

For Dayforce shareholders, the legal uncertainty creates a dilemma. On one hand, the $70 offer provides immediate liquidity in a market where Dayforce's stock had traded at $52.88 as of May 2025—a 27% decline from its January 2025 peak. On the other hand, the DCF model's $98.11 fair value estimate implies substantial upside if the company can meet its growth projections post-acquisition.

Exit Strategies and the Road Ahead

Shareholders facing the Dayforce-Thoma Bravo deal have three primary options:
1. Accept the Offer: Lock in the $70-per-share cash payment, which provides certainty in a volatile market.
2. Wait for Legal Resolution: Participate in the Rowley Law investigation to challenge the deal's fairness, potentially securing a higher payout if the board is found to have breached its duties.
3. Hedge with Derivatives: Use options or short-term trading strategies to capitalize on potential price swings driven by legal developments.

The choice hinges on risk tolerance and confidence in Dayforce's long-term prospects. If the legal investigation uncovers material misstatements or governance failures, the deal could unravel or force renegotiation. Conversely, if the board's rationale holds, the $70 offer may prove to be a prudent exit in a market where AI-driven HCM platforms are expected to grow at a 15% CAGR through 2030.

Conclusion: A Balancing Act of Value and Governance

The Dayforce-Thoma Bravo deal exemplifies the complexities of high-stakes tech acquisitions. While the $70-per-share offer appears fair in the context of industry multiples, the DCF analysis and legal scrutiny suggest that the board's decision may not fully capture the company's intrinsic potential. For investors, the key takeaway is clear: In an era of heightened regulatory and legal scrutiny, fiduciary responsibility and transparent communication are as critical to shareholder value as financial metrics.

As the deal approaches its projected closing in early 2026, all eyes will be on the courts and the market to determine whether Dayforce's shareholders will receive a fair shake—or if the board's actions will become another cautionary tale in the annals of tech M&A.