Cognita Sale to Blackstone and CVC on Brink of Collapse Amid Price Dispute

Private equity deal for UK private school operator Cognita is on the brink of collapse due to a mismatch between offers and the desired price, alongside UK tax changes. Blackstone and CVC Capital Partners were the final bidders, but the sale is now unlikely to proceed. Cognita operates over 100 fee-paying schools across 20 countries.

A planned EUR 6 billion private equity deal for the UK private school operator Cognita is on the brink of collapse, according to reports from The Financial Times. The deal, which was expected to see significant stakes sold to Blackstone (BX) and CVC Capital Partners, now appears unlikely to move forward due to a mismatch between the offers and the desired price, as well as recent UK tax changes [1].

Cognita operates over 100 fee-paying schools across 20 countries and has been seeking to sell a significant stake to Jacobs Capital, a European investment group. However, the proposed transaction is now at serious risk of falling through, with Blackstone and CVC Capital Partners being the last remaining bidders.

The collapse of the Cognita deal comes amidst a broader trend in private equity activity, as firms increasingly target high-margin SaaS platforms, particularly in niche sectors like HR technology. Thoma Bravo's reported $9+ billion buyout of Dayforce Inc. highlights this shift, reflecting growing interest in AI-driven SaaS firms with recurring revenue models amid public market undervaluation [2].

The Thoma Bravo-Driven SaaS Playbook
Thoma Bravo, a titan in private equity software acquisitions, has built a reputation for unearthing SaaS gems in undervalued markets. Its recent $10.6 billion Boeing digital aviation deal and $2 billion Olo acquisition underscore a strategy focused on recurring revenue models, scalable infrastructure, and AI-driven differentiation. Dayforce, a provider of AI-powered HR solutions, fits this mold perfectly.

Dayforce's revenue has surged 70% from 2021 to 2024, yet its stock has plummeted 60% from its 2021 peak. This disconnect highlights a broader trend: public markets often undervalue SaaS companies during macroeconomic volatility, even when fundamentals remain strong. Thoma Bravo's $9+ billion offer (a 24% pre-market stock surge on August 18, 2025, suggests market anticipation) reflects a belief that private ownership can unlock value through operational efficiency, reduced public market pressures, and strategic reinvestment in AI capabilities.

Why HR Tech is a Prime Target for Buyouts
The HR tech sector is uniquely positioned for private equity interest. Companies like Dayforce offer sticky, high-margin solutions in a world where workforce management is increasingly digitized. Key drivers include:
1. Recurring Revenue Models: Dayforce's $1.85 billion in annual revenue and $278.8 million in levered free cash flow demonstrate the durability of SaaS economics.
2. AI-Driven Differentiation: Its AI tools for recruitment, payroll, and employee development align with enterprises' demand for automation and data-driven decision-making.
3. Post-Pandemic Market Realignment: As companies cut public market spending, private equity can deploy capital more flexibly to scale AI capabilities and expand into adjacent markets (e.g., healthcare, retail).

The Broader SaaS Buyout Trend
Dayforce's potential privatization is part of a larger shift. Private equity firms are increasingly targeting SaaS companies with:
- Strong EBITDA margins (Dayforce's 2.65% margin is typical for early-stage SaaS but has room to grow under private ownership).
- Niche market dominance (Dayforce's focus on HR/payroll contrasts with broader SaaS giants like Workday or SAP).
- Scalable AI infrastructure (AI integration is now a baseline for competitive SaaS platforms).

This trend mirrors the 2020–2022 frenzy for cloud infrastructure plays but with a focus on vertical-specific solutions. For example, Thoma Bravo's Boeing acquisition targets digital aviation tools, while Dayforce's HR platform caters to industries like healthcare and hospitality—sectors with fragmented, high-growth SaaS markets.

Investment Implications for HR Tech
For investors, the Dayforce deal signals three key opportunities:
1. Position in Undervalued SaaS Niche Players: Look for HR tech firms with strong EBITDA growth, AI integration, and underappreciated public market valuations. Dayforce's 176.27 trailing P/E ratio (despite a 27% YTD stock decline) suggests room for re-rating under private ownership.
2. Track Private Equity Activity in SaaS: Firms like Thoma Bravo, Vista Equity Partners, and KKR are prioritizing SaaS buyouts. Monitor their portfolios for potential IPOs or spin-offs (e.g., Thoma Bravo's past exits like Ellie Mae and Veeva Systems).
3. Consider Direct SaaS Exposure via ETFs or Indexes: The iShares Cloud Computing ETF (SKYY) or the S&P Global Cloud Computing Index could offer diversified exposure to the sector.

Conclusion: The Next Frontier in SaaS
Thoma Bravo's Dayforce buyout is more than a $9+ billion transaction—it's a harbinger of how private equity will continue to reshape the SaaS landscape. By targeting undervalued platforms in high-growth verticals like HR tech, buyout firms are positioning themselves to capitalize on AI-driven efficiency and the ongoing shift to cloud-based solutions. For investors, the lesson is clear: focus on SaaS companies with durable margins, niche expertise, and AI scalability. The next Dayforce could be just a buyout away.

References:
[1] https://www.tipranks.com/news/the-fly/blackstone-cvc-deal-for-cognita-close-to-collapse-ft-reports-thefly
[2] https://www.ainvest.com/news/private-equity-saas-surge-thoma-bravo-dayforce-buyout-future-hr-tech-2508/