Corporate Governance and Shareholder Rights in Dayforce Inc.: A Critical Analysis of the $70-Per-Share Buyout Offer

The $70-per-share buyout offer for Dayforce Inc. (NYSE: DAY), proposed by private equity firm Thoma Bravo in 2025, has ignited a firestorm of debate over corporate governance, fiduciary duties, and shareholder value. While the deal promises immediate liquidity for public shareholders, it raises critical questions about whether the board of directors acted in their best interests. This article evaluates the transaction's fairness, analyzes the strategic implications for long-term value, and outlines a compelling case for investor action in light of governance risks.

Governance Red Flags: A Lack of Competitive Bidding

The cornerstone of the controversy lies in the absence of a competitive bidding process. Thoma Bravo's $70-per-share offer, representing a 32.4% premium over Dayforce's stock price on August 15, 2025, was accepted without soliciting alternative bids. This decision has drawn sharp criticism from legal experts and institutional investors, who argue that the board failed to fulfill its fiduciary duty to maximize shareholder value.

A key factor deterring competition is the $351 million termination fee, which creates a high barrier for potential bidders. Additionally, the deal is not subject to a financing condition, reducing the board's exposure to risk but limiting flexibility to renegotiate terms. The unanimous board approval, supported by lead independent director Gerald Throop, has been scrutinized for lacking transparency. Critics contend that the board did not provide a detailed rationale for the valuation or a comprehensive assessment of Dayforce's intrinsic value.

DCF Analysis: A $98.11 Intrinsic Value vs. $70 Offer

Discounted cash flow (DCF) models suggest Dayforce's intrinsic value is significantly higher than the $70-per-share offer. A two-stage DCF analysis projects free cash flows from 2026 to 2035, with growth rates declining from 21.50% in 2026 to 4.60% by 2035. Using a 7.2% discount rate and a conservative 3.1% terminal growth rate, the model estimates an intrinsic value of $98.11 per share—40% above the buyout price.

This discrepancy highlights a potential underpayment for shareholders. Dayforce's recent financial performance, including 9.8% revenue growth and a 13.6% increase in recurring revenue in Q2 2025, further supports the argument that the board undervalued the company. The DCF analysis also accounts for Dayforce's strong position in the AI-driven HCM market, where it is projected to grow at a 15% compound annual growth rate (CAGR) through 2030.

Legal Scrutiny and Shareholder Dilemmas

Legal firm Rowley Law PLLC has launched an investigation into the transaction, alleging fiduciary breaches. The board is accused of failing to disclose material risks, such as the potential underperformance of AI-driven growth initiatives and the lack of strategic alternatives. Shareholders now face a liquidity dilemma: accept the $70 offer and lock in gains, or challenge the deal's fairness through legal channels.

The transition to private ownership adds another layer of complexity. Shareholders lose the transparency and regulatory oversight of public markets, and the board's reliance on forward-looking statements—such as claims of AI-driven growth—lacks concrete benchmarks. Insider selling by executives, including Samer Alkharrat and Stephen Holdridge, has further fueled skepticism about the board's confidence in the company's future under private ownership.

Strategic Implications and Investor Action

The Dayforce-Thoma Bravo deal underscores broader trends in tech M&A, where governance issues increasingly influence market perceptions. Similar cases, such as Tesla's FSD-related class action and Fiserv's lawsuits over misleading growth metrics, demonstrate how governance failures can erode shareholder trust. For Dayforce, the outcome of the legal investigation will be pivotal. If proven that the board breached its duties, shareholders could secure a higher valuation through renegotiation.

Investors should consider the following actions:
1. Participate in the Legal Investigation: Shareholders have the right to challenge the deal's fairness. A successful outcome could lead to a revised offer or additional disclosures.
2. Monitor Governance Metrics: Track board independence, termination fees, and post-privatization accountability mechanisms. A lack of transparency may signal further risks.
3. Assess Long-Term Value: While the $70 offer provides immediate liquidity, the DCF analysis suggests Dayforce's intrinsic value could justify holding out for a better deal.

Conclusion: A Call for Accountability

The Dayforce buyout serves as a case study in the governance challenges of all-cash buyouts. While the $70-per-share offer offers certainty, it raises critical questions about the board's role as an “honest broker” and the long-term implications of privatization. Shareholders must weigh the immediate benefits against the potential for undervaluation and governance risks. As the deal moves toward its projected closing in early 2026, ongoing legal and regulatory scrutiny will be essential in determining whether shareholders receive a fair and transparent outcome.

For investors, the path forward is clear: demand accountability, challenge underpayment, and advocate for governance reforms that prioritize long-term value over short-term gains. In an era where corporate governance is under the microscope, Dayforce's shareholders have a unique opportunity to shape the future of their company—and set a precedent for tech M&A transparency.