Private Credit and AI-Driven SaaS: The Dayforce Acquisition as a Catalyst for 2025 LBO Trends

The 2025 leveraged buyout (LBO) landscape is undergoing a seismic shift, driven by the confluence of AI-driven SaaS growth and the rapid expansion of private credit markets. Thoma Bravo's $12.3 billion all-cash acquisition of Dayforce Inc., a leader in AI-enhanced human capital management (HCM) technology, epitomizes this transformation. This landmark deal not only underscores the strategic value of AI-first SaaS platforms but also signals a broader reallocation of capital toward non-traditional financing structures and high-growth sectors. For investors, the Dayforce acquisition serves as a blueprint for understanding how private credit is reshaping LBO dynamics and unlocking new opportunities in the AI/SaaS ecosystem.

The Dayforce Deal: A Strategic Shift in Capital Deployment

Dayforce's transition to private ownership via Thoma Bravo's acquisition reflects a calculated alignment of private equity capital with AI-driven SaaS innovation. The $12.3 billion enterprise value—offered at a 32% premium over Dayforce's unaffected share price—highlights the growing appetite for SaaS platforms with recurring revenue models and AI-native architectures. Goldman Sachs' $6 billion debt package, comprising a $5.5 billion term loan and a $500 million revolving credit facility, exemplifies a modern capital structuring approach that balances long-term leverage with operational agility.

This financing strategy is emblematic of a broader trend: the rise of private credit as a preferred alternative to traditional bank lending. With $3 trillion in assets under management, private credit providers are increasingly competing with banks by offering tailored solutions for high-leverage transactions. The Dayforce deal, which is not subject to financing conditions, illustrates how private equity firms are leveraging this flexibility to execute large-scale acquisitions in uncertain macroeconomic environments.

AI/SaaS as a Prime Target for LBOs

The SaaS sector's inherent strengths—predictable cash flows, scalable infrastructure, and high gross margins—make it an ideal candidate for leveraged buyouts. Dayforce's 98% gross revenue retention, 28.5% adjusted EBITDA margin, and 16% revenue growth in 2024 underscore its appeal to private equity. Moreover, its AI-driven capabilities, such as predictive hiring and workforce analytics, position it to capitalize on the $35 billion HCM market, which is projected to grow at a 6.7% CAGR through 2029.

The acquisition also reflects a valuation gap between public and private SaaS companies. While public SaaS firms trade at 7.0x current run-rate ARR, private SaaS companies command lower multiples (4.8x–5.3x ARR). This discrepancy creates opportunities for private equity to acquire undervalued assets and scale them toward public market valuations. Thoma Bravo's track record in SaaS rollups—such as its exits of Adenza and Dynatrace—demonstrates its ability to optimize these platforms through operational rigor and strategic acquisitions.

Private Credit's Role in Reshaping LBO Financing

The Dayforce deal's $6 billion debt package, led by Goldman Sachs, highlights the evolving role of private credit in LBOs. Traditional banks have retreated from high-risk lending due to regulatory pressures and macroeconomic volatility, creating a vacuum that private credit providers are filling. This shift is accelerating as the Federal Reserve's rate-cutting cycle improves borrowing conditions. In 2024, U.S. leveraged loan issuance hit a record $1.4 trillion, while the default rate for the Morningstar/LSTA US Leveraged Loan Index fell to 1.44% in November 2024, signaling stronger credit fundamentals.

For investors, this environment presents compelling opportunities. Leveraged loans now offer all-in yields of 7.5% or higher, while private credit funds provide access to non-bank lending with higher returns than traditional fixed income. The Dayforce acquisition also underscores the importance of sector-specific expertise in structuring complex deals. Thoma Bravo's deep SaaS experience and Goldman Sachs' capital markets capabilities exemplify how strategic alignment between sponsors and lenders is driving value creation.

Strategic Implications for Investors

The Dayforce acquisition signals a paradigm shift in capital deployment strategies. As private credit continues to gain momentum, investors should prioritize instruments that align with AI/SaaS growth and leveraged lending trends. Key considerations include:

1. Leveraged Loans and Private Credit Funds: These instruments offer attractive yields and strong risk-reward profiles, particularly in sectors with resilient cash flows like SaaS.
2. AI-Driven SaaS Platforms: Companies with AI-native architectures and recurring revenue models are well-positioned to benefit from private equity consolidation and innovation cycles.
3. Capital Structuring Innovations: The use of flexible financing structures, such as term loans and revolving facilities, enables sponsors to navigate macroeconomic uncertainties while scaling high-growth assets.

Conclusion: A New Era for LBOs

The Dayforce acquisition is more than a single transaction—it is a harbinger of a new era in leveraged lending and private credit. As AI and SaaS continue to redefine enterprise software, private equity firms and investment banks are reimagining capital structuring to capitalize on these trends. For investors, the message is clear: the convergence of AI-driven innovation and private credit expansion is creating a fertile ground for value creation. By prioritizing leveraged loans, private credit funds, and AI/SaaS opportunities, investors can position themselves to thrive in the evolving LBO landscape of 2025 and beyond.