Private Equity Financing in Enterprise Software: A Deep Dive into Dayforce's $5.5 Billion Buyout

The recent $12.3 billion take-private deal for Dayforce, a human capital management (HCM) software leader, has reignited debates about the role of private equity in financing high-growth tech companies. Spearheaded by Thoma Bravo and backed by a $6 billion debt package from Goldman Sachs—including a $5.5 billion term loan and a $500 million revolving credit facility—this transaction underscores both the opportunities and risks inherent in leveraged buyouts within the enterprise software sectorGoldman Sachs Readies $5.5 Billion Debt Deal for Dayforce Buyout^[1]. Let's dissect the strategic and financial implications of this deal, using Dayforce as a case study to evaluate the broader trends shaping private equity's approach to tech.

The Financing Structure: Aggressive Leverage, Strategic Allocation

Goldman Sachs' debt package for Dayforce is a textbook example of modern private equity financing. The $5.5 billion term loan, expected to carry interest rates in the low-to-mid 3% range over the benchmark rateGoldman Sachs Readies $5.5 Billion Debt Deal for Dayforce Buyout^[1], reflects lenders' confidence in Dayforce's recurring revenue model. With adjusted EBITDA margins of 31.7% and free cash flow generation of 13.5–14% of revenueDayforce Enters into US$12.3 Billion Definitive Agreement with Thoma Bravo to Become a Private Company^[2], Dayforce's financials are robust enough to support such leverage. However, the inclusion of a $500 million revolver—a flexible tool for managing short-term liquidity—signals a cautious approach to cash flow volatility, a common concern in software-as-a-service (SaaS) businesses.

The Abu Dhabi Investment Authority's (ADIA) minority equity stake further sweetens the deal for Thoma Bravo. By sharing risk with a sovereign wealth fund, Thoma Bravo reduces its exposure while gaining access to ADIA's global network—a strategic advantage for scaling Dayforce's AI-driven HCM platformDayforce Enters into US$12.3 Billion Definitive Agreement with Thoma Bravo to Become a Private Company^[2]. This hybrid structure—combining high-yield debt, revolver flexibility, and institutional equity—highlights how private equity firms are increasingly tailoring financing to balance growth ambitions with risk mitigation.

Dayforce's Financials: A Recipe for Resilience

Dayforce's recurring revenue model is its crown jewel. Excluding float, its revenue grew 14% year-over-yearDayforce Enters into US$12.3 Billion Definitive Agreement with Thoma Bravo to Become a Private Company^[2], a figure that outpaces the average SaaS growth rate of 10–15%. Its adjusted EBITDA margins, now at 31.7%, are also impressive for a company in a competitive sector. These metrics justify the 32% premium Thoma Bravo is paying for Dayforce's sharesDayforce Enters into US$12.3 Billion Definitive Agreement with Thoma Bravo to Become a Private Company^[2], but they also raise a critical question: Can this performance sustain under the weight of $5.5 billion in debt?

The answer lies in Dayforce's free cash flow. With $87 million generated in Q2 2025 alone and a full-year outlook of $135–$140 millionDayforce Enters into US$12.3 Billion Definitive Agreement with Thoma Bravo to Become a Private Company^[2], the company has the capacity to service debt while reinvesting in AI-driven features. Its single-data-model platform, which streamlines HR processes and integrates seamlessly with AI toolsThoma Bravo Circling Dayforce: Why The $9 Billion HR Software Firm Is Back In Play^[4], positions it to capture market share in a sector projected to grow at 12% annually through 2030. This technological edge is Thoma Bravo's ace in the hole.

Thoma Bravo's Strategy: Software as a Long-Term Play

Thoma Bravo's acquisition of Dayforce aligns with its broader thesis of targeting “innovative and scalable” software firmsDayforce Enters into US$12.3 Billion Definitive Agreement with Thoma Bravo to Become a Private Company^[2]. The firm's recent $2 billion purchase of Olo Inc., a restaurant SaaS platform, demonstrates a consistent focus on vertical-specific software with recurring revenue streams. By acquiring Dayforce, Thoma Bravo is not just buying a company—it's acquiring a platform to accelerate AI adoption in HCM, a sector ripe for disruption.

The firm's operational expertise is another key factor. Thoma Bravo has a track record of enhancing portfolio companies through strategic partnerships and process optimizationDayforce Enters into US$12.3 Billion Definitive Agreement with Thoma Bravo to Become a Private Company^[2]. For Dayforce, this could mean expanding its AI capabilities, improving customer retention, or even pursuing tuck-in acquisitions to broaden its HCM ecosystem. The Abu Dhabi Investment Authority's involvement adds another layer of credibility, as ADIA's long-term horizon complements Thoma Bravo's growth-oriented strategy.

Risks and Rewards: Navigating the Leverage Tightrope

While the numbers look favorable, this deal isn't without risks. The $5.5 billion term loan exposes Dayforce to interest rate volatility, particularly if the Federal Reserve's pause on rate hikes proves temporary. A rise in borrowing costs could strain free cash flow, forcing Thoma Bravo to rely on the revolver—a tool best used sparingly. Additionally, the integration of Dayforce into Thoma Bravo's portfolio must proceed smoothly; any operational missteps could erode investor confidence.

Yet, the rewards are equally compelling. Dayforce's AI-driven platform is a rare asset in the HCM space, where legacy systems dominate. By leveraging Thoma Bravo's operational playbook and ADIA's capital, the company could emerge as a category leader. For private equity, this deal exemplifies how strategic leverage—when paired with strong fundamentals and a clear growth path—can create value even in a high-debt environment.

Conclusion: A Blueprint for the Future

Dayforce's buyout is more than a transaction—it's a blueprint for how private equity is reshaping enterprise software. By combining aggressive leverage with strategic equity partnerships and a focus on AI-driven innovation, Thoma Bravo has crafted a deal that balances risk and reward. For investors, the key takeaway is clear: In the right hands, high-debt financing can be a catalyst for growth, not a constraint. The challenge lies in ensuring that the hands are skilled enough to navigate the complexities of a rapidly evolving tech landscape.