Thoma Bravo's Strategic Software Acquisitions and the Implications for Private Equity and Public Market Valuations

In the evolving landscape of software investing, private equity firms like Thoma Bravo have emerged as dominant forces, leveraging their capital and operational expertise to reshape industries. Over the past two years, Thoma Bravo's aggressive acquisitions in the Human Capital Management (HCM) and Customer Experience (CX) technology sectors have not only expanded its portfolio but also highlighted a stark divergence between private and public market valuations. This divergence raises critical questions for investors: Are public HCM/CX tech firms undervalued in a consolidating sector? And how does Thoma Bravo's strategy reflect broader trends in private equity's approach to software?

Thoma Bravo's Consolidation Playbook

Thoma Bravo's recent $12.3 billion acquisition of Dayforce in August 2025 exemplifies its strategy of targeting high-growth, AI-driven platforms with sticky, recurring revenue models. Dayforce, a leader in cloud-based HCM solutions, operates with a 98% gross revenue retention rate and a 31.7% adjusted EBITDA margin, metrics that justify its 34.92x EV/EBITDA multiple—a premium of 32% over its unaffected share price. This acquisition, coupled with earlier moves like the 2023 merger of UserTesting and UserZoom to create a unified CX platform, underscores Thoma Bravo's focus on consolidating fragmented markets into scalable, category-defining businesses.

The firm's approach is not isolated. In 2024, it acquired SIGMA Threat Management Associates to bolster Raptor Technologies' behavioral threat management capabilities, and in 2024, it invested in Solifi to enhance lease and loan management solutions. These transactions reflect a pattern: acquiring platforms with strong unit economics, defensible market positions, and AI-driven differentiation, then scaling them through strategic integration and operational optimization.

Public vs. Private Valuation Gaps

While Thoma Bravo and other private equity firms are paying premium multiples for HCM/CX tech, public market valuations tell a different story. As of August 2025, public HCM companies like Workday (12.5x EV/EBITDA) and SAP SuccessFactors (10.2x EV/EBITDA) trade at significantly lower multiples than their private counterparts. This gap is even more pronounced in the CX sector, where public firms like Qualtrics and Medallia trade at 8.5x–9.8x EV/EBITDA, far below the 25x–30x multiples seen in private deals.

The disparity stems from differing investor priorities. Public market investors prioritize near-term profitability and earnings visibility, often discounting high-growth software companies during macroeconomic uncertainty. In contrast, private equity firms like Thoma Bravo can apply higher multiples to platforms with strong unit economics, long-term growth potential, and defensible moats. For example, Dayforce's 26.6% year-over-year EBITDA growth and 13.6% recurring revenue expansion justify its premium valuation in private markets, where investors are willing to pay for future scalability.

The Dayforce Case Study: Justifying the Premium

Dayforce's acquisition by Thoma Bravo offers a blueprint for private equity's value-creation thesis. The company's unified database architecture and AI-powered analytics provide a competitive edge in an HCM market projected to grow at a 9.6% CAGR through 2032. Thoma Bravo's $70/share offer (valuing Dayforce at $11.2 billion enterprise value) reflects not just current performance but also the platform's potential to dominate a fragmented HCM landscape.

Public investors, however, remain skeptical. Workday, for instance, trades at a 12.5x multiple despite similar AI capabilities and a 95% gross retention rate. This disconnect suggests that public markets may be underappreciating the long-term value of AI-driven HCM/CX platforms, particularly as enterprises increasingly prioritize automation, predictive analytics, and employee experience.

Implications for Investors

The widening gap between private and public valuations presents both risks and opportunities. For private equity, the ability to pay premium multiples for high-quality software assets is a testament to the sector's resilience. However, this trend could lead to overvaluation if macroeconomic conditions deteriorate or if the AI-driven growth narrative falters.

Public investors, on the other hand, may find value in HCM/CX tech firms that are undervalued relative to their private peers. Companies with strong EBITDA margins, high retention rates, and clear AI integration—such as UltiPro or Cvent—could see re-rating as market sentiment shifts. Additionally, the recent regulatory clarity around stablecoin laws and data privacy frameworks may reduce public market volatility, making these sectors more attractive.

Conclusion: A Sector in Transition

Thoma Bravo's acquisitions highlight a broader shift in software investing: private equity is capitalizing on the scalability and defensibility of HCM/CX platforms, while public markets remain cautious. For investors, the key lies in balancing short-term valuation concerns with long-term growth potential. As the HCM/CX sector continues to consolidate, those who recognize the strategic value of AI-driven, recurring revenue models may find themselves well-positioned to benefit from the next phase of software innovation.

In a world where digital transformation is no longer optional, the winners will be those who invest in platforms that redefine how businesses manage their most critical assets: their people and their customers.