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ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Form 10-Q, such as Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations", the reader should carefully consider the factors discussed in Part I, Item 1A. "Risk Factors in our 2024 Form 10-K. There have been no material changes in our risk factors from those disclosed in Part I, Item 1A. of our 2024 Form 10-K, with the exception of the items listed below.
Risks Related to the Proposed Thoma Bravo Transaction
The consummation of the Thoma Bravo Transaction is subject to a number of conditions outside of the parties control, and, if these conditions are not satisfied or waived, the Manageerger Agreement may be terminated and the Thoma Bravo Transaction may not be completed.
On August 20, 2025, we entered into the Merger Agreement's Discussion and Analysis with Dawn Bidco, LLC, a Delaware limited liability company (Parent), and Dawn Acquisition Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent (Merger Sub). Parent and Merger Sub are affiliates of Thoma Bravo Fund XVI, L.P., Thoma Bravo Fund XVI-A, L.P., Thoma Bravo Fund XVI-B, SCSP, Thoma Bravo Executive Fund XVI, L.P., Thoma Bravo Employee Fund II, L.P., Thoma Bravo Fund XV, L.P., Thoma Bravo Fund XV-A, L.P., Thoma Bravo Executive Fund XV, L.P., Thoma Bravo Employee Fund, L.P., Thoma Bravo Fund XIV, L.P., Thoma Bravo Fund XIV-A, L.P., Thoma Bravo Executive Fund XIV, L.P. and Thoma Bravo Executive Fund XIV-a, L.P., investment funds managed by Thoma Bravo.
Pursuant to the Merger Agreement, (1) Merger Sub will merge with and into Dayforce, with Dayforce surviving the Merger as a wholly owned subsidiary of Parent, and (2) at the effective time of the Thoma Bravo Transaction (the Effective Time), each issued and outstanding share of Dayforce common stock, par value $0.01 per share, as of immediately prior to the Effective Time (other than certain excluded shares) will be converted into the right to receive $70.00 in cash, without interest. The completion of the Thoma Bravo Transaction is subject to the satisfaction or waiver of certain customary mutual closing conditions, including (1) the adoption of the Merger Agreement by the affirmative vote of holders of a majority of the voting power of the outstanding capital stock of Financial Condition aDayforce, (2) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act), (3) clearance of the transaction under the Competition Act (Canada), (4) approval by the Officer of the Comptroller of the Currency, (5) receipt of certain other regulatory approvals and Results of Opera(6) the absence of any law or judgment by a governmental entity of competent jurisdiction enjoining or otherwise prohibiting consummation of the Merger. The obligation of each party to consummate the Merger is also conditions", ed on the other partys representations and warranties being true and correct (subject to certain customary materiality exceptions) and the other party having performed in all material respects its obligations under the Merger Agreement, and the reader should carefobligation of Parent to consummate the Merger is additionally conditioned on no material adverse effect on the Company having occurred since the execution of the Merger Agreement.
The governmental authorities responsible for administering antitrust and foreign investment laws, including the HSR Act, have broad discretion in administering the relevant governing laws and regulations. These authorities may initiate proceedings or take other actions to delay or prevent the consummation of the Thoma Bravo Transaction.
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Failully consider tre to satisfy or obtain the required regulatory approvals and other closing conditions could significantly delay the completion of the Thoma Bravo Transaction or prevent it from occurring. Any such delay could reduce or eliminate the factors discussed in Part I, Item 1A. "Risk Factors in oanticipated benefits of the Thoma Bravo Transaction. There can be no assurance that the conditions to closing will be satisfied or waived, or that the Thoma Bravo Transaction will be completed within the expected timeframe, or at all.
Failure to complete the Thoma Bravo Transaction could adversely affect our stock price and future business and financial results.
There can be no assurance that the conditions to the closing of the Thoma Bravo Transaction will be satisfied or waived, or that the Thoma Bravo Transaction will be completed within the expected timeframe, or at all. If the Thoma Bravo Transaction is not completed, our business and financial condition could be adversely affected, and we would face a number of risks and consequences, including: (i) we are required to pay Parent a termination fee of $351 million in cash on termination of the Merger Agreement under specified circumstances, including termination by Parent in the event that the Board of Directors of Dayforce adversely changes its recommendation in favor of the Thoma Bravo Transaction or if we terminate the Merger Agreement to enter into an agreement providing for a superior proposal (ii) we will incur significant expenses related to the proposed Thoma Bravo Transaction, such as legal, accounting, financial advisory, filing, printing, and mailing costs, regardless of whether the transaction is completed (iii) while the Merger Agreement remains in effect, we are subject to certain restrictions on the conduct of our business which may limit our ability to pursue certain strategic initiatives or operational changes and (iv) the proposed Thoma Bravo Transaction, whether or not completed, may divert the attention of our management and other key employees from ongoing business operations and activities.
If the Thoma Bravo Transaction is not completed, these risks could materially affect our business, financial results, and the market price of our 2024 Form 10-Kcommon stock, particularly if the current market price of our common stock reflects a market assumption that the Thoma Bravo Transaction will be consummated. There have been no material ch
While the Thoma Bravo Transaction is pending, we will be subject to business uncertainties and contractual restrictions that could adversely affect our business and operations.
In connection with the pending Thoma Bravo Transaction, some of our existing or prospective customers, vendors or other third parties may react unfavorably, including by delaying, deferring or ceasing to provide goods or services, postponing business or transactional decisions, refusing to extend credit, or otherwise seeking to changes in our risk factors from those the terms on which they do business with us. These actions could adversely affect our revenues, earnings, funds from operations, cash flows and expenses, regardless of whether the Thoma Bravo Transaction is completed. The Merger Agreement also imposes restrictions on the conduct of our business prior to closing. During the pendency of the Thoma Bravo Transaction, these restrictions may limit our ability to pursue strategic transactions, significant capital projects, or financing activities, even when such actions might otherwise be beneficial. As a result, we may be required to delay, scale back, or forgo certain business initiatives and opportunities.
In addition, the pending Thoma Bravo Transaction may create uncertainty for current and prospective employees regarding their future with us. This uncertainty could make it more difficult for us to effectively retain, recruit and incentivize employees, including key management personnel, and may distract our personnel from executing our strategy and day-to-day operations.
The termination fee and restrictions on solicitation contained in the Merger Agreement may disclosed in ourage other companies from trying to acquire us.
The Merger Agreement provides that, during the period from the date of the Merger Agreement until the Effective Time, we will be subject to certain restrictions on our ability to solicit certain alternative acquisition proposals from third parties, provide non-public information to third parties and engage in discussions or enter into agreements with third parties regarding certain alternative acquisition proposals, subject to customary exceptions. The Merger Agreement also contains certain termination rights for us and Part I, Item 1A. oent. Upon termination of the Merger Agreement in accordance with its terms, under certain circumstances, we will be required to pay Parent a termination fee of $351 million in cash, including if the Merger Agreement is terminated due to our acceptance of a superior proposal.
Litigation against us, the other parties to the Merger Agreement, or the members of our or their respective boards, could prevent or delay the completion of the Thoma Bravo Transaction.
Lawsuits related to the Thoma Bravo Transaction and the related proxy statement have been filed, and additional such lawsuits may be filed in the future. The outcome of such litigation cannot be predicted, including the potential costs of
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defense or other liabilities that may arise. If plaintiffs were to obtain an injunction prohibiting the completion of the Thoma Bravo Transaction on the agreed terms, the Thoma Bravo Transaction could be delayed or prevented altogether. Even if such claims are unsuccessful, related litigation could result in significant costs and divert managements attention and resources from both the completion of the Thoma Bravo Transaction and the operation of our ongoing business, which could adversely affect our operations.
Subject to certain exceptions, if the Thoma Bravo Transaction is not consummated by May 21, 2026, either we or Parent may terminate the Merger Agreement.
The Merger Agreement contains termination rights for each of us and Parent, including, among others, if the consummation of the Thoma Bravo Transaction does not occur on or before May 21, 2026. In the event the Merger Agreement is terminated by either party due to a failure to close by May 21, 2026, we will have incurred significant costs and will have diverted significant management focus and resources from other strategic opportunities and ongoing business activities without our stockholders realizing the anticipated benefits of the Thoma Bravo Transaction.