Thoma Bravo has confirmed it will not inject additional capital into customer experience software provider Medallia, as pressure builds on the business following a difficult post-pandemic buyout cycle, according to a report by Bloomberg.
Speaking at a recent industry event, Thoma Bravo founder and managing partner Orlando Bravo indicated that creditors are now likely to assume control of the company, reflecting a shift in outcomes for one of the firm’s more challenged investments.
Bravo said the firm had no intention of committing further equity, emphasising a need for discipline in capital allocation. He noted that extending additional support could simply delay resolution, adding that fiduciary responsibility to investors was the priority.
The software group was taken private by Thoma Bravo in 2021 in a transaction valued at approximately $6.4bn. Since then, the investment has faced sustained operational and financial pressure, resulting in a significant write-down for the firm and its co-investors.
According to Bravo, private credit lenders, including a consortium led by Blackstone Inc, had already declined to provide further funding support, increasing the likelihood of a restructuring process in which lenders could assume ownership.
He added that Thoma Bravo’s exposure to the deal represents less than half of the total capital invested once co-investors are included, and noted that losses from the transaction are expected to be offset in part by stronger-performing portfolio companies.
As an example, Bravo pointed to cybersecurity group Proofpoint, acquired by Thoma Bravo in 2021, which he said has grown significantly since investment and is now generating more than $1bn in earnings, compared with around $250m at the time of acquisition.
