Overview of Thoma Bravo's Situation#
Private equity firm Thoma Bravo is close to an agreement to transfer control of Medallia, a customer experience software company, to its lenders. This move would erase $5.1 billion in equity, highlighting increasing pressures in both the private credit and software industries. The restructuring, reported by Reuters, involves creditors like Blackstone, KKR, Apollo Global, and Antares Capital, who collectively hold $3 billion in debt from Medallia.
Impact of Debt Write-Downs#
The value of Medallia's loans has already been significantly reduced by lenders. For instance, FS KKR Capital Corp has marked the debt at 79 cents for every dollar, while Apollo Debt Solutions has valued it even lower at 74 cents. According to Blackstone’s Brad Marshall, Medallia's struggles are not linked to artificial intelligence but stem from execution issues within the company.
Challenges in Private Credit#
This situation arises during a challenging period for private credit, which is facing its toughest test since rapid growth began. Business Development Companies (BDCs) are trading at significant discounts to their net asset values, indicating market concerns. As of March, the median price-to-forward 12-month net asset value ratio was about 0.74, reflecting a 26% discount—the largest since October 2020.
Software Sector Concerns#
The crisis is particularly pronounced for firms with significant software investments. Moody’s Ratings has pointed out that publicly traded BDCs with substantial software exposure have seen their share prices drop below net asset value, limiting their financial options. As of early 2026, there were $46.9 billion in distressed software loans in the private credit market. Additionally, the premium investors require to lend to private credit has risen, indicating growing worries about credit quality.
Thoma Bravo's Optimism Amidst Challenges#
Despite the issues surrounding Medallia, Thoma Bravo's CEO, Orlando Bravo, recently expressed optimism about the software-as-a-service market, suggesting that there may still be opportunities for investment in this sector.