Exclusive-Thoma Bravo nears agreement to turn software firm Medallia over to creditors, sources say
U.S. dollar banknotes are seen in this illustration taken May 4, 2025. REUTERS/Dado Ruvic/Illustration
NEW YORK, April 22 : Private equity firm Thoma Bravo is nearing an agreement to hand over software firm Medallia to its lenders, wrapping up months of restructuring negotiations, according to two people familiar with the matter.
The move will wipe out $5.1 billion in equity for Thoma Bravo and its co-investors, who bought the customer service software company for $6.4 billion in 2021, the people said, asking not to be identified because the discussions are private.
Medallia has struggled in recent months under the weight of $3 billion in debt, which it owes to Blackstone, KKR, Apollo Global and Antares Capital.
Thoma Bravo, Blackstone and KKR declined to comment. Apollo and Medallia didn't immediately return requests for comment.
Like other software companies, Medallia's valuation has been hit in recent months over concerns that its services will eventually be supplanted by artificial intelligence. Medallia provides software that collects and analyzes customer and employee feedback for companies.
Private equity firms invested heavily in the software sector when interest rates were low following the peak of the COVID-19 pandemic. Investors have become increasingly nervous about the sustainability of the high valuations assigned to some of those assets, and the debt raised to buy them.
Blackstone, KKR and Antares Capital hold some of the debt in traded and non-traded funds. FS KKR Capital Corp marked the debt at 79 cents on the dollar in its last quarterly report, and Apollo Debt Solutions marked it at 74 cents.
Blackstone's global head of private credit, Brad Marshall, said on a conference call in February that Medallia had been "underperforming, not because of anything related to AI, but due to what we believe to be execution-driven issues."
Thoma Bravo installed a new leadership team in early 2025. Marshall said they were working on a turnaround plan. "We also expect there to be discussions around the capital structure," Marshall added.
