Thoma Bravo hands Medallia to creditors in $5.1B equity wipeout

Thoma Bravo Wipes $5.1B in Medallia Equity as Software Bet Unravels

Thoma Bravo is handing Medallia to its creditors after restructuring negotiations failed, erasing $5.1 billion in equity value. The private equity firm acquired the enterprise feedback software company for $6.4 billion in July 2021, when it was trading around $5 billion as a public company on the NYSE. The move resolves months of negotiations with lenders including Blackstone, KKR, Apollo, and Antares Capital, who collectively hold $3 billion of Medallia's debt.

The deterioration tracks a familiar pattern in software private equity: aggressive valuations and leverage when interest rates were near zero, followed by compressed valuations and surging debt service when rates rose. Medallia carries floating-rate debt that ballooned in cost as the Fed raised rates, while the business failed to generate sufficient cash flow to cover the payments. Secondary lenders have already marked the debt down sharply—KKR's fund marked Medallia debt at 79 cents on the dollar, while Apollo's debt solutions valued it at 74 cents.

Sales execution, not AI, was the primary culprit, according to Blackstone's global head of private credit. The company installed new leadership in 2025 to execute a turnaround, but sales reps were reportedly delivering only 20 percent of quota and getting outcompeted in the market. Medallia operates in customer and employee experience management, competing against Qualtrics and increasingly against younger startups using AI-native approaches to feedback analysis. Sequoia Capital was an early backer, investing $35 million in 2012 and $50 million in 2014 before leading a $150 million round.

The deal represents one of the larger software blowups in the current cycle—a vindication of Jamie Dimon's recent warning about "cockroaches" still lurking in portfolios that banks haven't yet discovered. It also underscores a structural disadvantage many acquired software companies face: they're no longer founder-led and are competing against founder-led competitors in a market where execution and optionality matter more than distribution alone.