Insight
Missing Targets Opens the Door for PE Sponsors to Guide Management
“So sometimes it's good that they miss numbers because it gives us an opening to have them listen to us and become more open-minded.”
Disclosure
Thoma Bravo Now Operates as a Growth Investor in SaaS
“We are really growth investors in companies where you can add significant value to your product ongoing because you have to. If not, you'll be displaced by another SaaS solution.”
Insight
SaaS Is Less Sticky Because Customers Avoid Upfront Capital Expenditures
“It's not as sticky as maintenance was because the customer hasn't made the capital expenditure.”
What-if
Thoma Bravo Would Be Larger Than SAP If It Never Sold Companies
“Now, in hindsight, based on where software has gone, we should have held all the companies. And if we would have done that, we would have been much larger than SAP.”
Insight
Sell When Strategic Buyers Approach Because They Will Not Ask Twice
“When a strategic approaches you, look to sell, because they won't approach you again. They'll either build the product internally or buy somebody else.”
Insight
High Software Valuations Act as a Barrier to Entry for Generalist Buyouts
“The fact that valuations have been high, some claim too high, Actually, it's a barrier to entry. It keeps big players that could be new players or new entrants out of this market. There should be 20 or 30 private equity firms doing large buyouts and software. …”
Disclosure
Thoma Bravo's Core Philosophy Is Retaining Existing Portfolio Management Teams
“Our philosophy is to really stay with the existing management.”
Insight
PE Sponsors Should Retain Management Teams Making Positive Progress
“We say that as long as people are making positive progress, you stay the course. Even if that progress may not be fast enough for your investment case, because people move at different speeds.”
Opinion
Public Market Software Retention Metrics Are Often Murky Due to Missing Data
“These headline numbers that public investors talk about could be a bit murky, because they also don't have the information, the raw data week by week or month by month.”
Disclosure
Sponsoring SPACs Creates Future Exit Pathways for Thoma Bravo Portfolio Companies
“By being in this market, we're not adding any work because we're already in these verticals. We're already talking to these companies. We're already interfacing with them. This is what we do. This adds value to our core business, and it makes us more informed …”
Assertion Supported
Thoma Bravo Expanded Software Buyout EBITDA Margins From 25% to 50-60%
“Our best in class metrics before were 25% EBITDA margins. Now we're getting up to 50. LMA got up to 60%.”
Prediction Held up
Orlando Bravo Predicts Thoma Bravo Will Double $80B AUM in Five Years
“In five years, we're going to be double the size. We have eighty billion dollars under management, and we can tell how the portfolio is going to do.”
Assertion Not checkable as stated
Post-Dot-Com Software Revenue Was Cheaper Than Any Other Sector Evaluated
“You can buy recurring revenues in software less expensively than in any other category that Toma Cressy or Toma has looked at. Transaction processing, media, radio in the days, outdoor advertising.”
Insight
Orlando Bravo Argues Software Sales Organizations Are Run by Gut Feel
“Sales is an area that is run a lot by gut feel. I like this quote unquote guy, or I have a gut feel that momentum is going up, or this, or that, but it's not run mathematically, and he put together a mathematical approach to running sales.”
Disclosure
Thoma Bravo Defines Innovation Through Profitability and Hitting Financial Targets
“I think for our organization, Atoma Bravo, What holds us together is our passion for doing innovation right, meaning profitably, by measurement, by hitting numbers, by when an LP comes to visit us, what companies are unplanned and not unplanned. We're really f…”
Disclosure
Thoma Bravo Targets Market-Leading Software Companies With $500M to $1B ARR
“The typical deal will look like five hundred million to a billion of recurring revenue. Number one or number two player in an application space, cybersecurity space, or infrastructure software space.”
Insight
Small Project Teams Give Deal Participants Broader Roles and Foster Creativity
“Our philosophy is to work in very small project teams, because when you do that, you give the associate on the deal, the VP on the deal, all the participants a very broad job, and when you have broader jobs, you become a lot more creative.”
Disclosure
Thoma Bravo Replaces Strategic Board Meetings With Monthly Four-Hour Operating Reviews
“We do monthly operating reviews from eight a.m. To noon every month instead of these strategic board meetings, and in those ops reviews, we have all the direct reports of the CEO present together collaborating, and we go through each of those areas.”
Insight
Centralizing Operational Execution Burdens Leadership Instead of Delegating Down
“The more centralized you become, the You're putting the monkey on your back, and you don't want that. You want to delegate it all down.”
Insight
Private Equity Deal Teams Should Not Exceed Five or Six People
“You don't need more than five or six people in the deal team. You don't need 20. What would they do? They even have a hard time catching up with one another.”
Disclosure
Thoma Bravo Will Invest in Software-Driven Financial Service Business Models
“Software itself is extending into becoming the business. I was having a lunch yesterday where this venture capitalist was asking if we would invest in business models where the business model may be you're selling a financial service, but you're a software com…”
Disclosure
Thoma Bravo Intentionally Operates Without a Corporate Organizational Chart
“We don't have an org chart, because everybody knows what their job is. We look to transfer ownership Over time.”
Insight
LPs Should Diligence Private Equity Firms by Overhearing Office Calls
“Hearing what people are talking about on phone calls and in the office is key. If you walk around Toma Bravo, most of our colleagues will be talking to companies about Sales plans and quotas, and they may be on a board call. It's a lot of operational talk. If …”
Assertion Supported
Thoma Bravo's 2008 Fund Raised $822.5 Million and Returned 4x Net
“We tried to raise a billion, we ended up raising eight, 22.5. That tells you we're looking for every penny, like every 500,000 we would take. The few that did, that fund returned for net, And then it gave about a one X multiple in co-invest that was great econ…”
Orlando Bravo