The Ledger
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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.”
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.”
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.”
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.”
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.”
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. …”
Thoma Bravo's Core Philosophy Is Retaining Existing Portfolio Management Teams
“Our philosophy is to really stay with the existing management.”
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.”
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.”
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 …”
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%.”
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.”
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.”
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.”
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…”
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.”
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.”
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.”
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.”
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.”
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…”
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.”
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 …”
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…”
Excuses That IPO Windows Close for Summer Holidays Make No Sense
“The big one is how so many market participants explain the market as if it's true. So for example, when they say, well, the reason this time is not good for IPOs is although the market is up, that's the secondary market, but the primary market is struggling ri…”
Bravo: SailPoint was Thoma Bravo's first IPO before its 2022 reacquisition
“Which led to our first ever IPO as an investment firm to eventually acquiring SailPoint again in 2022.”
Bravo's First Three Private Equity Tech Deals Failed Back-to-Back
“And I did three deals and the three of them failed. They didn't do well. All three. It was like back to back to back.”
Thoma Bravo's Three-Month Onboarding Tracks Hundreds of Functional Metrics
“We onboard the company into our reporting package. That has our hundreds of metrics by division, functional area, and potentially business unit if the company has multiple business units. That takes about three months of work.”
Thoma Bravo Employs 25 Operating Partners Across Its Software Portfolio
“Now, we do have 25 operating partners that work across all of these companies, so a lot of the sharing happens.”