Thoma Bravo’s Medallia in financial hot water in private credit scrutiny

The customer experience management software Medallia has been making headlines recently for having its debt marked down to what is considered a “distressed” level. 

Medallia is owned by Chicago-based firm Thoma Bravo, which also owns RealPage, another software company that has frequently been the subject of numerous headlines due to ongoing litigation and public backlash for allegations of price-fixing within the rental housing market. Now Medallia joins RealPage’s ranks as another Thoma Bravo owned software that is the subject of controversy and negative press. 

Based in San Francisco, Medallia is a cloud-based software platform that uses AI to assist businesses in collecting customer feedback through various means such as social media or in-store communication. Medallia markets itself as providing “real-time insight,” and “real-world” results and as a leader in the area of customer experience. Thoma Bravo purchased Medallia in 2021 for $6.4 billion taking the company from public to private. 

When private equity firms purchase corporations through leveraged buyouts they may rely on private credit lenders which are non-bank lenders that provide loans that are typically high interest. Thoma Bravo relied on a group of private credit lenders to purchase Medallia which included private equity firms such as Blackstone, Apollo, and KKR.

While Medallia has experienced double digit revenue growth, the corporation is still failing to consistently generate profit and finds itself experiencing significant economic distress thus concerning the group of private credit lenders that funded the purchase of the company. At the time of purchase Thoma Bravo used a $1.8 billion loan from the private credit lenders. The balance has since grown to almost $3 billion with lead lender Blackstone currently owning $1.5 billion of the balance. Due to its issues with generating profit, Medallia missed performance targets that would have converted the company’s debts into a traditional cash-paying loan. Because of this, Medallia’s credit lenders have decided to not extend further payment-in-kind flexibility  forcing Medallia to do full cash interest payments. The group has also increased annual debt servicing costs by $100 million, bringing the cost to $300 million and exceeding the company’s $200 million earnings. 

Blackstone is considering restructuring the company as a whole and Private Equity Insights reports that lenders are considering a debt-for-equity swap, or asking for a fresh equity injection from Thoma Bravo. All of these options pose a significant financial risk for Thoma Bravo and could cause ripples throughout the financial market. If the lenders end up taking control of the corporation, Medallia’s restructuring could possibly rank among the largest private-credit restructurings ever. 

Medallia’s financial woes triggered a wave of articles about the situation including a March 2026 article by Barron’s titled “Software Firm Medallia Is a Problem for Private Credit. Blackstone, Thoma Bravo Have Exposure” and an April 2026 article by Bloomberg titled “Blackstone Squeezes Thoma Bravo and Its Ailing Software Company 

Medallia.” Bloomberg called the acquisition of Medallia a “cautionary tale of the generous equity valuations and loose lending standards” with software businesses. 

With the mounting press about the situation, Medallia and Thoma Bravo face a significant headline risk. This is in addition to the fiduciary risk that Medallia poses to Thoma Bravo (which could lose up to $5 billion on Medallia), which in turn could adversely impact pension funds invested in the firm. With the backlash against RealPage still not over and with state Attorneys General publicly re-committing in their fight against RealPage and the landlords who utilized the software, pension funds should ask how Thoma Bravo plans to weather this new storm of negative press. Additionally, funds should ask why these Thoma Bravo portfolio companies have found themselves in hot water and if these new developments represent a larger pattern of what is to be expected with corporations associated with the firm.