Private equity firm Thoma Bravo is nearing an agreement to transfer software company Medallia to its lenders, concluding months of restructuring negotiations.
This move is expected to eliminate $5.1 billion in equity for Thoma Bravo and its co-investors, who acquired the customer service software firm for $6.4 billion in 2021.
Medallia has faced challenges recently due to $3 billion in debt owed to lenders including Blackstone, KKR, and Apollo Global.
The company's valuation has been impacted by concerns that artificial intelligence may eventually supersede its feedback analysis services. Medallia provides software for collecting and analyzing customer and employee feedback.
Private equity firms made significant investments in the software sector during a period of low interest rates. However, investors are increasingly cautious about the long-term viability of high valuations for some assets and the debt used to finance their acquisitions.