Thoma Bravo co-founder Orlando Bravo says the slump in software company valuations due to fears of AI-driven disruption is creating a “huge buying opportunity”
Context & Ripple Effects
Thoma Bravo has repeatedly built capital for software buyouts, including a $34.4B fundraise across three funds in 2025 and an earlier acquisition of SailPoint. Bravo’s comments place AI-related valuation pressure within that established dealmaking mandate.
The view also arrives as the firm faces a reported Medallia loss, underscoring that lower entry valuations do not by themselves remove execution and debt risks in software buyouts.
First-order effects
- Thoma Bravo can screen AI-discounted software businesses more aggressively, framing disruption fears as a potential entry-price advantage rather than a reason to avoid the sector.
- Public software companies perceived as exposed to AI substitution may face greater private-equity interest, but also sharper scrutiny of whether their products retain durable demand.
Second-order effects
- Other software-focused sponsors may have to compete for targets whose valuations have reset, particularly firms with recurring enterprise relationships and credible paths to AI adaptation.
- Management teams and boards at discounted public software companies gain another potential strategic path—private takeovers—while buyers must price in the cost of product reinvestment needed to address AI risk.
Third-order effects
- If AI fears continue to separate software valuations from underlying cash generation, private equity could become a more important owner of mature software assets while public markets assign a higher premium to proven AI resilience.
- The pattern would shift buyout underwriting from efficiency-led playbooks toward a harder question: whether an acquired software platform can defend its position as AI changes customer workflows.
The trend: AI is creating a bifurcated software market in which disruption concerns compress some valuations while well-capitalized buyers seek assets they believe can adapt.