Mubadala, CalPERS among institutional investors that collectively lost billions in Medallia by co-investing with Thoma

Thoma Bravo's 2021 acquisition of Medallia for $6.4 billion has culminated in one of the most significant private equity losses on record, with institutional co-investors and the firm's own capital suffering near-total equity wipeouts. According to reporting from 9fin, institutional investors collectively lost nearly $3 billion through equity co-investments made alongside Thoma Bravo's principal investment in the customer experience software company. The restructuring, which transfers control of Medallia to lenders, destroys $5.1 billion in total equity value—approximately 80 percent of the original purchase price.

The co-investment losses affected major institutional capital providers. CalPERS, one of the world's largest public pension funds, lost over $100 million on its co-investment stake. Mubadala, the Abu Dhabi sovereign wealth fund, also participated in the equity investment alongside other institutional investors, all of whom are experiencing total or near-total loss of their capital. The participation of these blue-chip institutional investors underscores the breadth of the deal's failure and the challenge of selecting high-conviction software targets in a market characterized by elevated leverage and compressed multiples.

Thoma Bravo's loss extends beyond co-investor capital. The firm recorded a $5 billion loss on its direct equity investment in Medallia, representing substantially all of the principal capital deployed in the acquisition. This marks a historic loss for the otherwise successful platform-focused private equity sponsor and reflects the operational and market challenges that emerged post-acquisition. The equity restructuring, in which lenders assume control, indicates that the asset's debt service requirements could not be sustainably met through operational improvements or refinancing, forcing a debt-for-equity conversion.

The Medallia failure highlights execution and timing risks inherent in software acquisitions at peak valuations. Acquired in 2021 during peak growth multiples in the customer experience software category, Medallia appears to have faced headwinds in customer acquisition, retention, or margin expansion that prevented the deal thesis from materializing. The five-year deterioration from a $6.4 billion purchase price to near-zero equity value suggests either significant overpayment at entry, material operational underperformance post-acquisition, or a combination of both factors.