Key Takeaways
- • Thoma Bravo to cede Medallia control to creditors: The private equity firm is nearing a deal to hand software firm Medallia to its lenders after months of restructuring negotiations, transferring control to Blackstone, KKR, Apollo Global, and Antares Capital, which collectively hold $3 billion in Medallia debt.
- • $5.1 billion equity wipeout for Thoma Bravo: The restructuring eliminates virtually all equity value for Thoma Bravo and co-investors who acquired Medallia for $6.4 billion in 2021, representing a total loss on the investment.
- • Private credit sector faces severe stress test: BDCs are trading at their deepest discounts to net asset values in 5.5+ years, with median price-to-forward 12-month NAV ratios at approximately 0.74—implying a 26% discount, the widest since October 2020.
- • Significant redemption pressure across BDC funds: Blackstone's flagship BCRED private credit fund experienced $3.7 billion in net outflows during Q1 2026, while Barings Private Credit Corp shareholders sought redemptions of 11.3% of shares, with the fund fulfilling 44.3% of repurchase requests.
- • AI disruption threatens software-heavy private credit portfolios: The Medallia restructuring underscores sector-wide concerns about artificial intelligence upending software services businesses, raising questions about the viability of software-focused leveraged buyouts financed by private credit.
Summary
Private equity firm Thoma Bravo confirmed on April 24, 2026, that it is nearing a definitive agreement to hand control of software firm Medallia to its lenders following months of restructuring negotiations. The transaction represents one of the most visible stress tests for the private credit sector since its rapid expansion, with significant implications for both PE sponsors and institutional credit providers.
The restructuring transfers majority control to a consortium of lenders holding $3 billion in Medallia debt: Blackstone, KKR, Apollo Global Management, and Antares Capital. The deal effectively wipes out approximately $5.1 billion in equity value for Thoma Bravo and co-investors who acquired the company for $6.4 billion in 2021. Thoma Bravo's refusal to inject fresh capital into the struggling software company accelerated the outcome, leaving equity holders with minimal recovery prospects.
The Medallia situation reflects broader systemic pressures within the private credit market as the sector grapples with multiple headwinds, including artificial intelligence disrupting software-as-a-service business models. Business development companies (BDCs) are experiencing elevated redemption activity and trading at significant discounts to net asset value. As of end-March 2026, the median price-to-forward 12-month NAV ratio stood at approximately 0.74, representing a 26% discount—the widest gap recorded since October 2020.
First-quarter 2026 earnings reports highlight mounting investor concerns. Blackstone's flagship BCRED private credit fund suffered $3.7 billion in net outflows during the quarter, driven by a surge in investor withdrawals. Similarly, Barings Private Credit Corp shareholders initiated redemption requests totaling 11.3% of outstanding shares in Q1, though the fund fulfilled only 44.3% of the repurchase requests from each shareholder, according to SEC filings. These redemptions signal investor anxiety about credit quality and portfolio valuations within the private credit sector as broader economic conditions and technological disruption reshape risk assessments.
The restructuring transfers majority control to a consortium of lenders holding $3 billion in Medallia debt: Blackstone, KKR, Apollo Global Management, and Antares Capital. The deal effectively wipes out approximately $5.1 billion in equity value for Thoma Bravo and co-investors who acquired the company for $6.4 billion in 2021. Thoma Bravo's refusal to inject fresh capital into the struggling software company accelerated the outcome, leaving equity holders with minimal recovery prospects.
The Medallia situation reflects broader systemic pressures within the private credit market as the sector grapples with multiple headwinds, including artificial intelligence disrupting software-as-a-service business models. Business development companies (BDCs) are experiencing elevated redemption activity and trading at significant discounts to net asset value. As of end-March 2026, the median price-to-forward 12-month NAV ratio stood at approximately 0.74, representing a 26% discount—the widest gap recorded since October 2020.
First-quarter 2026 earnings reports highlight mounting investor concerns. Blackstone's flagship BCRED private credit fund suffered $3.7 billion in net outflows during the quarter, driven by a surge in investor withdrawals. Similarly, Barings Private Credit Corp shareholders initiated redemption requests totaling 11.3% of outstanding shares in Q1, though the fund fulfilled only 44.3% of the repurchase requests from each shareholder, according to SEC filings. These redemptions signal investor anxiety about credit quality and portfolio valuations within the private credit sector as broader economic conditions and technological disruption reshape risk assessments.
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