Thoma Bravo is one of the largest tech-focused private equity firms globally, with $184 billion in assets under management (as of March 2025) and investments in over 535 software companies. Here's what you need to know:
- Focus: Specializes in software and technology investments, prioritizing businesses with growth potential and recurring revenue models.
- Approach: Builds strong relationships with management teams, emphasizing collaboration and performance improvement.
- Recent Activity: Between 2024–2025, Thoma Bravo expanded its portfolio with key acquisitions, targeting cloud infrastructure, cybersecurity, and AI-driven software.
- Market Impact: The firm's strategies influence valuations and acquisition trends, pushing entrepreneurs to focus on profitability and operational value.
For smaller buyers, Thoma Bravo's methods - like niche specialization, leveraging data, and creative financing - offer lessons for navigating the competitive software M&A landscape.
Thoma Bravo's Acquisition and Investment Methods
How Thoma Bravo Sources Deals
Thoma Bravo's approach to sourcing deals is rooted in strong relationships and a deep understanding of the software industry. The firm has built a vast network that includes investment banks, business brokers, and industry executives who regularly bring them opportunities that align with their software-focused strategy.
By leveraging proprietary market insights and advanced data analytics, Thoma Bravo identifies trends and potential targets before they become widely known. Their team actively tracks software companies across different sectors, focusing on key performance metrics and growth stages that indicate promising investment opportunities.
In addition to monitoring the market, Thoma Bravo takes a proactive stance by reaching out to software companies early. Even when a deal isn't immediately on the table, they cultivate relationships with management teams, laying the groundwork for potential future transactions. This forward-thinking approach ensures they are well-positioned when opportunities arise.
This blend of data-driven research and early engagement sets the tone for Thoma Bravo's collaborative work with the management teams of their portfolio companies.
Working with Management Teams
Rather than imposing new leadership, Thoma Bravo works closely with existing management teams to improve performance and refine strategic direction.
The firm provides operational support through an extensive network of advisors and executives who have successfully scaled software businesses. These experts assist management teams in areas like sales optimization, product development, and enhancing customer success strategies.
A key part of Thoma Bravo's strategy involves performance improvement initiatives. They collaborate with management to pinpoint areas for growth, such as boosting recurring revenue, entering new markets, or streamlining cost structures. This partnership ensures that changes align with the company’s culture and existing strengths.
Additionally, Thoma Bravo offers strategic guidance on growth opportunities, including market expansion and acquisitions. By tapping into the firm's extensive network and market insights, management teams can make well-informed decisions about investments and potential add-on acquisitions.
These methods provide valuable insights for small and mid-sized business (SMB) buyers looking to adopt similar strategies.
Lessons for SMB and Lower Mid-Market Buyers
Thoma Bravo's strategies offer practical lessons for smaller buyers aiming to refine their acquisition approach. Here are a few takeaways:
- Build strong relationships: SMB buyers can benefit from networking within their target industries. Attending industry events and staying in touch with brokers and intermediaries who understand their specific criteria can open doors to valuable opportunities.
- Specialize in a niche: Smaller investors should concentrate on specific industries or business types. This focus allows them to develop expertise and spot opportunities that broader, generalist buyers might overlook.
- Use technology to source deals: Platforms like Clearly Acquired can help SMB buyers compete. These tools provide access to public and private listings, off-market opportunities, and features like Google Maps API integration for identifying targets. Automated deal alerts can also streamline the sourcing process.
- Be financially prepared: Establishing pre-qualification processes and maintaining relationships with multiple lenders is essential for acting quickly on promising deals. Tools like Clearly Acquired's Plaid integration and loan marketplace can simplify financial verification, helping buyers build credibility and close transactions faster.
- Strengthen due diligence: Leveraging AI-driven valuation tools and organized data management systems can help smaller buyers make better decisions and present professional, well-informed proposals to sellers.
Major Software Acquisitions and Portfolio Growth
Major Deals: 2024–2025
Between 2024 and 2025, Thoma Bravo has made several key acquisitions to grow its software portfolio. These transactions reflect the firm’s focus on tapping into high-growth opportunities, shaping the direction of its expanding investments.
Shifting Focus in Thoma Bravo's Portfolio
Recent investments reveal a shift in focus for Thoma Bravo. The firm is incorporating cutting-edge technologies into its existing offerings, creating software tailored to specific industries, and ramping up investments in cloud infrastructure and cybersecurity. There's also a noticeable preference for business models that deliver steady, recurring revenue streams.
Market Competition and Consolidation
Thoma Bravo’s approach to consolidation is reshaping the competitive landscape. By bringing together complementary businesses and streamlining operations, portfolio companies under Thoma Bravo are better equipped to innovate, adjust pricing strategies, and attract top-tier talent, giving them a stronger foothold in the market.
Market Effects for Entrepreneurs and Investors
How Thoma Bravo Affects Valuations and Acquisition Benchmarks
Thoma Bravo’s extensive influence in the software sector is reshaping how valuations and acquisitions are approached across the market. By paying premium multiples for high-growth, AI-driven software platforms, the firm has widened the gap between private and public market valuations. This dynamic creates potential opportunities for smaller investors, particularly in public human capital management (HCM) and customer experience technology firms with solid fundamentals.
The landscape for exit multiples has shifted significantly, compressing from 25x to around 15x EBITDA. This shift puts pressure on founders to focus on creating real operational value rather than relying on market-driven multiple expansion. Entrepreneurs now face the challenge of driving meaningful business transformation, rather than merely riding market trends.
Thoma Bravo’s emphasis on profitable growth and operational excellence has become a new benchmark for the industry. Software companies aiming for successful exits must now showcase sustainable profitability and robust business models, moving away from strategies that prioritize rapid user acquisition alone. These valuation shifts are not only changing exit strategies but also opening doors for smaller, emerging opportunities in the SMB space.
Opportunities for SMB Buyers
The wave of consolidation led by Thoma Bravo presents unique openings for smaller buyers willing to think beyond the large, headline-making deals. While Thoma Bravo focuses on acquiring market leaders and all-encompassing platforms, smaller and niche software companies often fall under the radar, creating opportunities for SMB buyers with more focused strategies.
Today’s market prioritizes tangible value creation, making this a favorable time for profitable, scalable enterprise software businesses. Unlike the earlier era of "growth at all costs", the current environment rewards businesses that deliver measurable results. SMB buyers can utilize AI-driven valuation platforms like Clearly Acquired to identify undervalued niche opportunities that larger players might overlook.
Additionally, as traditional lending becomes more restrictive, alternative financing options like seller notes, earnouts, and mezzanine capital are gaining traction. SMB buyers who can navigate these creative financing structures have a chance to compete effectively, even without the deep pockets of major private equity funds.
Competing in a Crowded Market
In a market increasingly shaped by valuation shifts and niche opportunities, smaller players need specialized strategies to succeed. Instead of chasing inflated AI valuations, entrepreneurs should focus on enhancing their core products with targeted AI integrations. While Thoma Bravo targets broad, comprehensive platforms with extensive datasets, smaller companies can excel by developing solutions tailored to specific industries or applications - what some call "Vertical Intelligence Segments".
Adoption of AI technology tends to be gradual rather than immediate. Customers often seek tools that augment their existing workflows rather than entirely replacing them. This measured pace creates opportunities for agile businesses to design specialized AI tools that enhance efficiency without overhauling entire systems.
Entrepreneurs should also be cautious about relying on the hype surrounding AI. The current AI market shows signs of being in a bubble, with industry experts predicting that 85% of AI startups will fail. Between 2013 and 2024, 6,956 AI companies were funded in the U.S., with 1,073 of those funded in 2024 alone. This underscores the importance of building profitable businesses that integrate AI thoughtfully rather than chasing unsustainable valuations.
The key to success lies in investing in AI capabilities that improve existing products and workflows. Customers are looking for solutions that deliver clear returns on investment (ROI), not just buzzword-driven innovations. Companies that can demonstrate how their AI integrations enhance efficiency and productivity will stand out, whether they aim for acquisition or organic growth.
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Key Lessons from Thoma Bravo's Playbook
Best Practices for Finding and Evaluating Deals
Thoma Bravo’s approach to deal sourcing offers valuable insights for smaller buyers. The firm relies on building deep, proprietary networks within specific software sectors. By forming early relationships with industry executives and specialists, they position themselves to spot opportunities long before they hit the market. This relationship-driven method often secures them exclusive access to high-quality assets.
When it comes to due diligence, Thoma Bravo focuses on operational metrics rather than just financial figures. They carefully examine customer retention rates, product engagement levels, the quality of recurring revenue, and the strength of the management team. Their priority is finding businesses with strong market positions and clear opportunities for operational improvement. For smaller buyers, this highlights the importance of digging deeper - understanding the core drivers of sustainable growth rather than relying solely on surface-level financial data.
Another standout practice is their emphasis on speed and certainty in deal execution. Thoma Bravo moves quickly with competitive, fully financed offers, often avoiding financing contingencies. This ability to close deals efficiently gives them a significant edge in competitive situations. For smaller buyers, adopting a disciplined and prepared approach to deal-making can help level the playing field.
Using Platforms Like Clearly Acquired
The way deals are sourced has changed dramatically, moving beyond traditional broker networks and cold outreach. Platforms like Clearly Acquired bring AI-driven tools into the mix, offering smaller buyers access to advanced screening and valuation methods typically used by larger firms. These platforms combine business-for-sale marketplaces with tools to search off-market opportunities, helping buyers uncover deals that might otherwise go unnoticed.
One of the biggest challenges for smaller buyers is acquisition financing, but platforms like these address that by connecting buyers with SBA lenders and offering pre-qualification services. This integration simplifies financing, making it easier to compete with larger firms that have institutional capital at their disposal.
Another game-changer is the availability of data-driven valuation tools. Thoma Bravo relies on teams of analysts to assess acquisitions using complex financial models and industry benchmarks. Similarly, AI-powered platforms now enable smaller buyers to make well-informed offers, helping them avoid overpaying in competitive markets. These tools are especially valuable in today’s fast-moving deal environment, where agility and informed decisions are key.
Adjusting to Market Changes
In today’s market, buyers must adapt to shifting priorities. The focus has moved from rapid growth at any cost to sustainable, profitable business models. Thoma Bravo’s recent emphasis on companies with strong unit economics and clear profitability paths reflects this trend. For smaller buyers, this means prioritizing businesses with proven cash flow over those banking solely on future growth.
Technology is another critical factor. Thoma Bravo’s strategy underscores the importance of practical tech applications, particularly in AI and automation, that improve workflows and customer outcomes. Rather than chasing flashy trends, buyers should focus on acquisitions that use technology to enhance efficiency and deliver measurable results.
The financing landscape is also evolving. Traditional lending has become more restrictive, pushing buyers toward alternative structures like earnouts and performance-based payments. Thoma Bravo’s use of creative deal structures highlights the need for flexibility. Smaller buyers who can navigate options like seller financing, revenue-based arrangements, or partnerships will likely uncover more opportunities in this challenging environment.
Finally, timing plays a crucial role. Like Thoma Bravo’s focus on operational metrics, buyers should closely monitor real-time performance to stay ahead of market shifts. Changing valuations can create both challenges and opportunities. While sellers may need to adjust their expectations, patient buyers with the right expertise can find excellent opportunities in businesses that were previously overvalued.
Inside Thoma Bravo: Building Great Software Companies
FAQs
What makes Thoma Bravo's strategy for acquiring software companies unique?
Thoma Bravo has carved a niche for itself by focusing on acquiring established B2B software companies and boosting their growth through targeted operational improvements and strategic investments. Their strategy revolves around enhancing both innovation and efficiency, turning these businesses into highly competitive assets.
A key part of their success lies in building long-term partnerships with management teams. By leveraging extensive industry knowledge, they work to improve performance and unlock greater potential. This approach has helped Thoma Bravo expand its portfolio and remain a prominent force in the tech buyout industry.
How does Thoma Bravo help its portfolio companies grow and succeed?
Thoma Bravo partners with its portfolio companies to help them reach their full potential by implementing effective growth strategies and operational improvements. With extensive experience in the software and technology sectors, the firm identifies ways to scale businesses, enhance efficiency, and encourage new advancements.
By prioritizing long-term growth, Thoma Bravo works to improve performance, broaden market presence, and support sustainable development. This hands-on, collaborative approach positions its investments for success in the fast-changing and competitive tech industry.
What can smaller software companies learn from Thoma Bravo's acquisition strategies to strengthen their market presence?
Smaller software companies can take a page from Thoma Bravo's playbook by concentrating on strategies that drive growth and sustainability. These include honing in on niche markets, boosting operational efficiency, and prioritizing long-term value creation. Thoma Bravo’s success often lies in identifying market leaders with untapped growth potential and enhancing their performance through targeted investments and operational fine-tuning.
Smaller firms can adopt a similar mindset to make themselves more appealing as partners or acquisition prospects. This means refining processes, using data to uncover growth opportunities, and staying in tune with shifting market trends. Additionally, focusing on innovation and cultivating a loyal customer base can help these companies carve out a distinct presence in the crowded tech space.
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