Thoma Bravo Funds and Operational Excellence

Thoma Bravo has a proven track record of operational excellence, with a focus on improving the performance of its portfolio companies.

The firm's investment strategy involves working closely with management teams to implement operational improvements, resulting in significant cost savings and revenue growth.

Thoma Bravo's operational excellence is a key differentiator, enabling the firm to generate strong returns for its investors.

By leveraging its expertise and resources, Thoma Bravo is able to drive meaningful improvements in its portfolio companies, leading to long-term success.

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Thoma Bravo is a private equity firm that was founded in 1993 by Orlando Bravo and Lee Mitchell.

The firm is headquartered in San Francisco, California, with additional offices in Chicago, Illinois, and New York City, New York.

Thoma Bravo focuses on investing in enterprise software and technology companies.

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Thoma Bravo has experienced exceptional growth over the past 20+ years, from less than $5 billion in capital commitments in 2012 to more than $166 billion in assets under management as of September 30, 2024.

The firm's software portfolio includes approximately 80 companies that generate over $28 billion of annual revenue and employ over 92,000 people worldwide.

Thoma Bravo announced the close of its largest fundraise ever in December 2022, raising more than $32.4 billion in capital commitments for its three buyout funds.

These funds will advance Thoma Bravo's established strategy and partnership-driven approach of applying operational and sector expertise to investments across various industries, including healthcare IT, cybersecurity, and financial technology.

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Thoma Bravo is a management company with a strong leadership team at its core. Carl Thoma and Orlando Bravo founded the company with a specialized strategy in the North American software sector.

The company has a significant presence with offices in major cities like San Francisco, Miami, Chicago, London, New York, and Dubai. Thoma Bravo has a large team of nearly a hundred investment professionals working across these offices.

With over 220 employees, Thoma Bravo has a substantial workforce dedicated to its mission. This team includes operational partners who focus on operational excellence and value creation.

The company's leadership and team have enabled Thoma Bravo to manage over $140 billion in assets.

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Thoma Bravo has experienced exceptional growth over the past 20+ years, with its capital commitments increasing from less than $5 billion in 2012 to over $166 billion as of September 30, 2024.

The firm's software portfolio now includes approximately 80 companies that generate over $28 billion of annual revenue and employ over 92,000 people worldwide.

In December 2022, Thoma Bravo announced the close of its largest fundraise ever, raising more than $32.4 billion in capital commitments for its three buyout funds.

This milestone represents one of the largest private equity fundraises in history, with Thoma Bravo Fund XV being the largest tech-focused buyout fund ever raised.

Thoma Bravo's growth has earned it a spot in the top ranks of private equity firms, moving from #15 in 2020 to #4 in 2023 according to Private Equity International's "PEI 300" rankings.

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Thoma Bravo's approach to operational excellence is rooted in discipline and a relentless focus on continuous improvement. This mindset is reflected in their highly structured monthly boards of directors, where they meticulously monitor and refine their processes to guarantee the stability and performance of their investments.

Robust internal processes are at the heart of Thoma Bravo's operational excellence. They have a track record of operations that makes them attractive to managers of target companies, who know that partnering with a private equity firm of this quality will give them a better chance of pulling off an excellent deal.

Thoma Bravo's playbook is built on two main axes: rapid operational improvements and complementary acquisitions. This approach has been refined over years of experience and has made Thoma Bravo a benchmark player in Software buyout in North America.

Thoma Bravo has been making significant investments in the security sector, acquiring several companies and selling them off at a profit.

In 2018, Thoma Bravo took cloud-first security provider Barracuda Networks private for $1.6 billion, and later sold it to KKR for about $4 billion in 2022.

Thoma Bravo's acquisition of Imperva in January 2019 for $2.1 billion was followed by a sale to Thales Group for $3.6 billion in July 2023.

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The company completed its $3.9 billion acquisition of Sophos in March 2020, and its $12.3 billion acquisition of Proofpoint on August 31, 2021.

Thoma Bravo made a series of security-related investments in 2022, including the acquisition of identity security company SailPoint for $6.9 billion, Ping Identity for $2.8 billion, and ForgeRock for $2.3 billion.

In 2023, Thoma Bravo acquired Canada-based digital investigation software maker Magnet Forensics for CA$1.8 billion (US$1.34bn), and merged it with Grayshift, a digital forensics firm in its existing portfolio.

The company agreed to acquire Darktrace, a UK-based cybersecurity company, in a private transaction valued at $5.3 billion in April 2024.

Here's a summary of Thoma Bravo's security investments:

Thoma Bravo has a strong commitment to corporate stewardship, championing diversity of thought and background, and promoting inclusion.

Since 2014, the firm has been reporting on progress in specific ESG areas since 2017, demonstrating its dedication to transparency.

Thoma Bravo is a signatory to the ILPA Diversity in Action initiative and the United Nations Principles for Responsible Investment (UNPRI), showcasing its commitment to responsible practices.

Donna Riley Bebb, Thoma Bravo's Head of ESG since 2022, has helped create a more robust ESG framework and serves as an adviser on the firm's portfolio companies' ESG practices.

Thoma Bravo regularly provides thought leadership on ESG at industry events, including the PEI Responsible Investment Forum and the Women's Private Equity Summit.

The firm views GenAI and its integration and use at portfolio companies as an evolution that warrants a disciplined approach, and has launched a responsible AI learning cohort to help portfolio companies navigate this rapidly evolving landscape.

Through this cohort, Thoma Bravo collaborates with portfolio companies to encourage innovation through AI while building safeguards to protect against potential risks.

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Refined Operational Excellence is a hallmark of Thoma Bravo's approach to private equity investing. They've built a reputation for discipline and operational excellence that attracts top-notch managers of target companies.

Their robust internal processes ensure stability and performance in investments. Meticulous monitoring through highly structured monthly boards of directors and continuous improvements guarantee the stability and performance of investments.

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Thoma Bravo's track record of operations led by the firm makes it an attractive partner for managers of target companies. They know that with Thoma Bravo, they'll have a better chance of pulling off an excellent deal.

Investors should note that past performance is not indicative of future performance and is not consistent over time.

ThomaBravo targets software publishers that are undisputed market leaders, positioned in fragmented market segments with the best products, high recurring subscription revenue (SaaS), low churn, and high organic growth (10-20%).

These companies have low EBITDA margins, typically around 5-10%. Thoma Bravo is convinced it can improve these margins to around 40% by leveraging its own highly experienced operational resources.

Here's a breakdown of the characteristics of under-managed target assets that ThomaBravo is looking for:

ThomaBravo XVI will be looking to acquire this type of company, while the Discovery V fund targets smaller operations from buyout, around companies typically still run by their founders.

Thoma Bravo's strategy is centered around making bigger and bolder deals, with a focus on acquiring entire divisions from technology giants.

Their investment history shows a clear trend of increasing deal sizes, with transactions like Proofpoint and SailPoint on the buy side and McAfee and Barracuda on the sell side.

Thoma Bravo has raised three funds totaling $22.8 billion, and they're rumored to be raising again, targeting $10 billion-plus deals.

Orlando Bravo, the firm's leader, has described the opportunity as "bigger and better companies to fix than there were ten years ago."

This audacity is justified by their formula and track record, which have led to their success and the confidence to make bold moves.

Thoma Bravo's focus on software companies has allowed them to build a diverse portfolio with over 350 investments.

Their ability to differentiate themselves in the market is evident in their focus on the software sector, which has experienced significant growth in recent years.

Thoma Bravo's expertise in software investing has helped them identify opportunities that others may have missed, resulting in successful investments in companies like Amdocs and Qlik.

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Thoma Bravo's investment team is highly specialized in three sub-sectors: infrastructure software, security software, and application software. This hyper-specialization allows them to focus on specific areas and capitalize on opportunities within those markets.

Thoma Bravo has been investing in the enterprise software sector since 2002, with the acquisition of Prophet 21, a provider of software for durable goods distributors. Their expertise and structured approach enable them to navigate the complex software market with confidence.

The software market has been expanding steadily for the past 20 years, offering a wealth of investment opportunities. Thoma Bravo is well-positioned to capitalize on these opportunities due to their brand strength and ecosystem.

Thoma Bravo's focus on hyper-specialization has led to significant investments in the software sector. Some notable examples include the acquisition of Riverbed Technology for $3.6 billion in 2014 and the purchase of edtech company Instructure in 2020.

Here's a breakdown of Thoma Bravo's notable software investments:

Thoma Bravo's hyper-specialization in the software sector has enabled them to complete over 440 software deals as of July 2023 and oversee a portfolio of over 70 software companies. Their expertise and focus on specific areas have made them a major player in the software investment market.

One of the key factors in achieving focus is having a clear understanding of what sets you apart from others. This is known as differentiation.

Having a unique value proposition is crucial for standing out in a crowded market. It's what makes your product or service more attractive to customers than the competition.

Research shows that companies with a clear differentiator have a 50% higher revenue growth rate than those without one.

A company's mission statement can be a powerful differentiator, as it communicates the company's purpose and values to customers. This can be seen in the example of Amazon's mission statement, which is to "be Earth's most customer-centric company."

Differentiation can also be achieved through innovation, as seen in the example of Tesla's electric cars, which have disrupted the traditional automotive industry.

Innovative products or services can create a new market or disrupt an existing one, giving companies a competitive edge. This can be seen in the example of Airbnb, which has disrupted the traditional hospitality industry.

A clear differentiator can also help companies to attract and retain top talent, as employees are more likely to be motivated by working for a company with a clear purpose and values.

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Thoma Bravo has experienced exceptional growth over the past 20+ years, from less than $5 billion in capital commitments in 2012 to more than $166 billion in assets under management as of September 30, 2024.

The firm's software portfolio includes approximately 80 companies that generate over $28 billion of annual revenue and employ over 92,000 people worldwide.

In December 2022, Thoma Bravo announced the close of its largest fundraise ever, and one of the largest ever in private equity history, having raised more than $32.4 billion in capital commitments for its three buyout funds.

One of these funds, Thoma Bravo Fund XV, represents the largest tech-focused buyout fund ever raised.

The firm's rankings in Private Equity International's "PEI 300" reflect its growth, with Thoma Bravo ranked #15 in 2020 and #4 in 2023.

Thoma Bravo's funds have enabled the firm to invest in companies like a leading cloud-based secure business collaboration software provider and a provider of mission-critical risk management, regulatory reporting and capital markets software to the financial services industry.

The firm's focus on funds has allowed it to advance its established strategy and partnership-driven approach of applying operational and sector expertise to investments across healthcare IT, cybersecurity, financial technology, infrastructure and applications.

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Thoma Bravo has been quite active in the private equity space, with a portfolio of over 40 software companies and over 300 software deals since 2003. They've made some significant acquisitions in the enterprise software sector, including taking Medallia private for $6.4 billion in October 2021.

In 2022, Thoma Bravo acquired Anaplan for $10.7 billion, and later cut the takeover offer down to $10.4 billion after alleging that the company had violated the acquisition terms. They've also made notable acquisitions in the security space, including taking Barracuda Networks private for $1.6 billion in 2018 and later selling it to KKR for about $4 billion in April 2022.

Some of their notable acquisitions include:

These acquisitions demonstrate Thoma Bravo's commitment to investing in the software and security sectors, and their ability to make significant deals in these spaces.

Thoma Bravo has been making waves in the private equity world with its numerous acquisitions and investments. The company has completed over 440 software deals as of July 2023.

Thoma Bravo's acquisition spree shows no signs of slowing down, with recent deals including the purchase of health-records software company NextGen Healthcare for a total enterprise value of $1.8 billion in November 2023.

In a notable move, Thoma Bravo acquired clinical payment technology provider Greenphire LLC in July 2021. The company has also made significant investments in the security sector, including the acquisition of cloud-first security provider Barracuda Networks in 2018.

Thoma Bravo's largest acquisition to date is the $12.3 billion purchase of Proofpoint in August 2021. The company has also made significant investments in the identity security and digital forensics spaces.

Here are some of the notable acquisitions made by Thoma Bravo in the security sector:

H.I.G. Capital and Thoma Bravo have agreed to acquire CompTIA's brand, IT certification and training business, and products.

CompTIA will continue to operate as a for-profit company under H.I.G. and Thoma Bravo's ownership. The transaction is expected to close in early 2025, subject to regulatory approval and other customary closing conditions.

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Todd Thibodeaux, president and CEO at CompTIA, is optimistic about the acquisition, stating that it will enable CompTIA to accelerate and expand its products and services to train the highly skilled workers of the future.

The trade group's membership-based nonprofit organization will remain separate from CompTIA, continuing to support the IT industry.

H.I.G. and Thoma Bravo plan to invest in further developing CompTIA's training and certification products, creating the next generation of resources the industry needs.

Macquarie Capital, Ropes & Gray, and Polsinelli are advising H.I.G. and Thoma Bravo on the transaction.