Orlando Bravo, founder and managing partner of Thoma Bravo, declared that the era of severe valuation compression for software-as-a-service companies is over, positioning artificial intelligence as the catalyst for a sector-wide repricing.
The private equity firm, which manages over $100 billion in assets, has historically been the dominant buyer of enterprise software businesses, and Bravo’s comments signal a strategic pivot toward more aggressive deployment in the current market environment.
The shift in sentiment arrives as private credit lenders and institutional investors are actively re-evaluating their massive exposure to the software sector.
For years, the sector faced headwinds from rising interest rates and a flight to quality that punished unprofitable growth stocks.
Bravo argues that AI integration now provides the necessary margin expansion and efficiency gains to justify premium valuations, effectively ending the multi-year discount that weighed on software buyouts.
This perspective marks a significant departure from the cautious posture adopted by many buyout firms during the recent rate-hiking cycle.