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How Orlando Bravo built a $130 Billion Software Powerhouse?

Orlando Bravo is a billionaire private equity investor and the co-founder and managing partner of Thoma Bravo, a firm that focuses solely on software deals.

He has been named "Wall Street's best dealmaker" by Forbes and "Private equity's king of SaaS" by the Financial Times. In today's article, We will explore how he built Thoma Bravo which has over $130 Billion in AUM.


Orlando Bravo's Background


Orlando Bravo was born in Mayaguez, Puerto Rico, where his grandfather and father ran a shipping business. He graduated from Brown University with a degree in economics and political science, and then earned a JD from Stanford Law School and an MBA from Stanford Graduate School of Business. He started his career as an investment banker at Morgan Stanley, where he developed an interest in software.


He joined Thoma Bravo in 1998, when it was still called Thoma Cressey Equity Partners, and became a partner in 2003. He led the firm's early entry into software buyouts, convinced that software was the future of every industry. He also saw an opportunity to apply a strategy of operational improvement and growth acceleration to software companies, which were often undervalued and undermanaged.


He split with his healthcare-focused partner Brian Cressey in 2008 and created Thoma Bravo with Carl Thoma, a software-dedicated buyout shop. Since then, he has overseen over 440 software acquisitions conducted by the firm, representing more than $250 billion in transaction value. He has also expanded the firm's strategy to include minority growth equity investments in software companies through its Growth platform.


Bravo's Investment Strategy and Performance


Orlando Bravo has a clear and consistent investment strategy that has delivered superior returns for his investors. He invests only in well-established software companies, especially those with clearly discernible moats, such as high switching costs, recurring revenue streams, loyal customers, and strong market positions. He avoids startups, turnarounds, or unproven technologies.

Thoma Bravo's Investments

He then works closely with the management teams of his portfolio companies to improve their operations, margins, and growth rates. He leverages his firm's expertise and network in the software industry to help them optimize their pricing, sales, marketing, product development, customer service, and M&A strategies. He also encourages them to invest in innovation and customer satisfaction.


thoma bravo returns
Thoma Bravo Annual Returns

Big Exits


Ellie Mae: Thoma Bravo acquired Ellie Mae, a leading provider of cloud-based solutions for the mortgage industry, for $3.7 billion in 2019. It helped Ellie Mae grow its revenue by 40%, expand its market share by 50%, and launch new products and services. It then sold Ellie Mae to Intercontinental Exchange for $11 billion in 2020, generating a 3x return on its investment.


Qlik Technologies: Thoma Bravo took Qlik Technologies, a leader in data analytics and business intelligence software, private for $3 billion in 2016. It helped Qlik transition from a license-based model to a subscription-based model, increase its cloud revenue by over 300%, acquire new customers and partners, and enhance its product portfolio. It then sold Qlik to Bain Capital for $5.3 billion in 2021, generating a 1.8x return on its investment.


Thoma Bravo IPO

Planview: It acquired Planview, a provider of project and portfolio management software, for $1.6 billion in 2017. It helped Planview grow its revenue by over 50%, expand its product offerings, and make strategic acquisitions. It then sold Planview to TPG Capital and TA Associates for $4 billion in 2020, generating a 2.5x return on its investment.


Cority: It acquired Cority, a provider of environmental, health, safety and quality software, for an undisclosed amount in 2019. It helped Cority grow its revenue by over 40%, expand its global presence, and enhance its product capabilities. It then sold Cority to EQT Partners for an undisclosed amount in 2021, generating a reportedly high return on its investment.


Big Buyouts


Proofpoint: Thoma Bravo completed the take-private acquisition of Proofpoint, a leading cybersecurity and compliance company, for approximately $12.3 billion in 2021. This represents not only Thoma Bravo’s largest investment to date, but the largest cloud deal in private equity history. Thoma Bravo plans to help Proofpoint accelerate its growth, innovation, and customer success in the cybersecurity market.



Medallia: They completed the acquisition of Medallia, a leader in customer and employee experience management software, for approximately $6.4 billion in 2021. Thoma Bravo intends to help Medallia expand its product portfolio, customer base, and global footprint in the experience management market.


Talend: It is a leader in data integration and data integrity software, for approximately $2.4 billion in 2021. Thoma Bravo aims to help Talend accelerate its cloud transformation, innovation, and growth in the data market.


Magnet Forensics: They completed the acquisition of Magnet Forensics, a provider of digital forensics software, for approximately CA $1.8 billion (US$1.4 billion) in 2022. Thoma Bravo plans to help Magnet Forensics expand its product offerings, customer segments, and geographic reach in the digital forensics market.

Thoma Bravo's Deal Count
Thoma Bravo's Deal Count

According to its website, Thoma Bravo has achieved an annual gross internal rate of return (IRR) of 30% across all funds since inception. It has also surpassed $100 billion in assets under management as of March 31, 2021.


Orlando Bravo is different from other venture capitalists like Sequoia and Tiger Global in several ways. First, he is not a venture capitalist, but a private equity investor, which means he buys majority stakes in mature companies rather than minority stakes in startups. He does not take on the risk of backing unproven ideas or technologies but rather focuses on enhancing the value of existing businesses.


Second, he is more focused and specialized in software than other private equity firms, which may invest in a variety of sectors and industries. He has developed a deep understanding of the software market dynamics, trends, opportunities, and challenges. He has also built a strong reputation and network among software entrepreneurs, executives, customers, and advisors.


Third, he is more aggressive and ambitious in pursuing large and complex deals, such as taking public companies private or merging multiple software businesses. He has the ability to raise large amounts of capital from his investors and co-investors to finance these transactions. He also has the experience and skill to execute these deals successfully and create synergies among his portfolio companies.


Other venture capitalists can learn from Orlando Bravo's secrets to success, such as:


- Finding a niche and becoming an expert in it

- Investing in companies with strong competitive advantages and loyal customers

- Working closely with management teams to improve their operations and growth

- Encouraging innovation and customer satisfaction

- Pursuing large and complex deals that create value


Conclusion


Orlando Bravo is a successful private equity investor and the co-founder and managing partner of Thoma Bravo, a firm that focuses solely on software deals. He has achieved remarkable success in the software industry by following a clear and consistent investment strategy, improving the operations and growth of his portfolio companies, and pursuing large and complex deals.


He is different from other venture capitalists in terms of his focus, specialization, and aggressiveness. He has also made a positive impact on the software landscape and society through his investments and philanthropy. He is a role model and a leader for anyone who wants to succeed in the software industry.

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