Orlando Bravo Defends Private Markets as AI Accelerates Software Disruption

Orlando Bravo pushes back on private-markets criticism as AI reshapes software

Orlando Bravo, founder and managing partner of Thoma Bravo, pushed back on intensified scrutiny of private markets and private credit, arguing that deep sector expertise and long-term company-level oversight separate winners from losers as artificial intelligence accelerates disruption across the software industry.

Bravo spoke from Davos on Jan. 21, 2026, and framed the debate around valuation marks, liquidity, and the pace of AI-driven change. He emphasized that Thoma Bravo invests at the company level — focusing on customer contracts, recurring revenue dynamics and operational detail — rather than at a high-level, market-based approach.

"We have been living in the details of the space for a very, very long time, not on a high level, not investing in stocks, [but] investing in companies, customer contracts, knowing the details," Bravo said. "We are so comfortable with our private credit book, given the choices we've made as a specialist."

Valuation scrutiny and investor confidence

Private markets are under heightened scrutiny after a wave of markdowns and redemption pressure across private credit and private equity funds. Market participants point to looming defaults, mark-to-market differences with public comparables and limited liquidity as reasons investors are asking tougher questions.

Key, publicly circulated data points in the current debate include a Morgan Stanley projection that direct-lending default rates could reach about 8%—a level approaching Covid-era peaks—and public comments from a senior Apollo Global Management executive that "all the marks are wrong" for some private software holdings. Those data points have sharpened investor focus on asset-level underwriting and secondary liquidity.

Bravo countered that Thoma Bravo's investor base — including major U.S. pension funds and global sovereign wealth funds — has remained confident because of multi-year transparency on marks and realized exits. "They've seen our marks, they've seen our exits, they've seen our progression," he said. "Everybody's extremely comfortable."

A candid recognition of mistakes: Medallia

Bravo acknowledged one visible misstep in the firm's recent history: the 2021 take-private acquisition of customer-experience software company Medallia for $6.4 billion. He described the transaction as an over-extrapolation of high historical growth.

"When we bought it, we way overestimated or extrapolated the very high rate of growth of that company into the future. We made a mistake. And that cost us to pay too much. Now, the equity from our standpoint has been impaired for a long time," Bravo said. He noted that institutional investors in the firm's funds have long been aware of that impairment.

Portfolio performance and the AI advantage

Despite the Medallia impairment, Bravo highlighted that the broader portfolio is performing strongly. He referenced a set of 78 platform investments, noting that "the other 77 companies that we have, for the most part — and it's so relevant for AI — they're absolutely crushing it." That contrast is central to his argument: a single impaired position can coexist with a majority of high-performing assets when specialist selection and active management are in place.

Bravo drew a distinction between private equity-owned software companies and many publicly traded software firms. He argued that private ownership structures allow for focused operational transformation and protected transition paths as AI rewrites product road maps and go-to-market strategies. At the same time, he said valuation declines in some public software names are "very warranted" given accelerating disruption.

"In the public markets, if you look at it, there are many, many software companies in the public markets that will be disrupted from AI. Those companies were going to be disrupted anyway. AI will create a disruption a lot faster," he said.

What this means for institutional investors

For professional investors tracking private market risk and return, the exchange highlights several practical takeaways:

• Underwriting granularity matters: Specialist firms that assess contract-level revenue durability, customer concentration and technology road maps can generate differentiated outcomes versus broad-market investors.
• Valuation transparency is essential: Institutions relied on multi-year mark visibility and realized exits to judge manager performance and risk. Persistent impairments should be disclosed and contextualized within portfolio performance.
• Liquidity and credit risk remain focal: With projections such as an ~8% direct-lending default rate cited by major banks, portfolio managers must stress-test private credit exposures and recovery assumptions.
• AI accelerates creative destruction: Companies with defensible AI strategies, fast integration cycles and clear monetization paths are more likely to outperform; those without are vulnerable to faster-than-expected disruption.

Market implications and next steps

The debate between public-market pessimism on software valuations and private-market assertions of superior stewardship underscores a broader industry reassessment. Institutional allocators will likely continue to demand:

• Enhanced asset-level disclosure (unit economics, churn, AI adoption metrics)
• Secondary-market price discovery to validate private marks
• Active credit-monitoring frameworks for direct-lending portfolios

Orlando Bravo's statements reflect a confident specialist stance: accept short-term impairments as part of concentrated private investing, but rely on rigorous company-level work and active operational involvement to preserve and create value as AI reshapes software markets.

Bottom line

Private-market managers face intensified scrutiny on valuation and liquidity as AI accelerates disruption across software. Firms that combine deep sector expertise, transparent marks and active operational playbooks aim to demonstrate that concentrated private investments can both weather cyclical pressure and capitalize on structural technology shifts. Bravo's remarks underscore that conviction, while also acknowledging that even experienced managers can overpay and must manage the consequences.