Thoma Bravo handed Medallia over to its lenders this week. Blackstone, KKR, Apollo, and Antares are taking control of a company Thoma Bravo bought for $6.4 billion in 2021. The debt-for-equity swap wipes out roughly $5.1 billion in equity held by the PE firm and co-investors.
The mechanics that broke it
Medallia carried nearly $3 billion in debt against annual earnings of around $200 million. Annual debt servicing hit $300 million by early 2026, up $100 million after Payment-in-Kind relief expired at the end of 2025. PIK arrangements let companies defer cash interest by adding it to principal. When Blackstone, holding $1.5 billion of the debt, refused to extend the PIK window, restructuring became inevitable.
Lenders had been marking down the debt for months. FS KKR Capital valued it at 79 cents on the dollar. Apollo Debt Solutions had it at 74 cents. Once the biggest lender declined to extend, the rest followed.
What this means for sales teams
If you are selling into PE-backed SaaS companies acquired between 2020 and 2022, pay attention to debt levels and PIK arrangements. Companies restructuring under lender control typically cut sales teams early. Medallia is the second major PE SaaS equity wipeout in 18 months after Vista's Pluralsight handover in 2024.
The software industry is sitting on $46.9 billion in distressed debt. More than $17.7 billion in US tech loans hit distressed trading levels earlier this year. From 2015 to 2025, PE acquired over 1,900 software companies in deals totaling $440 billion. About 20-25% of all private credit is now exposed to software.
The deals most at risk
Proofpoint (Thoma Bravo, $12.3B, 2021) is the one to watch. The company floated about $4 billion in debt against roughly $150 million of adjusted annual EBITDA. Thoma Bravo added more debt last year for a dividend recap, then more for the Hornetsecurity acquisition. Total debt load is now around $4.67 billion.
Qualtrics (Silver Lake, $12.5B, 2023) is likely next. A group of banks led by JPMorgan halted a $5.3 billion debt deal in March after failing to win over investors. Qualtrics already cut 15% of its workforce in 2023, then stacked the $6.75 billion Press Ganey acquisition on top of existing debt in October 2025.
Alteryx (Clearlake, $4.4B, 2024) carries roughly $2 billion in debt. Analytics automation is arguably the most AI-exposed SaaS category. Clearlake is already managing 11 portfolio companies with underperforming debt, including Quest Software trading at 25 cents on the dollar.
The takeaway
Median revenue multiples for mature SaaS platforms dropped from 9x in 2021 to roughly 6x in 2026. That makes refinancing at levels that preserve equity essentially impossible. Peak-vintage LBO plus aggressive leverage plus stalled revenue growth plus PIK toggles expiring equals restructuring. About one-fifth of PE-backed software debt has to refinance by 2028.
If you are evaluating roles at PE-backed software companies acquired at peak multiples with significant debt loads, ask about PIK arrangements, annual debt service versus EBITDA, and refinancing timelines. The Medallia playbook is becoming the template.