Uncertain Future for Medallia after Debts Mount

Creditors are set to take control of global customer experience firm Medallia, after its owner Thoma Bravo chose not to continue investing to service its debt, and a group of lenders led by Blackstone drew a line under further debt relief.

Medallia grew rapidly between 2019 and 2021 with the acquisitions of Cooladata, LivingLens, Voci Technologies and Decibel, then announced in July 2021 that it had agreed terms of a sale to software investment firm Thoma Bravo, in an all-cash transaction valuing the company at $6.4 billion. At the time, valuations of digital CX pioneers such as rival Qualtrics were still riding high, and both Medallia and its new owner continued to make CX and insight sector acquisitions after this, with Thoma Bravo investing in UserTesting. However, while the parent group has continued its interest in the vertical - it bought Verint for $2 billion as recently as last summer - Medallia's revenue has failed to keep pace with expectations despite a number of changes in senior leadership.

Online reports suggest that Medallia's annual earnings of c. $200 million were insufficient to service debt costs approaching $300 million, following several years of difficult market conditions. Thoma Bravo's decision to walk away, with the loss of $5.1 billion in equity - means investors including Blackstone, KKR, Apollo and Antares Capital will now own the company via a debt-for-equity swap, and are likely to look for restructuring and cost-cutting measures, including job losses and reduction in investment.

The firm is online at www.medallia.com .