Orlando Bravo on Software Buyouts, Cash Flow and Building a Life Beyond Work

In this early-2023 interview, Thoma Bravo founder and managing partner Orlando Bravo discusses software buyouts, operational change and investing discipline with Harry Stebbings. He also reflects on family, money and the experience of building a career. His assessments of his firm’s deals and market conditions come from an interested investor at that time.

Bravo joined a predecessor firm in 1997. After the dot-com bubble burst, he and colleagues found software companies with recurring revenue and high gross margins that were not yet profitable. He says early deals succeeded, and the firm eventually focused on software, becoming Thoma Bravo in 2008.

He credits Carl Thoma with teaching him value investing, leadership and the art of putting together a buyout involving management, lenders and other constituencies. Bravo says Thoma gave him responsibility and room to learn from mistakes, a form of mentorship he tries to offer younger colleagues.

Bravo believes a company’s value ultimately derives from its future cash flows. His firm assesses growth and potential earnings rather than relying only on a revenue multiple. That is an investment philosophy, not proof that any particular forecast or transaction will succeed.

A second mentor, Marcel Bernard, taught him how to work with management to turn a strong innovator into a profitable business. Bravo describes an ambition to combine growth with cash-flow margins as high as 40%; that is an operating target in his account, not a claim that every company achieved it.

The method begins by breaking a large problem into components, prioritizing them, measuring the starting point and delegating responsibility. Bravo says a team that understands its numbers and wants to improve can address many operational problems. The details depend on the business.

He says he fears stagnation and isolation and connects that feeling partly to growing up in Puerto Rico and leaving to pursue opportunities. In 1999, despite strong educational credentials, he felt close to failure and says he nearly lost his job. Staying in the game gave him time to find a different opportunity.

His work has changed enough over the years to keep him engaged. In competitive deals he tells himself that being behind on price or relationships does not mean the process is over; there may still be time to improve an operating plan or build management support.

Bravo does not view success as one fixed endpoint. At work he describes it as a series of steps: gaining trust, buying a company, working with its team and eventually exiting. He takes pride in the collective work that produces the result.

Discussing the market as of January 2023, he says profitable public software companies appeared reasonably valued relative to the broader market. He cites approximate forward earnings multiples of 25 for an index of profitable software companies and 16.5 for the S&P 500. The interview does not specify the index methodology, and these are historical figures.

He says unprofitable software companies faced more uncertainty and cites a drop in average forward revenue multiples from roughly 17 to 3.5. He cautions that the eventual level is difficult to predict and depends on the business. His figures are not independently established by the interview.

Pressed on whether the new level would persist, Bravo says he cannot predict the economy or stock market. He guesses investors would be reluctant for several years to repeat strategies that had recently produced large losses. This was his early-2023 view, not a confirmed future outcome.

Bravo says his firm values acquisitions using projected earnings and cash flow under an operating plan, then assumes an exit multiple to estimate returns. Higher financing costs had led it to assume lower multiples than during the boom. The projections depend on executing the plan and on future market conditions.

Harry asks how private equity makes unprofitable companies profitable and raises concerns about asset stripping. Bravo argues that a transaction can reset incentives and align an owner and management around cash-flow growth. He presents this as an advantage of his model; the conversation does not independently measure its effects on employees or customers.

Bravo says founders and managers can be outstanding innovators without having experienced every operational discipline. His firm looks for teams willing to learn and collaborate. He attributes the transformation to partnership with management rather than a single financial adjustment.

He wants a company’s financial data to support its story. For example, he says a reliable product may require fewer support calls, a simpler product may cost less to implement, and an important product may command higher prices and retain customers. These are hypotheses to examine, not universal causal rules.

His three criteria are high-quality, stable revenue with room to grow; a management team willing to work together and care about profitability; and enough inefficiency for the buyer to improve results. A perfectly run business may already be priced for its existing cash flow, leaving less room for his firm’s approach.

He says rapidly growing companies can accumulate people, processes and management layers that slow decisions. In his view, improving efficiency can support growth, but the opportunities differ across engineering, distribution and other functions; he does not offer one universal fix.

Harry asks whether large cuts at Twitter demonstrate a new operating model. Bravo says he does not know the business well enough to judge and suggests waiting several years to see the result. He distinguishes his firm’s enterprise-software focus from that consumer business.

On investment price, he says it matters greatly. A buyout may involve a very large equity commitment, making a major loss difficult to absorb. The economics and risks differ from a portfolio of smaller early-stage venture investments, although he believes some underlying investing principles overlap.

A struggling buyout can also consume years of management attention and prevent the firm from pursuing other opportunities. Bravo says the investor cannot simply abandon a large portfolio company and views that commitment as relevant to its relationship with management.

Asked whether Thoma Bravo overpaid for Coupa and Anaplan, Bravo says outside critics lack the firm’s detailed operating plans and projected cash flows. He defends the prices on that basis. These are his firm’s forecasts and self-assessment, not independent evidence of eventual returns.

He says the firm has mainly exited through sales to strategic or financial buyers. In his account, an IPO may be less useful to a cash-generating company if it requires issuing shares to raise money the company does not need. The best exit for a particular business remains dependent on circumstances.

He argues that a high-quality market leader can attract an acquirer even if fewer buyers can afford a large transaction, because only one buyer is needed. His focus is on running the company well rather than predicting a particular buyer’s appetite.

Bravo believes efficient companies with strong cash flow can withstand difficult periods and potentially acquire weaker competitors. In stronger markets, he expects such businesses to attract buyers at higher multiples. These are his investment views and scenarios, not guarantees.

Harry asks whether larger funds reduce performance. Bravo acknowledges a correlation between fund size and performance, while saying Thoma Bravo increased fund size to buy larger leading enterprise-software businesses. His explanation reflects the firm’s own strategy; the interview does not provide a controlled performance comparison.

On diversification, he prefers roughly 12–15 companies per fund, arguing that intensive operational work becomes difficult with 40 or 50. He says teams meet portfolio companies regularly and need enough experienced leaders to support them. This is his preferred model, not a universal portfolio rule.

Bravo acknowledges investment misses. In one unnamed deal he says the team saw deterioration in a product line during diligence but underestimated how bad it would become and expected another product to compensate. He does not identify the company or provide enough detail to assess the outcome independently.

He also says some transformation decisions went wrong when management had become too detached from day-to-day operations. By the time the firm reinvested in certain areas, it had lost time. He emphasizes learning from those errors.

Thoma Bravo maintains a target list and may follow companies for years before a transaction, Bravo says. He fears investment committees becoming too far removed from the actual asset through layers of reports and intermediaries. Senior decision-makers therefore participate directly in deals in his account.

The firm requires consensus: if a senior member strongly objects, Bravo wants to understand why. He attributes that approach to a long-standing team with a shared sector focus and operating playbook. He acknowledges a more diversified firm might need a different investment-committee structure.

When balancing opportunity against a falling market, he says the team examines revenue quality, customer acquisition, competition and pricing trends. The objective is to buy a sound business at a price that makes sense under a demonstrated operating plan, rather than relying solely on selling at a higher market multiple.

Asked about money, Bravo remembers feeling stressed and checking his bank balance frequently when he had little. Once he had enough, he says the relationship changed. Successful exits now give him pride in the team’s work more than satisfaction from the money itself.

On raising children with financial privilege, he says he and his partners try not to act superior because of wealth. He describes his children as hardworking and says a parent’s role is to be present and support their own ambitions. He recognizes that comparison with a successful parent can create pressure.

Harry says he struggles to feel happy while balancing work and relationships. Bravo recalls that his late twenties and early thirties were difficult and that he became clearer about his priorities later. He explicitly frames this as his own journey, not a timetable everyone will follow.

Bravo says making time for family led him to delegate, attend fewer meetings and mentor colleagues rather than personally manage every detail. In his experience, the business improved as he did so. He offers an example from his life rather than a universal prescription.

He recommends The Power of Now for its emphasis on being present, while acknowledging the importance of learning from the past in investing. His fear is stagnation; he sees bringing people together and mentoring as strengths and a short attention span as a weakness.

His advice to his younger self would be to relax and be authentic. He says rigid timelines for success created pressure over outcomes he could not control, and imitating industry leaders delayed his ability to contribute in his own way.

Bravo says philanthropy is difficult to measure because, unlike a business income statement, a foundation budget does not directly reveal the impact produced. He discusses the Bravo Family Foundation’s work in Puerto Rico and asks how to define success across communities and entrepreneurs. These are his descriptions of the foundation’s work.

Looking five years ahead from the interview, he hopes his team will demonstrate the value of operational improvement and partnership with management through a challenging environment. That is an ambition, not an established return. Harry thanks him for the conversation and Bravo thanks him in return.