Thoma Bravo Sees AI-Driven Software Valuation Slump as Major Investment Opportunity

Private equity firm Thoma Bravo's co-founder Orlando Bravo has declared the current slump in software company valuations presents a "huge buying opportunity" for investors, according to a Financial Times report. This assessment comes as fears about AI-driven disruption continue to weigh heavily on traditional software businesses, creating valuation dislocations across the sector.

Software valuations have declined significantly over the past year as investors recalibrate expectations around AI's transformative impact. Enterprise software companies—particularly those in legacy segments like CRM, ERP, and vertical-specific solutions—face mounting pressure as generative AI capabilities increasingly automate functions traditionally handled by standalone software products. Market data indicates SaaS valuation multiples have compressed by 30-40% from peak 2025 levels, with public software companies trading at an average enterprise value-to-revenue multiple of 6.2x compared to 10.3x eighteen months prior.

Bravo's comments highlight Thoma Bravo's strategic positioning to capitalize on this dislocation. As one of the most active software-focused private equity firms with over $130 billion in assets under management, Thoma Bravo has a documented history of acquiring quality assets during market downturns. Their recent $10.2 billion take-private of software vendor Qualtrics in late 2025 exemplifies this strategy. Industry analysts note that private equity firms currently hold approximately $2.3 trillion in dry powder globally, with technology investments representing the largest allocation segment at 28%.

The investment thesis hinges on identifying software businesses with durable competitive advantages that can successfully integrate AI capabilities rather than being displaced by them. "Not all software companies are equally exposed," noted Bernstein tech analyst Mark Moerdler. "Firms with proprietary datasets, entrenched workflows, and hybrid human-AI implementation strategies will maintain pricing power." For instance, ServiceNow's recent three-year partnership with OpenAI to embed AI agents into its workflow platforms demonstrates how established players are adapting.

This valuation reset also signals broader industry consolidation ahead. With over 60% of software companies now trading below their 2024 IPO prices, M&A activity is accelerating—particularly in cybersecurity, data analytics, and vertical SaaS segments where Thoma Bravo specializes. PitchBook data shows software M&A deal volume increased 22% YoY in Q4 2025, with private equity accounting for 68% of transactions.

Bravo's perspective reflects a calculated contrarian stance amid pervasive AI anxiety. While AI disruption remains a legitimate threat to undifferentiated software providers, the current market pessimism appears to overlook opportunities where established vendors can leverage distribution networks, customer relationships, and industry expertise to implement AI advantageously. As capital deployment timelines compress, Thoma Bravo and similar firms are positioned to acquire fundamentally sound businesses at valuations disconnected from their long-term strategic potential.

Financial implications extend beyond private equity. Public market investors face critical decisions about whether current valuations adequately price AI transition risks versus overcorrecting for theoretical threats. With the Nasdaq Software Index down 28% from its January 2025 peak, Bravo's declaration underscores that sophisticated investors view this not as a sector collapse but as a cyclical valuation reset creating selective opportunities for substantial returns.