The buyout cost 6.4 billion dollars. The end of the cycle erased 5.1 billion dollars of equity.
The design of the operation
Medallia was bought by Thoma Bravo in 2021, at 9 times projected revenue, at the top of the software market. The debt came with PIK interest, paid in new debt, which grows in silence every quarter.
The account never closed: about 300 million dollars of annual debt service against 200 million dollars of earnings, per the SaaStr accounting of the case. The model held while the PIK window kept renewing.
The day the largest creditor said enough
In late 2025, Blackstone, holder of 1.5 billion dollars of the debt, refused to renew the window. Within weeks, the other creditors followed. On April 22, the keys were handed over: Blackstone, KKR, Apollo and Antares kept the company, and 5.1 billion dollars of equity went to zero.
The PIK mechanics explain the ending. Interest paid in new debt passes the covenant test until the window closes, and the balance grows exactly when the business weakens. The model ends on the day the largest creditor says enough.
The market context is the same account at scale
46.9 billion dollars of software debt in distress, maturity peaks of 79 billion dollars in 2028 and 83 billion dollars in 2029, and the Fed moving up to the 3.75% to 4% range in September.
Medallia is the first big case of the cycle, not the last. Whoever signed a structure with service above earnings in a cheap cycle will meet the same account in an expensive one.
Conclusion
The question left for anyone signing SaaS debt structures: what is the annual cash service against your business''s earnings, and what happens on the day the largest creditor on the other side decides not to renew.
At Tech86, the reading we take to projects is the same rule: a long-term commitment enters the spreadsheet with the entire cash bill, before signing. It is the same arithmetic we apply to infrastructure contracts, from the GPU commitment that became a liability to the invoice that scales faster than revenue. What becomes a liability is the contract without a cap.