Page 70 - Forbes - USA (October 2019)
P. 70
grunt work done,” Boyle recalls. After seven ac- camps for new acquisitions, grueling daylong
quisitions, Bravo sold the business for $215 mil- sessions that are critical to its success. Partners
lion, making five times his money. regularly buzz into Bravo’s spartan glass-walled
Software quickly became Bravo’s sole focus, offices, while in the background the drilling and
and Thoma Cressey began to thrive. By 2005, hammering of construction workers making
Bravo and Thoma had recruited three employ- room for 13 new associates disturbs the peace.
ees, Scott Crabill, Holden Spaht and Seth Boro, After two decades studying software, Bravo
to focus on software applications, cybersecurity recognizes clear patterns. For instance, when a
66 and Web infrastructure. All remain with the firm company pioneers a product, its sales explode
today as managing partners. and then inevitably slow as competitors emerge.
Bravo’s big opportunity came during the finan- Often a CEO will use this cue to stray into new
O cial crisis when Thoma put Bravo’s name on the markets or overspend to gin up sales. Bravo calls
A V
R door and split with his partner Bryan Cressey, a this “chasing too many rabbits.” To fix it, he and
B healthcare investor, creating Thoma Bravo. From his ten partners work alongside 22 current and
O that moment on, the firm invested only in soft- former software executives who serve as con-
D
N ware, with Bravo leading the way. sultants. They begin tracking the profit-and-loss
A A string of billion-dollar buyouts followed— statements for each product line and pore over
L
R Sunnyvale, California-based network security contracts in search of bad deals or underpriced
O
E
L
I
F With a fresh $12.6 billion war chest, Bravo
O
R
P
is now eyeing $10 billion-plus deals and expects
to begin buying entire divisions of tech giants.
firm Blue Coat, financial software outfit Digital products. Critically, by the time a Thoma Bravo
Insight of Westlake Village, California, and Hern- acquisition check clears, existing management
don, Virginia’s Deltek, which sells project man- has agreed that this rigorous approach will help.
agement software—all of which more than dou- Bravo calls it “making peace with the past.”
bled in value under Bravo’s watch. The firm’s in- There are also layoffs. Those can total as much
augural 2009 software-only fund posted a 44% as 10% of the workforce, for which Bravo doesn’t
net annualized return by the time its invest- apologize. “In order to realign the business and
ments were sold, making investors four times set it up for big-time growth, you first need to
their money and proving the wisdom of disci- take a step back before you take a step forward.
pline and specialization. “Every time we picked It’s like boxing,” he says. “These are unbelievable
up our heads to peek at a deal that wasn’t soft- assets with great innovators, and they are usual-
ware, the software deal looked a lot better to us,” ly undermanaged.”
he brags. Mark Bishof, the former CEO of Flexera Soft-
ware, an application management company out-
I t’s late May, and Orlando Bra- side of Chicago that Bravo bought in 2008 for
$200 million and sold for a nearly $1 billion prof-
vo’s 20th-floor offices overlook-
ing the San Francisco Bay are
it three years later, has a succinct description for
filled with dozens of tech exec- this wild success. “He just kind of cuts all of the
utives from its portfolio compa- bullsh*t,” Bishof says. “It’s refreshing.” Flexera’s
nies. Folks from Houston’s Quorum Software, profits rose 70% during Bravo’s ownership, large-
which makes technology systems for oil and ly thanks to four major acquisitions. “Orlando’s
gas companies, mingle with cybersecurity ex- like the general in the foxhole with his sergeant.
perts from Redwood Shores, California’s Imper- You know he’s knee-deep in there with you,” Bish-
va. They juggle their rollerboard suitcases and of gushes.
thick financial books as Thoma Bravo partners Under Thoma Bravo’s watch, companies on av-
map out corporate strategies on dry-erase white- erage saw cash flow surge as margins hit 35%, as
boards. Those on break hammer away at key- of 2018, nearly triple those of the average pub-
boards in small workrooms or demolish chicken lic software company at that time. “It’s like train-
sandwiches in a no-frills kitchenette. ing for the Olympics. . . . You have a finite goal to
This is one of Thoma Bravo’s monthly boot make it [in year four], and you make it very, very
O C T O B E R 3 1 , 2 0 1 9
F O R B E S . C O M
