Investing in 2025: should you be concerned about the market context?
For Orlando Bravo, "no one ever really knows if it's a good time to invest. I can't predict the economy or valuations. Fortunately, I don't need to."
Rather than trying to time the market, Thoma Bravo takes an agnostic approach: the right time to invest is when an opportunity to acquire a quality company presents itself. For Bravo, market cycles are secondary to the search for companies with high transformation potential.
"We don't buy the index. We buy specific companies, with strong management teams, areas for improvement and growth opportunities," he explains.
In a constantly evolving sector like software, the world of listed companies represents an immense reservoir of opportunity. The publicly traded software market is worth $10,000 billion," recalls Bravo. In this context, all Thoma Bravo needs to do to ensure the success of its funds is to find three companies a year that fit into their value-creation strategy.
The market environment doesn't matter as long as the company can identify and transform strategic assets.
The future of private equity lies in the transition to software
For Orlando Bravo, the future of private equity is intrinsically linked to software. This trend is part of a wider phenomenon: companies in all sectors are adopting software technologies to transform themselves into "software companies".
"Private equity players are going to have to focus more on the digital aspects of their businesses," anticipates Bravo.
Currently, software transactions account for 30% of private equity deals. He believes this figure could rise to 50% or even 60% in the medium term, as the boundaries between technology companies and other industries become blurred.
"It will become difficult to distinguish a purely software deal from a traditional deal," says Bravo.
Private equity is particularly well suited to companies undergoing major transformations, whether in terms of their business model or internal organization. For these companies, coming under the governance of a fund enables them to carry out these changes more quickly and efficiently than remaining listed on the stock exchange.
Why will private equity continue to grow?
Bravo is convinced that private equity will continue to grow in popularity for two main reasons:
1. better governance: the private equity model enables asset managers to work closely with management, making rapid strategic decisions and transforming companies significantly.
2. adapting to digital transformations: as businesses become software companies, the need for support from specialized funds will grow.
The software sector has an impact on all segments of the economy, from financial services to industry. This transversality ensures that private equity will continue to play a key role in business transformation.
A pragmatic, long-term vision
Orlando Bravo sums up his investment strategy with disarming simplicity: buy, improve, transform, sell. For him, market timing is less important than the quality of the target companies.
The future of private equity lies in the ability of funds to seize opportunities in the software sector and support companies in their digital transformation.
In an environment where macroeconomic uncertainties are omnipresent, Thoma Bravo remains confident in its ability to unearth nuggets, work with visionary managers and maximize value creation for its investors.
"Private equity is going to become synonymous with software, plain and simple."
