Medallia has reached a "milestone agreement" with a new group of investors enabling its ownership to transition from Thoma Bravo and strengthening the company's balance sheet while providing a capital boost of US$150 million. This represents just under one third of the $500 million the company has committed to invest in "innovation" over the coming years.
The recapitalization agreement "significantly reduces" the debts Medallia has built up under the ownership of private equity and tech investment specialist Thoma Bravo. Once the agreement is complete, Medallia will change ownership from Thoma Bravo to an investor group led by Blackstone, Apollo, and FS KKR Capital Corp (FSK), which it says will allow it to "accelerate AI-driven innovation and customer-focused product investment".
"Today's announcement marks a significant milestone towards the next generation of AI-led enterprise experience management," said Medallia CEO Mark Bishof. "The transformation of Medallia has been well underway – what changes today is the pace. With a strengthened balance sheet and $150 million in new capital, we are accelerating our commitment to invest over $500 million in products and services for our customers over the next few years."
What happened to Medallia?
Medallia was founded in 2001 and went public on the New York Stock Exchange in 2019 before being taken private in 2021 by private equity firm Thoma Bravo, which claims the title of the world's largest software-focused investment firm. It manages more than $172 billion in assets for approximately 80 global software companies.
However, financial problems have been building for some time and 18 months ago, a new executive team joined Medallia to "reinvent the business for an AI-first market". Medallia says this was intended ton "modernize operations, and sharpe strategic focus while maintaining profitability".
The news that Thoma Bravo was preparing to hand over Medallia broke in April, with some indicating it could mean that CX tools were no longer being viewed as a lucrative enterprise software investment and that Medallia's bets on AI had failed.
Since then, stakeholders in the deal have confirmed that the company needed to offload its debts, which were outpacing earnings. Thoma Bravo handed control to Medalia's creditors, Blackstone, Apollo Global Management, and FS KKR Capital Corp as part of a debt for equity swap.
Today, Medallia has confirmed it has entered into a recapitalization agreement with its lenders that will strengthen its financial foundation for long-term growth, removing debts and investing $150 million in new capital and advances. This will support Medallia's $500 million commitment to "innovation and AI transformation in the coming years". The company said the money will take it "beyond traditional experience management into a more intelligent, predictive and automated platform".
"Medallia is a profitable business with a strong track record serving many of the largest companies in the world," said Brad Marshall, Blackstone's global head of private credit strategies. "We're confident in the business under this new capital structure and look forward to supporting its plans to invest in this next phase of innovation and growth."
Medallia, generative AI and automation
Confirming the news, Medallia's press statement set out three priorities:
- Conversational feedback experiences: Interactive, always-on dialogue, capturing feedback and providing real-time, contextualized responses
- AI-driven action orchestration: Connecting experience data across every touchpoint and automatically coordinating actions across systems and functions
- Agentic automation: Autonomously determining root causes and resolving issues at enterprise-scale
The statement continued: "The company's planned platform enhancements will empower enterprises to respond to their customer and employee needs with greater speed, precision, and operational impact."
Medallia will focus on expanding its capabilities in generative AI and automation across the platform, which is says will enable users to "more quickly identify emerging patterns, predict business impact, and orchestrate intelligent actions at enterprise scale".
Building on its Frontline-Ready AI™ foundation, Medallia also plans to further evolve its platform with deeper integrations across contact center, CRM, workflow, and emerging agentic AI ecosystems.
Medallia customers including Mayo Clinic Laboratories, Mazda North America, and Santander Bank are just some of those to share case studies on Medallia's early work in these areas.
Business as usual
The transaction confirmed today could take until the end of 2026 to fully complete and is still subject to customary closing conditions and regulatory approvals.
However, Medallia said that as it works with its financial partners to close the transaction, "operations remain uninterrupted, with no anticipated impact or disruption to the company's customers, employees, or partners". As stated by Bishof the capital injection will facilitate product development "over the next few years".
For now, it's business as usual, but with an added focus on delivering new capabilities for CX.
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