The Thoma Bravo-Verint Deal and the Software Sector's Private Equity Surge: Navigating Opportunities and Risks for Long-Term Investors

The $2.3 billion acquisition of Verint by Thoma Bravo marks a pivotal moment in the private equity (PE) rush into software. This all-cash deal, which merges Verint's AI-powered customer experience (CX) automation tools with Calabrio's workforce engagement management (WEM) capabilities, exemplifies a broader trend: the consolidation of fragmented SaaS markets under the banner of AI-driven innovation. For long-term investors, the transaction raises critical questions about valuation sustainability, exit strategies, and the long-term viability of PE-led software plays in an era of elevated multiples and shifting liquidity dynamics.

The Strategic Logic Behind the Deal

Thoma Bravo's acquisition of Verint is not merely a financial maneuver but a calculated bet on the future of enterprise software. By combining Verint's AI-powered contact center analytics and bots with Calabrio's employee engagement tools, the firm is creating a unified platform that spans both customer and employee experiences. This “end-to-end” approach aligns with the $50+ billion CX automation market's demand for integrated solutions. Verint's 24% year-over-year ARR growth and its 10,000+ global clients further underscore its scalability—a key PE metric.

The deal also reflects Thoma Bravo's mastery of the “buy-and-build” strategy, a hallmark of its $184 billion asset portfolio. By merging Verint with Calabrio and other portfolio companies like Medallia and Aisera, the firm is constructing a cross-industry AI ecosystem. This strategy mirrors KKR's $10 billion investment in Cotiviti, another 2024 megadeal that leveraged AI in healthcare analytics. For investors, the lesson is clear: PE firms are prioritizing platforms with modular, AI-enhanced capabilities that can be scaled across verticals.

Broader Trends in Software PE Investing

The Verint acquisition is part of a larger wave of PE activity in software. In 2024, the technology sector accounted for 33% of buyout deal value and 26% of deal volume, with software subsectors dominating. However, this surge comes with structural challenges. EBITDA multiples in North America and Europe hit 11.9x and 12.1x, respectively, by year-end 2024—levels that leave little room for error in exit valuations. Meanwhile, aging dry powder ($1.2 trillion globally) is pushing GPs to deploy capital quickly, often at the expense of rigorous due diligence.

The shift in liquidity strategies is equally significant. Traditional IPOs now account for just 6% of exits by value, with PE firms increasingly relying on minority stakes, dividend recaps, and secondaries. For example, minority stakes in 2024 totaled $116 billion, or 24% of total exits. While these tactics generate cash flow, they dilute returns for long-term investors. The Verint deal, which will delist the company from NASDAQ, highlights this trend. Thoma Bravo's decision to suspend quarterly earnings calls and guidance further signals a focus on long-term AI R&D over short-term performance metrics.

Risks and Opportunities for Investors

For long-term investors, the Verint acquisition and similar deals present a dual-edged sword. On one hand, the integration of AI and cloud-native technologies offers substantial growth potential. Verint's 50% AI ARR penetration and Thoma Bravo's track record (e.g., SailPoint's $12 billion relisting in 2025) suggest that well-executed consolidations can unlock value. On the other, the risks are tangible: regulatory scrutiny of cross-border data flows, integration challenges in merging disparate SaaS platforms, and the pressure to monetize through unconventional exits.

Investors must also grapple with the sector's valuation realities. With 24% of unspent PE capital classified as “aging,” there is a growing risk of overpaying for targets. The Verint deal's 18% premium to the unaffected share price, while reasonable, underscores the competitive bidding environment. For investors, this means prioritizing firms with defensible moats—such as proprietary AI models or sticky enterprise clients—over those with merely high growth rates.

Strategic Recommendations

1. Focus on AI-First Platforms: Prioritize investments in SaaS companies with deep AI integration, as these are more likely to withstand commoditization and regulatory headwinds.
2. Diversify Exit Strategies: Given the decline in IPOs, investors should structure deals with alternative liquidity mechanisms (e.g., minority stakes, secondaries) to mitigate holding period risks.
3. Monitor Debt Metrics: The software sector's reliance on private credit (90% of mid-market buyout financing in 2024) means debt costs and leverage ratios will increasingly dictate returns.
4. Engage Proactively with Portfolio Companies: Post-acquisition, investors should push for transparent integration plans and AI R&D roadmaps to ensure long-term value creation.

Conclusion

Thoma Bravo's Verint acquisition is a microcosm of the software sector's transformation under private equity. While the sector remains a magnet for capital, the path to outsized returns is narrowing. For long-term investors, success will hinge on a disciplined approach: balancing bold bets on AI-driven consolidation with a pragmatic understanding of valuation risks and liquidity constraints. As the dust settles on 2025's deals, those who adapt to this new reality will be best positioned to capitalize on the software sector's next phase.