How Orlando Bravo Built One of the Most Successful Firms in Private Equity

Overview

This episode features Orlando Bravo, co-founder of Thoma Bravo, one of the most successful private equity firms globally. The discussion spans his journey from Puerto Rico to becoming a pioneer in private equity, the philosophy behind Thoma Bravo’s operations, the evolving role of private equity in the economy, and the firm’s approach to acquisitions and management.

Notable Quotes

- The odds are one of us had to get lucky. Out of everybody here, one. – Orlando Bravo, reflecting on his improbable journey from Puerto Rico to private equity success.

- Private equity is a great change agent... These software companies are not meant to be owned by the same group for 30 or 40 years. – Orlando Bravo, on the transformative role of private equity.

- No matter how profitable you are, you can always cut 10%. No matter how unprofitable you are, it’s difficult to cut more than 20%. – Orlando Bravo, sharing insights on operational efficiency.

🌍 From Puerto Rico to Private Equity

- Orlando Bravo shared his inspiring journey from a small town in Puerto Rico to becoming the first Puerto Rican billionaire.

- His mother, a Cuban immigrant, played a pivotal role in exposing him to opportunities, including competitive tennis, which broadened his horizons.

- Bravo emphasized the importance of mentorship and discipline in his career, crediting early mentors like Carl Thoma for shaping his approach to business.

📈 Thoma Bravo’s Operating Philosophy

- The firm operates with a small, focused team of 230 people to remain outward-facing and avoid internal distractions.

- Bravo highlighted the importance of mentorship within the firm, ensuring the next generation of leaders is well-prepared.

- Thoma Bravo’s growth has been incremental, starting with smaller deals and scaling up to multi-billion-dollar acquisitions.

💼 The Role of Private Equity in the Economy

- Bravo described private equity as a change agent, particularly in the tech sector, where companies benefit from fresh perspectives and operational improvements.

- He addressed the industry’s reputation for being cutthroat, explaining that modern private equity focuses on growth and value creation rather than cost-cutting alone.

- The firm’s strategy has shifted from leveraging cash flow to driving terminal value appreciation, reflecting the evolution of the industry.

✈️ Acquiring Boeing’s Avionics Business

- Bravo detailed Thoma Bravo’s acquisition of Boeing’s Jeppesen division, a critical asset for aviation.

- The firm’s approach to acquisitions involves deep research, long-term tracking of target companies, and building trust with management.

- Bravo’s philosophy of buy the best and operate the best underpins their success in competitive bidding scenarios.

🤖 Navigating AI and Future Risks

- Bravo acknowledged the disruptive potential of AI in the software and SaaS sectors, which could significantly alter the private equity landscape.

- He emphasized the need for continuous learning and adaptation to stay ahead of technological shifts.

- Despite these challenges, Bravo remains optimistic about the firm’s ability to identify and invest in transformative opportunities.