Medallia looks less like an isolated mess and more like the first dead bird in the private credit mine.

This was a 2021 software deal done at peak optimism, peak multiple stupidity, and peak faith that recurring revenue could somehow suspend the laws of physics.

Now the music has stopped.

Blackstone and the lender group have reportedly refused to keep giving Medallia more payment flexibility, pushing it onto full cash interest. Debt service is now being reported at nearly $300m a year against roughly $200m of annual earnings.

That is not a “complex situation”.
That is a company being waterboarded by its own capital structure.

The problem is bigger than Medallia.

Private equity spent years buying software businesses on the assumption that revenue quality could cover up entry multiple insanity. Private credit was happy to fund it because software looked neat on a slide. Sticky revenue. High margins. Lovely cohorts. Very sophisticated. Very modern. Everyone felt terribly clever.

Then rates stayed higher.
Growth slowed.
AI turned parts of software from “mission critical” into “possibly replaceable”.
And suddenly a lot of capital structures built for fantasy started meeting reality.

That is why Medallia matters.

If a business bought for $6.4bn can end up in restructuring talks with lenders pushing back, this is not just a Thoma Bravo problem. It is a warning shot for every 2021 and 2022 software deal still being carried with a straight face and a valuation memo.

Medallia may be the canary in the coal mine.

The mine, obviously, is private credit’s enormous exposure to software deals underwritten in the age of free money and PowerPoint courage.

A lot of people have been pretending the issue is liquidity.
The issue is price.
More specifically, what these assets are actually worth when nobody is allowed to hide behind adjusted EBITDA, PIK, or a long worded board update.

The really funny bit is that private credit was sold as the grown up in the room.
More disciplined. More protected. Better underwritten.