By intentionally limiting its team size to around 230 people, the firm ensures senior partners can provide deep mentorship to the next generation. This structure prevents the team from becoming internally focused and keeps them hunting for deals, which are "not in the office."
During due diligence, analyzing support cost margins is a powerful heuristic. A company can claim to have a great product, but if its gross margins on support are low, it reveals underlying flaws. The goal should be to improve the product to "eliminate the reason for the call altogether."
Contrary to the typical founder narrative of invention, Orlando Bravo emphasizes that his career was built on execution and disciplined learning. He actively listened to his mentors, absorbing their playbooks rather than trying to invent his own, suggesting apprenticeship can be a faster path to success.
To generate returns on a $10B acquisition, a PE firm needs a $25B exit, which often means an IPO. They must underwrite this IPO at a discount to public comps, despite having paid a 30% premium to acquire the company, creating a significant initial value gap to overcome from day one.
The old PE model is obsolete in software. With high revenue multiples (7-8x) and low leverage (30% debt), firms must genuinely grow the business to generate returns. About two-thirds of value now comes from selling a larger, more profitable company (terminal value), not from stripping cash flow.
The firm's playbook involves an immediate, one-time cost reduction at closing to establish a baseline of profitability. This allows them to shift the company's valuation from a revenue multiple to a more stable EBITDA multiple, creating value without disrupting long-term growth initiatives and shocking employees later.