What Medallia's faceplant tells us about private credit

- Medallia is a customer-experience software firm that was taken private by private-equity firm Thoma Bravo in 2021 for $6.4bn. It has struggled under that debt load. - "Private credit" (or direct lending) refers to loans made by non-bank lenders (e.g., asset managers, specialty finance firms) to mid-sized companies, rather than via public debt markets or banks. This market has exploded in recent years. - The "faceplant" mentioned is Medallia's recent debt restructuring, where private-credit lenders who lent to the company had to take a "haircut" (loss) on their loans — something proponents of private credit had long argued was unlikely, because private lenders can work quietly with borrowers. - This matters because private credit is a large, fast-growing, and relatively new corner of finance with little public transparency. A high-profile restructuring that inflicts losses on lenders challenges the narrative that private credit is safer or more flexible than public debt. It may signal broader trouble in the sector if interest rates stay high and corporate earnings weaken.