Thoma Bravo's $2.0 billion acquisition of Olo Inc., announced in July 2025, signifies a crucial development in the restaurant technology sector. The deal, which offers a 65% premium over Olo's April 2025 share price, highlights a trend where private equity values vertically focused SaaS companies for their long-term growth potential, despite public market undervaluation.

Olo's valuation at $10.25 per share indicates that the market had not fully appreciated its strategic importance. The company processes millions of transactions daily for 750 restaurant brands, including major players like Domino's and Starbucks. Its impressive 111% net revenue retention rate showcases the effectiveness of its SaaS model. However, prior to Thoma Bravo's offer, Olo's stock had stagnated, failing to reflect its scalability and recurring revenue.

The disconnect between Olo's performance and its market valuation can be attributed to public investors' focus on short-term losses. Olo reported a net loss of $897,000 in fiscal 2024, overshadowing its $285 million in annualized revenue and a return to profitability in Q1 2025. Despite a trailing P/E ratio of 509.14, which is high for a company not consistently profitable, private equity recognizes the value of recurring revenue and customer retention.

Thoma Bravo's acquisition strategy is evident in its history of targeting niche SaaS leaders, such as ModMed and Edifecs. The firm aims to leverage operational discipline and reinvestment to drive growth. Olo, with a $323 million annual revenue run rate and a 12% year-over-year customer growth, fits this model well. Private equity's strength lies in its ability to prioritize long-term investments over immediate profit pressures, which could allow Olo to enhance its proprietary payment system and expand into AI-driven analytics.

The restaurant tech sector is experiencing sustained growth, driven by post-pandemic shifts toward digital ordering and contactless payments. Olo's extensive integrations with point-of-sale systems and delivery platforms create a competitive advantage. Thoma Bravo's willingness to pay 4.2 times Olo's revenue reflects a belief in the company's potential, despite its ongoing journey to profitability.

For existing shareholders, the $10.25 offer represents a significant exit opportunity, locking in a 63% gain from the stock's 2024 low. This deal provides liquidity while mitigating the volatility that has affected Olo's shares. However, for new investors, the situation is less clear. The offer price offers limited safety, especially given the stock's stagnation post-announcement.

The broader implications of this acquisition suggest a shift in capital allocation philosophy. Thoma Bravo's investment in Olo underscores a confidence in the resilience of SaaS companies within vertical markets. While public markets may undervalue firms like Olo due to inconsistent profits, private equity recognizes the long-term growth potential of scalable ecosystems with recurring revenue.

Investors are encouraged to look for similar opportunities in other niche SaaS firms, particularly those with high net retention rates, strategic network effects, and undervalued multiples. The Olo acquisition serves as a reminder of the importance of identifying overlooked companies in sectors such as healthcare, logistics, or finance, which may offer substantial growth potential.