In the increasingly competitive landscape of Private Equity (PE), the pressure to deliver differentiated alpha to limited partners (LPs) increases the importance of post-acquisition value creation. For many general partners (GPs), a key driver of value creation is go-to-market motion and a high-performing revenue engine. As GPs navigate the intricacies of due diligence, post-acquisition, mid-investment and pre-exit phases, the infusion of targeted marketing and sales strategies can be transformative in this value creation journey.
How high-performing sales and marketing leads to better outcomes for investors
1. Due Diligence: Assessments and Gap Analysis
Before any acquisition, meticulous due diligence is paramount. For instance, tapping into an executive with experience in the industry to assess the target company’s commercial operations and market position helps identify red flags that might be lurking beneath the surface. By combining such experience with voice-of-customer research approaches and tools, PE firms can gain a deeper understanding of market sentiments, potential pitfalls, and areas of opportunity. These insights can not only help de-risk the investment, but can help jumpstart the value creation plan.
Key Insight:
Asking the right questions during this phase is crucial. What is the company's current market position? What are the potential growth trajectories? Are there any latent issues that haven't surfaced yet? What are the gaps in the company’s ability to execute? How does the company perform in-market versus key competitors and indirect alternatives?
2. Early Post-Acquisition: Igniting the Growth Engine
Once an acquisition is finalized, the immediate post-acquisition phase is all about setting the stage for growth. Here, the experience of weathered experts is invaluable. Professionals with years of accumulated knowledge will know which directions a firm ought to pursue in any situation. The right senior executive support also helps company leadership offload some of the planning and execution elements related to sales and marketing to experienced operators. This can help the leadership focus on other strategic elements that come with new investors.
3. Mid-Investment: Building Scalability, Sustainability & Accountability
As the investment matures, the focus shifts to scaling operations, ensuring sustainability, and embedding accountability. Again, tried CMOs and CSOs are vital here. Expertise offers a unique blend of strategic insight and hands-on operational knowledge which cannot be found elsewhere, ensuring that marketing and sales strategies are not only designed but also effectively implemented. With the right people in place, the firm can begin to expand, thoroughly integrating additional acquisitions and entering new parts of the market with foresight and care.
Key Insight:
This stage often leads to a recalibration of progress and priorities. It also provides an opportunity for a gut-check on progress around all the elements required for a high-performing revenue engine, from technology, to process, to people and external agency support.
4. Approaching-Exit: Crafting a Continuous Growth Narrative
In the twilight of a PE investment, the narrative shifts to positioning the company for a lucrative exit. Here the firm must ensure that the company's growth narrative is compelling and backed by tangible results. This stage also provides an opportunity to wrap up any outstanding transformation efforts and to determine how far to progress on key outstanding initiatives.
Key Insight:
Yet again, expert CSOs and CMOs play a pivotal role at this stage. In addition to ensuring crisp execution of the key sales and marketing initiatives, their experience can be invaluable in framing the growth story to be included in the next transaction process.
Conclusion
The multifaceted world of PE demands a holistic approach to value creation. By intertwining proven marketing and sales strategies across various deal stages, and leveraging the expertise of seasoned professionals, PE firms can both amplify their returns and ensure their investments are poised for sustained success.
Slade Kobran is Managing Partner, Private Equity; and Dawn Werry and Evan Eckman are both Partner & CMO at Chief Outsiders.
