How 6 PE-Owned Companies Became Revenue-Generating Machines
You want a fast exit, but your revenue is not cutting it. What do you do? A growing number of PE operating partners are hiring temporary C-leaders. Their mission is to drive revenue to get more offers at a higher multiple.
The new temps are not just CEOs or CFOs, either. They are revenue-generation experts. Think: Chief Revenue Officers, Chief Sales Officers, and Chief Marketing Officers. And the PE firms are getting what they had hoped for from the Interim C-Leaders. The results include rapid revenue growth and much more lucrative offers.
Here are six companies that transformed their go-to-market strategies, increased market valuation, and grew revenue rapidly. The results are all thanks to Interim C-level Leaders. They brought the builder mentality, proven go-to-market strategies, and goal-obsessed drive. These stories are extracted from the new report: Interim C-Level Leadership — Go-to-Market Change Agents That Accelerate Private Equity Value-Creation Plans.
“We take a hard look at an organization, find what’s missing, and put the right pieces in place,” said John Auer, Managing Partner and Interim C-level Leader with Cortado Group. “We break glass when necessary. We replace non-performing talent, systems, and processes with the right tools, technologies, and people to create revenue generating machines.”
6 Revenue Generating Machines
1 — From a 3:1 to 6:1 Multiples Offer
What do you do if you want to exit in 12 to 18 months, but your revenue growth has stalled? Your best offer is just 3:1 multiple on earnings. But it’s lower than market rates.
You can take the offer and run. You can refuse the offer, hang on, and hope you get a better offer. Or you can take revenue-focused action.
You can replace misaligned sales and marketing teams with people prepared to roll up their sleeves. You can replace an SDR team performing at one-fifth the benchmark level and a low 16% win rate. You can hire a powerhouse SDR team ready to go-to-market. You can replace the marketing staff with top-tier talent. You can establish clear KPIs for the teams. You can add a revenue-generation structure to the sales and marketing process. And you add an accountability component.
Those are the exact actions that one SaaS company took. They hired an Interim CRO to right its ship. The move paid off. The firm doubled the opportunity win rates, raised the enterprise value from $28.5 to $55 million, and fielded multiple offers at a 6:1 multiples.
2 — Aims for $1 Billion Valuation. Achieves $1.5 Billion.
A growth target of $1 billion is not small potatoes. It requires a major go-to-market strategy to carry it off. Yet, a large industrial manufacturer had already faced several booking misses. One more would jeopardize both its objective and future valuation.
What’s more, it lacked a consistent way of identifying and prioritizing accounts that could deliver the greatest revenue in the shortest amount of time. Yet, that was the very thing it needed to do.
The company needed to maintain a 15% CAGR to hit its growth target of $1 billion. To do that, it hired an interim C-level Leader. The move worked — brilliantly.
In a very short time, the manufacturer launched several new revenue-generation-focused tactics. Changes included adding a new sales territory model based on potential spend and workload capacity. It also prioritized and assigned the highest potential accounts to the best sales resources. Another change was calculating revenue potential by account and solution across all sales channels.
The result greatly exceeded the company’s original goals — by half a billion. It reached a $1.5 billion valuation. Its new sales structure was so successful, it was on-pace to exceed 24-month goals.
3 — Lead Funnel Conversions Expand by 5.1%
Even a large marketing and sales budget can’t save you. You need to have the right go-to-market revenue-generation-focused processes and systems in place. A perfect example is a cybersecurity company that faced a common PE dilemma. Their C-level Leaders jumped ship.
In this case, the company churned through three CEOs and two CROs. When the head of a critical department left it was the last straw. Board members were exerting intensifying pressure. They wanted to regain lost ground and overcome the company’s lagging revenue.
With just three employees left in the company, it decided to hire an interim CMO. The sales and marketing builder rapidly executed a series of actions. First the I-CMO launched a new brand identity and messaging. Then he removed under-performing agencies. Next, he implemented lead scoring and weekly nurture campaigns. Finally, the I-CMO restructured sales territories and pricing schedule.
The results were felt immediately — delivering several revenue milestones. Among them was a 5.1% rise in MQLs to SQL conversions. Another was weekly appointments for SDRs increased by 33%. Also, sales cycle length decreased by 22%. And ASP increased from $90,000 to $110,000.
4 — 10.7% Sales Growth in a Short Timeframe
Sometimes PE companies reach a point where they feel like all hope is lost. For example, a real estate software company was being hit by several revenue killers all at once. Among them, stagnant growth, declining sales performance, unpredictable revenue attrition, and customer churn. This perfect storm compromised sales performance and drove down revenue.
While the situation seemed hopeless, the company hoped that an Interim CMO could perform strategic magic. The magic needed to include growing revenue and regaining its market position. The company wanted the interim C-leader to implement new initiatives. It wanted them to include generating revenue growth quickly and delivering rapid results.
The I-CMO executed several action steps in a short timeframe. They included identifying the source of customer churn risk on each account, sharpening market segmentation and cross-sell synergies, and redesigning sales team territories, compensation, and quotas.
The result was better than the company expected. Outcomes included minimizing at-risk revenue by 17% in one year, increasing upselling to existing customers by 3% overall and by 11% to top 50 accounts (>$95K per annum), and growing new customer sales by 4% year over year.
“When your sales and marketing operation is broken, you need a builder to fix it,” said Dan Bernoske, CEO and Founder, Cortado Group. “When your sales and marketing operation is optimized, you need a runner to keep it going. Without a C-level Leader who is a builder, there is a lot at stake. On the line are the opportunity costs of missing out on more robust sales, better deals, and higher revenue.”
5 — A 14.3% Gain in Revenue Growth
The current state of hiring C-level executives has been described by hiring experts as “fiercely competitive” and “incredibly challenging.” According to a Hunt Scanlon Media partner, “The competition to hire C-level Leaders right now is acute for PE. They need forward-thinking leaders who can transform and progress their business.”
A commercial fire protection and life safety company felt the pain of this reality at a time when it lacked a stable and predictable sales leader and source of revenue growth. At this dire moment, it decided to bring an Interim CRO on board. Goals included building a new sales and marketing go-to-market strategy, while searching for a permanent sales leader.
The I-CRO hit the ground running with a series of revenue-focused actions. Among them, creating a multi-pronged marketing program, and hiring industry experts and tenured sales professionals for the go-to-market team. He also built rigor around CRM to create predictable revenue projections, customized a five-step process for opportunity management, and introduced coaching cadence.
The results were formidable. They included expanding the sales team from zero to 22 salespeople, and growing revenue in two years from $7.2 million to a forecast of $26.1 million.
6 — 78% Sales Increase Across All Businesses
It’s a common story in the PE world. You need to grow revenue quickly. But while you slog through the months-long and challenging C-leader hiring process, you’re burning through cash and losing revenue. This was the scenario that a healthcare technology company was facing. It knew it needed a CRO stat, but was months away from finding the right full-time C-leader.
Compounding the problem was that, at the same time, the company had to achieve several milestones. Among them, reposition its GTM strategy, build a business case for funding, enable substantial revenue growth, and expand its marketing department. It gained a lifeline when it hired an Interim CRO.
The I-CRO stepped up and helped the company build the foundation for an effective lead generation engine. At the same time, he helped prepare the way for a new permanent CRO. The transformation initiatives included restructuring sales plays and the compensation structure, designing a persona-based nurturing campaign strategy targeted at key leads, and integrating HubSpot with Salesforce to refine and optimize the lead management processes.
The results included a rapid 78% increase in sales across all business sectors, with revenue projected to increase to $21 million. Closed deals increased from $9 to $16 million and were projected to increase another $5 million.
What’s Your PE Firm’s Revenue Growth Strategy?
“To thrive in the next wave of private equity, firms must reimagine business strategies and operating models,” according to EY. Revenue-focused Interim C-level Leaders can bring new business strategies and operating models to today’s PE firms.
“We know what needs to happen and in what sequence, so we can bring together the critical pieces of a revenue-focused GTM program quickly — from the tech stack to data scientists,” said George De Los Reyes, Managing Partner and Interim C-level Leader with Cortado Group.
Learn more about working with Interim C-Level Leaders in the Cortado’s Group new report. Download: Interim C-Level Leadership — Go-to-Market Change Agents That Accelerate Private Equity Value-Creation Plans or contact us today.