RevOps – Private Equity’s Secret Weapon for Achieving Exit Multiples Faster

Revenue operations for your go to market strategy

Top-performing Operating Partners shorten investment horizons by adding value quicker. They achieve this by confidently knowing when and where to make changes. These top-performers build the most effective revenue generation through superior Revenue Operations (RevOps) practices. 

While creating material gains in revenues, RevOps also structures the critical insights needed to accelerate exit plans. With better-informed decisions, Operating Partners maximize multiples and exit faster. In the following article, we cover more ways RevOps provides a clear path to a faster exit. 

Private Equity firms holding periods

Meet or Exceed Revenue Targets

With a strong RevOps function, a portfolio company will maximize sales efficacy, improve cross-sell potential, and prevent churn. Targeting top producing accounts is impractical without knowing the value of each account and each activity. To achieve this, sales and marketing leaders must learn through data what activities drive the tightest conversion rates. Teams can focus on meaningful reductions in customer acquisition costs while speeding up sales cycles. Opportunity “probability” becomes a real representation based on history and science.  

In 2019, SiriusDecisions conducted comprehensive research revealing 10% to 20% increases in sales productivity. They explained this as attributable to the alignment of Go-To-Market (GTM) functions as achieved through Revenue Operations.

Companies with superior RevOps also see:

  • 100% to 200% increases in digital marketing ROI
  • 10% increases in lead acceptance
  • 15% to 20% increases in internal customer satisfaction
  • 30% reductions in GTM expenses

All of this enables and encourages scalable growth, shortens exit timelines, and helps exceed revenue targets.

Increase Value with Effectiveness

Companies see an average 30% reduction in GTM expenses after transitioning to a RevOps model. Growing revenue with RevOps is neither the only solution nor the only problem to solve. Exit timelines shorten by improving EBITDA margins and shaving off the waste. 

The most impactful waste savings comes from the alignment of technology projects. Well-rounded RevOps teams optimize tech stacks and provide structure for spending and decision-making. A holistic backlog and roadmap will prioritize the most effective revenue technology projects. With 8000+ technology Solutions on the market, “build vs buy” has never been more critical or complicated. 

A close second is delaying (or preventing) additions to the staff. RevOps enables the evaluation of talent-based upon outcomes. In doing so, only the most productive sales reps are retained.  Likewise, new reps can become productive more quickly with shorter ramp times. 

  • Sales leaders coach and develop with more insights. 
  • Marketing teams prove where to focus resources while increasing campaign effectiveness. 
  • Customer Success teams solve problems with deeper insights into customer health. 

A strong RevOps function will squeeze value from GTM teams, saving money and shortening time to exit. 

“If there was ever a time when the speed at which fund managers were able to increase the value of the portfolio companies and sell them back to the market was the distinguishing manager selection criterion this was the year.”

Melissa Ferraz, Global Head of eFront Insight at BlackRock

Augment Intuition and Experience with Data

RevOps provides repeatable means to understand a business and take decisive action to improve it. Gartner predicts by 2025 60% of businesses will transition from intuition-based to data-driven GTM strategies. Top-performing PE Firms are driving this trend.  They are enabling their entire portfolio with  KPI dashboards, refreshed in real-time. A core principle of RevOps is to drive predictable revenue through transparency and cross-functional wisdom. 

Revenue growth using RevOps

It’s hardly the radical idea it once was 5 years ago. RevOps can now augment tried and true experience with real data.

As such, the need for RevOps talent has been on a steady increase. Over the last several years RevOps job postings have seen a steep increase. VP of RevOps job postings were up almost 300% recent years.  So while the RevOps playbooks have been written, the RevOps talent pool is burgeoning. 

To Recap

The transition to RevOps is complex and should not be taken lightly. For instance, for most companies bringing on an entirely new business unit is not feasible. Finding the right partner with deep GTM experience and RevOps capability will differentiate a portfolio. Leverage a trusted advisor with the experience and track record to assess and measure the business. Next, put together a change sequence that fits the unique position and market. Lastly, execute the strategy as soon as possible. Supported by a data-driven approach, quicker exits become a science.

As hold times fluctuate, Multiple on Invested Capital (MoIC) continues to stabilize at or before 5 years. Adding value by both growing revenues, and improving EBITDA margins early, is a sure win. For Operating Partners to drive down investment horizons, they must align portfolios with RevOps. Know sooner, when, and where to make the changes needed to maximize growth and exit earlier. It’s not a matter of “If” but “when” RevOps will be the standard.