Scaling the Lower-Midmarket Portco with a 100-Day Plan

Private Equity 100 Day Plan

Sales and marketing excellence consulting is moving down market. Private Equity is forced to find companies with outstanding products yet have flawed revenue generation capabilities. Fortunately, transformations are now being done at a right-sized price with rapid payback. Below are key insights to consider when building your private equity 100-day plan around sales and marketing excellence.

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Why are small companies so challenged to grow after being acquired?

Working with dozens of companies in a wide variety of industries has taught us one valuable lesson. CEOs of small companies do not know how to build and manage sales and marketing excellence. The founders built the company with passion, connections, and an innovative approach to a market problem. They have often come from a finance or technology background –never from sales. When the company gets to a certain size, the wheels fall off and sales dip.

The issue is the CEO often relies on the approaches they have always used. New tools or methods (SDRs, Marketing Automation tools, CRMs) are foreign. “Just add more reps”, “Raise quotas” or “buy some lists” are not the sure-fire fixes they once were.

Why is optimizing the efficiency and effectiveness of the revenue team critical?

Our experience is that sales and marketing processes and budgets are rarely optimized in the lower mid-market. Bloated compensation packages or insufficient funding leads to unhappy sales reps. We have seen lead management systems where interested prospects wait days or weeks for a response. Or forecasting processes that have worse odds of being accurate than bets at a roulette wheel. Meanwhile anxious investors are counting on a deal thesis that requires action. Operating Partner, it is imperative you act.

What should you do when you see the problem, but your CEO does not?

The idea of giving up even a small amount of control creates resistance from the Chief Executive. Even with a thorough analysis, benchmark data and primary research, your leader digs in and resists changes. They believe the business is a snowflake. It is so unique that no one could understand their issues or how to grow their business. A longer-term takeout may be needed but speed of change is imperative.

The answer is to zero in on the one or two things that will produce quick wins. Focus your efforts on what they will do. They will place the blame for slow growth on something – work from there.

Right sizing the solution

Budgets for smaller firms restrict their ability to correct their revenue issues using traditional consulting companies. They are nonetheless important to fix. Large teams will conduct extensive market research, build foundational tools, or conduct broad talent assessments. That takes months. The work is exhaustive and expensive. In my experience80% of the answers came from 20% of the work. The additional research was impressive, yet it did not often change our findings. We can build those same tools in a fraction of the time with significantly reduced cost. Knowing your buyers, for instance, is fundamental to any successful sales and marketing effort. It just does not need to involve dozens of customers and cost hundreds of thousands to build.

7 reasons why you should avoid the knight

After an acquisition, the new ownership team might ask for changes at the top of the revenue team. Essentially, to bring in the white night. The belief is fast change will result from an experienced leader. Bad idea. Why?

1. Any great CRO will take some time to find and acclimate to the environment. You will waste five months and up to one year.

2. They are expensive. Bringing in the right CRO will require equity dilution and guarantees like signing bonuses, and relocations.

3. The chances of selecting the right CRO is low. Keep in mind the average tenure for a CRO in the US is under 18 months. And CEOs are notoriously bad at picking good ones.

4. Terminating the old leaders will create a vacuum. Others will follow, even some of the best Account Executives.

5. There are builders and there are runners. Building a high-functioning sales and marketing team is very different from running one. Builders are quickly bored; Runners cannot “break glass” even if they need to.

6. The transformation will require your agent to burn bridges if necessary. Nothing can be sacred so enemies will mount. The long term CRO needs to be a leader, not constantly changing the company.

7. There is no perfect fit. Every candidate for the position will have strengths and weaknesses. Taking chances about the leader’s shortcomings will retard the growth of the portco.

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Short-term, Long-term Success

The private equity 100-day plan is critical to success. This is when companies expect changes and new processes to be developed meaning less internal resistance. It is also when transformation costs fall below the line providing the best chance of preserving the deal thesis. Structural and procedural issues with revenue generation efforts rarely get better without intervention. And the industry that serves that market is expanding.