Commercial leadership has made it to the top of private equity’s priority list, and today’s leaders are being called upon to champion the role of the sales organization as the value-creating engine of the company.
The formula for private equity growth is getting more complicated. No longer can firms rely on cost-cutting methods alone to achieve stellar MOICs, IRR, and exit targets. While PE’s unprecedented performance in 2021 and optimistic trajectory for the coming years are welcome news, it also means that competition will be that much more fierce. Increased available capital means higher valuations that lead to sellers’ markets across many industries. Under these conditions, private equity is focusing their attention on one area for growth: revenue.
When commercialization is prioritized and targeted, companies in businesses-to-business settings have seen 10% to 15% increases in EBITDA, and 20% to 30% higher median ROI with the adoption of specific commercial acceleration programs, according to a Bain report. At the portfolio company level, sponsors and leaders would be wise to invest in top sales leadership and hold them accountable for delivering on the promise of commercial excellence.
As the tide turns toward commercialization, P...