PE Value Creation 2.0: Helping Maximize IRR through Better Diligence & Ownership

We are in the new era of “PE Value Creation” that we can affectionately refer to as 2.0.  Now it’s much more about better diligence & ownership than ever before.

In the far more competitive world of PE, achieving superior risk-adjusted returns hinges on better diligence (which is surprisingly possible) and far more effective ownership – it focuses on optimizing go-to-market (GTM) and operational efficiency (not merely cost cutting, but actually capital-efficient Revenue Growth), and optimizing for better team dynamics.

 

Enhanced Diligence

GTM Due Diligence
– Assess the GTM teams and compare vs the role matrix
– Analyze customer acquisition and customer management strategies
– Review sales and marketing processes for effectiveness

Operational Due Diligence
– Identify opportunities for process improvements and capital efficiencies (not merely plain cost savings)
– Evaluate business processes and operational metrics to identify areas for improvement
– Assess scalability of current operational practices – how this supports scaling Revenue Growth
– Identify potential operational risks

Team Assessment
– Evaluate the capabilities and alignment of the management team with strategic goals
– Measure Employee NPS and assess employee engagement & team culture
– Identify key leadership gaps and plan for necessary hires

 

Optimized Ownership

I think a big part of our job in PE is talent business, more focus on this lever is key.

Talent Management
– Help your CEOs foster a great culture that attracts A+ talent
– Provide ongoing training and development not only for leadership but for middle and front-line managers
– Align incentives with long-term value creation goals

GTM Strategies
– Develop robust go-to-market plans with clear metrics
– Implement data-driven sales and marketing management practices
– Focus on customer excellence to increase retention and expansion

Operational Excellence
– Introduce best practices in operational management
– Continuously monitor performance and adapt strategies
– Implement a focus on capital-efficient growth (not just cost-cutting)