PE: Top GTM Acceleration Drivers to Create Sustainable Value (Revenue Growth, Higher EBITDA Margin, & Multiple Expansion)

Today, creating value in Growth PE & Middle-Market PE primarily begins after you invest or own the portfolio company.

Historically, the strategy was different – you could rely much more on financial engineering, buying low to sell higher, and using leverage (which today is a smaller portion of the deal than in the past).

Positioning a company for a strong exit with great ROI requires a lot of work – one of the key value acceleration drivers is GTM.

The smartest and most successful Private Equity and growth-stage PE funds take a partnership approach to collaborate with C-Level executives at the portfolio companies to create value via GTM to drive sales, marketing and operational improvements for a higher ROI.

It’s well known that combining your expertise in asset selection, market and sector expertise with GTM portfolio support is key to success. Best PE investors will: implement an optimal GTM strategy, best practices in sales, and will bring in best in class GTM talent while adding a wealth of operational GTM expertise to accelerate the rate of top-line revenue growth to aid the portfolio company to grow faster but capital-efficiently in their market.

When creating value for your portfolio companies, 80%+ of the uplift and real value can come from top-line growth.  Here are the key GTM drivers that can accelerate this revenue growth.

Top GTM Drivers to Accelerate Capital-Efficient Growth & Create Sustainable Value

  1. People (A-Level Talent) on your GTM Team
  2. Go-to-Market (GTM) & Sales Strategy
  3. Effective Pipeline Creation – Lead Generation, ABM, and Outbound SDRs
  4. Effective New Customer Acquisition – New Logo Sales
  5. Expansion Sales – Upsell & Cross-Sell (Account Management)
  6. Renewals / Retention (Customer Success & Customer Focus)
  7. Sales/Product Alignment
  8. Revenue Growth via Geographic Expansion
  9. Effective Sales Team & GTM integration of the M&A / Add-On Acquisitions
  10. CRO / GTM Leadership & Front-Line Management Talent
  11. GTM Representation at the Board of Directors
  12. Revenue Team – Operational Efficiency & Improvements
  13. Capital-Efficiency & Cost Efficiency on the GTM Team
  14. Pricing Optimization

 

 

PS – Rough notes on the supporting points of these Top Drivers/Levers:

 

  • GTM A-Level Talent / People 
    • Recruiting Process Improvements
      • Develop a process to bring in the best-in-class people
    • Leveling up skills
    • Improve Employee Alignment
      • Incentivising Employees to Create Value (see: KKR presentation by Peter Stavros)
  • Sales Strategy & Go-to-Market (GTM)
    • GTM – target the right markets, right customer profiles and using the right channels
    • Market mapping
      • where do you sell the product
  • Sales Excellence
    • “Sales excellence is the measure of how successful not only an entire organization is at closing more deals, but also a measurement of the success of individual sellers. Sales excellence takes into account how quickly deals are closed, how many deals are won, a sellers comfort with all of the tools at their disposal, an organization’s ability to support sellers, and much more.” – by Seismic
    • Sales enablement – equip your sales team with selling tools and tight Unique Value Prop
    • Improve Sales Rep Onboarding Process & Accelerate Ramp Time
    • Develop sales people more effectively
      • Consistent Training & Certifications
      • Required 1-on-1 Sales Coaching
    • Improve your pipeline growth
    • Customer Segmentation
      • targeted Unique Value Proposition by segment
      • identify the most profitable segments and focus
    • Adjacent Markets
      • identify the best and most attractive adjacent markets
    • Channel Strategy
    • Improve Customer Acquisition Efficiency
    • Sales Org Structure
    • Sales Process
    • Sales Tech Stack
    • Sales Management
      • Level up through Sales Management training and development
      • Focus on Analytical & Metrics-Driven Sales Management
    • Sales & Marketing Alignment
    • Comp Plans & Incentives
    • Sales Culture
  • Marketing Excellence
    • Marketing strategy
    • Demand Generation
    • Analytical Skills
  • New Customer Acquisition
  • Expansion Sales  – Upsell & Cross-Sell (Account Management)
  • Customer Focus – Retention/Renewals (Customer Success)
    • when you win customers, you need to ensure they are successful with your solution
    • acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one
  • Product Strategy & Offerings
  • Geographic expansion
  • M&A / Add-on acquisitions
  • Improve Executive Management
    • add world-class executives
  • Strategic Changes
  • Capital structure / capital allocation
  • Operational efficiency improvements / Operational Excellence
  • Cost Efficiency
    • Cost improvements
    • Cutting out unnecessary spend
    • Optimizing budgets
  • Pricing
    • optimize pricing structure to capture value that you deliver to the customers
    • implement controls to ensure pricing discipline and reduce price leakage
    • bundling to improve cross-selling

PE Funds can also increase value in other areas outside of GTM such as Strategic improvements or Capital Structure / Capital Allocation.  But a focus on GTM can produce exceptional top-line Revenue Growth that will affect EBITDA and ultimately a Multiple Expansion later when you prepare for an exit.