Can Private Equity Port Co's Be Like Mike?
Some of us remember August 1991 debut of the "Be Like Mike" campaign. It was created by Gatorade, it featured a memorable jingle, and launched the first mega deal sponsorship for the brand. Kids on playground courts everywhere were humming the tune, while sporting their Air Jordan's and playing with their tongues out.
Everyone wanted to be like Mike, but most didn't want to practice like Mike, work tirelessly like Mike, battle like Mike, compete like Mike, or be coached like Mike. Actually being Mike was impossible hard. In the Netflix move "The Last Dance", Jordan's college teammate James Worthy talked about being forced to stay after college practices to work on their one-on-one skills and other NBA legends Magic Johnson, Larry Bird, Dennis Rodman and Isiah Thomas shared stories of being out played by Jordan. Jordan made the game better.
Winning and success would be so much easier if we could drink the right energy drink and slip on the right set of shoes. It's interesting to note that Jordan's self identified top skill was not shooting, dribbling or passing, he embraced being coached. He was a self proclaimed "sponge and aggressive to learn".
For Private Equity teams, their game of scaling portfolio companies is competitive and hard.
According to Pitchbook, "exits—when private equity investors cash in on their investment and return those funds to their limited partners—continue to fall as the IPO window remains shut and many private equity firms are hesitant to sell companies at low valuations. Per the PitchBook report, U.S. PE exit count and value both declined for the third consecutive quarter in Q1."
Private equity portfolio companies need to identify every possible revenue accelerator to drive valuation.
Private equity managers can take a lesson from Michael Jordan and be a sponge with the rapidly changing B2B buyer data. Many emerging growth companies are using either ad-hoc or informal sales process and practices. For those with an actual sales playbook, if the playbook was designed before 2021, those plays are now extinct due to most buyer preference data shifting dramatically following the pandemic.
Mike Salvino, managing director at Carrick Capital Partners, an investment firm focused on
operationally scaling growing businesses that provide software and technology-enabled services, recently published “A CEO’s Greatest Challenge: Sales And Go-to-Market Execution.” Salvino states, “Don’t get me wrong, nothing about growing a business is easy, but the reason most start-ups fail is that they can’t develop and maintain a great sales channel."
More revenue is always the answer. A great sales machine drives great revenue.
In 2015, HBR reported that companies with a formal sales process generate more revenue. However, research conducted by Vantage Point Performance and the Sales Management Association revealed that 44 percent of executives think their organizations are ineffective at managing their sales pipelines. Korn Ferry’s 2020-2021 Sales Performance Study revealed that organizations with formalized sales processes versus informal/ad hoc sales processes achieved +9 percent win rates, +5 percent overall plan attainment, and +11 percent quota attainment.
Private equity portfolio companies need to be coached, like Mike. They need modern sales processes, practices and motions as the foundation of the sales machine. There is no shortage of data, metrics and benchmarks that define modern selling. Its time for portfolio company leaders to to lace up the shoes and put in the work.
Visit us at LucrumPartners.co and download our latest eBook "Red Flags in Revenue: A Guide for Private Equity". The book provides guidance on how to attack the revenue blockers inhibiting higher valuation.