Private Equity Blog

Portfolio Matters: 5 Reasons Growth Stalls

Posted by The Chief Outsider

For private equity firms managing small and mid-cap companies there are five common reasons that growth gets stuck in first gear. But that doesn’t mean it has to stay there.

Given the high prices of assets these days, GPs need full-fledged growth at portfolio companies to generate the returns that will bring LPs back for the next fund. So we sat down with David Vroom of Chief Outsiders to discuss the five most common challenges small and mid-cap companies have with growth.

Vroom speaks from experience, having interacted with hundreds of such companies over his career as a CMO. Since joining Chief Outsiders, he’s dealt with over a hundred PE firms as well, helping them spark the kind of the growth that can be all too hard to generate at these enterprises. Here are the 5 most common challenges he’s seen.

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3 Keys for Increasing Odds of M&A Success

Posted by Clay Spitz

Solid due diligence on ALL aspects of the business and a fast start on value creation are needed to reach the end-point of a strong ROI for the investors at exit

Recently, I was visiting with a colleague from my days at Waste Management Inc. (WM) reminiscing about a major industry roll-up of which we were a part. Waste Management had decided to create value for shareholders by acquiring and consolidating companies in the very fragmented pest control and lawn care business, creating new national players in the industry.

We were part of the acquisition team – several of us having been owners of acquired companies, plus a long-time WM executive.  In two years, our team directed the acquisition and consolidation of over 150 companies, resulting in a roll-up of about $200 million in annual home services revenue.  The entire consolidation was eventually sold to ServiceMaster, owner of Terminix. Fast forward to current days, when many of the old problems with M&A are the same, but there’s a new twist.  In the world of Private Equity, today’s sky-high valuations require making even smarter decisions when buying a company.  Solid due diligence on ALL aspects of the business and a fast start on value creation are needed to reach the end-point of a strong ROI for the investors at exit.

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Banks: Strategies to Keep from Losing Ground to FinTechs

Posted by The Chief Outsider

Over the last decade, the financial services industry has endured rapid transformation. Powered by disruptive technologies and business models, regulatory challenges, and a spectrum of customers with varying expectations, banks and private equity investors are having to re-consider both their operational processes and growth strategies.

To help guide industry insiders through the process, Chief Outsiders’ financial services and SaaS experts Chris Wallner and Sharon Spooler share their insights about what banking institutions need to do today to stay competitive – and what investors should be looking for in considering portfolio firms.

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Mr. or Mrs. Right Now

Posted by The Chief Outsider

More than ever, private equity firms need real marketing solutions at their portfolio companies as quickly as possible, and the fractional CMO model might be the answer.

It’s not enough for private equity firms to merely improve the operations of their portfolio companies anymore. Cost-cutting and generic balance sheet reforms won’t cut it. They need to pursue growth strategies, which are more complex and less reliable. Growth needs talent, and often, marketing talent. But truly gifted marketing chiefs can be hard to find and even harder to hire.

So we sat down with Karen Hayward, a Managing Partner at Chief Outsiders, a firm that places Chief Marketing Officers at portfolio companies for short-term commitments to build and accelerate marketing initiatives to discuss why private equity firms are such a fan of their model.

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Evaluating Board Guidance vs. C-Suite Leadership

Posted by Slade Kobran

The difference between a marketing executive working inside the business and on the board

A standard part of the private equity playbook is to find seasoned executives to fill seats on the boards of their portfolio companies.  Increasingly that includes someone with a strong marketing pedigree who can provide advice, guidance and support to both the management team and the board on an ongoing basis.  But this approach may not be enough for many mid-market firms, especially in an environment where acquisition prices are on the rise, exit multiples are shrinking, and the pressure mounts from LPs to deliver outsized returns.

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