Kyle Uebelhor: Hi, everybody. You’ve got Kyle Uebelhor and my colleague Andrew Horvath today, and we’re really excited to introduce you to the, the first in a podcast series that we’re doing at the Alexander Group. This particular topic, Andrew, near and dear to our hearts, it’s all about how you create value regardless of who you are in your organization, what are the things you have to do to actually create value that increases your multiple, delights those shareholders and finds ways to actually grow the business in a great way. And today’s really the introduction of how that all works together. Andrew, I don’t know. You see this a lot in the private equity world. I mean, value creation is probably the topic that most people gravitate to when they’re thinking about any kind of transaction.
Andrew Horvath: Yeah. I mean, it kind of starts and ends with enterprise value. And that’s how any good sponsor or owner creates their revenue stream. So I think being able to control what you can control, right. We can control our EBITDA the multiple sort of at the mercy of the market. But that’s half of the value equation there. So it’s a lot about what we can control and how we really maximize that, that value creation lever in the organization.
Kyle Uebelhor: Yeah. An interesting thing is that, you know, through all the work that we’ve been doing over the past decades within Alexander Group and Andrew and myself in particular, especially if we look at the sort of the industrial, the manufacturing, the distribution space, individuals who are really kind of responsible for servicing and or producing a product or distributing a product, we’ve learned there are really only six key value creation levers four of which really matter. But maybe what we’ll do, Andrew, let’s just run through those really quickly, and then let’s talk a little bit more about what everyone can expect over the course of the next series as we go deeper into each one of these particular topics. But, if you think about it, you start with a profitability, and profitability is, as you mentioned a minute ago, it’s the EBITDA, but it’s profitability with a growth component to it. It’s not just profitability for profit’s sake, but actually how do you profitably grow an organization? Lever number two is organic growth. How do we actually grow the business in places we’ve never been before? Lever three innovation. How do you actually create value? By being innovative. Lever four mergers and acquisitions, showing people that you know how to actually acquire an organization and really integrate it appropriately. And then lever five and lever six, you know, financial engineering, this is what traditional people have done. They’ve they found leveraged buyouts or finding ways to work the balance sheet in their favor to create some sort of value. And, you know, last one is synergy. And synergy is that euphemistic word that says, hey, how do we take some things and cut the cost out? And really, really only interested in the first four. I don’t know if you want to speak to, you know financial engineering or synergy, but, you know, that’s not really commercially excellent in the world that we live.
Andrew Horvath: I think very important for the overall story, but as far as we’re concerned and want to keep it very commercially relevant, there’s a lot to talk about with those first four like you mentioned.
Kyle Uebelhor: Yeah. And commercially relevant for us. Just to sort of be clear, that’s anybody who’s got a revenue number on their shoulder who concerns themselves with the revenue or the P&L statement. And it includes the marketing team. It includes the sales team, it includes the service leaders, includes that whole organization who’s truly kind of responsible for the revenue equation and what commercially excellent orgs look like. Let’s break it down just a little bit. I’m going to go into detail what you can expect in terms of each one of these four major levers, and give you a preview of what you can expect. When we get a little deeper with some of the clients that we’ve worked with and some organizations that we’ve seen do this quite well starting with profitable growth. Profitable growth is about doing more with the same or less than you have today. Let’s unpack that a moment. More or less with the same essentially saying, hey, we have ways to get better at what we do to actually have our business maintain its revenue structure. But actually getting more out of each individual. Each part of the process or whatever tools we have today. So profitable growth is actually broken differently from what we’ll talk about in a moment. In organic growth, profitable growth says, hey, we’re very great at optimizing our resources. One of the ways I always think about it, it’s the right person at the right place, at the right time, against a whole myriad of buyer journeys that exist in your world, so very attuned to what those buyer journeys are and what the customer lifetime value of our or your clients might be, but it’s actually thinking very succinctly right person, right place, right time.
And it’s really about choosing channels and partners and internal resources the correct way. And you know, in the world that we’re living in today, especially with AI, there are those routes to market, those omnichannel environments are getting more and more complex. And I think you’ll hear some interesting stories when we talk about profitable growth, about what people have done uniquely in this space to actually really demonstrate value to shareholders, value to the street, whomever it might be, saying, hey, we know how to do this really well. We are commercially excellent. And spoiler alert on this one. When this episode pops up, we know that there’s one key ingredient to profitable growth. Yeah, obviously it’s an engaged leadership team. But the real differentiator when we see great organizations who know how to grow profitably, They have a strong revenue operations team, Rev ops as a cohesive unit that truly understands how to help the, you know, garner insights from our customer base, leverage our marketing team, you know, get the most out of the sales team and understand that back end service value rev ops is a key to that piece. So I mean profitable growth, it’s huge. I think it’s all something we think about passively, but maybe not something that’s front of mind on a day-to-day basis.
Andrew Horvath: Yeah, I think you can see that. Just look at how much attention pricing gets. That’s a big margin lever, right? How to activate that in your organization. We’ll talk about that and much more in that particular installment.
Kyle Uebelhor: That’s right. So you know, after profitable growth Andrew, why do we differentiate between that and lever number two organic growth?
Andrew Horvath: Organic growth it comes in many forms. It’s obviously the higher level of definition would be creating more value or increasing your revenue base with your current structure. So a lot of times we’ll look at an organization that, you know, may do some M&A, but we try to do like year over year. How did you grow with your core team? And that could be things like introducing new products that could be gaining new customers, that could be going deeper with your current customers? That could be pricing changes. That could be you entering new markets, right? Whether it’s geographic or specific end markets. But organic growth is really essentially trying to add on to your current revenue base without necessarily adding any external resources. We can add hires. We can add particular products to the bag, but it’s your same team, your same core business, just bigger the following year. So we’ll investigate some of the more practical and more common approaches to true organic growth in that installment. But, you know, when you think about things like competitive wins, right, displacing a competitor from a prospect, what does that look like in terms of lead generation, lead qualification and really how to go display somebody with a better value prop with you know, could be a better mousetrap, but it’s oftentimes the entire revenue team wrapped around that product.
Things like expansion of current customers. It’s a lot easier to expand with current customers than it is to crack into new customers. What are some strategies there? What are some of the tried and true methods to go get more from our current set of customers? And that could be as simple as knowing where to go look for additional white space. It could be educating around our vast product set or services breadth. That’s one of the key components here. Very tough to hit a number, a growth number every year with just new customers. We have to concentrate on expanding our current footprint with our existing, and we have to make sure we’re outpacing what we’re losing with our existing. So part of the organic growth equation is really minimizing the churn risk, really building the moat around our current customers to make sure no one can come pick them off. So it’s a combination of all three of those. And a couple other levers as well. But, you know, it’s one of those that it’s sort of the meat and potatoes of any good go-to-market organization. And we’ll talk about, you know, what differentiates the top performers from those that sort of just get by.
Kyle Uebelhor: Yeah. And I think, Andrew, in organic growth, what’s really interesting about this to, to me is I see my clients go through it. It’s the toughest sales motion that exists. Oftentimes it’s it’s that, you know, that conversion that you know, Hunter mentality. I want that hungry person out there to go and, you know, kill what he or she eats or eat what he or she kills. I always mix those metaphors up. But as we think about it, that conversion of net new accounts, net new clients and contacts comes with a lot of extra motions underneath it. It’s really it’s actually quite challenging, frankly. It’s probably one of the toughest things that we see organizations fail at. And as we think about the expansion of the talent profile, uh, for your sales organization in particular, perhaps how your sales organization interacts with your marketing organization? There are different jobs out there now that are necessary to actually get organic growth. Right. And I think trying to do the organic growth motion, which is different than profitable growth, the organic growth motion requires a rethink of talent oftentimes.
Andrew Horvath: Yeah. That’s right. If you’re thinking about holding the same organization accountable for growth in the following time period, having our people get better and identify those who need some skill building. That’s a big part of it, right? It’s you only do so much with your top performers. They’re going to do what they do every year. But getting that growth from the middle of the organization, it takes a lot of those talent levers to activate that. So getting those that are the low performers out of the business, moving those into new roles, maybe that are not a great fit, and then really enabling everybody to get better at what they’re selling. That tends to be a winning formula.
Kyle Uebelhor: Yeah. And Andrew, you’re going to explore on this one. I think you touched on it a minute ago. And I think this is a key piece because it’s often very interesting, very alluring for organic growth to go either into new markets and or to new geographies. And I think that that discussion, how those two things may seem similar but are quite different, and how that challenges faced by a lot of our, you know, world-class organizations that we see.
Andrew Horvath: Yeah. That’s right. I think they both come down to really prioritization. I think new markets for the sake of new markets is always one that could be it can be fraught with a lot of expense if not done right. So being very careful and very particular about where to place those bets. And that’s I think a lot of these organic growth levers come down to prioritization and deployment of scarce resources. That’s without adding a ton of heads, which I think is probably somewhat of a limiting factor in 2026. We have to be able to place our people where we know they’re going to win, and that does a lot of times take new data sets. It takes maybe a new approach or methodology to deployment, maybe breaking some old habits. That’s some of the bolder visionaries in the revenue leadership space. They’re doing just that.
Kyle Uebelhor: Yeah. And interestingly enough, if you think about new geographies I masked oftentimes, well, in this new world that we’re looking at today, you know, with a little bit of protectionism and or some tariff things that are getting in the way, or perhaps just different national outlooks. Hey, are you guys seeing this, this world go back where the pendulum is swinging to just a country for country sake. And my answer to that is not yet. No. I think there’s too much that is great about really well-run, commercially excellent organizations that say there’s applicability across all regions of the world in kind of an equally footed way. But to Andrew’s point a moment ago, you have to be selected. You have to be intentional. Go where you have the right to win, and make sure you’re provisioning yourselves and your channel partners or your direct selling resources the right way to win when you’re there. But I think global and globalization is still going to exist from a commercially excellent organization. It’s just a little bit more nuanced than maybe it was five years ago.
Andrew Horvath: That’s right.
Kyle Uebelhor: Yeah. So we’ve covered profitable growth, you know, do more with less organic growth, find some new places or new customers. Number three, innovation. We know that you get a multiple term and a premium when you innovate and innovation comes, you know, really in our world kind of three ways. Um, it’s really product management, Evolution and meaning. Specifically, how do we become a less product-centric or an engineer solution-centric to a more market-driven view of the world? Customer centricity. So going from product centricity to customer centricity and doing it with a product and or service that may or may not be in existence today, how do you do that? How do you do that? Well there is messaging reimagined, you know, making sure that you’re positioning yourselves as a leader with the way that you’re providing maybe things that you’ve got today in a new and innovative way. Making sure that we’re actually adapting into the economic models of our customer sets the right way. And being innovative as to how do we actually get there? What do we do to do something different that’s new for them and then monetize it? You have to monetize it.
And I’d say the third thing about, you know, really the way the cross-section between product commercialization and actual monetization is how demand gen is changing the world of innovation these days. Being really thoughtful about that buyer journey that happens so much further in advance than ever before, where you are viewed as the thought leader before a person has the first conversation with anybody in your organization. So how does demand Gen tie back to the product ideation, to the product commercialization, to the actual monetization in your org? And what points did the marketing and product teams come together to help you get to that level? This one I’m super excited about. We’re going to have one of our colleagues, Kevin Savage, join me on this conversation, and we’re going to dive deep in what we’re seeing best in class organizations, both inside of manufacturing and distribution on a global basis, but also what are others who are outside our space doing that would be interesting to you. So I don’t know, you know, we used to think innovation just happened outside the box. Let’s focus on the sales team, Andrew. Not the case anymore. This is all one embedded ecosystem whenever you’re customer-centric.
Andrew Horvath: Yeah. Agreed. And I think it’s about striking the right balance between what we know as a business is the next offering, the next service, the complementary product and relying on voice of customer. I think VOC is a very powerful tool, one that has to be used correctly and go back to that famous Henry Ford quote about if I ask my customers, they tell me they needed a faster horse. Right. So it can’t be overly driven by VOC if, you know, if they don’t know what we know, you know what our team doesn’t know. So I think having some combination of that, plus our product development teams kind of connected by the sales and marketing team, that’s where the real innovation starts to happen. And it’d be great to hear Kevin’s thoughts on that as well.
Kyle Uebelhor: Yeah. I’ve seen more change in the evolution of the ecosystem of the product and marketing and sales team in the last 3 to 5 years than in my past 20 years doing this. And that’s that, I think, is because customers are asking for us to become innovative partners and thought leaders with them. I’ll make a quick comment on this. You know, innovation, it’s a product management evolution from being, you know, engineer-centric to, you know, customer-centric. It’s about messaging reimagined about demand gen those are the highlights. You know, there’s another piece to this puzzle though, and that piece is I’m seeing innovation in your go-to-market strategy. And this is where it’s really interesting. And this is where we’re seeing people becoming more. And we’ll bring some research to this more adept in the AI opportunities. How do we actually connect in an innovative way to connect with our customers. So innovation you will get rewarded. It is a value creation lever. It’s not just about whether or not you’ve created a new widget, but it’s really how you’re connecting and engaging on the terms of your customer base. When they want to be engaged with appropriately and providing a unique, different solution that nobody else has. That stuff’s pretty cool right now, you know. All right. So we’ve covered three of the four commercial levers. We said there were six, but three of the four that, you know, really, really focused right now. Andrew, talk a little bit about what you see all the time, especially in the private equity world mergers and acquisitions.
Andrew Horvath: Yeah. So M&A is definitely part of the investment strategy, the growth strategy for most private equity firms, obviously very important in corporate organizations, publicly traded organizations. And the frequency of that in private equity is gets most of the attention. So we’ll talk about the, you know, the M&A plan as part of growth, of value creation, how it fits in. I think obviously it’s going to be one of those where it doesn’t take the place of the levers that we’ve covered already. It is very much in concert with those levers. And it’s interesting because this one plays into the other three levers. So we think about M&A. Typically, you’re going to acquire a business to fill a product or service gap. Right. What does that mean for innovation? What does it also mean for how you arm your sellers to grow organically and profitably grow with that new offering? It could be to cover a geographic hole. So if we buy a part of the business that’s in the northeast that we don’t currently have a footprint in, that’s great. But how do we integrate that with our overall organization? How do we make sure that we are possibly turning on additional national accounts that we now can service because we have a northeast footprint? So geographic expansion is very much a valid M&A reason there. It can be just for scale, right? Or buying to get bigger. It’s a lot easier to buy volume than create volume in the near term. How does that mesh with the rest of the organization and their growth goals? And then competitive displacement, right? Buying a competitor is sometimes easier than taking them out in the field.
So what does that look like for the renewed value proposition of the organization? How do we make sure that we’re getting the most out of that acquisition? So M&A is obviously you think about the buy and build approach in private equity. It’s fundamental to that growth story. But I think when you look at the quality of M&A and not all inorganic growth is created equal, obviously some organizations have a really good plan to, uh, not just bolt on, but to really integrate the organizations. And if you think about some of the potential hurdles, the risks of just buying a business and not getting the full value out of it, how do you avoid that? Right. So we’ll talk to folks that know their stuff in the M&A game and, and how to not just target and acquire businesses that can increase the overall value of the platform. But also we can create an equation where one plus one is greater than two. And we’re really harnessing that the M&A activity to add, you know, much more than just marginal value to the business. Obviously, this one comes at a much bigger cost than the other growth levers, right. You know, innovation you could argue is could be a pretty high cost for R&D. But M&A is typically a much bigger cost outlay, at least in the front end. So how do we recoup that cost and make sure that translates into value story. There’s a lot to dig in there.
Kyle Uebelhor: And I’ll tell you, Andrew, it doesn’t matter if you’re a private equity owned, which the spotlight gets shown a little brighter. And a lot of publicly traded companies I look at, I found three ingredients for success in M&A. And you know what? Well, first off, what does success mean? Well, success means you can prove to others who have an outside lens a critical view of who you are because they want to evaluate how much they, you think you’re worth. Success for them is repeatability. Somebody who can go in and show that this is something that is not just a one off, but rather a core structure for who they are. Those three ingredients for success that I have seen in really, really good M&A world, it’s a very robust commercial diligence. Don’t buy something not worth it. First and most important. So you got to do commercial diligence. Not just the regular due diligence, but true commercial diligence to prove your thesis that this company target that you’re going to acquire is value added to you and you have a way to actually extract that value. The second real important lever there is is some sort of integration playbook. There is an expectation for your organization as well as the target that this will not be a standalone. You’re actually going to be a part of the org of the future for us. And I will tell you that I’m looking forward to hearing some of the worst case scenarios in your in your in your pot whenever you talk to these guys, Andrew, about those acquisitions that just got bought and then set aside, that is a disaster waiting to happen for cultural pieces as well as value.
It’s actually a value eroded oftentimes. So you got to have a playbook on how to do it, how to do it well. And then finally, you really do need some sort of dashboard or tracking mechanism that demonstrates that, you know, pre, during and post acquisition, we are accomplishing that integration that will create value. Let’s show that. And I think that’s something that really any particular investor, somebody who’s interested in your organization in determining the value of who you are, having a way to show and demonstrate that you can do this, accomplishes that goal that I said, they want to see that you can. It’s really interesting. I don’t know, Andrew. I mean, it’s kind of exciting. We’ve seen this. We’ve been we’ve we’ve been really looking forward to this conversation or these conversations. We’ve got a lot of outside end viewpoints that are going to be joining us to, to help explore each one of these a little bit further. I think you kind of a summary comments you have before we wrap and get ready for the sort of that first, next, that next pod.
Andrew Horvath: Yeah. It’s interesting. I mean, this is almost like a bake-off in terms of the importance but just the benefits of doing these different levers correctly. I think it’s up to us and up to the folks listening in to understand sequencing, understand prioritization. When you think about a chief revenue officer, they’re balancing all of these objectives at the same time. It’s not do M&A this year and do organic growth next year. It’s grow organically and do it profitably and weave in some innovation. And oh, by the way, you’re going to have 3 or 4 different acquired companies joining the fold. You know, one each quarter. So how do you figure out how to mesh those together. How do you pay the right amount of attention to each of them and have them, you know, work to to boost each other rather than be at odds or ignore 1 or 2 of them. I think that the thesis here is that a really good chief revenue officer, a really high growth organization that can create more than market value is doing all of these levers at the same time. Obviously, you can load balance during a particular point in time, but I think it’s up to the listener to figure out based on each installment here. How do I correctly prioritize? How do I correctly sequence, how do I get the most out of these levers? By using them together in the right way, and it’ll be different for every business. Right? People are in different spots in terms of maturity growth objectives for private equity folks, time in the hold. But I think there’s probably a roadmap or a loose playbook here to figure out how to really pull the levers in concert to make sure that we’re getting the most bang for our buck.
Kyle Uebelhor: Yeah, yeah. I think our goal hopefully over the, over this course of this next series is who needs to be involved as you make these decisions? How do you do it? What does good look like? And you know, we’ll have a few anecdotes and stories of when things have not gone well and why. So looking forward to sharing that all with you and couldn’t be more delighted to have you join us on this next series together. I always enjoy my time with Andrew because I think we have a lot of interesting insights and opinions. We bounce off each other, but more importantly, we hope that you get the same from us as we go down this path together over the course of the next several weeks. So thank you very much and truly appreciate your time today. Looking forward to connecting. And as always, if you have any questions, you can always reach out to us independently or through the Alexander Group as a whole. We’re delighted to have you along the journey. And please keep those questions coming and ideas, because this idea spurred from our client work and some folks who are in our community. So delighted to have you. Thanks for joining and looking for that next installment. Take care.
