Private Equity Research Briefing

Value Creation and Commercial Optimization Study

Evaluating a portfolio company’s revenue organization to determine growth challenges and best practices for commercial optimization is essential to build value creation throughout the hold. Alexander Group recently surveyed and interviewed operating and deal partners from over 50 private equity firms to determine the top commercial value-creation levers for portfolio company growth.

The following five levers and implications were noted as the most important:

  1. ICPs & Account Segmentation: target segments before making GTM shifts. Keep a pulse on buyer-level preferences with tailored messaging and value propositions.
  2. Demand Generation: Test demand generation capabilities during diligence and look for multiple lead channels and technology infrastructure. Work with management to deploy segment-specific motions.
  3. Differentiated Coverage: Diagnose cost to serve at the customer level and help management understand the sales, marketing and service costs and their impact on profitability. Use the annual commercial planning process to promote productivity initiatives.
  4. Customer Experience: Establish a CX vision and strategy for the organization and set KPIs that align to the strategy and goals. Systematically track VoC and customer journeys.
  5. Pricing: Move to value-based pricing by incorporating changes in customer buying behaviors as key inputs. Leverage revenue operations to own pricing planning and governance.

The report includes tactics, guidance and checklists from the PE community for initiating, implementing and procuring value creation from the levers.

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