How the advancing trend of data & analytics focused revenue expansion is impacting middle-market growth.
Persistently high multiples have further intensified the operating pressure in private equity-backed deals. As a result, the focus on organic growth is becoming on par with the more traditional profit levers of add-ons, financial management, and operational excellence. Add-ons will continue to drive multiple arbitrage and post-integration synergies, financial management will always be a cornerstone of private equity excellence, and operational excellence will continue to improve performance and margins. But only accelerated organic growth rates can discount a steep purchase multiple while ensuring a successful conclusion to a competitive exit.
Compared to its other profit levers, private equity’s growing interest in bolstering organic growth is currently in the early stages. However, more and more portfolio companies are upgrading from traditional VP of Sales roles to the higher-horsepower Chief Revenue Officer, and a number of sponsors have implemented commercial Operating Partner roles to drive revenue growth across their portfolio companies. As sales management becomes more and more data driven, an upgraded CRM is now as critical as a company’s ERP system.
Commercially oriented executives understand that their sales teams are hamstrung without the right product-market fit. Yet, sales and product teams have historically been at odds mostly due to the fact that sales teams are typically less rigorous with the use of data and forecasting than their finance colleagues. So, how are best in class companies making the leap forward? Enter Revenue Operations.
The Function of Revenue Operations
Let’s begin with what Revenue Operations isn’t. It’s not a tre...