Better Marketing May Be the Key to Boosting Your PE Portfolio Companies’ Growth

by Debra Andrews | September 14, 2022

If you run a private equity (PE) group and you’ve bought portfolio companies in the last couple of years, chances are you paid hefty multiples. The higher the valuations of those businesses, the greater the pressure to accelerate their growth.

You surely have a playbook for turning high-potential companies into high-growth businesses. But if modern marketing isn’t part of that plan, you’re leaving a lot on the table.

Growth marketing can ramp up your portfolio companies’ revenue, generate more value, and drive a higher return on your investment, faster. 

The Key to Powering Up Growth

A recent Adweek article noted that PE firms haven’t led the way in adopting modern marketing practices, but that’s quickly changing, especially in the middle market.

In a competitive environment, with economic pressures growing and a short window to deliver strong returns to investors, it’s not enough to find a target company with solid products, quality revenue streams, and favorable tailwinds. You need assurance that every portfolio company you bet on can build a steady, predictable pipeline of leads—quickly and at scale—and convert a high percentage to customers.

That’s exactly what modern marketing does. And it’s why more PE groups are embracing it to power up their portfolio companies’ growth and value.

What’s Likely Missing in Your Portfolio Companies

Even in middle market companies successful enough to grab your attention, you’re likely to find the marketing function isn’t set up to generate strong demand and drive aggressive growth.

In our experience with many PE-backed companies, we’ve seen that bloated marketing staffs, inefficient processes, a lack of strategy, and insufficient infrastructures are common. It means too much money spent on FTE head count and not enough on marketing execution; and too much time doing marketing busy work and not enough focus on strategic marketing that moves the needle on growth.

One PE-backed client had a huge marketing team that was wildly underperforming, with lots of people doing marketing “things” that were not tied to business objectives, not aligned with the company’s strategy, and not measured. With our help, they righted the ship. Now a significantly smaller team is laser focused on achieving well-defined objectives, staying true to the business strategy, equipped with the technology and tools to engage in modern marketing that drives a steady stream of leads and converts them to customers. This effective marketing machine is enabling the portfolio company to generate a lot more value.

Your Portfolio Companies Need a Marketing Transformation

If a portfolio company’s technology infrastructure was hampering its efficiency and growth, you’d get the leadership focused on a technology transformation. If that same company’s marketing infrastructure is hampering its ability to generate demand and drive revenue growth, you need to be equally passionate about engaging in a marketing transformation.

Marketing transformation is all about setting up the marketing function to perform optimally and drive greater results. It means putting in place the building blocks to transform your marketing operation from a cost center to a profit center—a well-oiled machine that accelerates growth, generates predictable revenue, builds value, and boosts ROI.  

Exactly what that transformation looks like may vary a bit by company, but there are typically a few common ingredients. One of the most important is the right marketing talent.

Too often, middle market companies hire a single marketing generalist lacking the experience and skillsets to power up marketing that’s rooted in strategy and drives measurable growth. But it’s cost-prohibitive for a company of that size to staff an in-house team capable of developing a strategic marketing plan and driving execution. A large internal team also gives you no ability to flex or scale as conditions change (an especially big hindrance right now).

For many PE portfolio companies, a fractional marketing model is the best approach.

With fractional marketing, middle market companies gain a team of highly experienced marketers who can strategize, plan, execute, and measure without tying up budget on FTEs. By providing a slice of each specialist it takes to engage B2B buyers and turn them into customers, this model delivers the specific skillsets and level of resources the business needs, exactly when they’re needed.

Beyond optimizing the budget, fractional marketing is more effective at creating a predictable pipeline of leads that convert to sales—building greater value in the portfolio company, faster. When you have a short runway to create value before it’s time to exit, you can’t afford to get it wrong or leave money on the table. Fractional marketing ensures you don’t, by helping you scale faster and more profitably, leveraging the agility, experience, and skillsets that turn marketing into a profit center.

The right talent is at the core of a marketing transformation, but it’s not the only component. It takes well-developed goals and strategies; technologies that allow you to scale, measure, and optimize marketing; and an agency-like mindset to truly transform marketing and turn it into a profit center.

Want to learn more about setting up a portfolio company’s marketing function for better results? Download our Marketing Transformation Guide

PE Groups are Embracing Growth Marketing…for Themselves   

Some PE groups are adopting modern marketing—not only to power up their portfolio companies, but for themselves, too. We see more PE firms building value creation teams that include marketing professionals charged with developing strategy and driving execution. Most are focused on helping portfolio companies leverage growth marketing, but some are using modern marketing to compete for top targets.

Even in this uncertain and volatile market, there’s a lot of dry powder to be deployed…and a lot of strong companies ripe for investment. Before a founder will put the future of their company in your hands, they’ll evaluate your PE group just like you’ll evaluate them. Your brand and digital presence need to convince them that your firm is the right one to get them a big, second bite of the apple.  

If you’re ready to embrace growth marketing to power up your portfolio companies (and maybe your PE firm, too), what should you look for in a marketing partner? In our experience, it comes down to this:

  • A track record of working with portfolio companies and others with a planned exit strategy that demands fast growth
  • A proven playbook on how to stand up a modern marketing function, quickly and effectively
  • A fractional marketing model that optimizes the budget, putting more dollars where they’ll generate more value
  • A team that knows how to approach marketing transformation carefully (not callously), making recommendations that are good for the business and good for people

To learn how Marketri can help your portfolio companies scale better and faster through growth marketing, schedule an introductory call with our CEO Deb Andrews.