For me, one of the defining experiences over the last couple of years has been working directly with Private Equity firms and their portfolio companies. In fact, you’ll see Private Equity investment increasingly in mid-market companies.
So why the defining experience I mentioned?
These days when a PE firm invests, it does more than just seek to cut costs (that typically gets done and dusted in a few swift months…), the main focus is on growth. For example, if a PE company has taken an investment for a five year period (which requires creating significant upside at the end of the 60 months) then early cost cutting can return maybe a 20-30% EBITDA improvement. Healthy, but hardly going to set the world on fire.
For more meaningful returns, PE companies then quickly focus on ‘the growth engine’. And by that they mean Sales and Marketing.
And at this point, things get interesting. They see a problem, and with inbound, an opportunity.
The problem: they see Marketing as unmeasurable, costly and not directly connected to sales. They see Sales as inefficient and often ineffective.
The opportunity: if you could join the two up, and have process and technology underpinning the two functions, then you could have a ‘closed loop growth engine’.
And, being the smart folk they are, Private Equity firms are increasingly seeing inbound marketing as key to delivering this in their portfolio companies.
Why have they latched onto inbound?
- You can fix the investment cost into a monthly amount that means no nasty surprises at Board Meetings.
- You can measure the return: a really good inbound dashboard means you’ve got transparency all the way from website visits through to closed sales.
- At last, you can get proper pipeline visibility. This is great from a business planning perspective and also they get a better future view of their portfolio companies performance (ie. No nasty surprises…)
- You can start small and grow the approach – completely depending on results. This fits with something a lot of the PE guys like, the concept of a ‘Minimum Viable Product’ (MVP). Inbounds aligns nicely with this – as you start small then iterate based on actual behaviours and results
With Private Equity becoming an ever more popular funding/growth route for mid market companies, we expect Inbound to be major conversation in the boardrooms. So don’t wait for your investors to ask ‘where are you with inbound’ – get ahead and start closing the loop!