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Increasing the Value of Portfolio Investments

A famous print ad for McGraw Hill once stated,

I don’t know who you are.
I don’t know your company.
I don’t know your company’s product.
I don’t know what your company stands for.
I don’t know your company’s customers.
I don’t know your company’s record.
I don’t know your company’s reputation.
Now – what was it you wanted to sell me?

The message is clear: no matter how valuable the product/service offering and innovative the business model, a company’s success (and therefore its value) depend in large part on its brand. When PE firms consider investing in a company, their brand must be thought of as a business asset much like their people, patents, technology platform or even their supply chain – either it’s an area of existing strength for the business or an area where there is an opportunity to raise the value of the investment.

There are a couple questions a private equity firm can ask to quickly assess the health of their portfolio companies’ brands:

  • How much awareness is there of the company in its target market?
  • How educated is that market on the company’s offering?
  • Do all market-facing groups within the company describe its value proposition consistently? Succinctly? Does it engage their target audiences? Do they “get it”?
  • Does the company have compelling marketing tools to educate customers on that value?

Strategic clarity is an invaluable tool because it not only provides external audiences with the understanding they need to appreciate the value a company offers, but it provides the company with an understanding internally of where the company is heading and what it can accomplish. Our CEO Brenna Garratt sums it up saying:

“It’s the concept of attainable market share – a realistic understanding of the marketplace and how much of that your company should have. PE firms want companies to have a good sense of ‘what do we do?’, ‘what problems do we solve?’, ‘who do we solve them for?’, ‘how many of those companies are out there?’ and ‘how many should be our clients?’”

Brand strategy can help companies achieve that clarity and tell a succinct, consistent and compelling story to all their audiences. But just as important as the strategy is the execution – how do you bring the strategy to life in a comprehensive Go-to-Market campaign to grow the business? According to Brenna, one of the most common challenges faced by B2B services and technology companies that have reached the point of receiving private equity funding is low brand awareness:

“One of the common pain points for these companies is brand awareness – their marketplace isn’t aware of them. The PE firm sees the potential, but the company may not have the skill set to raise that awareness or even the experience to know what steps to take.”

Everyone can appreciate the value of greater brand awareness, and it doesn’t have to carry a massive price tag or a broad-based advertising budget. By telling the same compelling story to the market repeatedly and consistently along with outreach targeted specifically to prospects that meet your ideal client profile, companies can economically grow their pipeline. And with the right marketing tools and sales processes in place to nurture prospects to close, companies can realize a far greater portion of their attainable market share.

Brand, sales, and marketing strategy help to not only increase the perceived value of the company in the marketplace, but provide genuine business assets that raise the value of a portfolio company by laying the foundation for top-line revenue growth. That means an increased valuation as well as more options for exit strategy alternatives.

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