Private equity is often thought of strictly in terms of its role in financing the growth of mid to large size companies. But many private equity firms take a proactive role in advising their portfolio companies to help them grow, which in turn raises the value of their investment. There are many ways PE firms help portfolio companies, and in our experience, holistic-thinking and “brand-minded” firms often strive to put intangible assets to work to effectively bolster their businesses. In this post, our CEO Brenna Garratt, who has worked extensively with PE firms over the course of her career, shares some insight on how portfolio companies can accelerate their growth and PE firms can share in their success through the benefits of a well thought through Brand strategy.
In such a hard-nosed industry, so focused on the numbers and the value of tangible assets, brand-building might seem like a soft way to improve ROI, but as Brenna points out:
“It is often all about money – about increasing value. It’s no secret that a business with a brand that is well known in the marketplace will generate higher revenues, attract better talent, and command a greater valuation.”
Branding is often undervalued because it is equated with its component parts rather than a strategic initiative with supporting tactical pieces. If Branding is treated as simply a design exercise of creating a new logo and prettying up new sales materials, no lasting value will be created. In a world of increasing connectivity, crowded and sophisticated market places will quickly see through these tactics – sometimes referred to as “being dressed up for the dance.”
In contrast, a company seeking to wisely expand its market share by investing in its Brand must shift its thinking from tactical to strategic by considering how it is currently communicating and being perceived, both externally and internally. A successful Brand is aligned with the needs of external stakeholders (clients, prospects, analysts etc.) as well as with the strategic goals of the business in a way that is both credible and differentiating. It’s not just a new look; it is refining or even redefining who you are as an organization and how you serve existing and new clients better than the competition.
“Think about this as Brand with a capital B rather than brand with a lowercase b that is mired in “window dressing” activities like logo development and related tactics. Branding done strategically is a business asset that raises the value of an organization.”
Companies that have reached the level of receiving private equity funding have most likely built a valued service/product offering, but oftentimes their sales and marketing functions are underdeveloped, creating a substantial opportunity for improving the business. Particularly for the companies we serve in complex B2B industries, many suffer from a lack of awareness, an inability to consistently describe their business to clients, or both. Without a well-positioned, consistent, and clearly articulated brand, investments in other aspects of the business will not be able to reach their full potential:
“Money going into sales, operational improvements, new talent and new products and services development will not be maximized if the business isn’t positioned and promoted in the marketplace in a way that is strategically relevant to the company’s goals and objectives.”