Private Equity firms operate across a clearly defined lifecycle: deal sourcing, deal making, value creation during the holding period, and exit preparation. While tools and market conditions evolve, the core drivers of success remain stable. Sustainable value creation is driven primarily by revenue growth as studies show consistently between 50%-60% of Exit Value increase can be attributed to revenue growth. This is amplified by disciplined execution across the portfolio. Understanding this reality is essential to understanding how sourcing, diligence, value creation, and exits need to be set up to enable above benchmark revenue growth that generate higher exit price realizations.
Most Private Equity firms are highly professionalized in deal execution and governance. Deal sourcing, investment processes incl. financial engineering, and portfolio oversight are structured and disciplined, supported by clear decision frameworks and governance models. At the same time, commercial value creation during the holding period often depends on the experience and capabilities of individual investment teams, operating teams, and portfolio management. In our view this less structured approach to revenue growth value creation is posing a big risk to exit value realization which is for 50%+ delivered by revenue growth.
Across the investment lifecycle, value is often constrained by fragmented sourcing, unclear commercial insight at entry, slow revenue impact during the holding period, and late exit preparation.
Strong Private Equity firms treat Sales & Pricing as the core engines of value creation and apply the same principles in their deal sourcing processes. They use structured, repeatable approaches to assess and improve commercial performance, applying the same discipline to revenue growth and pricing execution that they apply to capital allocation and governance. They are supported by operating partners, internal and/or external, who operate at eye level with the investment team, with comparable mandate and governance influence to ensure value creation is executed, not just planned.
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