Like them or loathe them there is no arguing over just how effective the teams behind private equity are at producing outsized growth returns. In short, they’re better than everyone else at scaling companies to the next level.
I know this only too well having sat through and supported them across due diligence and helping them unpick costly sticking points myself over the last year.
But how is that ‘closed door’ experience helpful or insightful to you as you try and scale and break through those glass ceilings? Below I have captured what I’ve observed through working with them.
1. Build a Great Business by Prioritising Long-Term Health
Private equity investments often carry a reputation for short-term cost-cutting to boost exit value, but this stereotype overlooks the primary goal: creating sustainable, thriving businesses. PE firms aim to maximize returns by enhancing the intrinsic value of a company, not by draining its resources or compromising its future.
The focus is on sound decision-making that improves operational efficiency and strategic growth. This involves balancing cost management with investments in areas like innovation and market expansion. For instance, one PE-backed business acquired six companies over five years, expanded globally, and improved operational efficiency—without compromising its profitability. The key takeaway? Building a great business involves making decisions that are good for the company, regardless of exit timing, as value creation ultimately attracts the right buyers.
2. Master Execution with Analytical Precision
Execution is paramount in PE-backed businesses and often more granular than in larger, public companies. Success requires translating strategy into actionable tasks that deliver results immediately. Leaders must move beyond directing teams and instead ensure clarity on who does what, when, and how.
This execution-focused environment is paired with analytical rigor. PE firms demand a deep understanding of operational metrics, benchmarking, and unit economics. Leaders must dig into the details, diagnose inefficiencies, and iteratively refine processes. For example, optimizing a marketing funnel requires not only tracking conversion rates but also understanding the nuances between cohorts and refining each stage of the pipeline.
Operating within a PE-backed company is akin to an intensive MBA—it sharpens your ability to diagnose, adapt, and implement strategies effectively.
3. Own Your Results and Drive Impact
In PE-backed businesses, the scale is often smaller than in public companies, enabling employees and leaders to see a direct connection between their actions and outcomes. Every decision and every team member contributes visibly to building enterprise value, fostering a sense of ownership.
This immediacy of impact encourages decisive action. Teams are empowered to “kill the snake”—to solve problems directly rather than over analyzing them. Such ownership leads to faster, more effective solutions. Even during market downturns, the focus in the boardroom remains on what is within the team’s control. This mindset ensures continued improvement and adaptability, regardless of external challenges.
4. Access to Expertise and Resources
Private equity firms bring significant operational expertise and resources to the table. They often have in-house specialists or a network of advisors experienced in scaling businesses across various industries. These experts assist with challenges like improving supply chains, optimizing pricing strategies, or navigating digital transformation. PE firms also provide access to a broad portfolio of best practices, benchmarks, and playbooks that have been tested across similar companies, allowing businesses to implement proven strategies faster.
5. Strategic Capital Allocation
PE firms excel at identifying where capital investments can yield the highest returns. They take a disciplined approach to resource allocation, ensuring funds are directed toward growth drivers like product innovation, market expansion, or strategic acquisitions. This targeted deployment of capital accelerates scaling efforts while maintaining financial discipline, often transforming the company’s growth trajectory.
So, if you’re thinking about whether PE investment is right for you and your business today, or in the future, our DMs are always open to chat through those options with you and give an unbiased view. It’s NOT for everyone, but for those that do suit it the next level of scale (and value) can be within reach.
