Egress Solutions Product & Innovation Management Blog

Product Management: PE Firms’ Next Lever to Pull for Value Creation

By Stephen Newman
Stephen Newman
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Private Equity is shifting. Firms have a record number of competitors. Asset prices are steep. Dry powder is abundant, and expectations are high. Firms can no longer depend on deleveraging and achieving operational cost synergies.

Private Equity is shifting. Firms have a record number of competitors. Asset prices are steep. Dry powder is abundant, and expectations are high. Firms can no longer depend on deleveraging and achieving operational cost synergies. In today’s market, a dollar of growth is worth so much more than a dollar cut. To achieve the multiple expansion LPs are expecting, PE firms must empower portfolio companies to obtain strong revenue and margin growth.

 

 

Investment theses today aren’t limited to a 3 year time window and require more than just operational improvements but must tackle difficult market questions for each portfolio company such as price sensitivity, product rationalization, identification of growth opportunities, credible roadmap execution, and a well thought-out go-to-market strategy. It also includes ensuring mission-critical roles are staffed with the right A-player talent to execute on the investment thesis.

In software-based technology products, value creation is dependent on understanding of the market, the buyers, the problems being solved, the company’s unique value proposition, the underlying technology, and ultimately the product vision to get there. This, by definition, is Product Management and is the next lever PE firms will pull to achieve value creation in their portfolio companies.

Despite Product Managers being the leverage to achieve excellence in a portfolio company, most PE firms are light in this skill as part of their value creation bench.

To help PE Firms understand the steps they should take to assess the product management teams in their portfolio companies and how to empower them to move the needle, we have authored this white paper Product Management: PE Firms’ Next Lever to Pull for Value Creation.  Its a valuable read to both PE Firms and to Product Managers who are at companies backed by PE Firms.