Private Equity Reality Check: When Your Portfolio Company Is Missing Growth Targets
If you are a Private Equity Investor and your portfolio company is missing performance targets, you know enterprise value projections are slipping, and timelines keep moving right — the issue is rarely effort. The longer the missed performance targets persist, the more difficult it becomes to implement course corrections and align the PE firm with the portfolio leadership team. The more the company explains what it is trying to do rather than the strategic growth plan you both agree they need to pursue, the more likely their enterprise value will plateau or decline.
Working with private equity investors, we have found that the root cause of poor performance is usually a lack of strategy. ( a goal without a strategy or an outdated one)
No smoke.
No narratives.
No “market headwinds.”
Specifically, an outdated customer acquisition and growth model that no longer matches how B2B buyers make decisions.
Many PE investors underwrite value creation, assuming:
- Revenue acceleration
- Margin expansion
- Multiple expansion
- Stronger pipeline predictability
- Tested vision and plan for profitable growth
But those outcomes depend on one thing: A modern, customer-centric growth engine.
No-Smoke-And-Mirrors Hard Truth: If the go-to-market model is misaligned with today’s buying behavior, no amount of cost control or leadership pressure will fix it.
What Are The Structural Shifts in B2B Buying (That Break Old Sales Growth Plans and Playbooks)
Is what has always worked for your B2B Portfolio company not working today? What do we need to do to get growth back on track, and where should we start? Your B2B portfolio companies are likely facing shifts in market conditions, but are failing to recognize them or pivot. In many cases, they are trying to do more but are failing to meet growth forecasts.
Where should a Private Equity Investor look when their B2B Portfolio Company is missing agreed growth targets?
-
Generational Transition in Decision Makers
Has your portfolio company adapted to the new generation of buyers and how they make decisions today? Boomers are exiting. Millennials dominate VP and C-suite roles. Gen Z is entering positions of operational influence.
They:
- Self-educate before engaging sales
- Expect digital fluency
- Demand ROI transparency
- Distrust heavy persuasion
- Speak in terms of solutions and outcomes, not products
- Are risk-averse, and sales must build trust and demonstrate competence
No-Smoke-And-Mirrors Hard Truth: If the company still relies on relationship-first, golf-course selling, bourbon and cigars — it’s structurally behind.
-
Committee-Based Decisions Are the Norm
The larger the B2B purchase, the more decision-makers and influencers are involved in each deal. The days of just calling on purchasing alone are over. Has your portfolio company adjusted and identified its top three to five buyer personas? Are they meeting with them?
Enterprise deals now include:
- Finance
- IT
- Operations
- Legal
- Procurement
- End users
The “single champion” strategy is fragile.
No-Smoke-And-Mirrors Hard Truth: If sales training is built around individual persuasion instead of stakeholder orchestration, win rates erode quietly.
-
Digital Education Precedes Sales
Buyers complete the majority of the evaluation before contacting a rep. Some studies suggest 90% of the buying process is over before they speak with a salesperson.
Does your portfolio company have a website designed around how buyers search, and is it being found?
For example, has your portfolio company ensured they have strong SEO and AEO, given that so many searches are conducted on AI?
If marketing assets:
- Lack depth
- Fail to quantify ROI
- Avoid implementation transparency
- Ignore risk mitigation
- Are not relevant to the outcomes they desire today
- Are focused on your company and not the value you deliver
- Do not understand SEO and AEO
Then you do not have a modern sales growth engine, but a sales and marketing system that relies on random acts of sales… and what you thought was a strategic investment will become a job.
No-Smoke-And-Mirrors Hard Truth: Then the company enters deals too late — and too weak.
-
Risk Aversion Is Elevated
In today’s market, buyers want to reduce risk. Over 70% of decision makers are focused on avoiding risk today.
Sales teams that adapt, build strong business relationships based on trust, and demonstrate their competence win today.
Sales teams that have not been trained or coached, and feel their job is to pitch-slap customers and prospects, lose. It’s not any more complicated than that.
Does the sales team of your portfolio company have the skills, beliefs, and mindset to execute your growth objectives?
Economic uncertainty increases scrutiny.
Buyer’s delay decisions.
CFOs demand financial clarity.
No-Smoke-And-Mirrors Hard Truth: If value messaging is feature-led instead of financial-impact-led, deals stall in “evaluation.”
-
AI Is Now Embedded in Buyer Evaluation
Buyers are using AI to:
- Compare vendors
- Pressure-test claims
- Draft internal business cases
- Identify alternatives
- Search for solutions ( many using AI instead of Google
No-Smoke-And-Mirrors Hard Truth: If positioning lacks clarity and structured proof, AI filters the company out before sales are engaged, and you are never invited to the dance.
So, you have had several meetings with your portfolio’s leadership team, and you do not feel they have identified the root causes of their missed growth plan.
What should you do?
Below are some of the questions I use when a PE firm asks I meet with their underperforming B2B portfolio company, and I encourage you to ask them as well.
How Can Private Equity Investors Diagnose an Outdated Growth Strategy?
Private Equity Investors Should Ask these 10 questions during board meetings and QBRs:
-
Is pipeline growth driven by repeatable demand generation or heroic sales effort?
-
Has the win rate declined gradually over the past 3–5 years?
-
Are sales cycles lengthening without structural change?
-
Does marketing measure MQLs instead of revenue contribution?
-
Can the company clearly articulate economic ROI for CFO-level buyers?
-
Does sales training address committee-based selling?
-
Are case studies outcome-driven or anecdotal?
-
Is customer acquisition overly dependent on outbound prospecting?
-
Is digital content deep enough to support self-directed research?
-
Does leadership blame “market conditions” more than internal execution gaps?
No Smoke
No Mirrors
How did they score?
If 4+ answers raise concern, modernization is needed.
If 7+ raises concern, the growth engine is structurally misaligned.
If the root causes are not found or go unaddressed, and a course correction doesn’t happen quickly, your portfolio companies’ enterprise value will continue to decline.
Now your investors are pressuring you for answers.
Only a modern growth engine creates multiple expansions.
If your B2B portfolio company is missing targets, don’t ask:
“Are they working hard enough?”
Ask:
“Is their customer acquisition architecture aligned with how buyers actually decide today?”
Most are not.
The firms that modernize quickly will:
- Shorten cycles
- Increase win rates
- Improve margins
- Earn valuation multiple premiums
- Increase enterprise value
The rest will blame the market, the economy, dated equipment, or competitors that do not know their costs.
We know the research shows that private equity investors help their companies grow faster and more profitably.
A Harvard article titled What Every Company Can Learn From Private Equity shared:
Multiple academic studies have confirmed that PE-owned companies outperform their peers—not only by delivering better financial returns but also by making transformative operational improvements. On average, the companies PE firms buy achieve productivity gains of 8% to 12% in the first two years after their acquisition—far outpacing the 2% to 4% gains that public companies typically see.
The guiding principle for PE-backed firms is straightforward: The CEO and the team must fit the company’s value-creating thesis; the thesis shouldn’t be designed around their capabilities. At the best portfolio companies, each top executive is held individually accountable for one or more value drivers in the thesis.
Not all revenue is created equal. At PE-backed firms, the leaders understand this and regularly analyze revenue streams, eliminating unprofitable or low-margin ones that drain resources and dilute the organization’s focus. Many executives at public and family-owned businesses are familiar with customer profitability and its impact. But CEOs of portfolio companies are willing to manage revenue down to increase earnings and improve cash flow. That’s often difficult for public companies to justify, given short-term revenue pressure and investor expectations.
So what we are talking about is a cultural shift from how we have done things around here to a new strategic growth engine…if you have the data and answers to build it.
Are you a Private Equity Investor frustrated that your portfolio companies are not meeting growth forecasts?
I have some questions for you to consider:
Has one or more of your B2B portfolio companies failed to meet agreed growth targets?
Would you like to know if their go-to-market strategy will scale today?
Would you value understanding customer voices and their overall satisfaction?
Do you have a dated value proposition, or one that resonates with decision-makers today?
Do you feel your portfolio company is not on board with your growth expectations?
Do meetings with your portfolio company leave you feeling unaligned and with more questions than answers?
Have you found that the leadership team of your portfolio company is not aligned on how they plan to meet growth expectations?
How long has your portfolio missed its growth targets?
How much longer can you wait to set a new course?
Are any of your portfolio companies’ enterprise values less than when you invested in them?
Would you like to not have uncomfortable conversations with your investors?
From my experience, private equity investors can help the companies they invest in scale if they have unfiltered data and the leadership team is focused on increasing value. Working with their portfolio company, they can recommend and coach a new plan and the behaviors that support it.
We don’t build strategic growth plans to scale enterprise value on gut and intuition, but on current, unfiltered data.
One of the quickest ways I have seen PE investors help the companies they invest in is by gathering the data they need and writing a strategic growth plan that supports the growth forecast.