New Sales Motions Transform a Portfolio Company’s Performance

A midmarket PE fund faced a dilemma. It had acquired a promising industrial company specializing in testing, inspection, certification, and compliance (TICC). TICC Co’s* energy sector customers badly needed these services to meet environmental regulatory requirements and avoid costly accidents. Despite its status as a market leader, the company’s revenues and EBITDA remained essentially flat three years into the holding period. The investment was shaping up to be a disappointment.

Two factors turned things around and put the company on a solid path to value creation: The PE fund hired a new leader for TICC Co, and he kicked off a systematic review of the company’s go-to-market approach. 

Smarter segmentation

The outside-in review identified several opportunities for growth. Most customers fell into one of two camps: Some simply wanted to purchase the minimum number of inspections needed to comply with local market requirements, while others signed on for additional inspections in the hopes of detecting problems as early as possible. Given that shutting down energy infrastructure can trigger tens of millions of dollars in total costs for repairs, fines, lawsuits, and lost productivity, not to mention reputational damage, opting for more frequent inspections struck the second group as money well spent.

The review also identified a third segment: companies interested in determining the optimal number of inspections for each asset. This group used longitudinal data analysis to make the best decisions about additional testing, predictive maintenance, and preventive remediation before any more costly problems would arise. For the first two groups, sales motions largely focused on the customer’s procurement function. For the emerging third group, the strategic nature of the sales conversation was more likely to escalate to the CFO’s office.

Regardless of the target buyer, TICC Co’s commercial turnaround was driven largely by efforts to increase the professionalization of its sales force. It deployed a Sales Play System that provided sales reps with more granular information about customers: What did they need? How often? What was their total spend on inspection-related services? Where were the opportunities to grow share of wallet? Tools such as MoneyMap^® and Commercial Excellence X-Ray answered those critical questions, which enabled the sales reps to develop more customized and actionable account plans for each customer.

As a result of this sales transformation, revenues and EBITDA grew 70% and equity value tripled within 24 months. Rather than sell the business, the PE fund decided to double down. It acquired one of TICC Co’s major competitors and plans to apply the same level of sales and marketing sophistication to the new affiliate.