“To outperform their rivals, private equity firms will need to enhance their ability to spur organic growth in the companies they own,” write Ken Favaro and J Neely in a 2011 Strategy+Business article. They argue that while financial engineering and operational engineering were key differentiators in the past, “organic growth enhancement” is now what sets firms apart.
“Having been forced to write down the value of many of their portfolio companies in recent years,” Favaro and Neely explain, “private equity firms have taken steps to implement improvement via cost savings.” But they argue these improvements are insufficient to salvage underwater investments or reclaim superior returns. Instead, private equity firms should find new approaches.
Favaro and Neely define organic growth enhancement as “the ability to systematically increase the top line of portfolio companies organically.” Generating that organic growth, they argue, will require new capabilities, which some of the top private equity firms already have.
Many portfolio companies, they explain, are historically underperforming; they may lack top-flight product development or marketing staff. Private equity is uniquely poised to provide external support to help companies achieve growth.
The Value of Content Marketing
Content marketing can help portfolio companies achieve organic growth by creating new communications channels, attracting inbound interest, and solidifying (or rehabbing, if necessary) the company’s public image.
One helpful initial step: creating a company blog for the portfolio company. A recent article in PR Daily details the potential impact of CEO bloggers, and the same tenets hold true for PE companies looking to improve or maintain their portfolio companies’ image. A blog can:
- Articulate the company’s vision to a larger audience: A blog can be used to explain the company’s plans, highlight accomplishments, and build trust among potential partners, customers, investors, employees, and industry press.
- Underscoring and reiterating the company’s value – A corporate blog is a great place to emphasize customer success and satisfaction. A well-written, informative blog can emphasize how a company differs from the competition, and pave the way to bolstering corporate image and reputation. Blogs also help build relationships between a company and its customers.
- Solidifying the company’s brand via thought leadership — A corporate brand in an interconnected world can contribute significant value to overall revenue goals. A corporate blog can build brand recognition in new markets and solidify it in traditional markets — contributing significant value to overall revenue goals. Blog posts don’t necessarily have to be focused on the company’s activities; they can also provide insight into industry trends or valuable resources for consumers.
One example of an effective company blog is United Parcel Services’ UPS Longitudes, which regularly highlights corporate executive opinion on the markets and trends of most importance to key audiences. Private equity firms would be wise to emulate this and other similar corporate blogs as one means by which to help bolster the organic growth potential of their portfolio companies via marketing.
In general, effective content marketing requires companies to research and better understand their core markets. Creating buyer personas, interviewing stakeholders, and monitoring recent trends are all essential parts of establishing a content strategy that is focused on the needs and desires of customers and potential customers. These activities will pay dividends in other areas for the portfolio company, providing them with data and insight to inform everything from their product development roadmap to their growth plan to their internal and external messaging.