Private Equity’s GTM Wake-Up Call: Talent, Segmentation & the $500M Mistake

🧠 Episode Summary:
In this insightful episode, Alex Rawlings is joined by Brian Reavell, Founder of R-Squared Advisors and seasoned Private Equity Operating Partner, to dive deep into the world of go-to-market (GTM) strategies. Brian shares a comprehensive GTM playbook for PE-backed portfolio companies—spanning from due diligence and customer segmentation to talent evaluation and post-investment execution.

With over two decades of commercial leadership and consulting experience, Brian explains why private equity firms often overestimate internal talent, underestimate customer orientation, and misalign incentives—leading to missed growth targets. Packed with case studies and actionable frameworks, this episode is a goldmine for anyone looking to drive scalable and sustainable sales growth within a PE-backed environment.

⏱️ Timestamps:

00:00 – Introduction to Brian Reavell and today's GTM focus
 01:26 – Common mistakes PE firms make around organic growth assumptions
 03:21 – The three critical GTM pillars: Ideal Client Profile, Talent, and Segmentation
 05:38 – Why talent is the most overlooked area in due diligence
 08:00 – Assessing sales talent beyond resumes and black books
 09:28 – Quantitative vs. qualitative approaches to evaluating salespeople
 11:20 – EQ, IQ, and AQ: The key characteristics to assess in talent
 13:18 – Building a GTM strategy post-investment: Process & execution
 14:45 – Case Study: GTM transformation in a $4B building products distributor
 16:56 – Impact of role design and customer segmentation on profitability
 18:50 – $500M top-line and $100M EBITDA opportunity unlocked
 20:42 – Managing change in founder-led businesses
 23:07 – Overcoming resistance at field and leadership levels
 24:53 – Case Study: Cultural and GTM integration in a K-12 education platform
 27:43 – Creating flexible but standardized playbooks
 29:35 – Assessing and top-grading sales and marketing leadership
 31:02 – Succession planning and commercial leadership turnover
 32:54 – What creates board-level confidence in GTM leaders
 33:52 – Brian’s top reading and learning resources
 35:19 – The First 90 Days, AI, and making tech an enabler
 36:17 – How to connect with Brian Revelle

📚 Resources Mentioned:

• Winning Moves & Intelligent Equity by Dan Kremins
• The First 90 Days by Michael Watkins
• ChatGPT and AI tools for sales enablement and productivity

📨 Connect with Brian Reavell:
Email: brian@r-squaredadvisors.com
Company: R-Squared Advisors (not linked in transcript, assumed domain)

Raw Selection partners with Private Equity firms and their portfolio companies to secure exceptional executive talent. We focus on de-risking executive recruitment through meticulous search and selection processes, ensuring top-tier performance and long-term success.

🔗 Connect with Alex Rawlings on LinkedIn: https://www.linkedin.com/in/alexrawlings/
🌐 Visit Raw Selection: www.raw-selection.com

Transcript

00:00
Welcome back to the Royal Selection Private Equity Podcast. Joining us today  is Brian Reval, an experienced private equity operating partner focused on go-to-market. And that's where we're going to dive in today is your organic growth,  your playbook on go-to-market strategy for your portfolio companies  from  due diligence on a portfolio company  right through to  building that go-to-market strategy and then the deployment of it.

00:30
Here's a playbook for you. Get your pens ready. Brian, if you can share a brief insight into you, Yes, Alex. Thanks for having me. So I'm Brian Revelle. I am the founder and run my single shingle, R-squared Advisors, where I help PE-backed navigate messy middle market companies between acquisition and growth. My background is primarily I've been in the commercial roles for 20 plus years.

00:58
I started my career at SBI carrying a bag, went through leadership and made the leap into consulting about  nine, 10 years ago and  worked for a couple of boutiques,  have worked in private equity portfolio operations and at a larger consulting firm. And now I'm out of my own and helping companies in the middle market grow. Nice, like it. So what mistakes do you see private equity firms or portfolio companies making and what was used to correct them?

01:26
I think sometimes they underwrite to growth  without having properly either  understood the TAM or the achievability of  market share growth  or potentially wallet share growth within their existing  client base and within  certainly across their portfolio companies.  I think sometimes there's a impetus to prioritize budgeting  and  ensure that your role design and everything else falls within budgets.

01:56
not particularly in terms of the acquisition  growth potential. And  what I mean by that is  there's  a,  sometimes an  upside that is difficult to capture, right? And I think many times some of these companies that are less mature either don't have the aptitude or the attitude to be able to go get that market share that they're underwriting towards,  or they don't have the means or capabilities either within the existing structure of

02:25
performance conditions we'll call it or the talent to actually go execute.  And some of that is design work and strategy. Some of it's just pure tactical execution.  And so I think a lot of P firms sometimes mistakenly  overvalue the existing team or the go-to-market approach or structure without really understanding the customer orientation, right? It's very easy to look at  what's called pretty slide charts and  market potential, but

02:54
When it comes down to pure execution, I think that's where a lot of these younger middle market companies tend to fail  is that they don't have the means or the capability or the know-how to actually consistently execute.  So,  we talk about go-to-market strategy, which basically  in everyone's senses, how do we drive organic sales growth in the most part?  know there's other facets to that.  What are the facets that you look at?

03:21
that you go, okay,  let's look at due diligence and of an acquisition for a platform company. What are the things that you look at in  like the go-to-market readiness that these are the kind of three, five things that I look at and then let's dive into them in a little bit more detail. Sure.  So I like to think about it  in a couple of different ways, right? I think...

03:47
One of things I first look at, if I had to put a top three together, I would probably say the ideal client profile.  Do they really understand their ICP? Who is it that they're trying to win over as customers? Are they the right customers? Do they have customers that they potentially need to fire as they scale that are unprofitable or not aligned to their future growth potential  or  growth prospects, depending on what industry they're in or what verticals they're tackling? So I think it's one, ICP. I think the second piece is talent.

04:16
Um, you know, when we look at attainment and we look at, uh, some of the other go-to-market metrics around funnel conversions, et cetera, win rates, um, you know, lot of times that can mask if, if the, if the goals weren't properly set, it can mask potential talent, uh, within the organization. And then finally, uh, like I mentioned, performance conditions where I think about segmentation are, and that obviously all three of these tend to tie together, right. Where are we pursuing the right.

04:45
customers, one, right? And do we have them tiered in a sense where we're prioritizing the highest value, highest potential,  most aligned customer or potential customers to our ICP, right?  And are we doing so in a structure that is able to make the best talent that we have productive, right? The territory alignment, the compensation design,  and then all the incentives that go along with that, right?

05:10
Those three buckets are typically the ones that I focus on first and the metrics that underlie those that tell the story of whether or not we're one,  successful in executing up to this point. And then two, whether or not we are designed for future success with,  with underwriting that growth thesis. So if we kick off with, well, in fact, what's the, of those three, which is the one that private equity gets wrong the most?

05:38
when they're doing their due diligence  or overlooks the most, misses out the most. Yeah,  I would probably go back to  talent, to be honest.  It's very, I think it's a lot easier to  zero in on what an ideal client looks like based on their customer base. And if they're typically buying, unless they're buying a distressed asset,  you've got someone that's probably in the top  two or five companies within their category.

06:07
So they've typically had fairly good success of either nailing that customer profile to an extent, or they've had relatively decent performance conditions  depending on if this is their first time having an institutional investor or  where they are in their maturity cycle, if it's been a lifestyle business, et cetera. Usually there's been some level of  stability with performance conditions. And I think where the gap is typically missed is that  you typically have talent.

06:36
within that environment that is not ready to scale for the next level of maturity, right? In terms of the growth expectations, in terms of the pace, the velocity,  and  the efficiency that they're gonna need to be able to achieve even greater goals.  And a lot of times talent could be,  I think, overvalued  in some of these companies where you've had perennial consistent performers, but they've also had maybe...

07:03
outsized territories, or they've had a list of mostly clients that they've upsold into. So you could look at attainment and say, Hey, great. We've got, we've got all A players here when the reality is that they're not, you know, potentially hunters, right? You've got farmers in hunter roles. Uh, you don't really have any true hunters that are out there to really do true customer acquisition or folks that don't have traditional playbooks, or maybe don't have the traditional types of sales training that they would need to be able to go.

07:30
grow the business at scale, right? And achieve even greater heights  based on whatever  the new role design might be in this next phase of growth for the company. So I think it typically comes back to talent and overvaluing the talent. Sometimes it's in the seat or not having a clear picture on what the skill sets are and ensuring that they're aligned to the right roles for that next phase. So as we're looking at go-to-market strategy, we're predominantly looking at sales and marketing  from a talent perspective.  If we look them down that kind of

08:00
chain of sales. If we look at the kind of external sales team, if it's got one,  my take on a lot of private equity firms that come to us and say, hey, Alex,  we need to expand the team.  We don't do a huge amount of sales roles, but we'll take on the old one. But usually what they want, and my understanding of what private equity wants is can you get somebody who's sold our product, that knows our customer base, and if you can, I'd really like a black book.

08:29
of people that they can bring over. Now I know that they're particularly rare and that strategy  fails for majority of companies don't do well on that strategy.  But yeah, it's the tried and tested playbook in every business, whether private equity or non-private equity about business to try and buy revenue through appointing somebody that's whatever they are.  when you're making these assessments of these people...

08:58
If we take that as the private equity standard,  and I know there's people that do a lot better job than that, but if we take that as a private equity standard as are you a market fit? Do you know our product base? And can you, and do know some customers? When we're actually looking at from an acquisition perspective, it's a little bit different because they already have all those ticks. So for you personally, when you're looking at that, how are you assessing what the kind of good standard of people is and knowing who's going to scale with the business and who's going to hold it back?

09:28
Yeah, no, it's a good question. I think in a lot of these instances, it's, and most of the time if you're without doing some sort of deep town assessment or bringing in a third party or, or, you know, outside tools, think if you, when you speak to the sales team and people across different roles, it really is a blend of call it quantitative and qualitative, right? I would say on the quantitative side is some of the things that we mentioned before, right? Even if there, even if there was a low bar for

09:56
For instance, dunking on a six foot hoop, right?  Anybody can hit quota if the attainment levels are  fairly low or the goals are too low.  And you could also say the inverse that if the goals are too high, then nobody's achieving quotas. So some of those things will pop out in the metrics, but still the people that are consistent performers,  there is some base level of talent there, right?  I think where the qualitative piece comes in from my perspective,  along with those metrics that really paint the full picture.

10:23
it really comes down to  how coachable they are.  And you can get a lot of these things from either ride-alongs, interviews,  asking basic questions on how they approach their day. Do they really understand what their customer values,  what's their approach to  gaining market share and how do they plan out their weeks, their months, et cetera. So you can get a real feel for  one,  their structure and their mentality.

10:51
To how they handle adversity, right? So I listened to  another  gentleman in the space who talked about their talent evaluation across multiple functions, but it's particularly applicable I think into the sales environment where you have the EQ piece, right?  That's somewhat difficult to measure but you can assess that to a certain extent  There was also the aq that they mentioned which was an adaptability quotient  and that really is the figure it out factor that we call it sometimes where

11:20
If some of these reps are facing adversity, how do they handle pressure? How do they, um, you know, how do they adapt to certain conditions, whether it's, um, headwinds in the market space, whether there's competitors and whether there's other challenges that prevent them from just sort of blocking and tackling in the moment, right? Where they have to go out and be creative. have to drive a new value prop. have to potentially sell a new product in their, in their portfolio and of, of.

11:49
products and services that they're offering to either an existing customer base, new customer base, or potentially even an adjacent market. And you can  usually  understand who the A and B players are based on their responses there.  Some of it's their,  you know, the way that they approach their days and their weeks and  their customers versus  just thinking about how they,  you know, how they  typically would,  you know, involve other partners. And then also just looking at the way that they

12:19
the way that they structure those days and  are able to just kind of push through. So it really comes back to some of those pieces, right? The EQ,  obviously the IQ piece and then  AQ, I think the adaptability question was really something I've found insightful, but also something that is,  that you want to be able to judge.  And again, back to the coachability piece, right? Because a lot of these folks should be innately curious.  They should have some level of grit and they should have some of that resilience to be able to

12:49
achieve targets in really adverse environments. Right. So that's the way that we think about talent  in that sense on the qualitative side, but  the quantitative piece also is really important when you couple those together. sense.  sense. So,  that main aim around fixing that talent side and understanding that. once you've obviously the due diligence has been done, you've assessed your kind of three main areas, ideal client profile, talent, and then customer segmentation.

13:18
You then have to deploy said go to market strategy. So firstly, we've understood what their issues is. How do you go about then building, and that may happen before you actually make the investment, but how do you go about then  building an effective go to market strategy? Or even better, how have you gone about that with certain industries, certain, you don't need to name the companies, but just walk us through some of the processes that you've gone through and the reasons that you've made those decisions.

13:46
to do that go to market strategy, not a different one. Yeah. No, that's a, that's a good point. So  I think in a lot of these instances, and I'll go back to maybe a, um,  uh, building products distributor that I worked with,  uh, a few years back,  uh, fairly large company,  uh, had grown through acquisition a lot of mom and pops. had a lot of regional, um, displacement and, and  a lot of variation by region, not a lot of standardization, which to certain extent is okay.

14:16
if it's within a certain  margin of error or a tolerance range.  And then  not having a repeatable approach to certain areas and not orienting to the customer  is also a problem. So what you have there, in that particular instance  that we ran into, was there was a profitability problem.  It wasn't necessarily a top line problem as much, but there was certainly for  a

14:45
call it a $4 billion business,  they weren't growing top line as fast as they should, it was starting to decelerate.  And the bottom line was actually decelerating even faster.  So they had a  big profitability problem when it came to margins. And some of that was right in the middle between the coverage model,  the way that they were handling customers and also just the...

15:09
the sheer nature of the processes that they had that were disparate. Right. So if I can give you an example, if there was a customer in one region, um, that was in need of certain products, they weren't talking to the other region that may have had that capacity or that, uh, for the, for that service or that, for that particular product, uh, all within range. And if you were thinking from a customer perspective, it's, Hey, you guys are all one company, but I can't get service the way I need to, because I'm limited by the branch. Right. So you have these internal silos and backend integration that

15:39
that needed to happen, right? And so I think about that as the of the enablement foundation.  So in that particular case, we saw  one,  limited top line growth, two, decreasing profitability.  And  the drivers of that were really around the go-to-market organization, how it was structured, and how we were orienting to the customer. So what we did  was we ended up reorganizing.

16:03
the segmentation, right? We started with segmentation first to say, okay, well, who are the customers we should be spending time with versus the ones that we are? So we looked at some of the top performers versus the bottom performers, and we looked at regions and said, okay, so  where should we be spending time with the highest,  let's call it the highest potential customers versus the ones that we are spending time with now? And then two, how do we reorganize that in each region  to get the right, you know, to get the right coverage model?

16:29
And then secondly, we said, well, what are the role designs we have? Because right now it feels like a hero's mentality where I'm customer service, I'm the sales guy, I'm the account manager, I'm doing everything.  And  that model is not sustainable, nor is  it  an impetus for growth, right? And so what we did there was we split roles.  We got really specific in terms of role design. So we got rid of that, the role corruption.

16:56
got really particular with swim lanes, activities, expectations,  and design that piece of it, and then came up with new territories, new  incentive design plans, et cetera. And then  as another part of that foundation, we also went and said, well, hey, what are  the customer base that we've wanted to retain and which are the ones that we're okay with  if they end up leaving, right? So that stratification was important in that process as well. And then we said, well, what are the really good regions doing that we can...

17:25
copy across and with some variability, right? So we came up with a playbook that allowed the teams, whether they were, you know, call it tenured hunters that had done, had performed particularly well or new folks in the organization or people potentially in new roles.  We created an alignment structure there that allowed that team to be able to have a playbook to say,  Hey, this is how I'm going to approach this customer base. These are the plays I'm going to run. This is, you know, a little bit of vary by region because not

17:55
every part of the country operates a little bit differently, especially in that distribution world. And so we gave them this flexible playbook that would allow them to  standardize enough so that they had consistency of the customer experience across the board, but then also the right role design. And that in turn, in terms of those customer touch points, mean, we were able to decrease  the high  cost touch points by 30 to 50%.

18:21
just based on changing your role design, right? And that led to about, I think it was 500 million in top line  opportunity that we were able to drive. And then that flowed through the bottom line, which was a little less than a hundred million at EBITDA over an 18 month span. And all of that was because of the design, the allocation, right? Putting our boat over the fish and then allowing our best people to do their best work  and ensuring that it aligned to the customer journey and the customer needs, right? And so it was really basic.

18:50
simple things, but cutting the cost and the touch points so that it was with a low cost resource and then allowing hunters and farmers to do what they do best. Some of those separation of duties are also what led to some of those big cost savings that that flowed through all the way to EBITDA. And that made a huge impact to the business and their growth trajectory. So that's an example where, hey, we come in and it's a little bit of a disparate go to market structure and we're able to add just enough maturity and just enough

19:19
coverage model expertise to say, we're not trying to reinvent the way that you go to market or do business, but we're trying to professionalize it, right? So that you can scale accordingly and not have, you know, all these losses, right? Because they would,  if they were on the same trajectory, they would have been still growing revenue, even though it was slightly decelerating, but they would never have been able to hit the profitability because they were just,  they were on a path that was not going to allow them to do that just based on the resources they had and the expense there.

19:46
So  that's one example.  I think in other cases, it's a little simpler  just in terms of reallocating  either people or time or resources to be able to make some of those impacts. it's not always obvious in terms of what the root causes are to some of these symptoms that we see. But in many times, it really starts with the coverage model. And that goes right back to budgeting and how well we want to service our customers and how well we understand them. So back to the three points I made earlier around

20:14
the ideal customer and then the talent that you have in the right roles and then the performance conditions to say, hey, we're going to incentivize you to do all the right things and go out and acquire customers or grow share of all it and not, you know, and not be the customer service person. Those are the things that you have to really standardize across the board. Interesting. Lots to take from that. Sorry to interrupt. Just a quick mention of a longstanding partnership with Grata. As you all probably know, the private equity scene is constantly evolving and

20:42
Deal Flow is moving now to proprietary and data-driven processes. Grata provides you with the data and information of over 7 million private companies. So if you're looking to improve your proprietary Deal Flow and improve the data access, then reach out to Grata today. Now back to the podcast. What's your playbook around the overcome of change and we've always done it this way, which is atypical Founder-led?

21:12
businesses transitioning to private equity, et cetera. But when you talk about the level of systemic change that you've done there, there's a lot of fear from chief execs, CFOs, COOs, everyone on the leadership team, private equity that, well, what if we do this and we lose all of our customers and we lose our business and it all goes to pot, right? So what do you do around that overcome of resistance to change at the sales level of people saying, hey, we don't want to do things differently. I'm on a good deal here.

21:39
Um, and how do you overcome that at the leadership and  stakeholder level? Yeah,  I think it comes back to three things, right?  Um, managing expectations,  uh, allocating resources and aligning incentives in all of these,  uh, issues of transformation or change management.  It really comes down to those three elements and that could be either, you know,  that could be  multi-directional. And what I mean by that is you've got to manage expectations up across and down.

22:09
And the same thing with allocating resources across and down, and then aligning incentives from top to bottom. When I say top to bottom, I mean from board level all the way down to field rep, right, and customer facing roles.  And  typically when you come into these scenarios, there's always going to be  some level of resistance  for folks that just don't want change or don't believe in the change. And so a lot of times,  and my approach has typically been more collaborative to say, what is it we're trying to achieve?

22:38
as a company, as a group,  or as  a  functional department and say,  let's work backwards from there to say,  all  right, if we need to grow by X, then how do we align to that? And what  do  we reverse engineer to be able to get there and then get people aligned to the outcome and then working towards it in step changes, right? And so  depending on the level of complexity or the size of the organization or the speed of the goals,

23:07
Typically when in a sales environment, you've got maybe let's call it, I break it up into thirds, right? And I'll give an example here in a minute, but typically there's a third that just, no matter what you do, it's always going to be viewed as negative, Comp plan changes, territory changes, anything that you do to the organization or products that et cetera, there's always going to be a third that's going to be fairly entrenched. You've got the third on the other side of the spectrum that are more of your early adopters that

23:37
are all about change. They are the drivers. You typically are A players that want more products in their bag. They want to change plans for the better. They are on board before you can even announce what the details are. Right. And then really where I think you end up winning most of the time is, is in that middle third that are a little bit skeptical, but, are invincible or persuadable, I should say to the mission.

24:01
And you get more of those folks on board by involving more of those  top performers or those early adopters to be able to champion it across the organization. So it's not just me coming in as the external interim officer or  change manager. It's the folks that are in the business and the top performers that everyone else looks up to to say, Hey, they're going to champion this. And typically those are the folks that we leverage to help build the plan.

24:26
to a certain extent, whether it's through focus groups. And again, that could be on compensation planning. It could be on segmentation.  It could be on sales process or building  out playbooks.  But typically the more people you get involved and the more collaboration you get there,  the higher the impetus for  a successful change manager process. And so I think  in some of those scenarios,  the example I would give is  I was at a middle market company in the K-12 space, right?

24:53
Um, had gone through some growth. They were a platform that did a bunch of add-ons. You did, you had a lot of different cultures coming together. Um, and it was also a challenging time in a sense where the revenues were a little bit down. This is, you know, this is back in the pandemic era as well. So you have, um, all these different headwinds that are facing the business. You've got, uh, cultural headwinds, you've got morale headwinds you've got, you know, financial and economic issues as well. And so what we did there was, um, you know, one, we, we had gone through an organic.

25:22
growth spurt and then we're going through an inorganic growth spurt as well. So we had more acquisitions coming down the pipe. So what we did was we organized around what's our mission, right? What are we, what's our North star here  in terms of growth and in some of it was top line. Some of it was  very customer oriented to say, Hey, we want to be the premier, you know, K-12 provider in,  this particular space  and this particular niche that we're, that we're in and to be able to serve.

25:51
not only the districts, but especially the students. So it became very mission oriented and that was tied to the growth objectives. And so the folks that were in that K-12 space, either as salespeople or former administrators turned  commercial agents, everyone was bought into that mission. So when we work backwards to say, okay, well, how do we get there? What's the best way to do this? Even as we add more products to the bag or we have more overlapping customers, who's going to own that relationship?

26:19
why and then how do we drive the right lead flow and then increase conversion rates. So one, it was about modeling like, what does, what does, what does great look like or what is an ideal outcome that we want to get to in terms of, uh, in terms of this next phase of growth. And then based on all these components we're pulling together, what's the best way for us to do it in the present state of, you know, four or five acquisitions and different product sets and overlapping customers. Right. So let's get organized for now, but then what's the best way for us to scale that as we grow.

26:49
And so having a system and a process and an org structure that allowed us to be able to fold in new products and then also create the right processes so that we had less customer disruption, right? Less friction points. And some of it comes back to some of the things I mentioned earlier with the other transformation project where we had to recreate role design from account managers to customer success to hunters. And we had to re-segment who our customers were and who we thought our ideal customers were as we went

27:18
and focus more on middle market and less on down market, right? And reallocating resources that way. So what got us to where we were was not gonna get us to where we wanted to go in the future, right? In terms of growth and we were trying to, I think get 10 to 12 % top line consistently.  And this is like a $50 million business at the time. And it was a very complex organization, lot of complex products,  competing buyer interests, et cetera. So.

27:43
We had to get the role design downright and then we had to create the platform or the performance conditions, right, for enablement  and also for a great customer experience. So those things were tricky, especially in that type of environment. And what we ended up doing was creating the right playbook that had the right amount of referral structure and incentives that align to the customer journey so that we could go out and upsell. And I think we increased cross-sell by 30, 40 % within the first 12 months of reorganizing the structure.

28:13
We were able to achieve top line growth and hit budget.  But then we also were able to increase EBITDA by I think by 10 or 12 % as well, because we had the right cost structure behind what we were trying to achieve from a growth perspective.  And that role design played into it.  Getting the team on board with best practices from some of the top hunters was really helpful.  And then I think just the belief that, we're building this for the future. And that resonating throughout  not just the go-to-market organization, but across

28:42
product across, you know, it's called tech and finance and understanding how these things impacted budget decisions and how it impacted product roadmap. You know, all those things, everyone felt like they had a seat at the table, right? So even the folks that were more entrenched around not, you know, not changing, started to come around as well. So I think that to me was was a, was a great success story in the sense of having a really challenging environment, but being able to

29:08
realign folks and again, managing the expectations across and down and then being able to allocate people and resources accordingly and then  aligning the incentives so that we actually were able to go out there and execute consistently.  That's really what it comes down to in lot of these instances is those three key things. When you look at actual sales teams, sales leaders  and  marketing teams, marketing leaders.

29:35
How often are you having to make changes there? Because  it's quite well replaced within sales. I think, you know, specifically in sales marketing can be more downturn, get rid of marketers type thing. But certainly in the sales world, the frame is right. These guys aren't good enough. Let's go back out to market and find somebody who's better. I don't know if they know, as we spoke earlier about what actual good looks like, but how often is that something you have to come in and go, yeah, we need to make this number of changes. And depending obviously size of organization.

30:04
What percentage of people are you turning around and bringing on the journey and what percentage of people are you like, hey, we need to make calls here and  you wish you'd made them faster? Yeah,  it's a good question. think in terms of percentages, it's a tough one to nail down. I think it  sometimes depends on where you're investing  in terms of the hierarchy. In middle market companies, you're going to have a lot more turnover than you would in probably larger companies,  just on a percentage basis.

30:33
because most of those folks either kind of grew up with the company or were the right people in the right role for that phase of growth, but maybe not for the next phase, right? So as an example, like a marketing leader or revenue leader, CMO, CRO for up to 20 million may not be the, in terms of revenue, may not be the right person for that role to scale or from 20 to 50 or 50 to a hundred, a hundred, et cetera, right? It's a different skillset.

31:02
And sometimes  coming in,  think investors are  typically pretty good at understanding, hey, can we coach this person up or is this a person that eventually needs to be top graded or do we need to hire an executive  on top of this leader, right? To be able to groom the next generation of leaders. And so I think that part of the succession planning a lot of times goes into diligence  or is understood throughout the  pre-acquisition process.

31:29
I don't know if I would put a percentage on it, but I would bet that it's probably pretty high because most of these companies that scale from 20 to 100 million at some point are replacing at least half their leadership. If you look at the average lifespan of a commercial leader, it's 18 months, maybe less.  I think that goes on the marketing side and potentially even the product side to an extent. if the whole period is still three to five years and you've got  that type of turnover in terms of timing, then

31:59
I would say the math  would tell you that the percentage  turnover  is fairly high. And I think the way that you figure that out is just in the way that they plan, the way that they  are able to manage some of the obstacles or the headwinds in the business and how they communicate with the board,  especially in the C-suite, right? If you've  got transparency  and  understanding where the problems are and solutions on how to fix them and you're reporting on those.

32:26
you're in pretty good shape. But a lot of times I think where boards get concerned and especially on the investor side is that the either the C level or maybe the next level down, they don't even understand where the problems are in the business.  That they've got a churn issue or that they don't have potentially product market fit in one of their areas that they're projecting growth.  I think it's it's that misalignment that causes alarm faster versus the folks that say, we're you know, we're underperforming and here's why.

32:54
And here's what we're going to do about it. And I've been in a lot of those scenarios and a lot of those boardrooms where you can sense that there is a lack of confidence in the direction or conviction in the ability of the existing management team to actually go execute. Now, most of these firms too, they buy these companies, aren't looking to replace the entire team, right? It's a, I would say it's a bit of a trial period in the beginning. Most of them want to buy into good companies with great management teams so they can partner.

33:23
Um, but if they do have to top grade folks in certain pieces of the business, you know, there is a,  highly transactional nature to that, uh, eventually, but it's more about succession planning, I think, and, uh, being able to ensure that you have the right leader in the right space and the potential to grow, uh, into larger roles. And if it's not there, they're, very quick to move. Makes sense. What, um, what do you read? What do you watch? What do you listen to Brian that you recommend others check out?

33:52
Yeah, good question.  Let's see. I'm big Dan Kremens fan.  He's got a couple books out there, Winning Moves and Intelligent Equity on  AI, which I think  is a must read for everyone.  As a plug there, I really enjoy anything that's  AI related because I think that's one of the things that needs to be more consistently infused. I think we're at early innings and the folks that are adopting it sooner rather than later have an edge.

34:21
And I don't mean  just the  slapping together of some prompt engineering. mean, there's really specific playbooks out there that folks  are developing. And I have my own mini playbook that  I work with in terms of prompting and doing analysis and then helping teams create really,  let's call it  compelling messaging, how they approach their days and  analyzing customers, et cetera. So I think the folks that are figuring out how to leverage it, even

34:51
without some sophisticated tech stack are the ones that are getting an edge today. So definitely want to encourage folks to go out and leverage ChatGPT and other platforms to be able to accelerate what they're doing in their day to day. I think another one that, another book I read recently was The First 90 Days. Trying to remember the author. By Michael Watkins. Yeah, that's another great one, especially if you're in the transformation business or...

35:19
You're a high impact executive coming in to try and,  um, you know, get some quick wins to really understand where, where you're going to be able to move the needle and how you can relentlessly prioritize and show results and be able to create that,  um, that conviction and the growth trajectory.  Um, so first 90 days was, it was a great one,  uh, for me. And I think,  um, let's see, what's, what's another one? Oh, uh, there's this guy by the name of Alex Rawlings who has a great podcast.

35:48
that you can learn a lot from by his various guests that I listened to. Thank you.  No, appreciate that.  Brian has some good list and cream and stuff. I've  read some of this stuff as well.  If somebody wishes to reach out to you, Brian, how best do they get in touch, Yeah. Pay me at Brian with an I at r-squaredadvisors.com. Always available to set up a call and...

36:17
Happy to chat through any of the existing challenges and always open to roles and collaboration. And as an independent, single shingle contractor, I'm always keen for new challenges and  trying to help people solve some of these go-to-market problems. So, appreciate it.  Well, thank you very much for all the insights in the go-to-market strategy. I feel like we've done a bit of a playbook  on things here. So thank you very much for sharing everything you have done, All  right. Thanks, Alex. Appreciate the time.

36:47
And always, thank you very much for everybody yet again tuning into the Private Equity Podcast. Till the next time, keep smashing it, and thank you very much for listening.