Private equity value creation: rebuilding the commercial engine post-deal

Bain's Global Private Equity Report 2026 sets out why the commercial agenda has changed. In a typical 2015 buyout, 50% of the purchase price was borrowed at a 6% to 7% interest rate. Today, borrowing costs are in the 8% to 9% range, while leverage ratios are closer to 30% to 40%. Low interest rates, Bain adds, led to steadily rising multiples that powered over 50% of all buyout returns. Neither tailwind can be assumed in the plan that a CCO is asked to deliver.

The same report states what that means for earnings. A 2015 deal required just 5% annual EBITDA growth to generate a 2.5x multiple on invested capital over a five-year hold. Because entry prices have risen, with Bain estimating entry and exit multiples of 14.0x and 15.0x in 2025 against 10.0x and 12.5x in 2015, the expensive deals only work if EBITDA grows at something closer to 10% to 12% a year. Bain's shorthand is that 12 is the new 5.

The market has recovered in value but not evenly. Bain reports that 2025 global buyout deal value rose 44% to $904 billion, while the number of deals fell 6% to 3,018 transactions. Excluding deals above $10 billion, value grew 16%, and the $1 billion to $5 billion segment grew 29%. Activity is returning, which means that more sponsors are underwriting growth cases at current prices, and portfolio companies are being asked to deliver them.

For a portfolio-company CCO, the implication is arithmetic. If a plan needs double-digit EBITDA growth for five years, the revenue line has to grow faster than the cost base can be cut, because cost savings are finite and the first year's savings do not repeat. The commercial engine must produce a sustained increase in revenue, preferably with improving price and mix, and the sponsor's model will be built on assumptions that the CCO owns.

Start by reading the investment case. Establish the growth rate assumed for each year, how much comes from price, volume, new customers, new products and acquisitions, and what the sponsor believes about market growth. Then test each assumption against pipeline, win rates and customer data. Where the case relies on an assumption you cannot support, raise it in the first 30 days, while there is still time to change the plan rather than explain a miss.

Ask the sponsor three questions early. Which parts of the growth case are contractual, which are in pipeline and which are aspirational? What investment is available to fund the plan, and what payback is expected? And how will the sponsor judge progress in the first year? Written answers turn an ambiguous mandate into a brief you can execute, and they protect you from being measured later against assumptions you never saw.

Bain DealEdge analysed software buyouts and reached a result that surprises many operating teams. Revenue growth has accounted for 52% of total value creation in software deals. Multiple expansion contributed another 42%. Margin expansion, by contrast, added just 6%, and nearly all of that came from top-quartile deals. The sample is software, so it should not be generalised mechanically, but it shows how rarely cost improvement alone carries a deal.

The same analysis highlights an optimism problem. Bain found that 94% of the 33 software buyouts it examined projected significant margin growth, yet the margin contribution was small. An earlier Bain study of 65 mature deals found that 71% of investments fell short of projected margins, by 330 basis points on average. These are older and narrower samples, but the pattern is consistent: plans assume operational gains that do not arrive, and growth shortfalls then have to be made up elsewhere.

The lesson for a CCO is not that cost does not matter, but that revenue is where the sponsor's return is decided and where it is least tolerant of slippage. A dollar of revenue growth also tends to carry more valuation weight at exit, because buyers pay for growth they can see. Conversely, a business that has cut costs but not rebuilt its growth engine will struggle to demonstrate momentum to the next owner.

Sponsors increasingly know this. In the GP outlook that Bain and StepStone published for 2026, the picture on AI is cautious: nearly 40% of GPs do not expect material financial impact from AI in 2026, with benefits skewing to cost savings within portfolio companies. Commercial teams should therefore expect to be held to measurable revenue outcomes, and should be sceptical of plans that hide behind technology programmes.

The action is to decompose the growth case into levers with owners and numbers: price realisation, win rate, average deal size, new-logo volume, expansion in existing accounts, churn and channel mix. For each, state the baseline, the target, the date and the leading indicator. A sponsor reading that table in the first board meeting should be able to see what the CCO will change, by how much and how progress will be measured weekly.

Interpret the margin evidence carefully. It does not say that operational improvement is worthless, only that it is hard to achieve and easy to over-promise. The commercial equivalent is to be conservative where the plan depends on behaviour change in the field and more ambitious where it depends on decisions you control, such as price floors, discount approvals and deal desk rules. Control determines the confidence you can put on a number.

Exits are recovering but the backlog is large. Bain reports that global buyout-backed exit value jumped 47% year over year to $717 billion in 2025, and that the stock of unrealised assets has grown to roughly 32,000 companies representing $3.8 trillion in value. Average holding periods at exit have drifted toward seven years, and almost 40% of all companies are now held for more than five years, up from 29% in 2019. Distributions as a share of net asset value remained at 14%.

Exit routes are shifting as well. Bain reports that initial public offerings globally increased by 36%, GP- and LP-led vehicles by 41% and sponsor-to-sponsor value by 21%. The sponsor-to-sponsor channel is the most relevant to many mid-market portfolio companies, because the next buyer is another sponsor who will test the growth story in diligence. Bain also found that North America was by far the biggest contributor to growth during 2025, adding 80% to the total.

A longer hold changes the commercial agenda in two ways. First, plans must be sustainable over seven years, not just manufactured for a five-year story, which favours durable levers such as pricing discipline, customer retention and a repeatable sales process over one-off pushes. Second, the board will want evidence early, because sponsors under pressure to return capital to limited partners will ask whether a company is ready to sell as soon as the market allows.

Almost 80% of GPs surveyed by Bain believe multiples will stay flat in the coming year, so the next buyer will pay for growth quality, not for market optimism. Buyers in diligence will examine retention, cohort behaviour, pipeline conversion and pricing history. A CCO who builds these datasets during the hold, rather than reconstructing them during the sale process, will give the sponsor flexibility to choose its exit window.

Build an exit-ready commercial data pack as a standing deliverable. It should show customer cohorts and retention, price realisation over time, win and loss analysis, pipeline coverage by segment and the sales productivity trend. Update it quarterly. This makes the board's reporting more transparent today and reduces the cost and risk of vendor due diligence later, while ensuring that nobody is surprised by a weak spot discovered in the middle of a sale.

McKinsey's work on pricing in private equity puts the stakes plainly: a 1.0 percent improvement in pricing raises profits by 6.0 percent, on average. It adds that it typically sees margin expansion of between 3 and 7 percent within one year from pricing programmes in PE portfolio companies. Few commercial levers offer a similar combination of speed and flow-through to profit, since price changes need no additional headcount or capital.

The same source is candid about timing. Diagnostic work can take three to six months, another six to nine months of concentrated effort is generally needed before results show clearly, and full run-rate improvement can take between 18 and 24 months to achieve on an ongoing basis. McKinsey also notes that quick wins often boost earnings in the first or second quarter. A CCO should therefore plan a two-speed programme: quick, targeted moves in the first quarter, and structural changes over the following two years.

The quick moves are usually about discipline. Stop unauthorised discounting, close the gap between list and realised price, correct underpriced customers whose cost-to-serve is high, and enforce contractual escalators that were never invoked. The structural moves are about design: segment-based price architecture, value-based packaging, approval rules and sales incentives tied to price realisation. Each needs data, and in many portfolio companies the first task is to build a trustworthy view of price by customer, product and deal.

Pricing programmes fail when they are announced as projects rather than embedded as routines. Introduce a monthly pricing council with finance and sales, publish price realisation by region and rep, and change compensation so that reps are rewarded for margin, not only volume. Anticipate customer reaction: some churn is acceptable if it removes unprofitable accounts, but the plan should quantify the trade-off beforehand and have a response for strategic customers.

For sponsors, the attraction is that pricing is measurable. For a CCO, the risk is overpromising. Commit to a range and a timeline consistent with the evidence: a first-year effect in the low single digits of margin, with run-rate delivery over eighteen to twenty-four months. Report realised price against the plan monthly, separate price from volume and mix effects, and be explicit about the share of the benefit that is already in the sponsor's model.

Guardrails protect relationships. Before a price move, classify customers by strategic value, switching cost and price sensitivity, and decide in advance which accounts get a personal conversation and which receive a standard notice. Prepare a short value narrative that explains what the customer receives, and arm account managers with concessions that have a defined limit. Most price actions fail through inconsistent handling, not through the level of the increase.

The way B2B customers buy is shifting under the sales team. Gartner's survey of 646 B2B buyers, conducted in August and September 2025, found that 67% prefer a rep-free experience, and 45% reported using AI during a recent purchase. A year earlier, in a survey run in 2024, Gartner had reported 61% preferring a rep-free experience. The direction is clear, and the practical question is what a sales organisation should do about it.

Gartner's 2024 buyer research also found that 73% of B2B buyers actively avoid suppliers who send irrelevant outreach, and that 69% report inconsistencies between information on the sales organisation's website and what they hear from salespeople. Both findings bear directly on portfolio companies, which often inherit uneven data, patchy messaging and large outbound campaigns. Volume of activity is not a substitute for relevance, and inconsistency erodes trust at the moment buyers are comparing options.

The implication is a coverage model built around the buyer's journey. Digital self-service for early research and simple transactions, specialist reps engaged where complexity or value justifies the cost, and customer success teams focused on expansion and renewal. Account tiering should reflect potential and cost to serve, not historical habit. Many portfolio companies carry too many reps on small accounts and too few on the accounts where growth is concentrated.

Data quality underpins all of this. Clean the customer and prospect data, align the website, proposals and sales scripts, and make sure that marketing and sales agree on definitions of qualified pipeline. Then tighten outbound targeting so that messages go to accounts with a real reason to buy. A smaller number of well-researched, relevant approaches generally outperforms a larger number of generic ones, and it protects the brand with the customers who matter most.

As a first step, run a coverage review in the first 60 days: map revenue and margin by account tier, count reps and customer-facing hours by tier, and compare with growth potential. Redeploy capacity towards the accounts and segments with the highest potential, and design a digital path for the long tail. Present the proposed model to the sponsor with a view on cost, timing and the leading indicators that would show whether the change is working.

Marketing deserves a place in the coverage review. If buyers research suppliers on their own before contacting a rep, the website, case material and comparison content are part of the sales process. Check that the proposition is consistent across channels, that the pages buyers read answer the questions they ask, and that leads are routed quickly to the right person. Measure marketing on qualified pipeline created and on revenue it influences, not on clicks.

Gartner found that only 11% of sales organisations have been able to drive commercial success while executing a transformation. It reported that sales organisations had undergone an average of four transformations in the previous two years. A new owner arriving with a long list of changes is therefore adding to a pattern of fatigue that already depresses performance, which is the opposite of what a sponsor wants during the first years of the hold.

The effect on individuals is measurable. Gartner reports that overwhelmed sellers are 45% less likely to attain quota, and that sellers who effectively partner with AI tools are 3.7 times more likely to meet quota. The combination suggests a clear design principle: remove work from sellers before adding it. Technology that automates administration, research and follow-up gives sellers time, but only if the programme does not also load them with new processes, reporting and tools at the same time.

Sequencing is the discipline that matters. We suggest limiting any quarter to a small number of changes in each of three categories: how the company prices, how it covers customers and how it manages pipeline. Choose the changes with the shortest path to cash, such as pricing discipline and pipeline inspection, and defer those that demand heavy behaviour change, such as a full restructuring of territories, until the earlier moves have stabilised.

Be realistic about AI. StepStone and Bain's GP survey suggests that benefits within portfolio companies currently skew to cost savings, and sponsors vary in their expectations. In sales, the most reliable use is to cut seller admin and improve research and personalisation, not to automate customer relationships. Insist on a measured pilot with a control group, define the leading indicator, such as selling time or conversion, and stop what does not move it.

Communicate with the field. Explain what is changing and what is not, give managers the tools to coach, and publish a simple scorecard so that sellers can see how they are doing. Retain the people who deliver the pipeline you already have, because losing a top seller in the first year costs more than any efficiency programme saves. If a change threatens to disrupt key accounts, put an account-protection plan in place before it begins.

Use the board to protect focus. A short list of priorities agreed with the sponsor gives the CCO a legitimate reason to decline additional requests that would stretch the sales team. Tie each approved initiative to an expected revenue effect and a date, and review the list quarterly so that completed or failed initiatives are removed. A visible stop-doing list is as valuable as the start-doing list, because it signals to the field what leadership is willing to give up.

The CCO's first deliverable is a plan the sponsor can inspect. It should state the growth bridge from current revenue to the target by lever, the sequenced initiatives with owners and dates, the investment required and the leading indicators. It should also separate what is already contracted or in late-stage pipeline from what depends on new activity. Sponsors look for confidence in the first-year number, because it sets the credibility of the later years.

Pipeline reporting is where plans most often lose credibility. Agree definitions with finance and the sponsor on what counts as qualified pipeline, how stage probabilities are set, how coverage is calculated and how slippage is treated. Report weighted and unweighted pipeline by segment, ageing of opportunities, conversion rates by stage and the share of pipeline created by each source. When these are consistent month to month, the sponsor can forecast from them and will trust the CCO's judgement.

Link commercial KPIs to the incentive system. If sales compensation rewards bookings regardless of price or customer fit, it will undermine pricing and coverage programmes. If marketing is measured on lead volume rather than qualified pipeline, outbound activity will rise while relevance falls. Reset the scorecard so that the metrics the board sees are the metrics the field is paid on, and review them quarterly as the plan evolves.

Treat the first 100 days as a sequence: diagnose in the first 30, decide and communicate in the next 30, and begin execution with quick wins in the final 40. Hold a monthly commercial review with the CEO, CFO and sponsor representative, using the same dashboard each time. The aim is not a perfect plan but a credible one that is inspected regularly and adjusted without drama when evidence changes.

The measure of success is whether the sponsor can answer three questions at any time: what revenue will we deliver this year, how much of it is already visible, and what would change our view. A CCO who can answer those with data from a controlled pipeline will earn the freedom to run the engine. One who cannot will find that the plan is rewritten by others, at the moment when a missed quarter makes every assumption look suspect.

Karter McKinley supports commercial growth and sales execution for sponsor-backed businesses: testing the growth bridge against pipeline and customer data, designing pricing and coverage changes, and setting up pipeline reporting that boards can audit. We work with management and the sponsor team on the execution; nothing here is investment advice, and returns are not guaranteed.