Private Equity Go-To-Market Model

Key Insight

The Private Equity (PE) Go-To-Market model is identified as the most efficient, effective, and reliable relationship-based sales channel for cloud software, surpassing other strategies in maintainability and executability. First heavily invested in by ADP in the late 2000s, this model involves software companies strategically aligning with established PE firms. This alignment grants the software company direct access to the PE firm's extensive portfolio of operating companies and their executive teams, creating a unique sales pipeline.

This model thrives on the influence of PE operating partners or advisors, who possess exceptional executive experience, often with a Big Four Partner background. These individuals are tasked with driving new processes and business strategies to increase enterprise value and growth across the PE portfolio. The market opportunity is significant, with PE fundraising reaching 301 billion dollars in 2019, up from 60 million dollars in 2010, and Assets Under Management (AUM) exceeding 4 billion dollars in 2020. Even amid economic shifts, 58% of PE CFOs anticipated launching new funds, with 76% expecting them to be larger.

Selling within the PE model is not a traditional sales process; it necessitates a trusted advisor approach focused on solving problems, not just selling solutions. Success is predicated on delivering exceptional service and effective solutions. When a software company proves its value to one portfolio company, the operating partner facilitates introductions across the entire portfolio, embodying the principle that 'happy customers are the best salespeople.' Conversely, a failure to deliver effectively can lead to being universally shut down across the portfolio, underscoring the high-stakes, relationship-dependent nature of this sales channel.