1. 11october 2016 operational excellence special 2016
KEYNOTE INTERVIEW: BLUE RIDGE PARTNERS
Private equity firms should not delay pin-
pointing revenue growth opportunities and
instigating change at their portfolio compa-
nies,warns Blue Ridge Partners co-founder
and managing partner Jim Corey. Here he
explains why.
Why has Blue Ridge honed in on
revenue growth as a key driver of
shareholder returns?
Revenue growth has been the focus of our
firm since we were founded in 2002 – that’s
all we’ve done – and we selected this scope
of practice for two reasons.
One is that revenue growth is the larg-
est single driver of value creation over a
five-year holding period.The second is that
many management teams we see need help
accelerating revenue growth.
The recent survey we sent out to oper-
ating partners came back with an inter-
esting statistic: they said only 24 percent
of CEOs they worked with were highly
capable and self-sufficient in accelerating
growth. Frankly, it is a complicated topic.
It’s a challenging set of issues CEOs have
to deal with.
You say year one is crucial to value
creation. Why?
Many of the meaningful changes that
accelerate growth take multiple years to
implement. It’s not like a cost-reduction
initiative where maybe in 60-90 days you
can see those costs eliminated.
Imagine the lead-time selecting a new
go-to-market channel or to use a new set of
channel partners – it takes time.If you start
The non-invasive path to growth
Kick-starting revenue generating opportunities early in the
investment cycle is critical to boosting shareholder returns,
Blue Ridge Partners’ Jim Corey tells PEI
SELF ASSESSMENT
Corey: revenue growth is the largest single
driver of value creation
late,the benefits will be late and it might be
outside the investment horizon of the GP.
Why is operating partner engage-
ment with management tricky in this
period?
Revenue growth is a delicate topic to raise.
Typically,in year one the deal team is look-
ing for safe ground to engage with the
CEO and very often that does not include
revenue growth. In many cases, it wasn’t
included in the value creation plan, so it
would be a left turn to talk about it.
Also, CEOs view revenue growth as
their responsibility.They know the markets,
products and the business better than the
GP.All too often,unfortunately,we tend to
be called in three or four years after closing
when there has been some disappointment.
We call those the lost years.
So, should you consider revenue
growth in due diligence?
I would argue even earlier, in the pre-bid
period,and here’s why.Asset prices are very
high. Most companies are sold through a
competitive bidding process.A lot of GPs
need to stretch their valuations in order to
win the deal.Historically,investment com-
mittees haven’t been willing to underwrite
growth opportunities,and they don’t focus
on them during this period. As a result,
many firms are losing deals.We’re pretty
active now in the pre-LOI [letter of intent]
phase with a handful of private equity firms
that recognise the importance of growth.
You're a 30-year veteran of the
business.What has your experience
taught you about what works and what
doesn't?
It’s a matter of finding the right levers and
in every company those are different. ››
WHY REVENUE MATTERS
Source: Based on a survey of operating partners conducted
by Blue Ridge Partners for the October PEI Operating Partner
Forum in New York
Value creation sources in
portfolios over next 3 years
Revenue growth
Cost reductions
Cash flow improvements
M&A and other
58%
revenue
growth
26%
11%
5%
This article sponsored by Blue Ridge Partners originally appeared in Operational Excellence Special published by PEI in October 2016

2. 12 private equity international october 2016
growing while others in their industry
were.In a diagnostic,we found three things
were holding them back.They were too dif-
fused over different products and geogra-
phies.They needed to pull back and focus
their time and capital expenditure on fewer
areas and refocus on their core.
They had also lost track of market pric-
ing. We discovered that in 80 percent of
their markets, they were the low-price
bidder.They thought they were mid-pack.
They raised their prices and that made a
big difference.
Thirdly, a number of their sales people
didn’t have the right skill sets or motiva-
tions. The company upgraded its talent
pool.The valuation of that company tripled
in 18 months.
Your operating partner survey asks
firms to rate their operating team's
ability to diagnose revenue growth and
identify the proper levers. How is that best
done?
It goes back to analysing data and getting
market feedback.But study work is an inva-
sive approach. If the CEO hasn’t accepted
that they have a problem with revenue
growth, it will be unwelcome.An alterna-
tive that shines a light on where there might
be opportunities is our self-assessment tool.
We examined the 400 companies we
have worked with to find out what made
the difference regarding revenue growth
and included those 60 factors in the assess-
ment.Wherever we could, we quantified
the benchmark.
The tool can make a big difference to the
way that operating partners function.They
might already have a checklist they review
with the management team.The feedback
we hear from them is that the checklist
is nowhere near as comprehensive as our
self-assessment tool.
In general, getting sales and market-
ing organisations to change is difficult.
Successful sales people have their own
formula and are change-resistant. There
are a lot of great ideas that never ring the
cash register because companies can’t get
change implemented in their sales organi-
sation.
The second thing that I have learned is
that most sales organisations are doing too
many things at the same time and getting
grades of Cs and Ds. I’ve found it works
better to focus on a few things and get
A-grades, then pick up the next set and
then the next, in waves of change.
Most companies, surprisingly, are also
missing insights about their markets and
how they are changing.Most sales organisa-
tions are not highly analytical. If they did
analyse the data,they would see things like
the distribution of performance across the
sales organisation, which would generate
insights.And they don’t spend lots of time
asking really hard questions of customers,
like why do you buy from this competitor
and not us?
INDIA ROUNDTABLEKEYNOTE INTERVIEW: ACTISKEYNOTE INTERVIEW: BLUE RIDGE PARTNERS
›› What problems do companies
encounter trying to accelerate
revenue growth?
Most lie in two areas. Sales people have
a tendency to spend a lot of time with
existing happy customers. If they under-
stood better where to focus their time in
the market and what message they should
deliver, they would be more successful.
The other is sales force effectiveness
– the tools that the sales force is given,
whether they get the right sort of coach-
ing,whether they have the proper skills and
motivation to be successful.Sometimes it’s
just a skills problem.
Studies also show the vast majority of
CEOs lack prior experience in leading sales
organisations. Sometimes they fear if they
change something in sales there might be
unforeseen negative results.
Can you give us an example where
you’ve navigated significant chal-
lenges?
We worked with a US-based construction
equipment rental company that wasn’t
THE BEST OPPORTUNITIES FOR GROWTH
Key: Circle size reflects self-assessed magnitude of opportunity
Low
Low
High
High
Establish the essence
of the growth strategy
Sharpen the
go-to-market model
Enhance sales effectiveness
Create a productive
sales environment
Get pricing right
Digitally enable the business
Enter new geographies
Sell into new end-customer
markets
Add new products/services
Sizeofopportunity
Relative ease of capturing opportunity
High potential opportunity
This article sponsored by Blue Ridge Partners originally appeared in Operational Excellence Special published by PEI in October 2016

3. 13october 2016 operational excellence special 2016
Jim Corey chairs a panel on factoring revenue growth
into the traditional value creation plan at PEI’s Operating
Partners Forum in New York this month.
How do you go about making chan-
ges based on the results of the
self-assessment?
One UK-based GP is working through the
self-assessment at each of its dozen or so
portfolio companies. We will summarise
what we’ve learned in a cross-portfolio
leadership workshop and outline any con-
sistent issues across the portfolio that might
need investment.
Onecompanyhighlightedthatgrowthwas
constrainedbytheslowpaceofnewproduct
roll-out.They were known as being pretty
innovative in their industry but they hadn’t
releasedanynewproductsinquitesometime.
Looking closer, the new product team
had become very bureaucratic,wasn’t con-
nected to the market, and worked in an
isolated laboratory environment. When
they did release new products they were
at the wrong price point or had the wrong
functionality.We discovered lots of differ-
ent issues with product commercialisation.
The firm emphasises the 'non-inva-
sive' nature of the self-assessment
tool. Why?
CEOs are concerned that someone is going
to come in and shine a big bright light on
things they haven’t been doing well.They
are naturally resistant to that invasiveness.
This tool involves self-discovery. And it
doesn’t take a lot of time. n
KEYNOTE INTERVIEW: BLUE RIDGE PARTNERS
How does the self-assessment tool work?
The questionnaire is a non-threatening way to engage with a portfolio company
CEO on issues related to revenue growth. It’s not like an intrusive study with data
requests and interviews. Rather the CEO is asked to reflect on some thoughtful ques-
tions to see where energy might be reallocated to accelerate growth.
The operating partner could sit down with the CEO and walk them through the
self-assessment and discuss it. It’s also very informative for deal partners as a cheat
sheet of questions they might ask the board. But the most common way is to have
several people at the company and the operating partner fill it out and compare results.
We’ve organised 60 factors into nine areas that we call ‘the roots of growth’. Our
back-end reporting shows how responses differ across those areas.Then you might see
how the CEO is in a very different spot from the sales organisation and that may be
worth talking about in a workshop facilitated by the operating partner.
The survey also asks about the potential impact of fixing these topics and how
easy that would be.The key is to look for big impact changes that are relatively easy
to implement. n
EXAMPLES OF SELF-ANALYZERTM
QUESTIONS
EXAMPLES OF
SELF-ASSESSMENT
FACTORS
STRONGLY
DISAGREE
1 2 3 4
STRONGLY
AGREE
5
DON'T
KNOW
6
Sales and service channels
are responsive to buyer
values for the customer
segments they are serving
(direct sales, third-party sales,
telesales, digital and others)
O O O O O O
The company is effective at
generating leads for entirely
new customers
O O O O O O
The productivity of the sales
organisation (gross margin/
total sales organisation cost)
meets or exceeds industry
averages
O O O O O O
At least 70% of sales reps are
achieving quota
O O O O O O
Revenue forecasts prepared
60-90 days in advance are
+/- 5% accurate
O O O O O O
The sales force knows how
to sell value to avoid leaving
margin on the table
O O O O O O
The company understands
its pricing power and is able
to capture premium pricing
opportunities
O O O O O O
The pipeline of new
products/services is robust
and is likely to generate at
least 25% of new revenues
within 2 years
O O O O O O
CEOs view
revenue
growth as
their responsibility

4. 14 private equity international october 2016
Blue Ridge Partners is a specialised
management consulting firm with a unique
combination of strategic insight and prag-
matic implementation expertise.We believe
that knowing “what to do” for revenue
growth is only 20% of the challenge.The
other 80% is knowing “how to do it” so
changes get implemented and stick.
We are often asked to start our work
in evaluating the potential for accelerated
revenue growth in the pre-bid period when
valuations are set and then continue in due
diligence and post close.
During the holding period, we assist
portfolio companies with four primary
services – assessing/developing the growth
strategy, improving commercial effective-
ness, optimising pricing performance and
revitalising product and service portfolios.
About a year before exit (“T-1”) we
help refresh growth plans and develop exit
strategies.
We consider both organic and inorganic
growth options for each business.Based on
our experience with over 85 sponsors and
400 companies, we created an integrated,
comprehensive suite of tools, called “Top
Line”, for use by our teams to accelerate
growth in a company’s Revenue EngineTM
.
Two of these tools are available for use
by our private equity clients. Deal and
operations personnel can engage with
CEOs and their management teams using
the Self-AnalyzerTM
tool early in the holding
period.With minimal time demands, this
non-invasive tool stimulates thinking about
strengths,weaknesses,and revenue growth
opportunities.
INDIA ROUNDTABLEKEYNOTE INTERVIEW: ACTISCOMPANY PROFILE: BLUE RIDGE PARTNERS
Helping companies grow faster
We help portfolio companies accelerate profitable revenue growth by addressing issues
with the company’s Revenue Engine® throughout the life cycle of an investment.
Sponsor and management teams use
The Indicators of OpportunityTM
, a com-
prehensive yet simple tool, to examine the
range of growth opportunities and levers
available in the company, align thinking
and define priorities for the most impact-
ful levers to pull. Built around nine areas
we call “Roots of Growth” such as the
go-to-market model, sales force effective-
ness and pricing, the tool also serves as
a useful reference when preparing for
meetings with the management team or
Board.
With personnel in North America, the
United Kingdom and Continental Europe,
Blue Ridge Partners is positioned to serve
the needs of global firms.We have earned
high marks from private equity sponsors
and CEOs for delivering material, rapid,
pragmatic and cost effective results.
For additional information, visit
www.blueridgepartners.com or
contact Jim Corey, Managing Partner,
at +1-703-624-0286 or
jcorey@blueridgepartners.com.
TOP LINE ANALYTIC ENGINE
PRICING
OPTIMISATION
EXIT
PLANNING
("T-1")
PRODUCT
PORTFOLIO
REVITALISATION
GROWTH
STRATEGY
POST-MERGER
INTEGRATION
COMMERCIAL
DUE DILIGENCE
120-DAY
PLANS
COMMERCIAL
EFFECTIVENESS
This article sponsored by Blue Ridge Partners originally appeared in Operational Excellence Special published by PEI in October 2016