4 minute read
A Note for PE Partners
Author
Devin DaRif
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This piece speaks to a specific audience. If you're not in private equity or venture capital, feel free to skip it.
Private equity operates from a well-established playbook. Acquire, optimize, exit. The optimization usually means operational efficiency, financial engineering, go-to-market acceleration, sometimes product. Everyone looks at the same levers because the levers are proven and measurable.
There's a lever almost nobody's looking at. It affects talent acquisition costs, retention rates, sales velocity, and exit multiples. It's brand. Specifically, the coherence between what portfolio companies say externally and what employees and customers actually experience.
A senior brand capability sitting at the portfolio level, deployed across companies at high-leverage moments, creates asymmetric value.
The Problem Across Portfolios
Every portfolio company has some version of the same problem. The employer brand is generic or nonexistent, making recruiting harder and more expensive than necessary. The corporate narrative is unclear, making sales cycles longer and valuations harder to justify. The culture doesn't match the story being told externally, creating retention problems that show up in the numbers but never get traced to the root cause.
These problems compound over the hold period. A company with a clear identity, coherent narrative, and aligned culture is easier to recruit for, easier to retain in, easier to sell from, and easier to position at exit. A company fighting friction on all these fronts leaves value on the table at every stage.
Why It Falls Through the Cracks
The gap persists because brand sits awkwardly in the PE worldview. Operating partners focus on P&L optimization and operational excellence. Brand feels like a marketing concern, something portfolio company leadership should handle. Portfolio company leadership is focused on hitting board metrics, and brand strategy feels like something you get to after the fundamentals. So it falls through the cracks while the costs accumulate.
Solving this at the individual portfolio company level rarely makes economic sense. A VP of Brand costs several hundred thousand dollars fully loaded, hard to justify when the company needs another engineer or another sales rep. Agency projects help with specific deliverables, but agencies optimize for deliverables rather than continuity. They don't know the portfolio, don't see patterns across companies, and the capability disappears when the project ends.
The Portfolio-Level Unlock
The math changes at the fund level. A senior brand capability sitting at the portfolio level, deployed across companies at high-leverage moments, creates asymmetric value. Portfolio companies get access to strategic thinking they couldn't justify on their own. The fund gets a differentiated value-add that makes term sheets more attractive to founders who've felt the pain of brand confusion. Companies approaching exit have a more coherent story that acquirers can see immediately.
The moments where brand intervention creates disproportionate value are predictable. Pre-exit, when the narrative needs to be sharp and credible. Post-acquisition integration, when two cultures are merging and nobody knows what the combined company stands for. Leadership transitions, when a new CEO needs to establish credibility. Scaling inflection points, when what worked at fifty people stops working at five hundred.
Most PE firms optimize the same levers everyone else optimizes. Brand remains under-leveraged because nobody owns it at the fund level. The firms that figure this out will have an edge.
At WorkingTheory, we work with organizations that understand brand is a strategic asset, not a marketing expense. If you're looking at your portfolio and seeing these patterns, we should talk.
