ZS guides private equity fund from acquisition to commercial strategy
Impact by the numbers
The challenge
A middle-market private equity fund was considering investment in a payments and tech-enabled services company. The client hypothesized that the target company’s revenue and EBITDA could be doubled within three years, while simultaneously serving as a foundation for adding tech-enabled services focused on the municipal government end market.
The client partnered with ZS to validate this growth hypothesis and determine how that growth could be achieved. This included analysis of which markets offered the most immediate potential, what scalable sales model would be needed to capture the growth opportunity and how much investment would be required.
The solution
ZS performed market research and conducted interviews with company and industry leadership, municipal software experts and government purchasing decision-makers. ZS then segmented and analyzed third-party market data to determine the geographic regions and customer segments with the highest immediate potential, and we then recommended a scalable hiring plan to capture that opportunity.
ZS created an ROI model based on target company financials and current (and expected future) sales force productivity to project revenue and EBITDA growth under the phased hiring plan, allowing the board to monitor and course correct as needed.
ZS also performed a commercial assessment of the target company to identify current gaps in sales force effectiveness. Based on this assessment, we recommended the most critical next steps to take after the acquisition to bridge these gaps and focus on the priorities for
The impact
The private equity fund acquired the target company and pursued ZS’s recommended segmented sales strategy and hiring plan. The client also made an add-on acquisition to accelerate market capture and build out a “next phase” commercial strategy for the broader payments and tech-enabled services platform.
The new commercial strategy drove the company to achieve 24% year-over-year revenue growth, and it accelerated the add-on company’s subscription revenue growth rate 50% over the year before acquisition.