Daniel Perry: Parthenon Capital Sales Director on Enhancing Commercial Excellence and Go-to-Market Strategy to Drive Value Creation

Daniel Perry is an energized revenue leader who, time and again, has been the driving force for scaling companies and delivering successful exits. The challenges he tackles are as varied as his approaches to solving them, whether collaborating with portfolio companies to dramatically scale their productivity, provide capacity to their go-to market teams, or help accelerate revenue growth.

In 2022, he assumed his present role as director of sales and commercial excellence at Parthenon Capital, a private equity firm with over $10B in AUM that invests in middle market companies across business services, financial services, and healthcare services. In his previous years with The Riverside Company, Dan established and led the sales excellence team for the Micro-Cap Fund and spearheaded its growth initiatives for LMM portfolio companies.

For private equity firms to succeed now, they must go beyond financial engineering to operational value add. So, on this episode of the Brilliant People Podcast, Linnea Jungnelius, Global Head of Marketing & Strategy at Acertitude, sat down with Dan to answer the question: how does commercial excellence fit into that puzzle? They also get into strategies and stories that illustrate how this lever delivers returns.

Linnea: Dan, let’s begin by talking about operating group models. We’ve seen private equity firms go through the journey of expanding their teams, becoming more sophisticated, and recently, quite a few firms have been restructuring their teams. What are the key models, and what have you found to be effective about different approaches?

Daniel: The history of the operating team, and the sales and marketing specialization which I play in, originates back to the 2000/2010s. Typically, they would have a guy like me drop into a company as an interim CRO or CMO to run the sales and marketing function for six months until they found a permanent person. During those six months, you would build fundamentals and a foundation.

Now, that has now morphed into more of a consulting organization where there's a sales and marketing specialist that runs across portfolio companies and focuses on their area of expertise. For example, when I was at Riverside in the micro-cap Fund, I created a sales and marketing organization, which was consulting for their 40+ portfolio companies. Now, within that though, there's also this push-pull theory.

Push model

Pushing means we own you, and we have a controlling interest in your portfolio company. I'm going to be there to help you out, and I'm going to be alongside you whether you want me to be or not. That's a little firm, but that's a push.

Pull model

Pulling means we're a resource, and we're here to help. If you're doing well and you don't need me, then that's okay, or if you want some advisement, I'm here to advise, too. I would only get involved with platform companies, new portfolio companies, or ones that aren't doing well. So, it's a vast array, and every single private equity company has a little bit of all of what I just described based on their maturity.

Linnea: How do factors like firm size, investment strategies, or focus on particular industries or regions influence the ways that firms do, or should, leverage operating talent?

Daniel: I'm going to take it from a different private equity perspective. If I'm a KKR, Thoma Bravo, or Blackstone, I'm buying large organizations that already have or should have highly functioning (knock on wood) sales and marketing organizations. I'm really going in there as the commercial sales excellence expert to help them refine that go-to-market strategy, especially if they add another large organization and combine it.

But, if I'm a micro-cap or a mid-market, I've got to build fundamentals. I'll give you an example. We just purchased a platform company, a small $30M platform that we're going to add on to, to make it larger. When I walked in and asked the founder, who's now the CEO, "Who's your ideal customer profile?" he said, "Anybody who can fog a mirror," I said, "Oops. That's not the answer we're looking for." In that case, I must go back to the fundamentals, and I get firmly involved in building those fundamentals, and firm size makes a big difference.

Investment strategy – is it early in the whole period or late in the whole period? It depends on how active you want to be in a go-to-market reorganization. Then talent. Linnea, all things to prove successful are talent and performance conditions in equal parts, so I choose talent and put them in the right performance conditions. A lot of these small organizations have been successful in building their companies. As a founder/owner, they relied on talent to get things done, but if you want to scale towards a larger organization, you have to have a process, so I need both of those to be successful.

Linnea: Dan, your role covers the commercial excellence function. Are there also specific go-to-market archetypes?

Daniel: Yes, there are. We broad brush this as certain PE firms have one person. At Parthenon Capital, I'm the guy, so I help out in all go-to-market functions. In other firms, there are specialties by industry, so a retail go-to-market industry or an indirect channel go-to-market is very different than a manufacturing go-to-market or a pharmaceutical go-to-market. Depending on the size of the PE firm, we can specialize based on industry and go-to-market function. That's super important because if you choose the wrong go-to-market structure, you are going to cost yourself up to 50% growth.

Linnea: What are the most valuable skillsets and competencies of someone in your role?

Daniel: Speaking as a true talent professional – competencies, accountabilities, and job descriptions. In terms of competencies, you must be an expert in sales and marketing effectiveness, which really means all things; not just go-to-market, but compensation, territories, quota setting, CRM usage, coaching and enablement, or know where to turn to get that expertise, which is super critical.

The next thing is collaboration. Even though, Linnea, I have a controlling interest in your portfolio company, that doesn't mean I get to tell you what to do, so I must be collaborative with you. I really have to extend the olive branch to work with you to develop a process strategy and go-to-market structure that's going to be executed by you, not by me. So, I need to be sure that it's collaborative. If it's not, you won't execute it, and the execution is the most important part.

First you must focus on competencies, and then urgency. You need urgency because the hold period is only five years on average. Some are four, some are six. Maybe a little longer or a little shorter depending on the market conditions, but my hold period is short. I've got to get in there and get going quickly: test things out, pilot things.

Linnea: Walk us through some pages of your playbook. How can operating partners better align with deal teams or influence investment decisions through the commercial lens?

Daniel: Deal teams are super important. They run the portfolio company for the private equity company, so they're a key liaison. The deal team can consist of different players. Some PE companies don't have operating partners, they have resources like me. At Parthenon, our investors are part of the deal team, but at Riverside, investors and operating partners are part of the deal team. So, there's a contrast there, right? It depends upon who's on the deal team, and then the collaboration and communication to follow is super important. Remember, deal team members typically have different responsibilities in their job description versus their day-to-day life.

We have to be super collaborative and communicative to ensure that we're achieving the goals that we want to achieve at the portfolio company, and that we're doing it at a good pace. Sometimes too much change paralyzes people, so collaboration and communication usually take place on a weekly basis. The best practice is a weekly call with the deal team to let everybody know what's going on. On those weekly calls, we talk about strategic initiatives: what are we doing this year in 2024? How are we marching toward our goals? Then, more tactically, what do we do this week? What went well, what didn't go well, and how do we change those things in the following weeks as we move forward?

Linnea: When you get into a new asset, where do you start?

Daniel: I typically get involved after a letter of intent is signed and we're going through due diligence. I try to do a sales and marketing assessment without getting all the information, so we open a data room. We get to view all the data specifics about the company, all the sales and marketing KPIs and the entire process, and I try to understand the maturity level of their sales and marketing organization and the amount of money we need to spend to get that company to the level we need to make it successful and scalable. That goes into the deal thesis.

It's critical to make sure that I'm providing insight on how much work it takes and how much money it will take to be successful. Once we get into this, we go through a sales and marketing assessment. We get a framework that we go through and say, "Okay. What's your total addressable market, your service addressable market, your ideal customer profile?" There are 41 specific modules that we go through to examine that, and then we put a project plan together. Sometimes, it's 100 days to give you a fast start, and sometimes it's a longer project plan. We identify the people that need to be collaborative in that project and work hard to get that done.

Linnea: What are the repeatable go-to-market strategies you employ in growth stage and middle-market companies?

Daniel: Regarding the growth stage of the middle-market, we're looking for maturity of the organization and the founder. We ask questions like, “What's our ultimate goal? What's your deal thesis?” Those are all important as we look at ideal customer profiles, buying personas, buying process, maps, value proposition, buyer positioning, and competitive positioning. We look at what the revenue is we want to achieve, and the dollars we need to achieve that revenue. We look at our marketing organization. How do we generate campaigns, or really demand, but campaigns, content, and digital marketing? We also look at a ton of information around the go-to-market structure.

Remember Linnea, a lot of times the portfolio company executives – maybe not the CEO but the CRO, head of sales, head of marketing – they don't know what's around the corner, but we kind of do. What I mean by that is we know which add-ons we're pursuing for that portfolio company. So, I'm trying to structure the company per the add-on, right? I'm trying to look at that and say, "Okay. I'm going to add this new product or service on. I need to change my go-to-market strategy or make my go-to-market structure adaptable for this add-on as well." I'm trying to look around the corner, whereas the company itself sometimes is not, but I can't really reveal some of that stuff yet either. I've got to really balance the area between what I tell the portfolio company, how I put a go-to-market structure in place, and how I communicate to my DLT. Big balance.

Linnea: Naturally, strengthening the sales team is an important part of the work that needs to get done over the course of the hold period. How has the profile of the modern PortCo CRO evolved over the past few years?

Daniel: Let's talk about what chief revenue officer really means. A lot of people have the CRO title and they're not CROs.

Chief revenue officer means you are responsible for all things revenue. That means new logos, cross-sell, upsell, retention, demand generation, and customer satisfaction. It's kind of tied to retention, so it really means that you're in charge of the sales organization, the customer success or account management organization, the marketing organization, and all things in between. That's a chief revenue officer.

The head of sales is responsible for what? New logos and maybe cross-selling and upselling, business reviews, value creation, value add type of thing to the customer. Then a marketing organization oversees communication, brand identity, and demand generation. If you think through those items, are you really a chief revenue officer or are you just a head of sales?

As the company grows, we must be able to understand what talent we need. So, Linnea, let me put it in a couple buckets for you. When we first start an organization, we need a head of sales, that's a builder. They want to build things and really put the fundamentals in place, put the structure in place, and make sure we're a scalable organization. That takes a couple of years.

After that period, I need a runner, and builders don't run, and runners don't build. So, I need to flip the script and get a new head of sales – CRO – that's a runner, and can execute; that can hold Linnea accountable to the process we put into place, and make sure she's achieving her goals through coaching, accountability, KPIs, deal strategy, etc.

There are two different types of CROs: a builder and a runner. Choose wisely what you want as you build your team, and remember that it’s okay to make a move midstream if that's what the business needs.

Linnea: Exactly. An important distinction there, and certainly something to think about as you're building that scorecard and getting the team aligned around the right profile up front.

I have to ask – AI – how is it tangibly changing the business already from your point of view?

Daniel: I’ll give you an example. We went out to several of our portfolio companies, and we picked marketing. I went to some CMOs and said, "Let's test AI in marketing campaigns, a controlled set," and one company that we did this with ran a traditional marketing campaign. We emailed 114K people. In those 114K contacts, it was like email one, email two, email three, a traditional marketing campaign, and that produced a 6.6% click rate. We then went out and studied the market for AI and chose three AI vendors to run the same marketing campaign, to the same 114K people, and one AI vendor got a 55% click rate.

By changing the subject line, body of email, and the overall content, we were learning and adapting as we went along. Now, this is not autonomous. It's generative, so we were physically involved in each one of those changes, but the AI was really, really dramatic. However, the other two vendors only produced a 10% click rate, so with AI, you have to shop for the right vendor. Buyer beware: not all AI vendors are the same, so make sure that you shop for them, run a test against them, whatever you want to do to be indicative of the results you can achieve by using AI.

There is all this other information that we're trying to understand about AI, like using AI for our customer service people to generate responses as an example. That's another way AI has changed a lot of what we do and improved our response time and answer time to fundamental questions, FAQs, which allows us to get a better CSAT score.

Linnea: Great examples and great recommendations. I think it's something we've heard on this podcast before, which is use those vendor conversations to get smart, hear what's out there, and keep iterating on how you approach the AI topic.

Given the higher cost of capital, slowed deal activity, and longer hold periods, how is all of this changing how you go about your work?

Daniel: Dramatically. There's less leverage out there now. Before, 10 years ago, 12 years ago, you could have a PE company, buy a firm, use leverage, and still make a ton of money. It's not that easy anymore. We have to grow organically, and there are less platforms coming into our PE company. There are less new companies. We have to pay attention to our existing firms, and get inside of them and work with them at a deeper level. What I mean by that is, again, collaborative, again, best practice, using the framework, but get involved with them at the level they want us to.

An example of this is, since we have purchased a large number of acquisitions in the past year, I've been more involved with our current business, to the point, Linnea, that I'm helping our sales managers do deal reviews that normally I wouldn't have time to do. What that means is that I'm on a call every Friday, with several companies, reviewing deals with them and helping them strategize on how to get deals done. Two years ago, I wasn't doing that because the deal activity was so high, and pre-COVID, I definitely wasn’t doing that.

So, that's been a little bit of a change in my role and what I'm doing. We’re working those existing companies because we want to show organic growth; it’s a longer hold period, but when the opportunity's right, we've got to put that company to market and really show a difference.

Linnea: Make sense. Let's talk a bit now about setting companies up for successful exits, specifically in light of the more challenging private equity exit environment. What's your role in that, and how are you teeing your companies up for more successful exits?

Daniel: We want to be sure that the organization is growing organically, no doubt, but can also scale without a lot of involvement from the PE company. So, that means building a go-to-market structure that is easily transferable to a buying entity, making sure we're using best practices around hiring people, setting their territory, and setting their quotas up. We need to make sure that we're generating demand and we're using a best practice lead management process like MCL, MQL, SQL, SAL – i.e. marketing captured lead, marketing qualified lead, sales qualified lead, and sales accepted lead.

Fundamentally, to get the sales and marketing organization in place, we need to ensure that our CRM is in place and that we’re using it to mine data. We want to have this in place for a buyer to say, “Wow, I don’t have to spend an inordinate amount of time redoing this, investing in this, and hoping that we’re going to get the sales.” The intent is that the sales are already coming, our CAGR is good, so now they just have to add to it to make it more successful.

Linnea: Dan, you've given us a massive amount of insight. Could you apply this now to a specific deal, and walk us through one of the best-in-class examples of how commercial excellence has delivered returns?

Daniel: At Riverside, the micro-cap fund, we purchased a company that was in loan origination software. We renamed it from the original name – Baker Hill. When we first bought it, the product was old and outdated. I believe it was still using AS400 green screen, which is a little dated, so we had to go rewrite the product. It took a year of development just to rewrite the product and redo the product line, so it would come up to speed and even surpass our competitors. In the meantime, we had to take a founder-owned business and build it for scalable growth. We needed to do all of this while still selling and generating revenue. It's a bad cliche, but it’s like flying the airplane while you're changing the parts.

So, we're doing that, and over the course of four-and-a-half years, we redid the product and the go-to-market structure. We redid everything that was involved in their process, including how you get a lead, how you complete a deal, how you retain a customer, the KPIs involved, and the CRM system. Then all things go towards territories, quotas, compensation, enablement, sales coaching, and sales management. We grew the business: we put in roughly $80M and sold the business for roughly about $400M.

The valuation in that company was about $320M, so it was a great exit. Now, how did we get that exit? We built the company for scalable growth. We built the company, and it grew. We built the company for the new owner to take it and continue to run it as well, and we built the organizations within. The product was compelling and competitive, and we had a good value proposition against our competitors. We sold the company about a year or so ago at Riverside. To this day, I still know the CEO (who's still there), the head of marketing (who's still there), and they're just growing the business now because we put a growth engine in place. Baker Hill was super successful.

Linnea: That's fantastic, and congratulations on that deal. Let's get a little more general now – how do you keep your own leadership skills sharp?

Daniel: I work on this every day. I listen to podcasts, like the one I'm doing right now, and do my own research. I get together with several of my colleagues at different private equity companies once a month, as well as twice a year – usually at a PEI conference – to collaborate on best practices and fundamentals.

We decided our meeting was going to be around demand generation, so during the morning hours, we looked at everything around demand gen. How does AI affect that? What are some organizations out there that generated more demand? Are the best practices still in place? Do we still use the benchmarks that Forrester has?

In the afternoon, we looked at the biggest topics, and what we found was sales productivity, in the last year, has dropped dramatically, according to Gartner. What that means is that salespeople’s win rates have gone down. Why are sales win rates going down? Is it the industry? Is it the market, or is it just bad sales management? So, these are all things that we've collaborated on, and we then try to go back to our portfolio companies, try things out, and come back and report back to the group. This is one thing that we're doing on a consistent basis to make sure the skills stay sharp, and that we're on the cutting edge of best practices without forgetting the fundamentals.

Linnea: Were you able to find an answer as to why sales win rates were going down?

Daniel: It's always a combination, Linnea, of all these things, but what we found out, and now what I'm testing, is that good, old-fashioned sales coaching is becoming a lost art. What that means is we want our sales leaders to really double down on and really focus on coaching their salespeople and have marketers coaching their marketing people to get them more productive and more effective.

Linnea: Are there any leaders that are inspiring you lately? It sounds like you have a great network that you're leaning on.

Daniel: What I try to do is listen to private equity leaders. I just went to a conference and saw Orlando Bravo speak about what his firm is doing. I listened to that and then I listened also to my colleagues, not just on the private equity side, but also the guys that I've worked with before that are in public companies. I know the head of sales for Office Depot. It’s a dying business, but I listen to what he is doing to still generate returns in an industry that's slowly losing revenue.

These are the type of people that I really pay attention to because I am not necessarily in the game anymore. I am not a sales leader with a quota over my head. I help people make their quotas and I help sales and marketing leaders achieve their goals, but I'm not in the game anymore, so I must listen and dive deep on those individuals to be sure that I can give sound advice and best practices to my portfolio companies.

Linnea: Are there any books, podcasts, quotes that you draw inspiration from?

Daniel: Believe it or not, I am a big Tony Robbins fan because of the motivation, and the ability to go deeper on some topics. I'm an avid podcast listener, especially podcasts about leaders that drive these organizations to success. I listen to random people as well, and here's my goal, Linnea: instead of following just one person, I try to follow a series of people to be sure that we're being successful. What did they do? What attitude did they have, that those people that made it out of that terrible environment were successful? I'm always trying to figure out how to improve myself through a wide array, not just one or two individuals.

Linnea: Inputs equals outputs. In each episode, we like to define brilliance in a few ways. I’m going to hit you with a quick lightning round if you could please fill in the blanks.

Daniel:

Purpose is… to pay it forward. Do good things for other people because they will come back to you exponentially.

Leadership is… coaching and guiding people to do great things.

Success is… peace of mind when you go to bed at night. Success isn't about how much money you make or how you are the leader of an organization. Success is, did I do a good job today, and do I have peace of mind?

Brilliant leaders… listen well, guide people well, and know when to shut up. What I mean by that is don't out talk what you're doing. Give people direction, help them achieve that, and let them go and do it.

I perform at my best when… I'm under pressure.

Linnea: Dan, this is not an uncommon thread amongst you private equity folks.

Daniel: That's funny, Linnea. No, I actually perform best, whether it's playing sports, whether it's a deadline, or whether I have to accomplish something when I'm under pressure and I shouldn't, but I just do. That's just me. So put some pressure on me, and I'll crank out some really good stuff. If you allow me too long to get something done, I'll procrastinate. I won't get it done until it's due because I work at my best when I have a deadline in place.

Thank you to Daniel Perry of Parthenon Capital for joining us on today's episode. We hope all of you walk away inspired by new ways to win new business, serve customers, and ultimately exit at a higher value.

That's it for this episode of The Brilliant People Podcast. If you found this conversation valuable, be sure to subscribe, rate, and review the show, and follow us on LinkedIn for the latest insights on how to lead and perform at your best.

Until next time, stay brilliant at work.

Defining brilliance with Daniel Perry

	Purpose is:	to pay it forward. Do good things for other people because they will come back to you exponentially.
	Leadership is:	coaching and guiding people to do great things.
	Success is:	peace of mind when you go to bed at night.
	Brilliant leaders:	listen well, guide people well, and know when to shut up. What I mean by that is don't out talk what you're doing.
	I perform at my best when:	I'm under pressure.