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Unlocking Value Creation in Private Equity through pricing - When to leverage pricing expertise during the lifecycle

Introduction:

In the dynamic landscape of private equity deals, the strategic use of pricing expertise can significantly impact the success and profitability of transactions.


At Pricing Strategy Partners, we understand the critical role that pricing plays in value creation during the deal lifecycle. This article delves into the key phases of engagement for pricing expertise in private equity deals, focusing on identifying opportunities and the execution requirements to deliver value creation in portfolio companies.



Private Equity Value Creation

 

Phase 1 - Pre-Deal / Due Diligence:

 

Objective:

During the pre-deal phase, the primary objective is to identify pricing opportunities and conduct a high-level assessment of the target company's current capabilities. This phase sets the foundation for creating a straw-man for key pricing programs and estimating the potential size of the prize.

 

Typical Activities:

·       Review Vendor Commissioned Due-Diligence (VCDD) and other documentation to gain insights into the target company's pricing landscape.

·       Issue a tailored Pricing Due Diligence questionnaire to gather specific information related to pricing strategies.

·       Conduct interviews with key staff involved in pricing activities to understand existing practices and challenges.

 

Typical Deliverables:

·       Pricing observations and commentary derived from the Due Diligence questionnaire, staff interviews, and documentation review.

·       Identification of the top three pricing initiatives and priorities for further exploration.

·       Presentation of a high level straw-man Pricing Strategy Plan outlining the proposed strategies, financial impact, and organisational design recommendations.

 

 

Phase 2 - Pricing Planning (post signature):

 

Objective: 

Following the deal signature, the focus shifts to developing detailed pricing analysis and work streams. The objective is to deep dive into the identified pricing initiatives, assess organisational capabilities, and establish a roadmap for execution.

 

Typical Activities:

·       Conduct a detailed analysis of the top three pricing initiatives identified pre-deal to determine feasibility and potential impact.

·       Assess the pricing and renewals organisation's structure and capabilities to align with the strategic objectives.

·       Review default contracts for pricing opportunities and obstacles that may impact pricing strategies.

 

Typical Deliverables:

·       Presentation of the Pricing Strategy Plan to key stakeholders, outlining the proposed work streams, roles, responsibilities, and organisational design changes.

·       Establishment of a monthly pricing and renewals performance report to track progress against targets and initiatives.

 


 

Phase 3 - Execution:

 

Objective:

In the execution phase, the primary goal is to implement the pricing and renewals strategies and work streams developed during the previous phases. This involves recruitment, restructuring as per the organisational design, and ongoing execution and management of pricing programs.

 

Typical Activities:

·       Implement pricing and renewals plans through recruitment and restructuring as per the recommended organisational design.

·       Conduct weekly pricing and renewals program management and status reviews to ensure alignment with objectives.

·       Establish monthly performance reporting to track renewal revenue, churn, and the status of pricing initiatives.


 

Summary:

Unlocking Value Creation: When to leverage pricing expertise during the Private Equity deal lifecycle

Engaging pricing expertise at strategic points during the private equity deal lifecycle is crucial for maximising value creation and achieving financial targets. By identifying pricing opportunities, developing tailored strategies, and executing pricing plans effectively, Private Equity firms can enhance their competitive position and drive profitability. At Pricing Strategy Partners, we offer specialised pricing expertise to support Private Equity firms in navigating the complexities of deal pricing and optimisation.

 



Unlocking Value Creation: When to leverage pricing expertise during the Private Equity deal lifecycle
Unlocking Value Creation: When to leverage pricing expertise during the Private Equity deal lifecycle


 

About Us:

We are Pricing Strategy Partners. We help Private Equity clients with:

 

·       Identifying Value Creation opportunities in target companies

·       Providing Due Diligence support to identify future EBITDA growth levers

·       Improving renewal and pricing uplift performance across portfolio companies

·       Conducting product pricing & packaging reviews and executing pricing research.

 

 

We have particularly deep Value Creation experience across the software,

technology enabled, recurring revenue and subscription sectors.


If you would like to know more, please either contact us or schedule a free 30 minute call using the buttons below:




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