Operators and investors, |
Picture this: for decades, the private equity playbook was a classic tale of arbitrage. Buy a large enough business at a low multiple, optimize cash flow, stack on some debt, and sell higher. It was effective, straightforward, and in a stable market, reliably profitable. |
But if you've been in the trenches lately, you know that opportunities of that kind are scarce, and the financial unit economics no longer pan out. The traditional arbitrage model, once a cornerstone of wealth creation, is fading. We're in an inflationary environment, interest rates far from zero, and the days of picking up a mismanaged gem for pennies are largely over. |
Why the old model is breaking down |
Inflated valuations: Every industry is seeing inflated prices, making "buying low" a contradiction in terms. Rising cost of capital: Cheap debt fueled many arbitrage plays. With interest rates climbing, the cost of leveraging an acquisition quickly eats into potential returns. Saturated markets: Most industries are mature, with fewer genuinely overlooked opportunities. Operational efficiencies yield diminishing returns. Talent scarcity: Attracting and retaining top-tier talent (especially in tech and sales) is fiercely competitive, making traditional cost-cutting a double-edged sword. |
If your investment thesis still hinges on this outdated model, it's time for a radical re-evaluation. |
"Build and Scale" - the playbook for the next decade |
The new path to value creation is less about financial engineering and more about fundamental business building. |
We're talking about strategically acquiring companies with genuine growth potential and then aggressively investing in their capacity to scale. |
This isn't just "growth equity" by another name. This model represents a profound shift in how PE firms approach portfolio management. Different sourcing, different due diligence, different unit economics - and different expectations for the hold and sell periods. |
What "Build and Scale" truly means |
Strategic acquisition: Identifying companies with a strong, defensible core product/service, a viable market, and perhaps under-optimized (but not broken) operational infrastructure. Human capital in its core: Investing heavily in training, retention, and recruitment of top-tier talent, especially in sales, marketing, product, and engineering. This isn't a line item; it's the core investment. Operational IP as a moat: Developing proprietary processes, systems, and technological stacks that can be replicated, standardized, and scaled across the portfolio. Think RevOps frameworks, standardized onboarding, shared data analytics platforms. Aggressive market expansion: Not just organic growth, but strategic M&A to consolidate markets, enter new geographies, or expand product lines. |
This revamped playbook provides new modeling opportunities for acquisitions, whenever the market expansion/GTM playbook is clear, and it's a matter of capital and execution to go there. |
For instance, instead of buying a business for $50M through debt and financial engineering, and focusing 90% of the effort in operational efficiency, modern PE firms look into smaller $20M acquisitions, and investing an extra $20M in GTM to achieve the same and often, better results, in a matter of months. This reduces the capital needs, increases control, and sets up the growth playbook in motion early on. |
Human capital and operational IP for execution |
Aside from strategic playbooks and new edge R&D, two mandatory pillars of this playbook are human resources and developing IP in the era of AI and vibe coding. In the "Build and Scale" model, your investment thesis must explicitly prioritize these two areas. |
Human capital investment |
Talent acquisition strategy: Building an employer brand, defining clear career paths, and investing in upskilling. Retention programs: Competitive compensation is just the start. Think mentorship, leadership development, and fostering a high-performance culture. Fractional & interim leadership: Especially for smaller portfolio companies, bringing in seasoned fractional CMOs, CROs, or CTOs can accelerate growth without the full-time salary burden initially. This is where DevriX often steps in, providing CTO-as-a-Service to de-risk technical execution and accelerate product roadmaps for PE-backed firms. |
Operational IP investment |
Standardized RevOps frameworks: Developing repeatable processes for lead scoring, sales enablement, customer success, and data analysis that can be deployed across portfolio companies. Shared technology stack: Identifying core platforms (CRM, ERP, marketing automation, data warehousing) that can be integrated or standardized to create operational efficiencies and unlock cross-portfolio insights. Playbook development: Documenting and disseminating best practices, sales scripts, marketing campaigns, and customer onboarding flows. This becomes a core asset of the PE firm and is transferred to new acquisitions. |
We recently worked with a PE firm that acquired a fragmented market player in the SaaS space. |
Instead of just cutting costs, they immediately invested in a shared RevOps lead generation system, a standardized CRM implementation, and fractional sales enablement coaching across three of their newly acquired assets. Within 12 months, blended revenue grew 40%, largely due to the operational IP they infused. |
If you're not focused on arbitrage, your scouting metrics need a complete overhaul. Forget EBITDA-only analysis. You need to dig deeper into what truly fuels scalable growth. |
Key metrics for "Build and Scale" acquisition targets: |
Customer Lifetime Value (CLTV) & Customer Acquisition Cost (CAC) Ratio: This ratio, more than anything, indicates a sustainable business model. A high CLTV:CAC shows strong unit economics ready for scaling. Net Revenue Retention (NRR): Especially critical for SaaS. If existing customers are expanding their spend, it signals product stickiness and value. This is a powerful predictor of future growth without needing new acquisitions. Sales Cycle Efficiency: How quickly can new leads be converted? What's the average deal size, and how consistent is it? This points to a repeatable sales motion. Product-Market Fit (PMF) Indicators: High engagement metrics, low churn rates, and strong word-of-mouth referrals all signal a product that genuinely solves a customer problem. Look at second-order effects past revenue. Operational Readiness Assessment: Aside from financial audits, evaluate the existing team's capacity, existing sales processes, and tech stack maintainability. Can it handle 2x, 5x, or 10x growth? Where are the bottlenecks? |
For PE firms, this means a shift from purely financial analysts to strategic operators who understand growth engines. For RevOps leaders within portfolio companies, this elevates your role from process improver to strategic architect of scalable growth. |
Actionable takeaways |
For PE investment committees: Challenge every acquisition target through the "Build and Scale" lens. Demand detailed plans for human capital investment and operational IP creation. How will the thesis drive growth, not just cut costs? For fund operating partners: Develop internal frameworks to standardize RevOps, HR, and tech across your portfolio. You are no longer just an advisor; you are a builder of repeatable success. For RevOps leaders in portfolio companies: Don't just optimize existing processes. Proactively identify bottlenecks to hyper-growth. Champion the introduction of scalable technologies and processes. Document everything - your process is your product. For everyone: Recognize that the biggest returns will come from those who can truly transform companies from good to great, not just from undervalued to market price. |
At least in the next few years, the arbitrage era is over. Future hedge opportunities will arise at some point, but debt management will look different. |
The "Build and Scale" era is here, demanding a more strategic, operational, and human-centric approach to private equity. |
Are your portfolio companies truly optimized for "Build and Scale"? |
If you're looking to infuse strong technical leadership, implement robust RevOps strategies, or accelerate product roadmaps in your PE-backed assets, talk to us. Our technical value creation solutions have been applied in over a dozen PMI projects with several more undergoing. DevriX specializes in providing Fractional technology and strategic RevOps advisory retainers to de-risk growth and unlock scalable value. |
Reply to this email to schedule a quick chat. |
Mario |
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📈 On startup and agency hiring culture - one of the clearest signals in our recruitment process is agency or fast-velocity startup background. I brought this up on LinkedIn once again, even as the labor market is tough, yet we have 5+ open roles at the moment, some still open for months at an end. Is it a lack of job opportunities or a lack of perseverance? |
💼 Synergies in M&A for value creation - a simple yet important mini-playbook for squeezing EBITDA with synergies. |
How vibe coding can ruin hundreds of customers (a practical story): |
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Market insights & opportunities |
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Source: LSEG |
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Consulting is buying telemetry, not headcount. Ziff Davis' Connectivity unit did ~$231M revenue last year, Accenture is paying for recurring network intelligence that strengthens experience, revenue protection, and incident response. |
Physical AI shifts from demos to deployments. Oxa claims it can autonomise a heavy-duty port truck in under a day - an execution detail that makes industrial autonomy commercially plausible. |
On-device AI is becoming the privacy moat. As AI shifts from text to always-on microphones and cameras, the winning constraint is trust, processing stays local, minimizing exposure while improving responsiveness. |
Healthcare AI has entered the CFO era. Startups are shifting from SaaS seats to outcome-based pricing (per task/transaction), with value capture often framed at ~3-5× ROI. |
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Automotive B2B CRM: A 2-year-old B2B CRM platform serving the automotive sector with 100 subscribers, 50% margins, and just 1% churn. Generating €12.9K in monthly profit, it's offered at $706,844. |
Link in Bio SaaS: A 2-year-old viral link-in-bio SaaS with proprietary anti-ban technology and a 300M+ monthly visitors history. Generating $47K in monthly profit at 53% margins with 1,600 subscribers, it's listed at $1,000,000. |
Multi Device Audio iOS App: A 10-year-old iOS and Android app that syncs multiple devices for simultaneous audio playback, backed by 52K+ reviews and a 4.2 rating. Generating $22K in monthly profit with 55K average downloads per month, it's selling for $1,164,862. |
TikTok Native Supplement Brand: A 2-year-old health and beauty ecommerce brand built on TikTok Shop with strong Amazon spillover and a creator flywheel of 10K+ active videos. Producing nearly $53K in monthly profit, it's available at $1,360,000. |
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Working with me |
🌐 Scaling $30M - $100M+ mid-market companies with value creation through RevOps, data engineering, and WordPress. DevriX provides full RevOps consulting + delivery with GTM enablement for PE-backed portfolio companies, traditional tech, healthcare, finance, and professional service businesses pacing toward revenue growth initiatives. Our standard retainers between $10K and $60K include revenue lifecycle services for marketing and sales leaders, FP&A for financial teams, pipeline enrichment through websites and dozens of lead sources, automations and delivery integrations, CRO and ongoing testing, product delivery and platform integration solutions, and more through our consulting solutions. |
🚀 1:1 Consulting. At Growth Shuttle, I run two popular plans: Async Advisory ($3,500/mo) for $3M - $30M founders and executive teams and the smaller Strategic Growth Circle ($997/mo) for $100K - $500K entrepreneurs, agency founders, scale ups. My fractional executive plan is also available here. |
📈 Building US LLCs from Europe. I help European and Asian founders scale faster through doola and their "Business in a Box" model. Also suitable for US citizens (given their bookkeeping solution), but in very high demand across Europe. |
📊 Post-Merger Integration. We take on M&A initiatives with Flippa. Working closely on PMI retainers for PE companies and fast-growing startups integrating new companies within their portfolios, enabling data pipelines, and securing more deals through my personal network. |
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