The Growth Thesis Is Underwritten. The Commercial Engine Isn't Built.

Accountable for the number, not in charge of the system

Ask who owns that engine in a portfolio company, the whole path from a stranger to a signed order, and the answer is usually the VP of Sales who came with the business. That person owns the revenue target but rarely controls the things that decide whether the target is reachable: lead quality, qualification, quote turnaround, pricing exceptions, the handoffs between marketing, sales, and operations, and the delivery constraints that decide whether the company can supply what it sells. An inherited sales leader can be excellent. The question is whether the role came with the authority, the people, and the resources to change how demand gets created and converted, or just the quota. My default is to give the incumbent those things first: decision rights over pricing exceptions and handoffs, people to run the process, and data to see it. Change the role only if the system still does not move once they have them.

Peter Drucker settled the framing in 1954: "There is only one valid definition of business purpose: to create a customer" (The Practice of Management, p. 37; passage). Open the value creation plan and ask which workstream owns that job. Often none does.

How it shows up in diligence

I see this most in lower-middle-market, founder-led manufacturers, and it shows up as specific, checkable conditions, not a blanket failure of diligence:

• Relationships stay concentrated in a few people.
• The commercial numbers, opportunities to quotes to orders to margin, do not reconcile.
• Key pricing and account knowledge lives in individuals' heads.
• The named growth initiatives have no staffing or decision rights behind them.
• Diligence established the market opportunity without fully testing whether the company can capture it with the founder out of the room.

None of these means the deal team missed something obvious. They are what a pipeline hides and a P&L or a plant tour never shows. Most of them can be tested before close: ask for the opportunity-to-order reconciliation and the quote log in diligence, not after.

What the gap costs

Put two identical $30M manufacturers side by side. One grows revenue 6% a year on the engine it has. The other grows 13%, because someone rebuilt the engine in year one and lifted margin two points along the way. Hold both five years. Exit both at the same 10x multiple.

On those assumptions, that is about a $33.7M difference in exit enterprise value (the rounded table figures differ by $33.8M). The two drivers are not equal: roughly $22.7M comes from the faster growth at the baseline margin, and about $11.1M from the margin uplift on the larger revenue base (this split assigns the growth-and-margin interaction to the margin component). The multiple never changes. The improvement shows up as more earnings. At a 10x entry, the engine-left-alone case is a 6% annual gain in enterprise value, which no sponsor underwrote; the rebuilt case is about 16%. The multiple is held flat on purpose. If buyers pay more for growth they can inspect, the gap widens; if they do not, the earnings gap stands on its own.

A deal partner should challenge the 13%, so here is where seven extra points could come from: a point or two of price realization, which shows up in both the growth line and the margin line; a few points of win rate on quotes the company already sends; and one segment entered on purpose. The two-point margin lift is a conservative reading of what price alone would do, since it is net of the commercial spend and the cost inflation that absorb most of a price gain. The shape also survives a harder case. At 9% growth with the same margin lift, the gap is still about $18.2M; at 9% with no margin lift, about $9.0M. If the rebuilt engine takes two years to show up, with 6% growth until then and 13% after, the gap is still about $22.5M.

The figures are illustrative, not a forecast, and they do not establish that rebuilding the engine causes those outcomes. The model assumes the 17% margin is net of the ongoing commercial spend needed to produce it, and it excludes interim cash flows, implementation cost, working capital, capex, and debt. It measures enterprise value, not sponsor equity return or IRR. The only point is the shape: the commercial engine is a growth-rate lever, and a holding period compounds growth-rate levers. Bain made the same point in 2023: with multiple expansion and cheap debt providing less support, earnings growth has to carry more of the return (Bain, Global Private Equity Report 2023).

Pricing is part of this lever. A widely cited McKinsey analysis found that a 1% improvement in price, at flat volume, lifts operating profit about 8% for the average S&P 1500 company, roughly three times the impact of a 1% volume gain (The Power of Pricing). In the model company above, 1% of price on $30M of revenue is $0.3M, about 6.7% of its $4.5M of entry EBITDA (15% of $30M). Whether that power exists in a given manufacturer is worth testing against customer value, alternatives, and your own economics. Where it does exist, and it often does in a differentiated product, what is usually missing is a system that captures it instead of giving it away one exception at a time.

Six questions for the first read

You do not need a full diagnostic for the first read. Six questions get most of the way, and they respect how industrial companies sell:

A weak answer to any of these is an investigation prompt, not proof of failure. Which gaps to close, and in what order, is the work, and it is specific to the company.

Where the constraint usually hides

The constraint is rarely where the noise is. Here is a rough map of where it tends to sit and what to test before spending against it. Each row is a hypothesis, not a diagnosis.

Prioritize the constraint with the largest credible economic effect you can address within the hold, after weighing implementation cost, dependencies, and how strong the evidence is. And mind the order: if qualified opportunities already wait for quotes, more lead generation only lengthens the queue. Test intake completeness, engineering capacity, pricing authority, and team capability before spending to create more demand.

What it looks like to build it

At Powerblanket, the founder-led manufacturer from the opening, we built the commercial engine that took revenue from $5.5M to $21M and the company to a sale to Thermon. Just as important, we trained the people to run it and keep improving it. That was a strategic sale, not a fund's hold, but it is the same work a platform faces with every add-on: make the commercial capability belong to the business instead of to one leader.

• What got built: structured intake from every sales conversation, jobs-to-be-done research by segment, dashboards feeding one board in the president's office, demand-generation processes, and clear handoffs and decision rights.
• Who learned to run it: the marketing and sales team was coached to use that intake and those dashboards to set priorities, adjust targeting, and make calls without waiting on me.
• What survived the acquisition: Thermon bought the company in 2022 for $35M. The commercial capability carried over, along with local authority where it mattered, the team's ability to test and respond, and access to Thermon's reach and resources.
• What continued after I left: I moved into a Thermon corporate role in January 2025, and the unit kept growing on the systems built and the people trained. EBITDA more than doubled between fiscal 2022 and fiscal 2026, from about $3M to roughly $7M, and fiscal 2026, the year ended March 31, 2026 and the first full year after my move, was the highest of the series (internal figures).

That is the strongest evidence I have for the argument: commercial capability can become an asset of the business instead of staying locked in one leader's head.

Mine is not the only case. Bain documented a PE fund that owned a market-leading testing, inspection and certification business whose revenue and EBITDA had gone flat three years into the hold. A new leader ran an outside-in segmentation of the customer base, found that in one segment the buying decision sat with the CFO rather than the plant manager, and rebuilt the sales motion around that. Bain reports that revenue and EBITDA grew 70% and equity value tripled within 24 months (Bain, New Sales Motions Transform a Portfolio Company's Performance). Same assets, different engine.

The first moves, in order

1. First 30 days. Build one reconciled baseline, from opportunities to quotes to orders to margin, and mark every revenue stream that depends on a single person.
2. By day 60. Name the leading constraint, test it against customer, sales, and operating evidence, and give the fix an owner with real authority.
3. Days 60 to 90. Train the people who will run it, and pilot one intervention with a budget and a measurable outcome.
4. Every board meeting after. Measure results and side effects.
5. Through the hold. Scale it, and embed the capability so it survives a leadership change.

Who owns the work is a decision the plan makes explicit: the incumbent with new authority, a hire, or fractional commercial leadership until the capability is in-house. What does not work is leaving it to whoever has time.

Match the proof window to the intervention. Some pricing or reactivation changes move orders quickly; most industrial initiatives take quarters, because the sales cycle is long.

What the board should see each quarter, by segment: quote turnaround, win rate on qualified quotes, price realization against target, pipeline coverage for the next two quarters, and the share of revenue that depends on one person. Five numbers, one page.

Close the gap on purpose

The growth was underwritten. The engine that delivers it usually was not. If you have a portfolio company where growth has flattened and no one can say exactly why, that is the symptom, not the diagnosis. I run a Commercial Engine Diagnostic: about four weeks, fixed scope, priced against enterprise value rather than hours. It is built to find the constraint, establish what it costs, and end in a readout and a sequenced 90-day plan that names who owns each fix and what capability it needs. Bring one portfolio company and book a 30-minute commercial review. For a quicker fit check, book 15 minutes.

Book a 30-minute portfolio review →

Nate Evans
Founder, Evans Advisory | Fractional CCO for industrial manufacturers
Led Powerblanket from $5.5M to $21M in sales and through its sale to Thermon for $35M at 12x EBITDA.
evansadvisory.co

Quick answers

What is the commercial engine in a portfolio company?

The commercial engine is the whole path from a stranger to a signed, profitable order: demand, qualification, quoting, pricing, the handoffs between marketing, sales, and operations, and the capacity to deliver what is sold.

Why does the growth thesis stall after close?

The model says how much the company will grow, not who will build the capability to get there. The inherited sales leader usually owns the target but not the pricing authority, handoffs, data, or people that decide whether it is reachable.

How much is a rebuilt commercial engine worth over a hold?

In an illustrative model, a $30M manufacturer growing 13% with a two-point margin lift is worth about $33.7M more at a 10x exit after five years than the same company growing 6%. At 9% growth with the same lift, the gap is about $18.2M. The figures show the shape of the lever, not a forecast.

Should a fund replace the inherited VP of Sales?

Not by default. Give the incumbent the decision rights, people, and data to run the system first, and change the role only if the system still does not move once they have them.

What should happen in the first 90 days?

In the first 30 days, build one reconciled baseline from opportunities to quotes to orders to margin. By day 60, name and test the leading constraint and give the fix an owner with authority. In days 60 to 90, train the team and pilot one measured intervention.