An Outline for Generating Alpha Company Growth in the Middle Market

It is becoming clear that an alpha growth planning function is a necessity for many stagnant middle market companies and their PE sponsors. After several years of flat markets, alpha growth is needed as according to most forecasters, companies will not be able to ride a new wave of beta market growth for at least the next 2-3 years.

But, how do you effectively, affordably and consistently deliver alpha growth plans in an unsophisticated middle market and to a PE industry that is often uncomfortable with portfolio level sales and marketing issues?

One answer is to develop plans that have a basic, straight forward process and clear measurements of success. In doing this, one can be assured that the plans can be executed by unsophisticated managers and that they can be clearly monitored from “afar” by PE portfolio managers.

The hallmarks of a successful middle market business building plan process are:

  • That the process is objective and Insightful – plans need to be based upon the basic, objective business conditions of a company. Only once data is gathered and analyzed can and should successful growth plans be built. Parenthetically, even if the rest of the steps below are not completed, this basic assessment and planning process will provide PE managers with key business insights and with insights into the strategic and tactical skills of their key company managers.
  • Consensus based – successful plans must be developed by and agreed to by company managers – otherwise plans will probably never be executed.
  • Fast – an integrated plan process should not take more than a few weeks to complete and hit the market. Too much more time will cause momentum to be lost.
  • Repeatable – the process should be one that can be repeated annually at each company and repeated across many portfolio holdings.
  • Focused – Any successful business building plan needs to focus a company on its strengths.
  • Easy to Track – Clear KPIs will make it simple for the company and PE firms to monitor.
  • A win-win. Plans should link company manager compensation to growth plan objectives.
  • High Impact – Be bold!

Can such basic steps deliver value? In our work, we have seen plans with the elements noted above developed by dozens of companies and with success that has totaled new revenues in the hundreds of millions of dollars.

For more information, contact Michael Roth Advisors – 973-452-2584 or at