Sales performance has always been a value creation lever in private equity. Anyone who has worked with PE-backed businesses for any length of time knows that. The classic playbook combined financial engineering, operational improvement, and multiple expansions at exit, with sales growth as one of the core EBITDA drivers underneath.
What has changed is not that sales have become a value lever. It is that the other levers have weakened, and sales now bear more of the return burden than they have at any point in the last 20 years.
I think most PE operating partners and PortCo CEOs feel this shift instinctively. The deals are harder. The exit windows are longer. The financial engineering room has narrowed. The cost base has usually already been optimised by the time the second or third PE owner arrives. What is left as a return driver is commercial performance, and that is where the load has fallen.
The shift is not subtle, and Bain’s 2026 Global Private Equity Report names it clearly.
The era of “5 is the new 12” in EBITDA growth requirements is over. Bain’s framing is now that “12 is the new 5.” In other words, the EBITDA growth required to deliver target returns has more than doubled. Deals that used to clear the bar with 5% annual EBITDA growth now need closer to 12%, and Bain is explicit that “actually achieving this growth requires sharper value creation and a clearer, data-backed edge.”
Bain goes further in their analysis. They state directly that “in today’s less benign environment, valuation multiples won’t expand on their own, making it vital that PE firms prioritise improving earnings at their portfolio companies through a mix of cost control and sales acceleration.” Two levers. Sales acceleration is one of them, named explicitly.
The other context that has changed is time. Average global holding periods for PE portfolio companies have reached 6.6 years in 2025, well above the 6.1-year average between 2011 and 2020. The backlog of PE-owned companies still on the books has never been bigger, with more than 16,000 companies globally held for more than four years. That is 52% of total buyout-backed inventory, the highest on record and ten percentage points higher than the past five-year average.
Longer holds combined with higher EBITDA growth requirements mean PE firms cannot afford to spend two years of the hold period waiting for sales performance to come right on its own.
The clock is shorter than it looks.
Because every other major lever has weakened, and sales has not been able to step back into the shade.
Financial engineering used to do a lot of the heavy lifting. Cheaper debt, higher leverage ratios, and aggressive refinancing structures produced meaningful equity returns even when operational performance was average. In a higher-rate environment, that lever has narrowed significantly. Debt is more expensive, lenders are more cautious, and the room for financial structuring has narrowed.
Multiple expansion used to do more of the heavy lifting, too. The exit multiple was often higher than the entry multiple simply because the market was rising. That pattern is no longer reliable. Bain’s data on the 16,000 unsold PortCos sitting in inventory tells you everything you need to know about how exit conditions have shifted. Multiples are not expanding on their own.
Cost-out has done its share of the work historically. But most PortCos have been through one or two rounds of operational efficiency programmes by the time the current owner arrives. The big-ticket cost reductions, the procurement renegotiations, the back-office consolidation, and the headcount efficiencies have largely been taken. What is left is incremental, and incremental cost-out does not deliver the EBITDA growth that “12 is the new 5” now demands.
That leaves sales. And it leaves sales in a more exposed position than at any time in recent PE history, because the other levers can no longer carry the slack when commercial performance disappoints.
McKinsey’s research on more than 100 PE funds with vintages after 2020 found that general partners that focus on creating value through asset operations achieve a higher internal rate of return, up to two to three percentage points higher on average, compared with peers. That is not a small number. Over a typical hold period and at fund scale, two to three IRR points is the difference between a top-quartile and a median fund.
The same McKinsey research found that around 54% of overall revenue growth from a PE deal is generated by value-creation initiatives, with the rest coming from multiple expansion. With multiple expansions under pressure, the share of returns that needs to come from value creation is rising. And inside value creation, commercial performance is the dominant component.
Bain’s portfolio case studies make the same point in practical terms. One midmarket fund I came across in their reporting faced three years of weak sales at a promising industrial PortCo specialising in testing, inspection, certification and compliance. After implementing a structured sales transformation, the business grew revenues and EBITDA by 70% and tripled equity value within 24 months. Rather than sell, the fund doubled down and acquired one of the competitors. That is what a properly executed commercial transformation looks like in PE.
The pattern repeats across funds. The PE firms that are pulling ahead in the current environment are those that have built systematic capabilities in commercial performance improvement. Not as a tactical fix when things go wrong, but as a strategic value creation discipline applied across the portfolio.
In my experience, three reasons.
The first is that commercial due diligence has not caught up with the shift. Most CDD processes are still focused on market sizing, competitive position and historical sales trends. They are not designed to surface the structural commercial weaknesses that determine whether a PortCo can actually deliver the growth assumed in the investment thesis. The result is that PE firms regularly close deals with weak commercial foundations, then discover the problem 12-18 months in when growth fails to track to plan.
The second is that sales transformation has historically been treated as a tactical intervention. Bring in a new CRO. Run a sales training programme. Implement a new CRM. These interventions create motion, but rarely sustained commercial change.
The third is that the operating partner model varies widely on commercial capability. Most PE firms have strong financial and operational expertise in-house. Commercial expertise is more variable, and in many funds it rests with one or two operating partners who cannot cover the entire portfolio at the required depth. The result is that PortCos get strong financial governance and operational rigour, but weaker commercial guidance during the period when sales acceleration is supposed to be doing most of the work.
Sales performance is no longer one lever among several. It is the dominant lever, and firms that have built a systematic capability around it will outperform those that have not.
That does not mean sales becomes the only thing that matters. Financial discipline, operational rigour and exit strategy all still matter. But the relative weight of sales as a return driver has increased significantly, and the response from most PE firms has not yet kept pace with the shift.
For PortCo CEOs, the implication is similar. The pressure to deliver commercial performance in the first 18 months post-investment is higher than ever, and the cost of getting it wrong is higher than ever. Sales transformation cannot wait for quarter four of year one. It needs to be designed into the investment thesis from day one.
The PE firms and PortCos pulling ahead in this environment have three things in common.
Commercial diligence is properly built into the investment process. Not box-ticking market sizing exercises, but forensic reviews of sales process, sales infrastructure, sales talent and sales culture. The deal closes with eyes open on commercial reality, not optimistic projections.
Sales transformation is treated as a strategic value creation discipline. Not a tactical fix when growth disappoints. A structured commercial programme is designed into the first 100 days, not improvised in month 18 when the board starts asking hard questions.
The operating partner model has genuine commercial depth. Not one or two stretched commercial generalists across a 25-portfolio fund. Embedded commercial capability that can run the diagnostic, build the transformation plan, and stay close enough to delivery to actually move the numbers.
This is what Sales Engine has built the capability to deliver across PE portfolios. You can read about how we think about the structural chasm in PE-backed growth here, and our methodology for commercial performance is set out in CORD.
The PE firms that move first on this will compound the advantage. The market will spend the next 12 months separating funds with systematic commercial value-creation capability from those still treating sales performance as a tactical problem.
Sales performance is no longer one lever among several. It is the dominant lever. The data already shows the gap between funds that have built around that reality and those that have not, and that gap is going to widen as the holding period problem forces more PortCos into commercial transformation programmes they were not prepared for.
If your fund or PortCo is approaching the point where sales performance has to do more of the work, the question is whether you have the diagnostic and the transformation capability in place to deliver it. Most firms are not prepared for that shift. That is the risk, and the opportunity.
If you would like to talk through how your portfolio companies are positioned against this shift, get in touch with the Sales Engine team. We would be happy to walk through it with you.
Steve Robinson is CEO of Sales Engine.
New to Sales Engine? Begin with the Commercial Performance Diagnostic.
