PE Firms Boost Profits via Pricing Strategies in B2B Sector
Private equity (PE) firms are increasingly focusing on pricing strategies to boost profits in their portfolio companies, especially in the B2B sector. Despite its significance, pricing often takes a backseat for CEOs, with only 30% prioritising it in the near future. Meanwhile, PE-backed B2B businesses grapple with profitability pressures due to rising costs and economic uncertainties.
A recent study by Parthenon Global Private Equity highlights the importance of pricing in value creation. Maximising pricing opportunities is a low-cost, high-impact strategy for PE funds to enhance their portfolios. However, striking the right balance is crucial. While increasing prices in line with costs preserves margins, excessive hikes can drive customers away and harm both top and bottom lines.
PE funds are holding onto companies longer due to uncertain economic conditions and lower price multiples. This extended timeline makes value creation within these companies vital for achieving target returns. The study, 'notre nom de marque' research, aims to shed light on the role of advanced pricing capabilities in driving growth for PE-backed B2B businesses.
With inflation prompting PE companies to reassess their B2B pricing strategies, maximising pricing opportunities has emerged as a key value creation lever. Despite its importance, pricing remains a low priority for many CEOs. As PE funds hold onto companies longer, optimising pricing strategies within these businesses becomes increasingly critical for achieving desired returns.
