Unlocking Growth
Unlocking growth in private equity and search fund retail portfolio companies
by Ken Mowry and Ed Scott New Opportunities and New Challenges for Multi-Brand Retailers Digital
Copyright © 2025 New Revolution Partners
PE & Search Funds
What NRP Can Do For Private Equity
For the Private Equity sector, Digital Transformation represents the most effective way to accelerate growth and enterprise value.
New Revolution Partners helps Private Equity firms, Search Funds and their portfolio companies redesign operations, expand digital capabilities, broaden customer segments and scale rapidly. We do this by leveraging our expertise in Digital Transformation and implementing a playbook of value creation digital opportunities that spur growth and accelerates efficiencies.
NRP PRIVATE EQUITY ENGAGEMENT FRAMEWORK
DUE DILIGENCE
Digital Opportunity Discovery
Identify & Evaluate Opportunities
ASSESSMENT
- Independent digital opportunity review
- Digital value levers identified
SIZING
- Digital targets and hypotheses finalized
- Macro EBITDA improvements sized
POST-ACQUISITION
Digital Opportunity Validation
Prioritize & Scope Opportunities
PRIORITIZATION
High-impact opportunity areas prioritized based on:
- Value to company
- Current and near-term digital capabilities
VALUATION
- Digital improvement opportunities, confidence levels and risk factors quantified
- Value metrics, tracking mechanisms and timelines to financial outcomes detailed
HOLDING PERIOD
Digital Value Acceleration
Accelerate Value Capture
VALUE DEFINITION
- Current state mapped
- Cross-functional agile sprint teams structured
- Resource gaps identified and capabilities augmented
- Definition of Done” for pilot and program teams clearly defined
EXECUTION
- Milestone and metric-based outcomes defined
- Sprint planning initiated and agile teams cycle through sprints, pivoting as required to ensure financial targets
- Agile methods and market responsiveness embedded in processes
EXIT
Pre-Exit Digital Assessment
Assess Current Efforts & New Value Areas
KILL, KEEP OR EVOLVE
- Current digital initiatives and valuation contribution reassessed
- Changing market dynamics prioritize new digital value opportunities
- Areas to shut down, pivot or add investment detailed
VALUE BOOST
Business improvement targets refocused to boost value
- Re-direct efforts towards higher value-creating opportunities
- Launch new teams to capitalize value in advance of sale
How we play across the investment and operational lifecycle
Early in the due diligence and investment processes, private equity firms and search funds spend hours assessing markets, identifying targets, vetting financials, making investments and identifying operational improvements. These are their core strengths.
The challenge for investors? Time and expertise required in making growth decisions based on a target’s technology platforms, infrastructure, digital capabilities and planned investments. Those are the core strengths of NRP.
In today’s competitive environment, there’s little room for error in carving out profits on a deal. NRP understands that margins are often dictated by a company’s ability to leverage technology – digitally enabling processes, driving digital efficiency and finding ways to accelerate digital growth.
NRP helps management teams prioritize opportunities and execute those with the highest impact on margins. In some cases, that could mean accelerating operational streamlining as competition and markets shift. In others, it might mean adapting digital channels to better understand and serve customer needs.
As the investment cycle evolves, NRP works with companies to capitalize new digital opportunities that emerge. NRP helps companies fund these initiatives by optimizing technology investments and digital capabilities.
What private equity firms and investors often need are Digital Transformation partners that help develop digitally-driven hypotheses then guide management teams in their execution. NRP was created to be this transformation partner.
Four PE Considerations in Digital Transformation
01.
Valuation: Historical approaches of valuing businesses based on free cash flow have evolved towards value creation plans that show technology-enabled growth and efficiency to justify aggressive valuations.
02.
Breadth: Sophisticated investors now assess opportunity areas such as channel optimization, customer experience, digital marketing, cloud infrastructure, RPA, AI/ML and data mining to uncover value.
03.
Bandwidth: In an environment of constantly changing technologies and business models, it is increasingly difficult for management teams and operating partners to be experts in all areas of value creation.
04.
Expertise: For high-priced deals to retain their high value requires the right pools of digital expertise, at the right time and with the right playbook for success.
NRP DIGITAL TRANSFORMATION CHECKLIST
NRP measures portfolio company digital transformation opportunities against 35 problem areas we’ve seen in our work. We then structure outcome-based value acceleration programs targeting those challenges with the biggest impact on margins.
Financial Objectives:
- Digital initiatives not achieving desired financial goals
- Financial targets require acceleration to achieve investment objectives
- Key metrics not well defined or lack accountability
- Growth and efficiency opportunities not prioritized
- Programmatic investments not continually reassessed
- Digital marketing and sales costs are high
- Digital marketing spend is inefficient
- Customer servicing and support costs are high
- Recurring monthly and annual digital revenues are low
- Share of digital transactions is below industry average
Customer Products, Services and Experience:
- Customer experience is poor or customers not served well
- Misalignment between customer needs and company offerings
- Value proposition not well understood by customers
- Value proposition across customer segments not clearly defined
- Profitable customer segments unknown or ineffectively targeted
- Customers increasingly lost to competitor products or services
- Competitors are more innovative
- Competitors better able to capitalize profitable trends
- Digital conversion rates and retention are low
- Direct-to-consumer and cross-selling opportunities not capitalized`
People and Partners:
- Management or staff resistant to change or doesn’t see need for it
- Management or staff lacks customer-first focus
- Management lacks effective data-driven decision-making tools
- Workforce not structured to succeed with next-gen customers
- Digital skills required to be competitive not identified or missing
- Culture discourages experimentation and innovation
- Inability to attract or retain digital talent
- Partners and innovative technologies ineffectively integrated
Process and Technology:
- Digital strategy, business model and operational opportunities unclear
- Teams not agile enough to pivot with changes in market and customers
- Processes are not effectively digitized or automated
- Processes do not allow products or services to scale
- Current technology stack not optimized to drive growth or efficiency
- Under-investment in technologies to serve next-gen customers
- Significant tech debt and costly legacy system exist
PRIVATE EQUITY INSIGHTS AND CASE STUDIES
Premium boutique children’s retailer and digital storefront.
The Client: A premium boutique children’s retailer with 14 stores and a digital storefront. The
Retail Energy unit of an engineering, logistics and energy company.
The Client: The Retail Energy unit of a North American engineering, logistics and energy company
Subsidiary of a large multinational delivery services company.
The Client: A subsidiary of a large multinational delivery services company with 40,000 couriers. The
Mid-sized regional bank with branches across Western US.
The Client: A mid-sized regional bank with branches across California, Washington and Oregon. The Challenge:
US-based women’s apparel retailer.
The Client: US-based women’s apparel retailer with 2,000 stores and $2B in annual sales. The Challenge: The
Direct-to-consumer automotive parts and accessories retailer.
The Client: A direct-to-consumer automotive parts and accessories retailer with $30m in sales, owned by Private
Specialty outdoor lifestyle retailer.
The Client: Specialty outdoor lifestyle retailer with 80 stores and $300m in annual sales. The