According to UK-based private equity houses, newly acquired firms exhibit the largest skills gap in marketing and in IT management. This is the result of a survey published by ThoughtSpark, part of the Lindsell Marketing Group and a content development, and international PR and marketing services provider. The survey interviewed private equity houses based in the UK with assets under management of over £2 billion, who were asked to rate a range of skills in companies they acquire or fund.
The rating was done on a scale of one to 100 percent, where 100 percent is the optimal skill level, IT management was rated at just 48 percent, while professional, accountable and measurable marketing was judged at 44 percent overall. This compares with much stronger skills such as new product development (71 percent) and sales (69 percent).
In 2015, the increasing role of private equity in developing British business is not simply a matter of contributing development capital, with many private equity firms helping acquired firms develop the key skills needed to drive rapid growth in the funded venture. ThoughtSpark have advanced their study as an important barometer of where skills enhancement is most needed amongst newly acquired firms.
The survey reveals a lack of IT management skills as a particularly worrying gap, with businesses critically reliant on their systems for operational efficiency, effective customer management and intelligent sales activity. Poor marketing skills mean that business development funds are misapplied, an effective pipeline of sales leads is not generated, and market awareness fails to be built.
In short, sub-par IT and marketing skills can significantly reduce a businesses’ ability to go to market, target the right audience with the most effective messages and generate effective sales growth.
Key findings from the research include that the skills private equity houses rated most highly in newly acquired firms were: new product development (71 percent), sales (69 percent) and overall financial and business management (57 percent). The survey also found that unsatisfactory skill levels were reported for IT management (45 percent) and professional, accountable and measurable marketing (44 percent).
Paul Lindsell, Managing Director and Founder of ThoughtSpark, commenting on the research findings, said, “Understanding the skills gaps in acquired companies is a key factor to ensure rapid sustainable growth. It is not surprising that start-ups focus on financial management and product development since incompetence in these areas would stop them from even getting off the ground in the first place. However, there is evidently a startling lack of capability in Marketing and IT as firms move to second stage growth. Leaving these skills undeveloped is likely to be disastrous for business managers and investors alike. In fact, there is little point in making a private equity investment in the first place if these key skill areas are left unattended.
“IT capabilities are increasingly important to business development in a world where sales automation and online interaction are becoming more and more the norm. Equally, misdirecting marketing effort and spend is tantamount to flushing money down the toilet. Addressing these two clear gaps in their skillset of newly acquired firms is key to transforming start-ups into market leaders.”