Why Some Private Equity
Portfolio Companies Struggle
to Scale—And the Strategies to
Unlock Their Growth Potential

Discovering the Right Growth Levers in Private Equity Portfolio Companies

Private equity firms invest in portfolio companies with a clear objective: to accelerate growth, maximize value, and position businesses for a profitable exit. Yet, despite the strategic and operational improvements implemented post-acquisition, many companies fail to achieve their projected revenue and profitability targets.

This is a persistent challenge for managing directors, portfolio managers, and operating partners. Their focus is often on financial restructuring, operational efficiency, and cost optimization, but one critical factor is frequently overlooked: marketing performance as a strategic growth lever.

Unlike finance and operations, which can be assessed through well-documented KPIs, marketing’s impact on growth is often poorly measured or misjudged. Many private equity-backed companies underperform because they lack the proven marketing leadership, investment levels, and infrastructure to drive sustainable expansion.

This article explores the key challenges that prevent some private equity portfolio companies from scaling and outlines a proven framework—guided by the expertise of a Fractional CMO—to unlock growth through strategic marketing execution.

It examines the importance of marketing due diligence in private equity acquisitions, the common gaps in multi-channel marketing execution, and how Fractional CMOs and outsourced marketing leadership can provide the strategic direction and operational expertise needed to accelerate sustainable growth.

The Underlying Barriers to Growth

Scaling a portfolio company is rarely a straightforward process. While operational efficiencies and financial discipline are critical, they are insufficient to unlock sustainable growth. Many portfolio companies struggle to identify and address the barriers preventing their expansion. These challenges are often systemic and rooted in how the organization perceives, funds, and executes marketing.

One of the most significant barriers is the lack of an integrated growth strategy. Many companies rely on fragmented marketing efforts, focusing on individual tactics—such as paid media, SEO, or content marketing—without a cohesive approach. Companies waste resources and fail to generate predictable demand without a structured framework that aligns marketing activities with revenue targets.

Additionally, poor market positioning and an unclear value proposition contribute to slow growth—even companies with strong product-market fit struggle to differentiate themselves in crowded industries. Without a compelling brand narrative and targeted messaging, companies are forced to compete on price rather than value, eroding margins and limiting scalability.

Another common issue is underinvestment in marketing relative to growth expectations. Many portfolio companies expect aggressive revenue expansion but fail to allocate the necessary resources toward demand generation. A company aiming for 30%+ annual revenue growth cannot succeed with a marketing budget of only 1-3% of revenue. This disconnect leads to inconsistent pipeline development and missed revenue opportunities.

Beyond budget constraints, many companies lack experienced marketing leadership to drive strategic growth initiatives. Without a seasoned marketing executive—such as a Chief Marketing Officer (CMO) or a fractional CMO—marketing often remains a tactical support function rather than a key driver of business outcomes. Companies with junior or overstretched marketing teams frequently struggle to execute data-driven campaigns that deliver measurable ROI.

Finally, the absence of marketing infrastructure and technology severely hinders scalability. Without a modern MarTech stack—including CRM, automation platforms, and advanced analytics—companies cannot measure campaign performance, track customer engagement, and optimize marketing spend. Data-driven decision-making is impossible without the right tools in place.

In the next section, we will discuss these barriers in more detail, exploring how each challenge impacts growth and what private equity firms can do to unlock the full potential of their portfolio companies.

Why Some Private Equity Portfolio Companies Struggle to Scale

No Clear, Cohesive Marketing Growth Strategy

One of the most fundamental reasons portfolio companies fail to scale is the lack of a well-defined growth strategy. Too often, businesses focus on short-term revenue gains rather than building a sustainable, scalable marketing and demand generation engine. Instead of executing a cohesive strategy, they engage in fragmented marketing efforts, shifting between tactics—paid media, SEO, content marketing, or account-based marketing—without an overarching framework.

Without a strategic roadmap that aligns marketing activities with revenue goals, portfolio companies waste resources on initiatives that fail to drive consistent demand. They often experience unpredictable revenue cycles, making it difficult to plan for long-term growth. Many private equity firms expect companies to hit aggressive growth targets but fail to recognize that growth requires a structured plan with the right mix of marketing channels, customer acquisition strategies, and brand positioning efforts.

In the next section, we’ll explore how poor market positioning and an unclear value proposition hinder a company’s ability to differentiate itself and drive sustainable expansion.

Poor Market Positioning and an Unclear Value Proposition

Even portfolio companies with strong product-market fit often struggle to differentiate themselves in a crowded market. Without clear and compelling positioning, companies default to competing on price rather than value, which leads to shrinking margins and slower growth.

The root of the problem lies in the lack of a well-defined value proposition. Many companies fail to clearly articulate why their product or service is superior to competitors. Without a differentiated brand narrative and messaging strategy, marketing and sales teams face an uphill battle in convincing prospects of the company’s unique strengths.

Additionally, companies often make the mistake of focusing too much on features and technical specifications rather than communicating how their offering solves critical pain points for their target audience. A strong positioning strategy requires understanding the emotional and financial triggers influencing buying decisions and crafting messaging that resonates with decision-makers.

Poor positioning also results in inconsistent messaging across marketing and sales channels. When a company’s value proposition is unclear or diluted, prospects receive mixed signals, leading to longer sales cycles, lower conversion rates, and weak brand perception.

To scale effectively, portfolio companies must develop a compelling market positioning strategy that:

• Clearly communicates the company’s unique value proposition
• Differentiates the company from competitors based on value rather than price
• Aligns brand messaging across all marketing and sales touchpoints
• Establishes thought leadership and credibility in the industry

In the next section, we will explore how underinvestment in marketing relative to growth expectations creates another major obstacle for portfolio companies.

Underinvestment in Marketing Relative to Private Equity Growth Expectations

Many private equity-backed companies have aggressive revenue growth targets but fail to allocate the necessary marketing investment to achieve them. The expectation that a company can scale revenue by 30% or more annually while only dedicating 1-3% of revenue to marketing is fundamentally flawed.

Marketing is often viewed as an expense rather than an investment, leading to underfunding essential demand-generation initiatives, brand development, and customer acquisition strategies. This misalignment between growth objectives and marketing spend results in companies struggling to build a predictable pipeline, effectively engage customers, and accelerate revenue growth.

A key issue is that many portfolio companies do not benchmark their marketing investment against industry standards. High-growth companies in competitive industries typically allocate between 7-12% of revenue to marketing, with some allocating even more in early-stage growth phases. Companies that underinvest in marketing relative to their peers fall behind in brand awareness, lead generation, and customer acquisition.

Furthermore, misallocated marketing budgets often exacerbate the issue. Companies that invest in marketing may not distribute their budgets effectively across high-performing channels, instead relying too heavily on a single approach—such as paid media or outbound sales—without a balanced multi-channel strategy.

To bridge this gap, portfolio companies must:

• Align marketing budgets with growth expectations and competitive benchmarks
• Optimize budget allocation across organic, paid, and referral-based marketing channels
• Implement data-driven marketing strategies to optimize return on marketing spend (ROAS)
• Systematically track return on marketing investment (ROMI) to measure the impact of spend on revenue generation

In the next section, we will examine how inexperienced or understaffed marketing teams further hinder a company’s ability to scale effectively.

In-House Marketing Teams Facing Resource and Expertise Constraints

Even when portfolio companies allocate sufficient marketing budgets, their ability to scale is often hindered by stretched-thin teams or operating without the specialized expertise needed for complex, multi-channel growth strategies. Many private equity-backed companies run lean marketing departments, limiting their ability to execute high-impact initiatives effectively.

In some cases, marketing is treated as a secondary function, with teams expected to manage everything from demand generation to brand positioning without the necessary senior leadership or strategic support. Without access to experienced marketing executives, these teams may struggle to implement high-level initiatives that drive sustainable growth.

Moreover, many marketing teams face gaps in specialized skills critical to modern marketing execution, such as:

• Demand generation & growth marketing – Developing data-driven campaigns that attract and convert high-value customers.
• Digital acquisition & paid media – Managing PPC, SEO, and paid social strategies to maximize ROI.
• Marketing automation & CRM optimization – Leveraging technology to nurture leads and improve pipeline efficiency.
• Data analytics & performance tracking – Using insights to refine campaigns and optimize marketing spend.

When marketing teams are too small or lack the necessary expertise, companies must rely on disjointed efforts that do not scale effectively. This results in inefficient lead generation, poor conversion rates, and stagnant revenue growth.

For private equity firms, ensuring portfolio companies have experienced, strategic marketing leadership is essential to unlocking growth potential. Many firms are turning to Fractional CMOs and outsourced multi-channel marketing teams to fill these gaps, providing access to executive-level strategy and execution without the overhead of a full-time hire.

In the next section, we’ll explore how lacking marketing infrastructure and technology limits scalability.

The Absence of Marketing Infrastructure and an Integrated MarTech Stack

A significant barrier to scaling portfolio companies is the lack of an advanced marketing infrastructure and integrated MarTech stack. Without the right tools and systems, companies struggle to track performance, optimize campaigns, and measure the true impact of marketing investments.

Many private equity-backed companies operate with outdated or fragmented marketing technologies, limiting their ability to make data-driven decisions. Often, MarTech stacks are siloed, with different systems operating independently rather than being seamlessly connected. This lack of integration makes reporting complicated and time-intensive, preventing companies from efficiently analyzing performance across all channels. As a result, organizations struggle to gain a holistic view of the entire customer acquisition cycle, leading to inefficiencies in marketing strategy and budget allocation.

Without a robust MarTech stack, companies cannot effectively:

• Track customer behavior across multiple channels.
• Automate lead nurturing and sales follow-ups.
• Attribute revenue to specific marketing activities.
• Optimize campaigns based on real-time performance metrics.

Modern marketing requires a fully integrated martech stack that includes:

• CRM & Marketing Automation – Platforms like HubSpot, Salesforce, or Marketo to manage customer relationships and streamline marketing workflows.
• Analytics & Attribution Tools – Solutions such as Google Analytics, Tableau, or Bizible to measure marketing impact on revenue growth.
• Content & SEO Management – Tools like SEMrush, Ahrefs, and WordPress to improve visibility and drive inbound leads.
• Paid Media & Retargeting – Platforms including Google Ads, LinkedIn Ads, and programmatic advertising to enhance demand generation.

Without these systems, portfolio companies can potentially lack visibility into performance metrics, waste budget on ineffective campaigns, and struggle to scale customer acquisition.

For private equity firms looking to drive measurable growth, ensuring that portfolio companies have the proper marketing infrastructure and technology is essential. A company that invests in MarTech and analytics-driven decision-making gains a competitive advantage by maximizing efficiency, optimizing spending, and accelerating pipeline velocity.

In the next section, we’ll discuss the role of strategic marketing leadership in unlocking portfolio company growth.

The Role of Strategic Marketing Leadership in Unlocking Private Equity Company Growth

Many portfolio companies fail to scale even with the proper marketing budget, infrastructure, and positioning because they lack experienced, strategic marketing leadership. Too often, marketing is treated as a support function rather than a core driver of revenue growth.

The Executive Leadership Gap in Marketing

Many portfolio companies operate without a Chief Marketing Officer (CMO) or an equivalent senior marketing leader who can align marketing strategy with business objectives. Instead, marketing decisions are often made by generalists or junior marketing personnel who lack the experience to develop and execute scalable growth strategies.

This lack of leadership results in:

• Fragmented marketing strategies with no clear direction.
• Poor alignment between marketing, sales, and finance.
• Ineffective budget allocation, leading to wasted marketing spend.
• Missed opportunities for demand generation and customer acquisition.

Without a strong marketing leader at the executive level, portfolio companies struggle to make data-driven decisions, optimize their marketing investments, and build sustainable revenue pipelines.

Fractional CMOs: A Scalable Marketing Solution for Private Equity-Backed Companies

For many mid-market and growth-stage companies, hiring a full-time CMO may not be feasible. This is where Fractional CMOs provide a compelling alternative.

A Fractional CMO offers executive-level marketing leadership on a flexible basis, ensuring that companies receive:

• Strategic direction without the cost of a full-time executive.
• A data-driven marketing roadmap aligned with revenue growth goals.
• Better cross-functional alignment between marketing, sales, and operations.
• Scalable marketing execution, leveraging best practices from multiple industries.

By leveraging Fractional CMOs or outsourced marketing leadership, private equity firms can ensure that their portfolio companies have the expertise to build sustainable, scalable marketing programs.

In the next section, we’ll outline a framework for turning around underperforming portfolio companies and setting them on a path to sustainable growth.

The Framework for Turning Around Underperforming Private Equity Portfolio Companies

For private equity firms, unlocking growth in underperforming portfolio companies requires a structured, data-driven approach. Simply increasing sales efforts or cutting costs will not create sustainable, scalable growth. Instead, a comprehensive marketing and demand generation framework must be established to drive measurable business outcomes.

Step 1: Conduct a Marketing Readiness Audit

Before making any strategic changes, private equity firms should conduct a thorough marketing audit to assess:

• Brand positioning and competitive differentiation.
• Demand generation capabilities and lead quality.
• Sales and marketing alignment and conversion rates.
• Technology infrastructure, including MarTech stack integration.
• Marketing spend vs. industry benchmarks and ROI performance.

This audit helps identify gaps, inefficiencies, and opportunities for immediate improvement.

Step 2: Baseline Current Marketing Performance

Once an audit is completed, it’s critical to establish a baseline of current marketing performance before making strategic adjustments. This includes:

• Defining key marketing KPIs such as CAC, LTV, pipeline velocity, and ROMI.
• Ensuring all tracking and attribution models are correctly implemented.
• Evaluating reporting systems to verify accurate measurement of performance metrics.
• Identifying gaps in customer journey analytics to improve funnel conversion rates.

By accurately measuring where the company stands today, leadership can set realistic growth benchmarks and track improvements effectively.

Step 3: Develop a Marketing Performance Measurement Framework

Portfolio companies must have a structured approach to tracking performance over time to measure ongoing improvements. This includes:

• Establishing a regular reporting cadence to track progress against baseline KPIs.
• Setting clear benchmarks for marketing efficiency and ROI improvements.
• Using predictive analytics to identify trends and refine marketing efforts proactively.
• Leveraging automation and AI-driven insights to enhance decision-making.

A robust measurement framework allows private equity firms to assess the impact of marketing investments and continuously refine their strategy.

Step 4: Align Marketing Strategy with Private Equity Revenue and Exit Goals

A marketing strategy must fully align with the company’s revenue growth objectives and potential exit plans. Private equity firms should work with marketing leaders to:

• Establish clear, revenue-based marketing KPIs.
• Develop a scalable demand generation strategy integrating organic, paid, and referral-based marketing channels.
• Ensure alignment between marketing and sales so both teams work toward target pipeline and revenue goals.
• Implement a measurement framework that ties marketing spend directly to revenue outcomes.

Step 5: Strengthen Marketing Talent and Leadership

As discussed in previous sections, strong marketing leadership is essential to executing a scalable growth plan. To ensure execution, private equity firms should:

• Assess existing marketing team capabilities and identify skill gaps.
• Hire a Fractional CMO or executive marketing leadership to guide strategy and execution.
• Build a specialized marketing team with expertise in demand generation, digital acquisition, content strategy, and analytics.

Step 6: Optimize Channel Mix and Budget Allocation

Many underperforming companies struggle because they rely too heavily on a single marketing channel (e.g., paid media) rather than adopting a multi-channel approach.

To drive growth, companies must:

• Diversify marketing investments across paid, organic, and referral-based growth channels.
• Use multi-touch attribution models to optimize marketing spend across high-performing strategies.
• Leverage data analytics to track customer journeys and conversion performance.

By implementing a balanced marketing strategy, portfolio companies can build a sustainable demand-generation engine that continuously fuels revenue growth.

Step 7: Executing the Right Marketing Strategy with the Right Team

Having a plan and defining growth benchmarks is critical, but execution is where many portfolio companies fail. Implementing a marketing strategy across all channels requires a team with specialized expertise in each discipline. However, building an in-house department is often not feasible for private equity portfolio companies due to the significant investment required to hire full-time employees for every marketing function.

Instead, PE firms should consider outsourcing their marketing operations to a Fractional CMO Agency or adopting a hybrid model with a small in-house department. To fill missing talent gaps, companies then outsource to a top B2B SEO Agency and a Marketing Automation Agency with experts and specialists on-demand.

This approach:

• Eliminates the cost burden of full-time salaries, benefits, and overhead.
• Assembles an experienced marketing team in weeks, not months.
• Provides access to specialists across all marketing channels.
• Eliminates opportunity costs associated with delays in execution.

Instead of waiting 6-12 months to build a fully staffed team, portfolio companies can accelerate execution within weeks, not months, by leveraging Fractional CMOs and outsourced marketing experts.

The following section will explore how private equity portfolio companies can adopt a more agile approach to maximize valuations and accelerate exit horizons.

Related Articles for Further Reading:

• Marketing Readiness Audit: How to Assess Your Portfolio Company’s Growth Potential
• Fractional CMO Services: Marketing Strategy Development and Planning
• Fractional CMO Agency: How We Help Companies Scale Faster

The Path Forward: A Smarter Approach to Growth

For private equity firms and portfolio managers, growth is not accidental—it is engineered through strategic marketing investment, leadership, and execution. Firms that recognize marketing as a core driver of value creation rather than an operational afterthought will significantly outperform their competitors and drive higher exit valuations.

Rethinking Marketing as a Strategic Asset

One of the most significant mindset shifts PE-backed companies must embrace is viewing marketing as an engine for growth rather than a discretionary expense. Private equity firms that integrate marketing into their investment thesis—just as they do financial optimization and operational efficiency—realize the direct correlation between marketing investment and valuation multiples, competitive differentiation, and predictable revenue growth.

To succeed, PE firms must ensure portfolio companies:

• Have well-defined revenue-based marketing KPIs that tie directly to business objectives.
• Invest in multi-channel demand generation to sustain and scale the customer acquisition pipeline.
• Adopt a data-driven, ROI-focused approach to marketing investments to improve efficiency.
• Leverage marketing automation, SEO, and a robust MarTech stack to maximize pipeline performance and revenue conversion.

Building a Scalable Marketing Function with Fractional Leadership

For many mid-market and growth-stage companies, hiring a full-time CMO and an extensive marketing department is neither feasible nor cost-effective. Instead, Fractional CMOs and outsourced marketing teams offer a flexible, scalable alternative, ensuring companies can access executive-level leadership and execution expertise while maintaining operational efficiency.

Fractional marketing leadership enables PE-backed companies to:

• Develop and execute a high-impact marketing strategy without the overhead of full-time hires.
• Rapidly scale marketing execution through a team of channel-specific experts.
• Deploy enterprise-grade marketing capabilities without long-term fixed costs.
• Avoid execution delays associated with building an in-house multi-channel team from scratch.

Driving Portfolio Company Valuations with Smarter Marketing

Marketing directly impacts enterprise value. Companies that invest in a structured, performance-driven marketing function consistently outperform their peers in:

• Revenue growth and customer acquisition efficiency.
• Pipeline acceleration and higher conversion rates.
• Stronger brand positioning, leading to premium valuation multiples.
• Increased strategic acquisition interest due to proven scalability.

Private equity firms that embed marketing into their investment strategy, operational playbook, and exit planning will realize greater portfolio returns and more predictable growth outcomes.

Final Thoughts: Prioritizing Marketing to Maximize Returns

The path forward for PE-backed companies is clear: treating marketing as an afterthought limits valuation potential, while a proactive, data-driven marketing approach drives sustainable revenue growth and enhances exit outcomes.

For private equity firms looking to take immediate action, the first step is conducting a Marketing Readiness Audit to assess performance gaps, identify growth opportunities, and implement a scalable marketing framework.

Related Articles for Further Reading:

• How a Fractional CMO Can Transform Portfolio Company Growth
• Marketing Readiness Audit: Assessing Growth Potential

Frequently Asked Questions

What challenges do private equity portfolio companies face when scaling?

Private equity portfolio companies often struggle with market positioning, inconsistent demand generation, underfunded marketing, and a lack of senior marketing leadership. Without a strategic, data-driven approach, achieving scalable revenue growth is difficult.

How can private equity firms accelerate the growth of their portfolio companies?

Private equity firms can accelerate portfolio company growth by aligning sales and marketing strategies, optimizing digital marketing channels, enhancing brand positioning, and leveraging data-driven decision-making. A Fractional CMO with deep experience in scaling private equity-backed companies plays a critical role in leading these growth initiatives.

Why is marketing due diligence critical in private equity acquisitions?

Marketing due diligence helps private equity firms assess customer acquisition strategies, brand strength, and demand generation capabilities before an acquisition. This ensures a scalable marketing foundation and minimizes post-acquisition growth risks.

What role does a Private Equity CMO play in a portfolio company?

A Private Equity CMO provides executive-level marketing leadership, developing scalable growth strategies, aligning marketing and sales, optimizing customer acquisition, and ensuring marketing investments generate measurable revenue.

What are private equity portfolio companies’ most effective marketing strategies?

Successful strategies include multi-channel demand generation, account-based marketing (ABM), paid media optimization, SEO, marketing automation, and thought leadership positioning. These tactics create a scalable and predictable marketing pipeline.

How does marketing impact private equity portfolio company valuations?

A strong marketing function reduces customer acquisition costs (CAC), increases lifetime value (LTV), and accelerates revenue growth. Companies with scalable demand generation systems and strong brand positioning typically achieve higher exit multiples.

When should a private equity portfolio company overhaul its marketing strategy?

A marketing strategy overhaul is necessary when a company experiences:

• Declining conversion rates and lead quality.

• Stagnant revenue growth or inefficient marketing spend.

• Lack of marketing-sourced pipeline and misalignment with sales.

• Over-reliance on outdated tactics that no longer deliver ROI.

Why do private equity firms outsource marketing execution?

Private equity firms outsource marketing execution to gain access to specialized expertise, rapidly scale marketing efforts, and reduce overhead costs. A Fractional CMO or outsourced marketing team enables portfolio companies to execute enterprise-level marketing strategies efficiently.

How does marketing technology (MarTech) accelerate private equity portfolio growth?

A modern MarTech stack improves campaign tracking, enhances customer insights, automates lead nurturing, and increases marketing efficiency. AI-driven analytics and predictive modeling help private equity firms optimize acquisition costs and maximize ROI.

What key marketing metrics should private equity firms track for portfolio company growth?

To measure growth performance, private equity firms should track:

• Customer Acquisition Cost (CAC) – Measures the cost of acquiring new customers.

• Marketing-Attributed Revenue – Determines the percentage of revenue influenced by marketing efforts.

• Return on Marketing Investment (ROMI) – Assesses marketing spend efficiency.

• Lead-to-Customer Conversion Rate – Tracks marketing’s impact on sales.

• Pipeline Velocity – Measures how quickly leads move through the sales funnel.