Our guest on SBI TV is Paula Shannon, the Chief Sales Officer at Lionbridge. Paula shares her journey going from a publicly traded company, as a chief sales officer, to a company owned by a private equity firm. She discusses the impact of changing her structure, getting laser focused on the key metrics that private equity investors look at, and how she had a successful exit.
To follow along, leverage SBI’s How to Make Your Number in 2018 and turn to the Sales Strategy section on page 340. To download the full transcript in a word document, click here.
Paula details her journey as the head of sales for Lionbridge, specifically where she started and how she ended up in her current role. This is especially powerful because the average tenure of the head of sales has never surpassed two years at the company.
When a company, whether it’s a privately held company taking outside capital to a private equity firm for the first time or a publicly traded company moving to private equity, getting a deal done is an incredibly arduous process. Primarily because everybody’s making a big bet on both sides of the ledger. Watch as Paula reveals the most common mistakes her peers are making, or will potentially make, when they’re engaging with private equity suitors who are considering investing.
Matt and Paula discuss the details of Lionbridge’s decision to shift from being a public company to a private equity firm, and top develop a new capital structure:
“At the core of it you have a company that’s under $600 million, a highly complex business operating across 26 different countries and different currencies and with major customers like Microsoft, Google, Apple, and Amazon. So, is shareholder structure really the optimum structure? You’ve got shareholders who want growth at any price, you’ve got shareholders who are more interested in growth at a reasonable price. It’s very difficult to satisfy all of those different constituents and stakeholders.
Fortune Magazine had a poll, just the end of the year, and they asked public CEOs how if they’d be better off managing in a private environment or a public environment. 77% of them said private. That’s stunning. Right now there’s almost $3 trillion in private equity management. There are more firms that are led or managed through private equity than are traded on public exchanges for the first time in history.
And, there’s $906 billion of dry powder, relatively liquid assets ready for investment. So this is here to stay. They go through periods where it’s more and less attractive, but I think we will continue to see more companies going this way. So, for a relatively small public company, the burdens of public reporting, of maintaining all of the compliance and the focus, the quarterly focus as opposed to a focus on longer-term objectives was no longer the best place for us to go.”
Paula goes on to share what the term “thesis” means to her, the different types of theses, and how to prepare for each type:
“During the process, you’ll be interacting with multiple firms and, typically, it’s a long timeline so you’re not going to know who the winner is until you get down to the final day. And you may go through several rounds of dances, as we did, each of which has different stakeholders and constituents. Which means that within those rounds the stakeholders may not all have the same thesis.
Some may come with a thesis based around growth, but explosive growth. If it’s growth, it’s going to be 20% or more or it’s just not interesting. They see something in the company that can be untapped. They probably see that you are not doing the job that they would’ve liked. You need to understand what you would you do differently if you were directed to drive that type of growth. I think you referenced earlier that Lionbridge was brave because they had begun to cannibalize and create some self-serve models of sales, some online almost B2C models and inside sales and indirect sales. And you’re exactly right. I think the courage to do that before the interactions with private equity helped because we could then say, “Yes, we understand it’s going this way and here’s what we’re doing and let us show you how that’s worked.”
But the other thesis could be that it’s a cost optimization play. You are not a well-run company. This typically happens with the large, multi-billion dollar public companies where perhaps they see synergies. Perhaps they have a plan to combine you with one of their portfolio companies and then take out a layer of cost and management. On some levels, that’s an easier thesis. And as the chief sales officer, your role in that due diligence is going to be very different from showing the opportunity. You’re actually going to be showing how you could take cost out of your model, by shifting to inside sales for example.
And then, the companies that really are exciting to interact with, tend to have bigger plans. They can see that this is a platform for an industry roll up. And in that regard, I think that could be the most exciting of all because while there’s cost optimization and growth expectations, they’re the ones that get it. They see the potential of not just your company but your industry. So I think I’d probably have a bias that that would be where it’d be most fun and potentially most successful.”
Skip to the 21-minute mark of the video to watch Paula outline the key lagging and leading indicators that were revealed during the process. She also shares advice on preparing to objectively think about your sales structure, specifically your sales org design, account segmentation, talent assessment, account management, and go-to-market strategy.