Latest Articles
-
Post-Close Playbook: Accelerating Growth in Industrial Software Portfolio Companies
The critical first 90 days after a deal closes can define the long-term success of an industrial software investment. Capital alone won’t unlock growth — execution speed and operational focus are what set winning portfolio companies apart. A clear post-close playbook ensures leadership alignment, rapid validation of assumptions, and early momentum. Below are five proven…
-
5 Red Flags in Industrial Software Due Diligence Every PE Firm Should Watch For
Private equity investors continue to be drawn to industrial software because of its sticky customer base, high-margin potential, and recurring revenue models. But while the upside can be compelling, these deals often hide risks that aren’t visible in a spreadsheet. Spotting the early warning signs during due diligence can make the difference between a strong…
Sample Industrial Software Investment Diligence: From the Desk of an Operator Who’s Been in the Trenches
Purpose:
This checklist is designed for private equity and growth investors who want an operator’s perspective on industrial software targets — spotting both value creation levers and pitfalls that the spreadsheets don’t always reveal.
1. Market & Positioning
- Market Definition: Is this truly “industrial software” (MES, SCADA, IoT, etc.) or something adjacent dressed up as such?
- Core Vertical Fit: Which industrial sectors are they winning in now? Is expansion realistic or wishful thinking?
- Market Timing: Is adoption accelerating in this niche or has it plateaued?
- Competitive Dynamics: Are they winning against entrenched competitors, or only in white-space accounts?
- Differentiation: Is the product genuinely unique, or is it relying on sales relationships alone?
2. Customer & Revenue Profile
- Concentration Risk: Any single customer over 10–15% of revenue?
- Retention Patterns: Actual renewal rates vs. management claims.
- Expansion Revenue: How much ARR growth comes from upsells vs. new logo wins?
- Implementation Complexity: Can new customers be onboarded quickly, or is it a 6–12 month slog?
- Reference Reality Check: Will their top 5 customers enthusiastically recommend them?
3. Product & Technology
- Core Architecture: Modern, modular, and cloud-capable — or legacy code with a UI facelift?
- Integration Capabilities: Can it connect easily to ERP, PLCs, or other shop-floor systems?
- Customization Burden: Is every deal a one-off implementation?
- Scalability: Can they double customer count without doubling the support team?
- Tech Debt Awareness: Do they have a roadmap to pay it down?
4. Go-to-Market & Commercial Engine
- Sales Model Fit: Is the sales force set up to hunt, farm, or both?
- Channel Strategy: Do they have credible VARs/partners, or are they pretending?
- Pipeline Quality: Are deals real and winnable, or just CRM filler?
- Marketing Engine: Is there a repeatable, measurable demand-gen process?
- Pricing Power: Can they raise prices without losing core accounts?
5. Leadership & Culture
- Management Depth: Who besides the CEO can drive the strategy?
- Execution Credibility: Have they delivered on past roadmaps and targets?
- Founder Transition Risk: Will the founder stay, and if not, will the culture and sales motion survive?
- Talent Bench: Is there an actual leadership bench or just one or two overworked key people?
- Change Readiness: Can the culture handle post-close changes without imploding?
6. Post-Close Value Creation Potential
- Quick Wins: What 90-day changes could move the needle on revenue or EBITDA?
- GTM Expansion: Which verticals or geographies could deliver the next phase of growth?
- Operational Efficiency: Where can automation, process discipline, or better systems improve margins?
- Product Extensions: Are there logical upsells or add-ons already requested by customers?
- M&A Roll-Up Fit: Could this platform integrate tuck-ins cleanly?
Operator’s Note:
The best industrial software investments aren’t always the “prettiest” companies — they’re the ones with the bones for scale, customers who love them, and a leadership team that will run through walls to grow. This checklist won’t replace a full diligence process, but it will help you spot deal-makers and deal-breakers fast.