As the private equity returns thrive, competition increases.  Deal flow is drying up making it harder to scale your firm’s business. While sourcing takes more time, you find yourself walking away from overvalued deals.  

The solution is to create a business process that acts as a “pull” system.  This means a marketing process designed as a filtered pipeline, not a narrowing funnel. This Lean Six Sigma key philosophy enables manufacturing innovators to create better customer satisfaction through higher product quality.

The key to the Toyota Way and what makes Toyota stand out is not any of the individual elements…But what is important is having all the elements together as a system. – Taiichi Ohno

In private equity, this moves the burden of sourcing and evaluating deals from off your shoulders because the investment opportunity does the work for you.




As business management consultants, we see bad marketing processes all the time.  The most common problem is a disconnect between the customer persona, sales and marketing processes.  In private equity, the key to scaling your business means having an ideal investment profile.

The key tenant of business process management is about optimizing all processes to the customer’s needs.  You can see this in the Toyota or Lean principles:

toyota lean management principles

Source: Quora


Your customer can change depending on the process.

For example, improving the value stream or macro process of your firm (from sourcing to growing investments), mean identifying the customers as the GPs, LPs or anyone who makes money off a portfolio company’s performance return.

In this case, we’re looking at a smaller subprocess focusing on sourcing deals.  This means designing an experience to quickly and easily convert the deal into a portfolio company.

Because we design to get them to convert, we need to know what they need to pull themselves through the sales and marketing process.  Not only does the profile tell us their needs, it tells us how to screen out low-quality deals.

Since our goal is to exit companies for highest EBITDA multiple possible, we only choose opportunities with the greatest lifetime value.  You can do all these things by combining Lean Six Sigma and digital marketing.




Any form of marketing that exists online.”  It includes tactics like:

  1. Search Engine Optimization (SEO)
  2. Content Marketing (blogging)
  3. Inbound Marketing
  4. Social Media Marketing
  5. Pay-Per-Click (PPC)
  6. Affiliate Marketing
  7. Native Advertising
  8. Marketing Automation
  9. Email Marketing
  10. Online PR

There’s plenty of material on digital marketing but the best strategy is always well-designed process with continuous iterations.  The classic framework below shows a process without Lean Six Sigma but gives you a taste of where to start.

digital marketing for private equity deal flow

Source: Smart Insights


Ignore the noise about whether traditional marketing vs digital marketing is better.  The best marketing process is the one with the highest ROI.  




Some firms dip their toes into a marketing funnel by specifying their industry niche.  This is a start but it does more harm than good because it backs the firm into a corner.  The best marketing processes don’t take away leads but increase quality leads.  

The best investors know industry segment or being a SaaS company don’t guarantee a high return  Investment success comes from a process of continuously improving until you hit your goals.

A traditional marketing funnel is based on a foundation of pushing as many leads are possible so you can weed through them to get to revenue.



marketing deal flow

Source: Feedough


A Lean Six Sigma marketing funnel says to push “quality” to the front of the funnel so your workload.  There are no “leaks” or lost deals, no bad leads wasting your time, no backlog of opportunities and no walking away from deals.

Not only does this increase the deal win rate, it makes revenue, EBITDA, cash flow more predictable.  A continuously improved marketing process means no feast or famine.



smart marketing funnel using lean six sigma




Lean process improvement focuses on creating visibility to the current process so you can efficiently analyze and improve it.  To build a continuously improving marketing strategy focusing on the customer, you:

  1. Create an ideal customer profile
  2. Create a customer journey map
  3. Map marketing content
  4. Audit your competition
  5. Exploit the gap in the market
  6. Create marketing schedule
  7. Create a cadence to continuously improve




Every business should have an ideal customer profile.  Sales conversion is less than 1% and falling.  I’ve seen stats benchmarking private equity deal close rates at 3% and B2B management consulting close rates of 20%

The fact is sourcing – for corporate sales or investment deals – is a quality game NOT a quantity game.

Deal flow close rate measures how effective your deal pipeline is.  It measures how well you’re filtering out bad deals in the marketing process and pitching your unique value proposition the sales process.

You can spend your time finding deal after deal hoping 3% of them close or you can source smarter by increasing your close rate.


b2b sales conversion rate benchmark





A well-analyzed target audience creates an ideal customer profile including:

  1. Demographic information
  2. Psychographic information
  3. Behavioural information
  4. Geographic information
  5. Lifestyle

The customer or investment profile’s goal is to create empathy.  The most successful businesses start with customer empathy.  This theme’s been in business books for the past 50 years:

  1. How to Win Friends and Influence People
  2. Never Split the Difference
  3. Principles: Life and Work
  4. Emotional Intelligence: Why It Can Matter More Than IQ
  5. The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change

Sometimes customer empathy is scratching your own itch.  Examples of companies with the high empathy because they were their own customer:

  1. WPEngine
  2. Airbnb
  3. Stripe
  4. Basecamp
  5. WPEngine
  6. Stripe

In fact, we found an article during our search from Basecamp’s CEO, Jason Fried, saying: “How solving real problems needs two things: personal empathy and great design”

Empathy aligns your team on your vision and frees them to think creatively.  They don’t focus on solutions but on the customer’s problem.


ideal investment profile

Source: User Testing




There are two simple methods to getting started:

  1. Talk to current ideal customers (won deals)
  2. Talk to lost customers (lost deals, churned customers)




First, set a few criteria and filter out investments that don’t meet.  Targets should include sales cycle, lifetime value (LTV), etc. These are a few indicators of who your ideal investment might be.

Second, don’t bias your data.  There are several resources on how to get started but I use two additional quality hacks to get better results:

  1. Listening KPI
  2. Script goals




The best interviews are when you let the other person speak – that’s what they’re there for!  This isn’t about telling them your theories or assumptions so set up a key performance indicator (KPI).  Listen to your interviews right away and measure to see how you compared to your target of 80% total time spent listening. 

You can limit yourself to so X number of questions, answering only with questions instead of statements or limiting your answers to 10 seconds long.  The process is yours, so study and adjust.




Each script section should test an assumption of your ideal investment profile.  This makes it easier to refine each section once it’s invalidated with data.  Also, go into the interview assuming you are wrong

Getting attached to assumptions or stale data, is the fastest way to build a bad process.

You also don’t need to be statistically sampling, because this is about being directionally accurate.

You can spend time getting the perfect sample size or you can spend that same time refining your processes to increase cash flow from investing. If your sample size is not directional or statistically accurate wrong, no big deal.  You’ve invested less time in sampling so you can pivot faster. 

Growing a business is not about being “right” but about course-correcting quickly when you’re wrong.




The attributes in your ideal investment profile shouldn’t be in your lost deals or investments.  It’s possible you missed an ideal customer here or there but if you see a pattern you’ve missed something. 

lost customer analysis




There’s nothing easy about what we’ve covered but it is simple.  The critical part is to take off your private equity principal, fund manager or executive management hat and be a customer.

Chances are your in someone’s marketing funnel right now.   Which ones earn your business? Why?

To summarize, what you can to get higher quality investment deals:

  1. Pull CRM customer data
  2. Create financial targets per customer (LTV, EBITDA, leadership tenure, employee churn)
  3. Segment into winners, soon to be losers, losers and lost
  4. Find common attributes among the segments to draft up an ideal customer profile
  5. Set up customer interviews to invalidate draft   
  6. Interview ideal and lost opportunities
  7. Set up a schedule to repeat

Thriving in the business world means finding joy in the struggle.  If you can’t thrive, you only need to survive until the next post: how to create a customer journey map.

Ashley Asue Guerrilla Analytics Private Equity Consultants
At 26, she was asked to create a new department to grow their Fortune 300 company using Lean Six Sigma continuous improvement.
While working with consultants and experts, she saw a common thread among their challenges and failures.
With this insight, she created a custom process to create a high-performance company.
As the only CPA and business architect in the US, she helps others use creativity instead of cash to efficiently build their businesses.