The Missing Seat at the Table: Why Private Equity Staffs Every Function Except Growth

Walk into almost any private equity firm and look at the people they bring in to support a portfolio company after a deal closes. There is an operating partner for operations. There is someone for finance, usually a quality of earnings review during diligence and a tighter reporting cadence after. There is legal counsel on retainer. There is an IT and technology resource. And over the last few years there is almost always a cybersecurity function, sometimes a portfolio CISO who sets a standard across every company the firm owns and benchmarks each one against it.

These functions are treated as table stakes. Nobody at a fund argues about whether the portfolio needs cybersecurity diligence or financial controls. The firm makes the portfolio company pay for them, builds them into the value creation plan, and reports on them to the investment committee. They are a normal cost of owning a business well.

Then there is growth.

Growth is the one function that almost no private equity firm staffs the way it staffs the others. There is rarely a growth operating partner. There is rarely a shared marketing leader across the portfolio. There is rarely anyone whose actual job is to look at how each company generates customers, leads, or patients and ask whether the engine is real, repeatable, and ready to scale. Marketing gets handed to whoever is already at the company, or to an agency nobody at the fund is qualified to evaluate, and everyone hopes it works out.

This is strange when you think about what these companies are actually trying to do. The most common problem a B2B or B2C company faces is not a broken cap table or a compliance gap. It is generating more customers. More leads. More patients. More booked revenue. That is the problem that determines whether the investment thesis comes true. And it is the one problem the firm tends to leave unstaffed.

I have sat in that seat. A few private equity groups have brought me in across more than one of the companies they own, specifically to be the growth resource the portfolio was missing. So I am describing this partly from the inside. But I also see it constantly from the outside, in firm after firm that has a sharp operating partner network, a real cybersecurity program, and a marketing function that is essentially a guess. The pattern is consistent enough that it is worth writing down.

Why the gap exists

The gap is not caused by laziness or by partners who do not care about revenue. It is caused by how the other functions matured and how marketing did not.

Operations, finance, legal, and cyber all became portfolio functions because the risk of ignoring them is obvious and quantifiable. A bad quality of earnings number kills a deal. A compliance failure creates legal exposure. An unpriced cybersecurity gap turns into a surprise remediation cost that erodes value after close. Those risks are legible to an investment committee, so the firm built standing resources to manage them.

Marketing never got that treatment for a few reasons. It is harder to quantify in a diligence model. It has historically been seen as a cost center rather than a value lever. And most importantly, when a portfolio company is doing fine on revenue, the growth engine is invisible. A founder-led company often grows on the founder's network and relationships. The pipeline is the founder. There is no documented demand generation system, no repeatable channel strategy, no attribution showing what actually produces customers. It works right up until the founder steps back or the easy growth runs out, and then the fund discovers there was never a system underneath the numbers.

By the time that becomes visible, the firm is two years into the hold and wondering why revenue growth is lagging the plan. The honest answer is usually that nobody owned growth as a function, so nobody noticed the engine was held together with one or two people and a single channel.

What a growth function actually does

When people hear marketing, they think campaigns. Ads, a new website, some content. That is not what the missing function is. The missing function is closer to what an operating partner does for operations: it sets a standard, installs the right people and systems, measures honestly, and reports up in language the board understands. When firms do go looking for this, they often search for a fractional CMO for their private equity portfolio, which is the right instinct even if the role is bigger than the label.

In practice it covers a few things that rarely exist in a portfolio company on their own.

It establishes a real measurement layer. Most portfolio companies cannot tell you what their marketing spend produces. They have a number for total spend and a number for total revenue and a lot of guessing in between. Before you scale anything, you need conversion tracking that actually counts, attribution you can trust, and a clear definition of what a qualified lead is versus a lead that just looks good in a dashboard. This is the unglamorous part that everything else depends on.

It defines unit economics consistently. Customer acquisition cost, payback period, lifetime value, channel by channel. Not each company's homemade version, but one standard the fund can compare across the portfolio. When every company is measured the same way, the outliers become obvious and the board can actually allocate attention.

It pressure tests the growth engine for concentration risk. A company that gets all its leads from one channel, one partnership, or one salesperson is fragile in a way the financials do not show. A growth function finds that fragility before it becomes a crisis and builds the second and third channel that makes growth durable.

It holds the agencies and internal teams accountable. Most portfolio companies are already spending money on marketing somewhere. The problem is that nobody on the fund side can tell whether that spend is performance or theater. Someone has to be qualified to read the reports, ask the right questions, and know the difference. That person should sit on the fund's side of the table, not the vendor's.

It reports growth to the board the way finance reports the numbers. Spend, customer acquisition cost, payback, pipeline, and what is being tested next. Not impressions and engagement rates. The board should be able to look at growth across the portfolio with the same clarity it looks at EBITDA.

None of this requires the operating partners to become marketing experts. That is the entire point of staffing it as a function. The firm does not expect its deal partners to personally run the cybersecurity program either.

Where it shows up by industry

The missing growth function is not abstract. It shows up as a specific, expensive problem in whatever vertical the firm is investing in, and the language changes by industry even though the underlying gap is the same.

In healthcare services and roll-ups, the problem is patient acquisition. A multi-location practice, a dental DSO, a med spa group, a behavioral health platform, a Medicare-focused business. These companies live and die on the cost to acquire a new patient and the ability to do it consistently across locations. Most of them have no real patient acquisition system. They have a few sources, a lot of word of mouth, and no idea what a new patient actually costs them. When a fund rolls up ten locations, the growth function is what turns ten separate marketing guesses into one scalable patient acquisition engine.

In home services, solar, and energy, it is lead generation and the cost per booked job. These businesses often grow on referrals and a single ad channel until that channel gets expensive or saturated, and then growth stalls. An HVAC roll-up, a solar installer, a moving and storage company, a home warranty business. Each one needs a real lead generation system and the measurement to know which channels actually produce profitable jobs.

In financial services, banking, payments, insurance, and fintech, it is regulated demand generation. The compliance constraints are real, the customer acquisition costs are high, and the difference between a lead that converts and one that wastes a sales rep's time is enormous. These companies need someone who understands both the growth mechanics and the regulatory limits.

In software and SaaS, it is pipeline predictability. The fund underwrote a growth rate that assumes a repeatable demand generation motion, and very often the company was actually running on founder-led sales and a couple of lucky channels. Building the pipeline engine that the model assumed is the growth function's job.

The same pattern repeats across retail and ecommerce, automotive, real estate, legal services, education, telecom, media, and consumer marketplaces. The category-specific words are different. The structural gap is identical. There is no one whose job is to own how the company generates demand, so demand generation is left to chance.

The diligence version of the same gap

The missing function is most expensive before the deal even closes.

Funds run commercial due diligence on a target's market and competitive position. They run quality of earnings on the financials. They run cyber and IT diligence. What they rarely run with the same rigor is growth due diligence, sometimes called growth diligence: a hard look at whether the target's customer acquisition is real and durable or whether the growth story is being propped up by something that will not survive new ownership.

This is exactly the kind of question that determines whether the model is right. Is the pipeline dependent on the founder? Is all the growth coming from one channel that is about to get more expensive? Is the reported customer acquisition cost real, or does it ignore half the actual spend? Is there any measurement in place at all, or is the growth a story told from total revenue divided by total spend?

A growth function answers those questions during diligence, when the answers can still change the price or the plan. The same skill set that builds the engine after close is the one that can tell you, before close, whether the engine you are buying actually exists.

Why this matters more now

There are two reasons the missing growth function has gone from a nice-to-have to a real problem.

The first is that revenue growth has become the dominant source of value creation in private equity. For years, returns could come from financial engineering and multiple expansion. That has gotten harder. A growing share of the value created in exits now comes from actual revenue growth, which means the function that drives revenue can no longer be left on autopilot. If growth is where the returns come from, growth deserves to be staffed like it matters.

The second is that hold periods have lengthened. When a firm holds a company longer, the cost of a slow or broken growth engine compounds. A company coasting on founder relationships might survive a three-year hold on momentum alone. Over a longer hold, the lack of a real demand generation system becomes the thing that caps the exit multiple, because buyers pay a premium for a growth engine that is a documented system and a discount for one that is really just a person.

What filling the seat looks like

Filling the gap does not mean every portfolio company hires a full-time chief marketing officer. At a company doing ten to thirty million in revenue, a full-time marketing executive is a large fixed cost to carry before the growth system has proven it works, and the right senior person is hard to recruit quickly anyway.

The model that fits the private equity operating structure is a growth resource that works the way the other portfolio functions work. This is often called a fractional CMO, though the portfolio version is broader than the title suggests. One experienced operator who can sit across multiple portfolio companies, set the standard, build the measurement, oversee the execution, and report to the board. Embedded enough to be accountable, shared enough to make economic sense. A fractional CMO at the portfolio level costs a fraction of a full-time chief marketing officer at every company, which is the whole reason the model works on a fund's economics. It is the same logic that makes a shared cybersecurity resource or a portfolio operating partner work, applied to the one function that somehow never got it.

Sometimes that means being deeply embedded in one company that needs senior growth leadership immediately. Sometimes it means working across several companies, bringing each one up to the same standard. Sometimes it means a focused diligence engagement on a target before the deal closes. The structure flexes. The principle does not. Growth is a function, and a function needs an owner.

The simple version

Private equity is very good at staffing the functions where the risk of ignoring them is obvious. Operations, finance, legal, technology, cybersecurity. Each one has a name, a budget, and someone accountable.

Growth is the one function where the risk is just as real but less obvious, so it tends to go unstaffed. And it is the function that most directly determines whether the company generates the customers, leads, and patients that the entire investment thesis depends on.

The firms that figure this out treat growth like the portfolio function it should have been all along. They put someone in the seat. The ones that do not keep wondering, two years into the hold, why the revenue is not following the plan, when the answer was sitting in the one empty chair at the table the whole time.