“The portfolio company’s leadership team must take ownership of its investment thesis and translate it into daily tactical execution. However, and ironically, they may not know that it even exists.” – John Lanier, Middle Market Methods 


In this podcast, Blue Margin Consultant Greg Brown hosts Dr. John Lanier, CEO of Middle Market Methods. John’s consultancy provides a value creation strategy, roadmap, and a toolbox for growth, productivity, and cultural solutions to portfolio companies of private equity firms (Middle Market Methods, 2023). Middle Market Methods has helped 170+ portfolio companies and 65+ private equity firms, pioneering and trademarking the Value Creation Roadmap which focuses on growth and efficiency for entrepreneurs.


Prior to Middle Market Methods, John spent two decades as an asset-based lender. He earned an MBA as well as a doctorate of Strategic Leadership—an endeavor which led to authoring the book, Value Creation in Middle Market Private Equity, available on Amazon. John is a certified Six Sigma Master Black Belt, a change management instructor, and an Excellere Partners' Project Expert of the Year honoree.     


Principal Interview Themes: 



Using the Socratic Method with Portfolio Executives  

“One of my favorite questions that helps figure out where we ought to go is, ‘What’s keeping you up at night?’ … Let’s fix it, because it’s a gateway to get to the other stuff that may actually produce more value. It’s a necessary step in the critical path.” – John Lanier, Middle Market Methods 


When beginning a relationship with an entrepreneur turned portfolio executive, John recommends the Socratic method as a way to better understand their perspective. He comments, “How do we get on their frequency and see the world the way they see it? If we can’t do that, we’re really not going to get to the right answer.” 


Once investors understand the portfolio company executive’s viewpoint, they can continue using questions to guide them and their leadership team to decisive outcomes.John recommends asking questions such as, “If you could have access to anything you wanted right now, what would it be?” or “Where are you spending most of your time?” The team’s answers to these questions will reveal skillset, process, or bandwidth gaps, and form the basis for future discussions on opportunities for improvement. 



Evaluating Opportunities for Improvement 


“Are we measuring anything that speaks to productivity (because that is the essence of a robust economy)? How efficiently do we produce anything?” – John Lanier, Middle Market Methods 


Once a PE sponsor understands their portfolio leaders’ perspectives and needs, and leadership recognizes opportunities to improve their current processes, they can collectively evaluate areas for improvement and solidify their processes and rationale. John helps groups evaluate where business improvements can be made by relying on these four categories of questions:   

  • Where are we going? (Strategic)
  • Where is growth coming from? (Business Development)
  • How do we keep up with it? (Operations)
  • Where are workers coming from? (Talent)



Addressing Misalignment Between PE Sponsors and Portfolio Executive Teams 


“It is the rule rather than the exception that there is misalignment. That’s not to panic. What is the degree of variation between the perspectives and the severity pertaining thereto? No diligence is perfect. The question is – what did we miss that is relevant? The only way to answer that is by engaging the functional leaders of the business model, however the value chain is defined.” – John Lanier, Middle Market Methods 


Misalignment between PE sponsors and portfolio company leadership may delay--if not forfeit entirely--developing latent value-creation potential.According to Alix Partner’s 8th annual private equity leadership survey, 62% of PE leaders say that the top cause of poor performance by portfolio company executives is unfocused execution (AlixPartners, 2023). For that reason, operating partners and portfolio executives must unite on the key value drivers. AlixPartners writes, “It’s very important that portco executives understand and share views about those priorities (AlixPartners, 2023). To that end, post-close meetings should facilitate growth and execution. 


For those meetings, John helps PE sponsors mitigate three potential areas of misalignment:


Missed Diligence/Varying Perspectives

It’s dangerous to assume that diligence is perfect. Most likely, some leaders in the portfolio company may not have been exposed to the process and have valuable information to share. It’s also possible that portfolio leadership teams have different perspectives on the acquisition, the history of the company, and its next stage.


New or unfamiliar terminology

John views terminology as a leading cause of misalignment. Why? An entrepreneur-seller typically hires an investment banker to speak on their behalf. Professional investors should confirm--even if it is not possible until after the transaction is consummated--that their terms, vision, and priorities are clearly understood.John says, “We have to be careful with disparate dialects. Private equity people use financial terms like value creation and investment thesis fairly frequently… but they need to make sure that the entrepreneur understands the terms.” 


Demographic and Educational Differences

Entreprenurial sellers may be baby boomers who grew their business in what John calls the “laboratory of grit.” In contrast, investment professionals on the deal team may include millennials with MBAs from esteemed universities using theories and data to grow businesses. Recognizing this demographic gap and bridging it with respect is critical. See how PE operating partner Brian Potts of One Rock Capital gives “a respectful nod to the past” in his Expert Insights Series interview



Cross-Functional Value Stream Mapping 


All this stuff integrates. It tends not to be as robust as it needs to be with the initial investment as it must be if you expect to exit it in a reasonable amount of time and for a nice price that reflects the quality of earnings and what is robustly scalable. Process mapping is foundational… I think it’s one of the most important issues in all business.” – John Lanier, Middle Market Methods   


Mapping out the value chain processvisualizes the complex flow from concept ideation to cash realization. This exercise is one of John’s signature steps with his clients, as it uncovers how tasks are actually being done. As swim lanes and owners are mapped, leaders find themselves surprised, typically asking, We really do it that way?”Mapping the value chain helps identify critical paths, bottlenecks, waste, and areas for automation or flow improvement.



Discussing Tech and Data Diligence with the Entrepreneur-Executive 


“Having the right fingertip information in the hands of people who can do something about it. How can I possibly hold a production person accountable for productivity and quality if they don’t know anything about their capacity, their scheduling, the production rate, the scrap… they have to be informed. Or else, to borrow from Drucker, we are literally setting people up to fail.” – John Lanier, Middle Market Methods 


In the lower-middle market, today’s entrepreneur-executives have typically scaled their businesses without robust technology and data systems in place. However, to grow the business to the next level, PE firms recognize the need for scalable systems that have the capability to feed data analytics and reporting platforms. In fact, 61% of PE firms envision big opportunities from turning their portco data into insights (AlixPartners, 2023).


Data analytics, reporting, and data visualization enable informed decision-making, increased productivity, and improved company culture. With high interest rates and leverage, it is vital to provide company managers and frontline employees with the information they need to operate efficiently. “Amid the economic challenges creating roadblocks for easy PE returns—think slower GDP growth, inflation and high interest rates—firms have to ensure their portfolio companies have tightly run operations in order to create value for a successful exit.” -AlixPartners (Burleson, 2023).  


To ensure wise investments in data, analytics, and other technology, operating partners can follow John's recommendations for evaluating technical needs, and ask the following questions as they relate to the investment thesis:  

  • What are the risks of not doing this?
  • What does it do/not do?
  • What does it need to do?
  • In what order should we fix it?
  • How long is it going to take?
  • What will it cost to fix it?



Connect with John 


Are you an entrepreneur, seller, executive, or private equity sponsor looking for a “resultant” rather than a consultant? Simply looking to discuss value creation in the middle market? Reach out to John Lanier via his website, email, or LinkedIn.




John A. Lanier | LinkedIn 


Blue Margin helps PE and mid-market companies quickly integrate and convert data into automated dashboards, the most efficient way to create company-wide accountability to the growth plan. We call it The Dashboard Effect, the title of our book and podcast. Our mission is to accelerate your value creation plan. 


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More Expert Insights Series Interviews 



AlixPartners. (2023). Eighth Annual Private Equity (PE) Leadership Survey. Eighth Annual PE Leadership Survey | AlixPartners


Middle Market Methods. (2023). Middle Market Methods 


Burleson, Emily. (2023, March 30). Nearly half of PE firms, portfolio companies double current management in survey. Pitchbook. https://pitchbook.com/news/articles/private-equity-hiring-recruitment-leadership

Suzanne Rains

Written by Suzanne Rains

Suzanne Rains is Strategic Partnerships Manager at Blue Margin Inc. With a MA in Human Resources and BAs in Marketing and Management, Suzanne unites an understanding of human nature and a keen interest in industry research to author thought leadership articles for today’s business leaders.