In the wake of Trump’s recent tariff announcements, private equity firms have noticeably shifted to a “risk off” stance. As the Financial Times recently reported, “Donald Trump’s tariffs are forcing private equity groups to pause their dealmaking and focus on managing their existing portfolio companies,” with many firms adopting a “pens down, let this thing settle” approach to new acquisitions.
This pause in dealmaking creates a critical strategic inflection point for portfolio companies. While conventional wisdom might suggest battening down the hatches and cutting discretionary spending, historical evidence points to a counterintuitive truth: economic uncertainty presents a unique opportunity to build market share and brand equity that can dramatically enhance valuation multiples when markets stabilize.
The Counter-Cyclical Advantage
For mid-market B2B brands and high-tech companies in particular, reducing marketing investment during downturns can create lasting competitive disadvantages that persist long after economic conditions improve. As competitors retreat, the companies that maintain or even increase their market presence gain a disproportionate share of voice, customer mindshare, and ultimately, market share.
A McGraw-Hill Research study examining the 1981-1982 recession found that companies that maintained or increased advertising during this period saw sales growth of 256% over those that cut advertising expenditures. These gains persisted well beyond the recovery period, demonstrating the long-term impact of marketing investment during downturns.
Similarly, more contemporary research by Malik Management’s PIMS© (Profit Impact of Market Strategy), which analyzed data from over 1,000 businesses across multiple recessions, concluded that companies that increased marketing expenditure during economic contractions achieved significantly higher growth both during and after the downturn compared to companies that reduced spending.
The Procter & Gamble Playbook: A Time-Tested Strategy
Procter & Gamble’s approach during the Great Depression offers perhaps the most compelling historical case for counter-cyclical marketing investment. Rather than cutting ad spending, P&G maintained its marketing programs during the 1930s, establishing several of its brands as category leaders—a position many maintain to this day.
P&G replicated this strategy during the COVID-19 pandemic. As marketing professor Mark Ritson noted, “During the [2020] crisis P&G has not only maintained its marketing investment, in many cases it has increased it.” The result? P&G reported a 10% increase in sales even as competitors struggled.
“When times are tough you build share,” explained P&G’s former CFO Jon Moeller. “We need to hold our nerve and increase investment in brands and innovation.”
The B2B Imperative: Long Sales Cycles Demand Consistent Presence
For B2B companies, especially in the mid-market and high-tech sectors, the case for sustained marketing investment is even more compelling. While consumer brands can sometimes rebuild awareness quickly, B2B purchasing decisions typically involve multiple stakeholders and extended evaluation periods.
According to research published in Harvard Business Review’s “Roaring Out of Recession”, companies that balanced defensive moves (improving operational efficiency) with offensive ones (investing in marketing, R&D, and new assets) achieved the strongest performance post-recession, with growth rates significantly outpacing companies that solely focused on cost-cutting.
McKinsey’s analysis in “How to market in a recession” further reinforces that companies that maintain strategic marketing investments during downturns are better positioned to capture market share when conditions improve.
“In uncertain economic environments, customers crave stability and reassurance,” says Deloitte Digital’s Barbara Venneman. “Brands that maintain visibility and demonstrate resilience become natural partners when business confidence returns.”
The PE Portfolio Advantage
Private equity-backed companies are uniquely positioned to capitalize on this counter-cyclical opportunity. Unlike public companies that face quarterly earnings pressure, PE portfolio companies can take a longer strategic view—particularly during a holding period when deal flow has slowed.
According to a Bain & Company analysis, PE-backed companies that increased sales and marketing spending by 10% or more during economic downturns achieved exit multiples approximately 1.3x higher than those that cut spending.
“The most successful private equity firms don’t just cut costs to create value; they invest strategically in growth even when markets are uncertain,” notes PitchBook analyst Alex Frederick. “Brand building is a force multiplier that compounds with time.”
Strategic Imperatives for PE Portfolio Companies
For mid-market B2B and high-tech portfolio companies seeking to capitalize on the current environment, consider these priorities:
- Strengthen category leadership positioning: When competitors go quiet, define the conversation in your industry through thought leadership, original research, and strategic content marketing.
- Focus on customer retention: Invest in understanding and reducing customer churn. Each retained customer represents significant lifetime value, particularly in subscription-based models common in high-tech.
- Build differentiation beyond features: In uncertain markets, buyers become more risk-averse. Strong brands reduce perceived risk and justify premium pricing even when budgets tighten.
- Optimize the marketing mix: While maintaining overall investment, reallocate budget toward higher-ROI channels and messages that address customer concerns specific to uncertain economic environments.
- Align messaging with the moment: Focus on stability, efficiency, and value preservation rather than solely on growth and transformation.
Measuring Marketing’s Contribution to Enterprise Value
For PE firms concerned about marketing accountability, modern measurement techniques now connect brand investment directly to enterprise value drivers. Beyond traditional marketing metrics, portfolio companies should track:
- Contribution to customer lifetime value
- Impact on gross margin through pricing power
- Reduction in customer acquisition costs
- Improvements in market share at the expense of competitors
- Enhanced resilience to competitive threats
Brand Investment as a Valuation Accelerator
As the private equity industry navigates this period of economic uncertainty, portfolio companies face a critical choice. Those that reflexively cut marketing investment may preserve short-term cash flow but risk permanent brand erosion and market share loss. Conversely, those that maintain or strategically increase their marketing presence will likely emerge with stronger competitive positions, enhanced pricing power, and ultimately, higher exit valuations.
The evidence is clear: when competitors are going “pens down” on deals, the smartest portfolio companies are doubling down on brand investment—creating value that will be realized many times over when deal flow inevitably returns.
In uncertain times, the companies that invest with conviction stand to gain the most. As Warren Buffett famously advised, “Be fearful when others are greedy, and greedy when others are fearful.” For private equity portfolio companies today, that means seeing the current market uncertainty not as a threat, but as an unprecedented opportunity to build lasting brand equity.