The $50M Lesson from Narcos: Mexico
NOTES FROM NORTHWOOD
There’s a scene in Narcos: Mexico where Félix Gallardo gathers all the independent drug lords in a room.
His pitch is compelling: “We’re stronger together than apart. One federation. Shared resources. Coordinated territories. Everyone makes more money.”
The logic was sound. Each group had their own strengths, their own connections, their own expertise. Together, they could dominate the entire market.
What happened next? Absolute chaos.
Everyone kept operating exactly like they always had. Different systems. Different standards. Different definitions of success. Different ways of handling “customers.”
Within months, the federation was at war with itself.
This is exactly what’s happening in boardrooms across America with private equity platform companies.
The $50 Million Synergy Fantasy
I was in a meeting last month with a PE-backed platform that had acquired three software companies in 18 months.
The partners were frustrated. They’d projected $50M in revenue synergies from cross-selling and operational efficiency.
Eighteen months later? They were missing every target.
“We don’t understand it,” the managing director said. “Each company was performing well individually. The market opportunity is massive. The products are complementary.”
I asked to see their consolidated sales reports.
That’s when the real problem became clear.
Company A (the original platform): 47% close rate, 90-day average sales cycle
Company B (acquisition #1): 23% close rate, 180-day average sales cycle
Company C (acquisition #2): 61% close rate, 45-day average sales cycle
“How do you define a qualified opportunity?” I asked.
The room went silent.
Company A: Someone who took a demo
Company B: Someone with budget, authority, need, and timeline
Company C: Someone ready to purchase within 30 days
They weren’t measuring the same thing. The “consolidated” forecast was meaningless.
Just like Gallardo’s federation, they’d created an umbrella organization without creating actual alignment.
The Language Problem
Think about this scenario: You’re trying to forecast Q4 revenue and you get these reports:
Company A: “We have 50 qualified opportunities worth $5M”
Company B: “We have 20 qualified opportunities worth $3M”
Company C: “We have 10 qualified opportunities worth $2M”
Which team is performing better? You have no idea because they’re using completely different criteria.
It’s like trying to add pesos, dollars, and bitcoin and calling it a financial plan.
But the language problem goes deeper than reporting. It affects every aspect of the business:
Cross-selling becomes impossible when Company A can’t properly hand off a prospect to Company B because they qualify leads differently.
Best practices can’t be shared because processes are incompatible. Company C’s “secret sauce” won’t work with Company A’s methodology.
Training becomes fractured instead of scalable. You need three different programs for three different approaches.
Management decisions get made on bad data because the underlying definitions don’t match.
Cultural integration fails because each company believes their way is the “right” way.
Why This Keeps Happening
After working with dozens of PE-backed platforms, I see the same pattern:
The Acquisition High
PE firms get excited about strategic synergies. They see two companies with complementary products and assume 1+1=3. The math looks great in PowerPoint.
The Integration Delay
“Let’s not disrupt what’s working.” Each acquired company continues operating independently for 6-12 months while leadership figures out integration strategy.
The Reporting Problem
Finance demands consolidated reporting, so they start rolling up numbers that don’t mean the same thing across companies.
The Synergy Panic
Projected synergies don’t materialize. Cross-selling disappoints. Costs are higher than expected. Partners start questioning the thesis.
The Blame Game
“The market is tougher than we thought.” “Integration is taking longer than expected.” “We need better people.”
Missing the real issue: Nobody speaks the same language.
The Gallardo Mistake
Félix Gallardo’s fatal flaw wasn’t ambition. It was assuming that putting different operations under one umbrella would automatically make them work together.
He created a federation without creating alignment.
Each group kept their own methods, their own standards, their own definitions of success. When conflicts arose, there was no shared framework for resolution.
The same thing happens with PE platforms. You can’t just bolt together three companies and expect synergies. You need one process, one language, one set of standards.
What Actually Works
I worked with a PE-backed platform that was struggling with this exact problem. Three acquisitions, zero synergies, missed projections for eight consecutive quarters.
Here’s what we did:
Step 1
We defined what “qualified,” “discovery,” “proposal,” and “committed” meant across all three companies. One definition, non-negotiable.
Step 2
We created a single sales process that all teams would use. Yes, there was resistance. Yes, people complained about losing their “special sauce.” We did it anyway.
Step 3
We moved everyone to the same CRM with the same stages, the same fields, the same reporting structure.
Step 4
We trained all managers on the unified process and held them accountable for compliance. No exceptions for “legacy” approaches.
Step 5
We created shared metrics, shared goals, and shared incentives for cross-selling and collaboration.
The timeline? Six months for rollout, another six months for full adoption.
The results? The three companies finally started functioning as one organization. Cross-selling became possible because teams could actually hand off prospects effectively. Forecasting became reliable because everyone was measuring the same things. Most importantly, the platform finally started delivering the synergies the PE firm had projected.
The Hard Truth About Integration
Most PE firms underestimate the operational complexity of creating actual synergies.
They focus on financial engineering and strategic positioning but ignore the boring fundamentals:
→ Do all teams define opportunities the same way?
→ Can prospects be seamlessly handed off between companies?
→ Are managers coaching to the same standards?
→ Do compensation plans encourage collaboration or competition?
Without these foundations, synergies remain a PowerPoint fantasy.
The Federation That Works
Unlike Gallardo’s drug federation, some business federations actually work.
Salesforce didn’t just acquire companies and hope for synergies. They integrated every acquisition into their platform, their culture, their way of doing business.
Berkshire Hathaway doesn’t try to create operational synergies, but they do impose consistent financial standards and reporting across all subsidiaries.
The key is intentionality. You either commit to real integration or you accept that you’re running a holding company, not a platform.
The middle ground… that’s where platforms go to die.
