Have you heard about the impact of Private Equity on sales teams?
#PrivateEquity #SalesTeams #OutboundSales
Revealing Insider Information
While this post may violate an NDA, it’s crucial to discuss the concerning practices affecting sales teams due to certain private equity firms. By removing specific names for confidentiality, let’s shed light on the alarming strategies being used.
Case Study: The Dark Side of Outsourcing
A firsthand experience with an organization heavily funded by a renowned PE firm exposed a disturbing trend. Weekly meetings were centered around sales progress and an outbound motion strategy. However, things took a sinister turn when the firm decided to implement a new approach involving SDRs.
- Hiring numerous SDRs
- Terminating the top 3 performers monthly
- Dismissing the bottom 3 performers monthly
- Repeating this cycle
The reasoning behind this ruthless practice was to avoid paying commissions to top performers and cut down overhead costs by eliminating low performers.
Unveiling Sneaky Tactics
Payment loopholes were exploited using various means, which included:
- Collaborating with outbound agencies
- Utilizing inexpensive talent from countries like LATAM and India
- Engaging with marketing agencies for hidden benefits
This unscrupulous model wasn’t confined to just one company but extended across all their portfolio companies. Surprisingly, even the CEOs of these companies were complicit and supportive. It’s even rumored that other PE/VC firms are replicating this unethical process.
Guarding Your Startup
For startups seeking additional funding, it’s imperative to be vigilant of potential tactics that these firms might attempt to impose on you. Awareness is key to safeguarding your team and your company’s future.
Startups should not find funding from PE. Their job is to squeeze the juice mainly, not grow the company.
This is pretty standard stuff. The only red flag is firing strong performers to avoid commission. If they’re performing well, then they should be printing money that far exceeds their commissions.
Firing the top 3 performers each month sounds like a bad idea since you’d destroy the moral of any newer SDRs which would affect future performance
Don’t give up your work to those clowns! How did we glamorize these guys and falling into debt servitude??
My only question …. Does it work?
What were the payment loopholes being practiced?
Sign up with the devil and it’s expected. PE firms are there to gut the company for profitability
What state are you in. In many states commission are earned wages at the time of sale and cannot be withheld if you are terminated.
Quite shady business dealing if you ask me.
Fire top 3 to avoid hefty commissions!!!
To their credit though, it about their business bottomline
Thoughts?
From a CFO perspective, it makes sense, yes.
From a CEO perspective or anyone doing LONG TERM planning, it’s not the optimal play.
PE companies are typically making plays in terms of months, not years.
This is sketchy at best. Firing top performers is just a law suit begging for a place to happen.
Literally any company I’ve worked with in the last 30 years. There is nothing shocking here, other than it’s just reality. You aren’t really exposing anything.
Maybe I’m missing something but I can’t connect how their sales team commissions correlate to startups looking for funding. Pull what exactly?
It just seems like you’re early in your career and you’re learning how the world works and like you’re bitter and looking for something to latch onto. That’s understable but you may want to find something more shady than sales team management.
I’m not here to say it’s a good plan or justify it, just that reality is valuable to understand and it doesn’t seem you realize how common this is. There are books on this as a management strategy.
Run.
I worked for a Company And this Company was swallowed by a PE. I was Not the one who got fired, but mayority was. I will Never ever do that again. It Sounds Like pretty Standard PE stuff.
Run …