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Due diligence research for PE deal teams

Sales-Led Growth

Definition

Sales-led growth is a GTM model in which human sellers — SDRs, AEs, solutions engineers, and account managers — are the primary engine for pipeline creation, deal progression, and revenue conversion. Marketing generates awareness and leads, but the conversion from lead to customer depends on people executing a sales process.

Sales-led is the default for B2B companies selling complex, high-consideration products: anything with ACV above $25K, implementation requirements, multi-stakeholder buying committees, or regulatory complexity. It is also the model most PE buyers encounter, because the companies PE firms acquire tend to sell to mid-market and enterprise customers with exactly these characteristics.

The model works because complex B2B purchases require human judgment — understanding buyer pain points, navigating organizational politics, customizing the value proposition for different stakeholders, and managing a 4-9 month buying process. No product demo does that alone.

The limitation is cost. Sales-led scales linearly: more revenue requires more headcount, which requires more management, more infrastructure, and more overhead. CAC ranges from $15K to $75K per customer. The model only works when ACV and LTV justify that cost.

Why It Matters in Due Diligence

Most PE growth theses for B2B companies assume sales team expansion as a revenue lever. This makes sales-led mechanics a primary focus of GTM diligence — because the thesis only works if the sales model actually scales.

The critical question: is current revenue produced by a process or by people? Process-dependent revenue scales by adding reps who follow the process. People-dependent revenue — where the top two reps produce half the number through personal relationships — does not scale by adding headcount. You cannot hire heroes at $150K OTE and expect them to replicate what a founder with 20 years of industry relationships does.

Sales-led diligence should also assess infrastructure quality. A company running sales-led with no CRM discipline, no defined stages, no structured pipeline reviews, and no forecasting rigor may have good revenue today — but the deal team should have no confidence that revenue is predictable or expandable.

What to Look For

Unit economics — fully loaded CAC (salary, commission, tools, management overhead), ACV, LTV, payback period. If CAC exceeds first-year ACV, the model depends entirely on retention.

Quota attainment distribution — what percentage of the team hits quota? Healthy: 60-70% at or above 80% of quota. Unhealthy: fewer than 50% hit quota, indicating either wrong quota or broken model.

Ramp economics — time-to-productivity and investment during ramp. A 9-month ramp at $200K fully-loaded cost means each hire is $150K committed before producing revenue.

Pipeline sourcing — self-sourced vs. marketing/SDR-generated. Self-sourced is harder to scale. Marketing-sourced is more scalable but creates dependency.

Win/loss analysis — does the company know why it wins and loses? If wins are "relationships" and losses are "price," there is no competitive analysis and no basis for improving win rates.

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