How to Perform Due Diligence on an Acquisition Target's Sales Team

When acquiring a middle-market industrial company, most private equity deal teams run a standard diligence playbook. They analyze financials, operations, and market position with precision. They look at pipelines, concentration risk, and recurring revenue. But when it comes to the sales team and sales function, that rigor often evaporates, replaced by a superficial review of lagging indicators that fails to predict the team's realistic likelihood of achieving the target IRR.

TL;DR

Standard sales due diligence, focused on CRM data and quota history, is dangerously insufficient. It tells you what happened, not why it happened or if it can be replicated to achieve your growth targets. A proper "Quality of Sales" (QoS) audit must go deeper, evaluating the underlying infrastructure that drives revenue: the sales process, the quality of sales management, the talent profile of the reps, and the team's ability to win new logos. Overlooking these systemic factors is a common, and costly, mistake that puts the entire value creation plan at risk.

The Conventional Wisdom of Sales Due Diligence (And Why It’s Wrong)

Most deal teams check the same boxes when evaluating a target’s sales function. The list is predictable:

• CRM Data Review: They look at pipeline size, historical win rates, and deal velocity.
• Quota Attainment: They check how many reps hit their number last year.
• Customer Concentration: They identify revenue at risk from the top 10 accounts.
• Sales Leader Interview: They have a conversation with the VP of Sales to understand their strategy.

The problem is that this is all rearview mirror analysis. It tells you what a sales team achieved under prior ownership, in past market conditions, with a different set of expectations. It tells you absolutely nothing about their ability to execute your value creation plan, which almost always involves aggressive organic growth through new logo acquisition.

This conventional approach mistakes activity for progress and historical results for future potential. It’s a recipe for a post-close surprise when the growth you modeled on your bridge slide fails to materialize.

Insights From Real Data - Companies like yours

But rather than just guess, let's look at key findings from the sales team evaluations I've conducted over the past couple years (in other words, recent data.)

1. Only ~12% of salespeople across these industrial companies qualified as "Strong Salespeople." PE investors are paying EBITDA multiples on revenue generated by teams where barely 1 in 8 reps has the capabilities to actually sustain and grow that revenue. In 30% of companies, zero salespeople qualified as Strong — not one.
2. "Hidden Risk" 28% of all salespeople evaluated look like performers — they hit quota, they have relationships — but assessed poorly on underlying sales capabilities. They produce through territory advantage, tenure, or market conditions, not skill. That revenue is fragile and non-transferable. 
3. Approximately 61% of all salespeople assessed in the bottom half of ≈3MM sales people evaluated over several decades. And sponsors and ELTs wonder why new logo growth and margin expansion are lacking...
4. Commitment to sales success — averaged just 50 out of 100. Nearly 29% of all salespeople scored below 30, and 16% scored below 20. This measures willingness to do what's uncomfortable: prospecting, pushing past objections, having tough money conversations. Without it, nothing else matters. These aren't people who lack training — they lack the will.
5. Consultative Selling scores averaged in the low 30s (out of 100) across the dataset. The teams fundamentally cannot sell consultatively. They can't uncover compelling reasons to buy, can't ask tough questions, can't get past "nice to have." 
6. The teams can't close. They accept "think it overs," they're derailed by put-offs, they lack closing urgency, and they can't get prospects to agree to make a decision. In a couple cases 100% of salespeople were likely to be derailed by put-offs,. Pipeline data in another case indicated that 0% could get a prospect to agree to make a decision.
7. Sales Management Percentiles ranged from the 20th to 76th percentile, with most in the bottom half. This is the person responsible for coaching, accountability, motivating, and developing the sales team. When management is this weak, there's no mechanism to improve the salespeople, and any training investment has no one competent to reinforce it.
8. Weighted and Unweighted Opportunity (the actual achievable revenue increase) - the average Unweighted Opportunity was 85% of current sales That's what growth would look like if every seller could be fully developed. But the average Weighted Opportunity-the actual achievable revenue increase-was only 38%. That means 56% of the theoretical growth potential evaporates when you factor in the team's actual ability to execute. The growth case in the investment memo is built on people who can't execute it.
9. Pipeline quality was rated "Low" for 50% or more of opportunities at multiple companies. The majority of what salespeople called "closeable" or "proposal-ready" opportunities were actually early-stage suspects. Forecasts at these companies were described as "Unreliable." PE investors modeling future quarters on pipeline data are looking fairy tales.
10. "question-by-question" answers were overwhelmingly "No." The pattern across these industrial companies is that virtually every capability PE investors need for their growth thesis gets a failing grade. For instance:
    1. Can the team sell consultatively? No. Are they reaching decision-makers? No.
    2. Can they sell value instead of price? No. Do they have an effective sales process? No.
    3. Can they shorten the sales cycle? Not without training.
    4. Can they close? After training.
    5. Are the forecasts reliable? No
    6. 81% of reps say "Prospects who need time to think it over will eventually buy from me."
11. 58% say "Any lack of results is due to the economy or marketplace."
12. 57% say "I have to work through procurement before reaching decision makers." 

Bottom line - the talent is often incapable of executing on the investment thesis.

Moving Beyond the Basics: Auditing the Revenue Growth Engine

A meaningful due diligence process treats the sales function not as a collection of individual reps, but as a system, an engine. You have to inspect the components of that engine to determine if it’s capable of getting you where you need to go.

Is There a Sales Process, or Just a Collection of Salespeople?

In the industrial middle market, the answer is almost always the latter. We see a level of rigor on the factory floor that would impress any operations expert. Processes are documented, measured, and continuously improved.

Then you walk over to the sales department, and the contrast is startling.

There is often no documented sales process, methodology, or playbook. No defined pipeline stages with clear, evidence-based exit criteria (often literally whatever populated the software originally!) No formal methodology for opportunity qualification. Forecasts are based on gut feel. This is why 40 to 60% of forecasted deals typically end in “no decision.” The pipeline isn’t a forecast; it’s a wish list. A lack of process means revenue is unpredictable and unscalable.

Does Sales Management Actually Manage?

The single most important role for driving revenue is the frontline sales manager. And in most industrial companies we analyze, they are the weakest link.

Often, they are former top-performing reps promoted without any management training. They don’t coach, they don’t conduct rigorous pipeline reviews, and they don’t hold people accountable. Instead, they act as "super-reps," parachuting in to close deals for their team members. This creates a dependent culture and masks the fact that 40 to 60% of the reps are chronically missing quota. This isn't a rep problem; it's a management and accountability problem that typical diligence will never uncover.

Are Reps Hired to "Find Projects" or "Create Projects"?

This is a critical distinction. Most industrial sales reps are trained to “find projects.” They network, they follow up on RFQs, and they hunt for opportunities that are already active.

The data is clear: this is a losing strategy. By the time a project is active, the buyer has often already built a short list, and research shows the vendor who gets in first and helps shape the buying vision wins the deal over 70% of the time.

Your diligence must determine if the sales team has the skill to engage buyers early, before a project is defined. Can they "create projects" by challenging a prospect’s thinking and building a case for change? Or are they stuck in a reactive cycle of chasing deals they are statistically unlikely to win? If 70% of revenue comes from repeat customers (a number that should terrify any PE sponsor whose thesis relies on new logo acquisition), you likely have a team of "finders."

Can the Team Sell Business Outcomes or Just Product Specs?

The classic hiring mistake in this sector is overvaluing industry experience. Companies hire reps who know the products and have a rolodex of contacts at the plant-engineer level.

But complex industrial sales aren't won on the plant floor. They are won in the C-suite. The decision to make a major capital investment is a business decision, not a technical one. Your due diligence must assess whether the reps have the business acumen to have a credible conversation with a CFO or CEO about ROI, risk mitigation, and operational efficiency. If they can only talk speeds and feeds with an engineer, they cannot sell value, and you will constantly be losing deals on price.

The Questions the Board and Deal Team Should Be Asking

To get past the surface-level metrics, your diligence team needs to ask a different set of questions. These questions probe the underlying infrastructure, not just the recent results.

• Show me your documented, multi-stage sales process.
• What are the specific, qualitative and quantitative, evidence-based criteria a deal must meet to advance from one pipeline stage to the next?
• Walk me through your sales manager’s weekly coaching and pipeline review cadence. What gets measured and discussed?
• Let me listen to some recorded prospecting, discovery, coaching and role play calls.
• How do you model your sales funnel? What are the activity levels and conversion rates required to hit your revenue target?
• What are the core competencies you evaluate when hiring a new sales rep, beyond industry experience?
• How does your sales compensation plan reward new logo acquisition versus account management?
• What's the sales turnover rate?
• What % of revenue is new logo business?

The answers to these questions, or the lack of them, will tell you more about the target’s growth potential than any CRM dashboard.

Protecting the Value Creation Timeline

These diligence failures have real consequences. A PE firm closes on a deal, inherits a sales team that can’t win new business, and spends the first 18 to 36 months of a five-year hold trying to fix it. Often, this involves firing the legacy sales leader and hiring a new one based on the same flawed criteria (industry experience from a competitor). When that fails, the cycle repeats. Two of these cycles can consume the majority of your hold period.

Identifying these systemic talent and process gaps during due diligence is the first step. The second is having a plan to fix them post-close. If your diligence uncovers that the company has no repeatable process for attracting, evaluating, and hiring salespeople who can actually execute a modern growth strategy, that doesn't mean the acquisition is wrong, but buying it and expecting it to grow, is. This is precisely the gap that structured services like a Quality of Sales audit Sales Talent Hiring & Recruiting from Ed Marsh Consulting is designed to fill, ensuring the right leaders and reps are in place to drive the value creation plan from day one.

Due diligence isn't about validating the past; it's about underwriting the future. It's time to treat the sales function with the same engineering rigor you apply to the factory floor.

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