A company’s exit strategy can have a huge impact on your sales career. Founders and investors may be focused on maximizing their return, but salespeople need to understand how these exits can affect your day-to-day life, compensation, and future opportunities.

Different exit types bring unique challenges and opportunities for sellers, from new financial incentives to changes in company culture.

Let’s walk through several common exit strategies and what they mean for you as a salesperson: IPO, acquisition by a larger company, private equity buyout, strategic partnerships or mergers, and, unfortunately, shutdowns or liquidation.

Initial Public Offering (IPO)

An IPO is the ultimate success story for any startup. This is when a company goes public and offers shares to the general public for the first time. However, only a small percentage of startups ever reach this point. While it’s the dream scenario for many, it also comes with a lot of changes.

Effect of an IPO on Sales Reps

The financial upside for sales reps can be significant in an IPO. If you’ve been granted stock options, this is the moment they can turn into real money. Additionally, bonuses or other financial incentives are often awarded after an IPO. From a sales perspective, being part of a public company can increase your credibility with prospects. 

Last but certainly not least, an IPO means an injection of cash that can be invested into the business which can be a major boost for sales efforts in the form of new marketing campaigns, investments in the product offerings, acquisition of other companies or products, or expansion into new territories (international growth).

But with these benefits come challenges. There will be new sales expectations due to public scrutiny and pressure to meet earnings targets. Reporting requirements become stricter, and the company may change its sales strategy to meet investor expectations. 

Another risk? Overhiring sales reps, which can lead to internal competition or even layoffs if targets aren’t met.

How your company decides to invest the proceeds of an IPO will be a key factor in determining how the IPO will impact you as a salesperson.

Acquisition by a Larger Company

Acquisitions are another common exit strategy, where a larger company buys the startup. Senior team members may have “earnout” clauses tied to performance, but for most employees, the payout isn’t always as big as hoped.

Whether the acquiring company is public or private will also be a key factor in determining what the financial impact is for sales reps. If the acquirer is public, then your equity will usually be transferred into equity in the acquiring company, which means that it will immediately be liquid (sellable). 

If the acquirer is private, however, things can get complicated. And whether or not you can sell your equity (or receive cash directly) will depend on the terms of the acquisition.

Effect of Acquisition on Sales Reps

Yes, you could get a nice cash windfall, but often it’s not as much as you imagine. The bigger impact may come from changes in company culture. Sales reps will need to navigate the integration of two sales teams. Often, the acquiring company’s culture takes precedence, which can be a difficult adjustment. There’s also a real risk of layoffs in the sales department, especially if the acquiring company sees your team as redundant.

However, acquisitions can also open up new doors. You might have access to better resources, more product offerings, or a larger customer base. And if you’re willing to stick it out, there could be opportunities for promotions or leadership roles.

Private Equity Buyout

In a private equity (PE) buyout, an investment firm takes control of the company, usually with the goal of boosting profitability and selling the business for a higher valuation later.

Effect of PE Buyouts on Sales Reps

Private equity buyouts come with a lot of pressure for the sales team. PE firms typically focus on aggressive growth targets and profitability, which can result in restructuring and leadership changes. 

A short-term focus on efficiency often leads to layoffs, particularly in sales, which can feel the squeeze. According to RepVue data, quota attainment rates tend to drop in PE-backed companies, which only adds to the pressure.

On the flip side, there may be new incentive structures, and if the company thrives, sales reps could see financial benefits during a potential future sale or IPO.

Strategic Partnership or Merger

Strategic partnerships or mergers often happen when two companies combine their strengths to expand their reach or capabilities. This can include combining product lines, teams, or market strategies.

Effect of Strategic Partnership or Merger on Sales Reps

Sales reps may find themselves selling new products, broader markets, and expanded opportunities. Collaborating with new teams could help close deals that were previously out of reach. 

However, it’s not always smooth sailing. Sales strategies might shift, leading to new commission structures or territory changes, which could lead to conflict between teams. It’s critical to remain adaptable during these transitions.

Shutdown or Liquidation

When a startup shuts down or goes through liquidation, it means that things aren’t going well. Unfortunately, it’s also the most common outcome. This typically happens when a company runs out of funding and can’t secure new investments.

For sales reps, a shutdown usually means scrambling to find a new job. Any unpaid commissions or stock options likely become worthless. 

It’s a hard hit, but not the end of the road. Your experience working in a fast-paced, entrepreneurial environment can make you a valuable asset in your next role. Leverage your network and past successes to land your next gig quickly. Keeping a positive attitude and learning from the experience can help you bounce back stronger than ever.

While closing up shop is certainly not what any sales rep wants, it may be a blessing in disguise. It’s certainly better than the worst case scenario for startups, which is becoming a “zombie” company: a company that has achieved some level of success — but due to a range of factors (over-saturated market, over-valuation in a prior fundraising round, poor leadership) has seen growth stall. While they may be able to limp along for some indeterminate amount of time, it’s unlikely that they will ever see a significant acceleration in growth or a successful exit. 

It can be hard for sales reps at a company like this to see the writing on the wall and realize that they may be wasting some critical years of career development. In cases like this, reps should be searching for a better sales org to join — but many don’t.

Smart Reps Prepare for Any Outcome

The path a startup takes is often uncertain and can change quickly. And while you may not be able to control or foresee the exit, you can be prepared. Understanding the potential outcomes and their impact on your sales career will help you stay ahead of the curve.

By staying informed, being adaptable, and planning for any scenario, you can position yourself to navigate these transitions effectively. Whether the exit brings new opportunities or challenges, preparation will help you make the most of whatever comes next and continue building a successful sales career.