Unlocking Top Sales Talent: Compensation Strategies for Lower Middle Market & Middle Market PE Firms

Attracting and retaining top-performing senior sales leaders in lower middle market and middle market private equity portfolio companies requires a strategic compensation approach. Done right, it drives revenue growth, boosts morale, and supports your exit strategy. Done wrong, it risks losing critical talent and stalling your value creation plan.

So, what’s the best way to compensate senior sales executives in PE-backed companies? Here’s a comprehensive guide.

1. Competitive Base Salary Plus Market-Driven Commission

Senior sales leaders expect a competitive base salary that reflects the size, industry, and geography of the business. But it’s the variable commission plan, ideally uncapped and tied directly to revenue, gross margin, or new customer acquisition, that motivates peak performance.

Key: Keep commission structures simple, transparent, and achievable to maintain motivation and focus.

2. Performance-Based Bonuses to Align With Company Goals

Bonuses should be tied not only to individual sales targets but also to broader company KPIs, like EBITDA growth, customer retention, or strategic account expansion. Many PE firms incorporate accelerators, higher commission rates once key thresholds are passed, to reward overachievement.

3. Long-Term Incentives for Retention & Ownership

To retain senior sales leaders through your PE holding period (typically 3–5 years), long-term incentives (LTIs) are essential. These may include:

• Equity or stock options

• Phantom equity or synthetic equity plans

• Performance shares linked to enterprise value or revenue milestones

Such incentives foster an ownership mindset, aligning leadership with long-term growth and exit success.

4. Clear Career Path & Role Clarity

Senior sales executives want to know how they can grow within the organization. Defining clear paths to expand territories, build teams, or move into broader leadership roles helps attract candidates looking for more than just a paycheck.

5. Culture & Non-Financial Incentives Matter

Top talent also values workplace culture, autonomy, and mission alignment. Flexible working arrangements, training opportunities, recognition programs, and direct access to company leadership complement financial rewards and boost retention.

Summary: Sales Compensation by Market Tier

Component	Lower Middle Market	Middle Market
Base Salary	Competitive, lean	Market competitive
Commission	Simple, uncapped, revenue/gross margin tied	Multi-metric, including EBITDA & strategic KPIs
Bonuses	Quarterly or annual, team/company focused	Larger, tied to EBITDA & growth goals
Long-Term Incentives	Phantom equity, profit interests	Equity or performance share plans
Career & Culture	Clear growth path, strong cultural fit	Formal leadership development programs

Why Getting Sales Compensation Right Matters

Misaligned compensation plans risk losing high performers and slowing growth. The best packages balance short-term financial rewards with long-term upside, all while aligning with your company’s growth and PE exit timeline.

How We Help

At Kirkland West, we specialize in designing sales leadership compensation plans for private equity portfolio companies. We help you benchmark, structure, and implement incentives that drive revenue growth, motivate leaders, and retain critical talent through the hold period and beyond.

Contact us today to build a compensation strategy that attracts and retains your next star sales leader. Contact Kirkland West