With many businesses currently utilizing mergers and acquisitions (M&A) to grow, there has been an increase in the creation of Corporate Development teams and leadership roles at major companies.
Additionally, these new Corp Dev officers are playing larger and larger parts within their companies, perhaps a direct consequence of said companies maintaining more active pipelines and being more advantageous with their deal sourcing.
Following this domino effect, it becomes increasingly important for practitioners on all sides to understand the purpose, strategies, and organization of Corporate Development teams. With this in mind, a full guide to Corporate Development follows.
In simple terms, Corporate Development is a team of employees exploring ways to grow and add value to a company - ways that align with the company’s core values.
More specifically, these team members generate strategies that will allow the company to enter into new markets, new partnerships, or perhaps to engage in mergers and acquisitions.
For companies interested in M&A, Corporate Development spends a great deal of time establishing a M&A strategy and then deal sourcing and building relationships with targets. Behind the scenes of these major moves, Corporate Development is researching, studying, and analyzing markets, which empowers it to make strategic recommendations.
Because of the large and extremely important scope of Corporate Development teams, most individuals working in Corporate Development do not begin their careers there because they lack experience with running deals. Overall, industry background is of the utmost importance for Corporate Development practitioners.
Corporate Development teams are becoming essential in today’s business climate. With rapidly changing technology and markets, the strategies Corporate Development practitioners develop ensure companies can adapt to these changes and remain competitive in their markets or expand into new markets if necessary.
Furthermore, with more M&A activity flooding the business ecosystem, having a Corporate Development team sets up for success both acquirers and targets, increasing their odds at maximizing synergies and generating lasting growth.
Corporate Development teams spend a majority of their time working on deal sourcing, analysis, and execution, and while the structure of the Corporate Development team depends largely upon the business (size, market, and goals), there are a few consistencies seen across Corporate Development teams.
First, especially at larger companies, there is often a Corporate Development executive with a robust M&A background as well as credentials such as a CPA or MBA. Teams might also look for members with experience in investment banking and law.
In general Corporate Development groups contain:
Corporate Development teams are usually responsible for:
While both corporate development and business development add value and are essential to companies, their definitions and activities differ (though depending upon the size of a company, there can be some overlap). We know Corporate Development is creating and acting on strategies to meet a company's overarching goals and objectives. All of the above - M&A, long-term partnerships, divestitures planning and carve-outs, and creative transactions for optimizing shareholder value - are activities that fall under the umbrella of Corporate Development.
These activities generally take a great deal of time (months, even years) to carry out. Business Development focuses more on the market; bringing in customers, working with vendors, and marketing. Consequently, Business Development activities often include marketing and sales related tasks. Both genres of development clearly include networking and developing relationships and partnerships.
As Corporate Development teams become more common, and tools are generated to help them with their strategies and deal management, it is easy to see more and more companies are relying on the creativity and skills of Corporate Development leaders to enhance and grow their businesses.
In fact, a study done by Deloitte notes that 62% of Corporate Development practitioners believe their role as a “source of innovation” has increased over the last two years. This does not mean, however, that the jobs of Corporate Development teams are getting easier; rather with more M&A activity flooding the market, it becomes increasingly challenging for these teams to make themselves stand out to potential targets.
Consequently, it becomes essential for Corporate Development practitioners to cultivate genuine relationships and avoid the all too tempting comfort of putting their heads down and blindly following playbooks. This is where Agile thinking and methodologies, as well as interpersonal skills (often referred to as “soft skills” - though they’re anything but) come into play.