Corporate Development Perspective: Deal Frequency vs Deal Size??

Hi all! In an effort to keep this as brief as possible, I wanted to get opinions on Corporate Development roles with a particular focus on the transactional functions of said roles. If possible, I'd love insight from individuals who've had experience in Investment Banking, Private Equity & CD. In short, is it about the size or the motion in the ocean? In evaluating someone's experience, how important is deal size relative to deal frequency? While an ideal situation would be working at a huge company that makes relatively big acquisitions & doing so pretty frequently, let's suppose a less than ideal situation: big, infrequent deals (closing a deal at a rate of maybe 1 per year, totaling 300MM+ annually while having rare outlier years of more than that) and smaller, frequent deals (closing at a rate of about 4-5 a year in a highly fragmented industry, totaling anywhere from $75-150MM).

There are two companies up for consideration. One of which has completed between 8-12 transactions in the last two years, while the other has done about 3 in the last 2 years, but they've been pretty big deals, which one can suspect isn't the usual, based on its history.

Please give me your thoughts, as I'd think for an analyst, more exposure to transactions could be very useful in one's development and comfort level in execution; but let's be honest, on paper $1B looks much better than about $300MM-- even if that $1B was from one deal over 2 years.

Comments (12)

Sep 5, 2017 - 11:29pm
Esuric, what's your opinion? Comment below:

From my experience, 1 big deal that the BD guys are familiar with outweighs hundreds of smaller, unknown deals. The bigger the deal the better. You can spend an entire interview talking about one big deal.

“Elections are a futures market for stolen property”
Sep 6, 2017 - 3:48pm
VforVendetta, what's your opinion? Comment below:

Thank you! I'm making the transition from FP&A to CD, and the biggest thing I fear is being apart of a team that has historically closed on bigger transactions every other year, which would obviously mean that depending on when I join, it'd be quite some time before I got exposure to much activity that could actually yield the sort of experience that could catapult me into similar CD roles on more active teams in the future in a worst case scenario.

Best Response
Sep 6, 2017 - 10:57am
BankerC159, what's your opinion? Comment below:

I think it'd also be helpful what are you trying to accomplish? Are you using these Corp Dev roles as a launching point into banking or PE?

That being said, I think in Corp Dev you should be more focused on process as opposed to deal flow. My personal experience (obviously others will differ) is that just cause a company has a track record of being acquisitive doesn't mean they will be going forward. Lots of factors at play (credit constraints, shareholder sentiment, shift in strategy etc.).

I do believe within Corp Dev you do get a lot of exposure to the M&A process, even at the junior levels. You will probably get to interact with executives, help drive the process, interact with MDs at banks - taking inbounds, facilitate due diligence processes and sit in on negotiations.

With smaller deals, typically you won't hire a buy-side advisor which means the corp dev team really does the whole process from soup to nuts. I think this is a pretty valuable experience, as opposed to a very large deal where you might be responsible for a small portion of the process.

Sep 6, 2017 - 3:59pm
VforVendetta, what's your opinion? Comment below:

I'd totally be willing to share my goals with you: the hope is to ultimately use my time in Corp Dev as a launching pad into PE if possible. It seems like the most traditional route would be to spend a few years in Corp Dev, followed by B School as an avenue into banking, which may yield opportunities in PE further down the line, but I question whether there's a more straightforward route-- whether it be lateraling into banking without B-School or having the chance to move into PE without banking potentially. Have you ever witnessed anyone effectively being able to do any of the aforementioned?

Ultimately, I am aiming to try to extract the most value out of the position in a way that best aligns my trajectory with any of the most foreseeable routes out of some of the ones I mentioned before. Essentially everything that you mentioned about the M&A process was described during my interview process as something that I would take part in-- especially facilitating the due diligence process & taking inbounds.

To your point about focussing on process as opposed to deal flow: should one assume that the more opportunity one gets to be involved in the processes would then be deemed really valuable-- even if the deals are smaller? (In comparison to the inverse- less frequent process exposure, but bigger deals) While I agree with your point about a company's history of acquisitiveness not meaning that they'll be in the future, a big part of this company's strategy because of its industry has been inorganic growth via tuck-in acquisitions and it's communicated in almost every earnings call; it seems that unless some really reckless financial management happens, it'll be this way at least for the next 18-24 months. (Obviously I could be wrong though)

Sep 6, 2017 - 5:31pm
Sil, what's your opinion? Comment below:

VforVendetta, you're not asking the right question. It's not the size of the deal that matters, but your experience on it. If all you do is manage the diligence tracker or change some font colors for the board presentation, it really doesn't matter how large the transaction was. I assume you don't have offers from either of these companies, so if you are interviewing (or when you get the chance to interview), I would make sure to ask what level of responsibility can be afforded to you.

That being said, there are many more factors that should go into your decision than just past transaction history. BankerC159 is spot on.

Sep 6, 2017 - 9:44pm
VforVendetta, what's your opinion? Comment below:

@Sil, Greatly appreciated! I totally follow you; I guess my concern was that if I were to attempt to make a move in my career down the line, I'd put myself in the best position to get a fair look. I wouldn't want my experience to be discounted in any way due to size or frequency, as it'd be almost impossible for anyone reviewing my work history to know about the extent of my role in any deal unless they were already interviewing me. I guess I just wanted insight as to if that happens often. (the part about discounting solid experience exclusively bc of deal size)

btw...you're spot on, final rounds coming up for both. Will be sure to ask about the responsibilities I'll be afforded

Sep 7, 2017 - 11:17am
BankerC159, what's your opinion? Comment below:

I understand your concern, I think a resume full of large glamorous deals will get you in the door but the interviewer will be able to understand your role in the process very quickly through a few deal specific questions.

I think (again MY perspective) if you are able to lead a small tuck-in acquisition (even if its sub $50m) from valuation, diligence, purchase agreement/NEGOTIATIONS, close and integration - that is VALUABLE experience. I'm not sure many junior bankers will have comparable experience.

I know Corp Dev teams are all different but I don't think once you prove yourself to be capable, that they would be afraid to let junior folks run with the small deals.

Good Luck!

Sep 7, 2017 - 1:22pm
Esuric, what's your opinion? Comment below:
Sil:
@VforVendetta, you're not asking the right question. It's not the size of the deal that matters, but your experience on it.

You can BS your experience on the deal but you can't (or shouldn't) lie about being involved on deals that you weren't.

“Elections are a futures market for stolen property”
  • 1
Sep 6, 2017 - 5:34pm
Sil, what's your opinion? Comment below:

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