Exiting from Corporate Development
WSO Community,
I'm finishing up my first year at a private ~Fortune 500 company in their corporate development group (M&A, VC investments, some JVs, board presentations). The company's industry is loosely classified as business services. I was incredibly lucky to get this opportunity after two years of non-IB experience. I thought it would be the perfect combination of work-life, money, and intellectual stimulation. I do generally love the work but I'm finding that the people don't share the same drive as me and I'm definitely getting underpaid for my title / position. My plan is to make it two years and move on.
Basically I view myself as having three potential exit opportunities, all of which intrigue me. I'm interested in MM PE, MM IB (ideally as an associate), or moving to a new corporate development group (with growth opportunities) where the hours are a bit more but the pay is significantly better.
I'm wondering how difficult these transitions may be, especially if I have a strong preference to avoid getting my MBA. An MBA is still on the table but I would prefer to save the time / money and focus my efforts elsewhere.
Thanks in advance!
Yes, that's right. I no longer believe corp dev is a viable function in terms of income growth, career development, etc., unless you come in at a very high level. You'll frequently hear those in corp dev talking about how they're "underpaid." The fact is that it's simply a low paying function at most firms. At most firms, it generally falls within or along the lines of finance, with a slight premium. There are exceptions, of course. I'm speaking in general terms.
In terms of the function itself, yeah, you get exposure to c-level execs. Great. That gets old quickly (especially if the comp isn't there). You're basically a project manager, gathering inputs from other functions and consolidating them into a high-level, very simple model that management can audit. Once the model's in place, your job is to basically run endless sensitivities until management is comfortable with the risk/opportunities. The work is very simple, but tedious.
Also, no one really gives a shit about your opinion, at least that was my experience in pharma. They talk to the PhD's when they want to understand the technicals and to outside advisors (banks, TAS teams, etc.) when they want the numbers. My job was basically to move it to that final step where the company was ready to spend some money on actual advisors.
In terms of exit opps, MM and boutique banks reached out but I didn't take any interviews. Reached out to a few (by "a few" I mean 2) upper MM banks but it didn't stick. PE was a no-go but there was some traction with small VC shops. Top-tier strategy consulting was a no-go though I did land some interviews (think ZS Associates, Clearview HC, etc) but ultimately didn't land anything because they're not really looking for CFA types.
At the end of the day I accepted a senior role at a valuation/restructuring/turnaround consulting group that I'm actually quite happy with. They were somewhat impressed by my corp dev experience but think the CFA did more for me than anything else. I interviewed at big pharma but ultimately declined to continue with their overly lengthy interview process once I got my current gig.
In big pharma, corp dev is basically a function for burnt out ex bankers looking for early retirement. You basically do no due diligence/valuation work or modeling. The deal is very mature by the time it comes to you (bankers and consultants have already done extensive work). Your job is to basically summarize findings in a PPT deck for the board.
Also, FP&A sucks. Any corp dev function that's tied to FP&A will suck. I'm just putting that out there.
I know there are a few corp dev guys on this forum that would disagree with me, which is fine, but I'd like to put my actual experience out there so that people can make more informed decisions. My prior comments on this thread reflected more of my optimism early on than anything else.
Hi Esuric, I read this comment and thought it might be helpful to add color from a non-pharma Corp Dev background. Overall, I can see how you have that perspective but just wanted to add a few different points.
"You'll frequently hear those in corp dev talking about how they're "underpaid." The fact is that it's simply a low paying function at most firms. At most firms, it generally falls within or along the lines of finance, with a slight premium."
No argument here, I think most groups it is a very underpaid gig and that was one of my biggest motivations to leave. The hardest part is that you are tied to the "corporate" pay increases. After getting to 15%+ pay increases initially, company policy literally would not allow me to get more than ~3% for a while after. * "...yeah, you get exposure to c-level execs. Great. That gets old quickly (especially if the comp isn't there). You're basically a project manager, gathering inputs from other functions and consolidating them into a high-level, very simple model that management can audit. Once the model's in place, your job is to basically run endless sensitivities until management is comfortable with the risk/opportunities. The work is very simple, but tedious."*
Agree with most of this. C level is exciting at first but once you realize that half of them are morons making 5x+ what you make, it can be a drag. From a modeling perspective, I think that really is group and deal dependent. For me, it varied by division. Some division presidents really wanted to understand and go deep into the numbers while others really just wanted to see an X% CAGR and y% margin.
Also, no one really gives a shit about your opinion, at least that was my experience in pharma. They talk to the PhD's when they want to understand the technicals and to outside advisors (banks, TAS teams, etc.) when they want the numbers. My job was basically to move it to that final step where the company was ready to spend some money on actual advisors.
Agree about the technical part but banker involvement was very minimal for me. They were just the people behind a process and we never engaged buy-side help or anything. Overall, yes there is a TON of project management. Basically shuffling DD groups to get their work done and on time, managing deadlines, etc. But truth be told, that's extremely true in banking as well and some consulting gigs. That work (hopefully) gets balanced out with more interesting work (modeling, building a deck for execs).
Also, FP&A sucks. Any corp dev function that's tied to FP&A will suck. I'm just putting that out there.
EXTREMELY accurate. FP&A groups are such a complete joke.
Interesting discussion here. I'm a little different as I didn't come from a traditional investment banking background and I came from valuations. I got a bit enamored with the idea of working on sexy M&A deals.
I've been in CD for about 4+ years now and I can echo a lot of the gripes Esuric and guitarman9470 mentioned already. I'm at a bit of a crossroad in my career as I'm mid-level manager. MBA ship has sailed for me and unsure as to where to go.
Ideally Lower MM PE would be ideal but those roles are very tough to find and hard to get your foot into the door. Second would be to go into banking to check that box off but hard getting any traction - for both these types of roles, I'm getting too experienced for Associate level.
So in quite a predicament as to where to go next. I think the easiest would be to find a company who has a well built out M&A team - where M&A is a true growth driver and a team that is looked highly upon within the organization but hard to gauge that through interview processes (back to the internal politics).