Would be very grateful for your input as I have an exploding offer to consider. Particularly if anyone can offer their view on the upside, downsides, and how to best mitigate the downsides. (e.g. I have for that matter seen 4 bankers, somewhat more senior (Senior associate - Director Level), go to Corp Dev and then back to banking, but most tell me it is a one way street.
I have received an offer for a corporate development role with a tech company.
I would be working directly with the founder of an M&A-driven tech business (200 or so employees) who recently exited a few years after founding, and sold his business at around $100-250m to a large and highly acquisitive tech company with about $10bn market cap. The majority is in earnouts, which in turn will be paid out based on meeting financial goals over the next 5-10 years, which in turn will be driven by mostly inorganic growth. His company originally focused on acquiring smaller tech assets. Acquiring cheaply, and optimising operationally. Being part of the larger group they now have access to more capital and just made a larger transaction at $200m, but believe they could acquire at up to $1bn.
I would be coming on as a Corp Dev associate, working directly with the founder who has been running all M&A processes himself until now. I would learn from him and then be able to take over the function. He might also hire someone above me.
The comp he has offered is normal for corp dev with estimated growth of about 12% per year, and expect that I would lead a small team in 2-3 years.
Given the growth trajectory, transaction experience, and mentor / mentee relationship with a successful entrepreneur, there could be significant upside. I also believe that the large group brand name could become increasingly relevant.
However, I am concerned about the downsides
- Stepping of the IB salary escalator too early - I could more easily negotiate better starting packages as an associate
- Too low initial salary trajectory
- Closing the door to other career paths in finance - not being able to go back if things do not go well or I do not like it
I think it will have to be a very personal decision for you. A lot of people that exit to Corp Dev do it because they are sick and tired of banking hours. If this is not a major concern for you, and maximizing your potential career earnings is of utmost importance, then it may not be the right move at this time.
However, it does sound like an interesting opportunity, and if this guy's earn-out is so long-term and inorganic growth helps him hit his targets, you can bet that he'll want to do a ton of deals and the experience will be good - as long as the tech company doesn't veto most of them.
I am rather sick of the meaninglessness of banking, so much time wasted on doing things that lead nowhere, when I could be doing real things. But I am concerned about stepping off the "escalator" a bit too early. Part of me thinks I should stay on a little longer and ride a little higher up to exit at a higher base comp.
The business is based around doing deals. The larger tech group, which acquired, did like 20+ deals last year (The division I have an offer in did at least 3 of those deals, after having been acquired themselves). The large group has announced 4 more deals this year so far.
Just do it. sounds like a very rare structure and you might be able to go it alone after several years. That said I'm not risk averse
Isn't it tougher to exit once you hit associate?
In watching several of my associates back in banking struggle to get out, I can confirm that it gets hard to get out the further up you go (esp. at the associate level / I think it gets a bit easier once you get to VP / Director - IE you can exit and go work for client).
Also - original poster, just because you get higher up the escalator doesn't mean that anyone is going to care about that. For example - if you stay and get the promote to associate, let's say you are making between $200 - $250k (incl. / bonus) and then you want to move to corp dev and you get a corp dev associate role offered to you. They are not going to match $250k salary just because that's what you were making in banking... it is understood that the sell-side makes a premium vs. middle level corp dev role because the sell-side is always on call - dedicated to the needs of the client. If you want to get off that path, do it sooner vs. later - you may find yourself getting trapped by the golden hand-cuffs.
You're going to be working on deals. No matter who you are, there is always work that will not lead anywhere. You'll build relationships with players in the ecosystem - bankers, PE, customers, suppliers, founders, etc. That business you diligenced for 2 months straight? Oh, board didn't like some of the findings so they veto that acquisition. That founder who's been "ready to sell" for 5 years? Maybe true but could be stringing you along as he waits for another offer so he can negotiate it against you.
I didn't post to be pessimistic, just be realistic that there will be work that doesn't go anywhere because that's the business you're in.
Im guessing the tech company bought him for his ability to do deals. That is how he creates value. Another data point is he did two significantly larger deals 3 months after being acquired.
I have that chance. But everything depends on whether one guy likes me or not. If he does not like me, then I might also have disqualified myself from banking permanently.
You are obviously pretty capable. Don't make a decision based on comp, you will do just fine if you do a good job.
The flip side is if you can get equity upside and eventually this company sells to someone else, you'll have on your resume the sale + building the company up, which will have doors wide open as well.
It already sold to a $10bn market cap acquirer. Also, equity is not on the table.
Sorry didn't read in detail. Regardless if you're doing a lot of buy-side M&A for a well known consolidator (including doing a lot of deals every year), it should help your career, not hurt it.
Any more comments are of course welcome. Thanks.
Your primary question to yourself should be "am I ready to leave banking or not"
If that answer is "yes" then you need to figure out if you want to be in Corp Dev / PE / VC / HF / etc. and given your experience how feasible the exits in those spaces are (i.e. is KKR an interest and on the table or are you going to be looking at LMM / MM - FYI nothing wrong with that).
If your next logical conclusion is that you'd be interested in leaving AND would entertain / like a role in CD... then that's where my advice can come in.
Take the role and don't look back. Successful founder dedicated to inorganic growth that you'll direct into (and presumably from interviews get along with well) in a highly acquisitive role is about as good as it gets for a CD role. Looks like you said pay will be relatively flat too which is great. Fuck this "accelerator" bullshit. If you kick ass as a direct to the head of the group you'll get promoted and manage a team (remember, in your new role you're competing against yourself vs. in banking you'll be competing against a dozen unknown variables, hundreds of other analysts, and you don't love it so you're more likely to relatively underperform).
One thing I will caution is WLB will likely become better but definitely won't turn into a 9-5 or 8-6. M&A is M&A is M&A and you'll be answering to execs, the board, leadership, etc. to get shit done. Maybe not 110 hour weeks but you'll be grinding.
Thanks for the insight and comment. Really appreciate it. Did you by any chances mean escalator (rather than "accelerator")? And why do you think flat pay growth is "great"?
I now also have an interview with an IBD coverage team at GS / MS / JPM, to make things more difficult for me to decide. I have most recently worked at an MM.
Hi OP, I am in the same situation and would love to know the decision which you had made!
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