Q&A: Corporate Development and Investing Associate

Hi Monkeys, 

As I've extracted great advice and wisdom from the community over the years, I figured I'd take some time to answer any questions for the community on my experience. 

Education:

  • School: Semi-Target / Large State School 
  • Degree: Finance w/ Honors
  • GPA: ~3.9
  • Relevant School Activities: School Student Hedge Fund

Internships / First Job:

  • Sophomore: S&T @ MS / GS 
  • Junior: M&A @ JPM / BofA / Citi
  • First Job: 2yrs at M&A @ JPM / BofA / Citi 

Current Role:

  • Corporate Development & Investment Associate at media & entertainment focused investment holding company
  • Day-to-day role: Evaluate new investment opportunities within the sector, work with portfolio companies that consist of wholly-owned entities and large minority stakes in public companies 
    • Focus on cable, media, sports, travel, ad tech, etc.
    • Effectively a hybrid between a more traditional PE investing role and corporate development 
  • Role will be 2 and out, have not yet decided on b-school

Happy to answer any questions!

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Comments (28)

Feb 5, 2021 - 1:15pm

Hmmm, that's a good question. I can't say that I have the answer to it, but perhaps can provide some useful guiding questions / observations:  

  1. This one seems obvious, but are you actually interested in the role?
    1. Something I have come to place better weight on is not just considering opportunities in the context of where it puts me next, but instead considering if it is helping me build the skillset / knowledge base / network that will get me where I want to go
    2. What is your current level in banking? I assume from your commentary that you're an analyst? How long have you been recruiting for PE and what is the honest reason that you want to pursue it (not your interview answer?) 
      1. And is there some kind of albatross around your neck that might be holding you back in the recruiting process?
    3. In the corp dev role you are considering, how big is the team? How much exposure to mgmt will you get? Did those managers go to good b-schools (i.e. they could write you meaningful recommendations?) 
      1. Will you have any interface w/ the sponsor owner? I.e. - maybe you can get your foot in the door with them
    4. Observation: While this does not come from personal experience, it is my understanding that it is challenging to break into PE post MBA, since the number of seats at the VP level shrinks and a number of PE associates go to get their MBAs and then come back to fill those VP seats. So while I am sure there are examples of success in this regard, I'm not sure that you can really count on it (unless of course you have some exceptional background) - but again, i'm not talking from person experience on this one.
Feb 5, 2021 - 1:43pm

Thanks - all good questions / notes.

1. I would say I'm 50/50. I really want to do PE at the end of the day. However, this is a PE-driven acquisition strategy so I imagine that it will be similar to what you described as a quasi-PE role, but maybe I'm not being realistic. Heavy commercial diligence and modeling to execute the add-ons and a flavor of general corporate strategy. My reservation is what you observed; I don't want to make the wrong move and still not be able to get into PE.

2. I just got promoted to IB associate actually this month. I have been recruiting since the fall and have still gotten a lot of PE interviews (in process with 4 right now). I want to pursue because there is just a lot of flexibility - I can go get my MBA after and then move to a VP role, better lifestyle corporate development / strategy role, go back to IB if I want, or even just go do something completely different like consulting / startup. Still do not know exactly what I want to do long-term. The albatross is frankly just exhaustion - PE recruiting is mean business and has required a lot of iteration and it has been fiercely competitive (have been ghosted, superday on the other coast and then they went with a local person). It's just a tough industry and I'm just trying to be proactive about my next role / Plan B so I don't get stuck in IB.

3. This is a good point - there is no corp dev team; it's just the CFO / CEO and business development leads. I would be the point junior person which could be a good or bad situation depending on how you look at it. CEO and CFO both went to business school, but probably not the most sophisticated leadership team. The PE team is a well-respected MM firm with a $2B+ new fund. Given how lean the corporate team is, I imagine that I will be teaming with the PE associate and VP to execute as we will all come from IB / finance backgrounds.

4. Yep - that's my biggest issue. I don't want to give up on potentially missing a PE associate role just because I recently got promoted to IB associate. There are still people who make the move at the ASO level, but I'm overall just worried about getting left behind in banking. I've been getting crushed at my MM IB and the work is just not satisfying to me / I really enjoy picking companies apart, thinking of investment cases, and partnering with management teams to grow the business.

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  • Summer Associate in IB-M&A
Feb 5, 2021 - 2:40pm

What's the hierarchy on the team/company you're in? Do you have the opportunity to re-join the firm after your MBA?

Feb 5, 2021 - 3:16pm

So - there are 3 associates (usually there are 4), 2 VPs, 2 SVPs, the head of the investing team / corp dev, and then our CEO.

So for port cos there are typically an associate, VP, SVP assigned to them.

And then on new investments we'll have some combination of associate / VP or associate / SVP or associate / VP / SVP - depending on the level of engagement we are putting forward and then we present / discuss with the head of the group and our CEO.

And on the MBA front, nope - above the associate level everyone has stayed with the company for years and years - with exceptionally low turn over. So there is really no where to be promoted to. 

Feb 5, 2021 - 3:20pm

Nope - my role was within M&A and I actually didn't do much TMT work within my banking years (much to my sadness). I came to the role with a real passion for the sector though that stemmed from my own personal interest / investing so that was able to come out in the interview process and was fairly natural for me. 

For a period of time I was exclusively looking at Media / TMT focused roles - and shockingly didn't face that much push back (at least in the interviews and HH discussions) about my not being from a TMT group. 

Re: unique valuation work - good question - thus far no but I think that is more so a function of the deals that I have worked on thus far not requiring it. 

Feb 5, 2021 - 8:00pm

Have a ton of questions given the company that you're at, but will stick general unless you're willing to answer firm-specific questions.

How does the team think of deployment of capital? $XB targeted over a certain time frame? Annual minimum to be deployed?

What's the main source of funding? Holding company cash flow? Debt markets?

What's the hurdle rate on investments and how is it determined?

Investment time horizon and preferred exit strategy? 

Is the team operating with sector driven theses and hunting for deals in those areas? Or is it generally anything related to your landscape and then determined by the individual deals?

Most Helpful
Feb 5, 2021 - 8:31pm

How does the team think of deployment of capital? $XB targeted over a certain time frame? Annual minimum to be deployed?

Great question - we do not have a targeted amount of capital deployment over  a certain time. We are more concerned with using the capital that we have efficiently. IE making the right decisions between buying back stock, paying out regular or special dividends, and making acquisitions with cash flows of our businesses or with money raised from the capital markets. 

What's the main source of funding? Holding company cash flow? Debt markets?

So our company is known to be rather creative in our structuring / funding. Our funding source is typically determined by the acquisition. If the asset we are looking at fits naturally at one of our Portcos or within the investment theme of one of our tracking stocks - we will seat that investment with that asset and fund with cash flows from that business (if available) and the appropriate mix of debt / equity. If the investment doesn't fit with an existing investing theme or we can't access cash at the entity it would best fit with - we may make the investment in whichever entity has cash available for us to deploy. Long story short - both internal cash flows / debt / even raised a SPAC recently. 

What's the hurdle rate on investments and how is it determined?

I've been with the company for 6 months now, and no one has ever told me that we have a certain hurdle rate. Obviously we model returns, but our mindset is not trapped in an exit in a certain period of time since we are long term investors - looking to add meaningful value to the business with our industry experience and use our capital markets expertise to drive value as well.  

Investment time horizon and preferred exit strategy? 

So I started getting to this point previously - but we do not really have a time horizon. Our entities are publicly traded through either traditional securities or tracking stocks (which if you're familiar with the space will tell you where we are talking about) - but we have basically one controlling shareholder (due to dual class share structure). So we do not face pressure to turn over the portfolio / exit to pay-out returns etc etc. 

When we do exit positions - we often pursue spins, if possible in the interest of tax-efficiency.   

Is the team operating with sector driven theses and hunting for deals in those areas? Or is it generally anything related to your landscape and then determined by the individual deals?

So yes and yes. We do operate with sector driven theses within several of our key sub-sectors - especially when it comes to cable, audio, and sports - but then we will also consider any number of opportunities that come our way and assess our ability to add value based on our sector expertise. 

Feb 5, 2021 - 8:42pm

Besides M&A, does your team do capital raising activities as well? By means of "corporate development", do you involve in subsidiaries operation activities. If yes, how and how to quantified the impact? 

How does the KPI set up for M&A, capital raising, corp dev activities?

Feb 6, 2021 - 9:01pm

So my team is involved in capital raising discussions and analysis but we also have a dedicated treasury team that serves as the experts on matters of capital raising.

We are involved in discussions on operational matters with our portfolio companies but we rely on the management teams to run the businesses, much like most sponsor owners.

In regards to your question on KPIs, not sure I follow could you rephrase?

Feb 6, 2021 - 11:22pm

What i mean is your comp structure. Does it link directly to performance of M&A transaction/capital raising activities? If yes then how?

For PE, they have carry and co-invest and the fund has a defined scope (life time, size, return hurdle rate), so comp could be structured around these metrics. But for corp dev, these things do not exist, so I just wonder how performance is measured and rewarded

  • Associate 2 in IB-M&A
Feb 8, 2021 - 1:28pm

I am an Associate moving to VP (sector coverage, post-MBA).

I am struggling to figure out whether I should leave banking now because my skills and expertise will grow from working in industry and will "compound over time" so that I'm more knowledgeable/experienced by ~age 45...or if I should stay in banking because I'll continue learning/experiencing new things and, if I leave to industry a few years from now, I'll still end up relatively the same spot by ~age 45.

Would love to hear your thoughts if you think bankers get to a point where there's diminishing returns from staying in banking or not...specifically on the sector coverage side where I'm exposed mostly to equity and M&A.

  • Associate 2 in IB-M&A
Feb 8, 2021 - 10:10pm

After banking, I'd like to move into a corporate development/BD/corporate strategy role.

Down the road, I could see myself wanting to develop a broader skillset to understand how to operate a company, although that may be getting ahead of myself as I may really like BD/corp dev/finance.

So not really looking hard at PE roles.

May 13, 2021 - 10:27pm

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