WSO has been instrumental in helping me break into this role so I want to offer some of my insights to anyone else who's looking to break into the industry.
Brief background: Graduated last December from a target school and now I'm finishing up my first year as an analyst in the corporate development team at a mid-sized pharma company. Happy to answer any questions regarding this role!
Let's cut to it, comp?
$70,000 base + $15,000 stock signing bonus that vests over 4 years + cash bonus depending on personal and company performance (in previous years this has been around 10-20% of base salary)
Everyone in my group also got another stock bonus that vests over 2 years in Q2 2017. This was completely out of the blue. According to our group head it was an incentive to stay with the company in the long run.
how's your team structured - strictly m&a? involved in JVs, partnerships, any venture investments? hybrid role with strategy functions?
75% of our work is M&A focused with the other 25% in Alliance Management (licensing, partnerships, etc.). I think it'd be cool to do venture investing, but our company is focused on companies and assets that are more mature and de-risked clinically or commercially.
At the junior level, all the work is M&A with the occasional modeling request for an Alliance Management project. Alliance Management seems to be more focused on relationship building rather than number crunching.
Many thanks for doing this. I recall some of your other posts which were very insightful so this AMA should be useful to many folks in each case :). I had a few questions if you don't mind:
1) Did you start the role as part of a broader rotational program, or was it specifically a hire for the corporate development team? (I do know that some companies have M&A/strategy baked in to their broader rotational programs, with this being the one way to circumvent pre-requisite banking experience as a way to get in)
2) When you've received a buy/sell side mandate from an operating division within your company on a potential opportunity, is corp dev tasked with running the entire process? Or do you hire outside advisors? I know that in some cases, the corp dev team runs with the entire M&A process (e.g., Drafting the CIM, conducting diligence, transaction document negotiations), but wasn't sure if this was the case here
3) Do you have a sense of where folks exit/depart to at the junior level and expected comp say 2 years out from starting? presumably the option is there to move up, but I imagine there are a few more opportunities at the analyst level than otherwise.
This was specifically a hire for the corp dev team. I got really lucky with this role because the company was looking for someone with 1-2 years of FT IB experience. My resume actually got dinged the first time because I didn't have FT experience. Fortunately, someone on my team kept pushing for my resume to go through and the team decided to bring me on right out of undergrad.
Our corp dev generally runs the entire process. When I was interviewing, the team members made a point about how corp dev was the "internal investment bank" of the company.
I've seen people from our corp dev team move internally to other roles or move on to corp dev roles at other companies. This is still a question that I'm trying to figure out.
What are the hours like? Also, how is pay at the Associate / Senior Associate level?
The hours at my job are really great, in the 40-60 hour range with some work on weekends. As an analyst, I'm owning all parts of a project (constructing the deck, editing the deck, modeling, auditing my model, etc.) Our VPs are pretty hands-off on the whole process and trust us to take a project from start to finish by ourselves, so I'm not sitting around waiting for comments from higher ups.
At the associate level, pay is around $90k cash with large amounts of stock. Sr. associate, I would venture a guess that it's $100k-$110k cash, but I'm not too sure on that.
Hi, can you share some tips on studying for the technical round of interview? The firm that I am interviewing is a private company focused on private mm deals. Thank You!
I currently work in financial due diligence and do some work on M&A/deals, but obviously don't have full deal experience like an investment banker would. Is it still possible to break into corporate development, or is it pretty difficult without IB experience? I know you said you did it without, but I'm wondering just how uphill the battle is on average.
Also, I'm interested in the pharma space. Aside from Boston, what are the best cities to be in to get exposure to this industry/where are all the finance jobs for pharmaceuticals?
Thanks!
I'm not too sure about coming from another full-time position, because I came into this position with a summer IBD internship and healthcare PE internship. It helped my case that I had experience in IB and PE even though those were only internship positions. Without those experiences, it would be quite difficult.
Chicago is a huge city for pharma. Shire, Baxter, AbbVie, Takeda, Walgreens and smaller pharma companies all have offices in the north suburbs. SF is also another great city for pharma.
Definitely possible...I came from Big 4 transaction services and moved straight into Corp Dev after I left. I also have several colleagues that came from TS and have moved on to CD roles
From what you have heard or know, do you think that someone with 1-2 years of FT IB experience would be taking a major pay cut to join the firm? Do many investment bankers join corporate development after their stints because of the easier lifestyle and comfortable wage?
What is the hierarchy like in terms of career advancement and compensation?
My coworkers who joined with 1-2 years of FT IB experience took pay cuts. Base salary is comparable (probably 5-10% lower) and we get generous amounts of stock, but we don't get huge cash bonuses like IB analysts.
Bankers at my company left for a variety of reasons, not necessarily because of the easier lifestyle. On that note, they have all commented on the fact that lifestyle is significantly better than IB and it justifies the pay cut.
Career advancement at my company is pretty good. When I joined as the new jr. analyst in January, the other jr. analyst and sr. analyst were both promoted after only 1 year at the company. The manager (equivalent of associate in IB) in my group was promoted after 9 months at the company. These guys all had full-time experience before joining, so I'm not sure what it would look like for me.
People who get promoted into the director level (equivalent of a VP in IB) in my team either stay in CD and try to make it to VP (equivalent of an MD in IB) or they move over to an inward-looking strategic role (e.g. product management, internal strategy, etc.).
I can't comment on how compensation looks as one progresses up the ladder, it's not something I've asked about in my time here.
I just went through the hiring process on the employer side. One thing for people on this forum to note is that, especially with these smaller pharma players, they are very hesitant to pay $100,000+ to bring on an IB analyst with 2 years of experience. We interviewed a lot of IB analysts and were not blown away. The point here is that, with respect to corp dev, you have the ability to compete with your wage. Someone with Big 4/Treasury/Strategy experience, at a 40% hair cut to an IB analyst, become very attractive.
Something to think about.
not blown away from what perspective - modeling, strategic thinking, industry knowledge, communication skills...?
This is why I wish firms would disclose a salary range in their job description. I assume almost all of these IB analysts either declined your offer or were cut after the first round because of the salary mismatch. Everyone's time would be spared if applicants knew up front what the salary range was. Not a knock against you or anything, but rather an observation.
In my experience, firms whose corp dev teams are run by former bankers will tend to pay more. So, when I went through my recruiting process about a year ago for my current role, I'd look the corp dev team up on LinkedIn before applying. That being said, there certainly is a haircut to IB salaries in corp dev.
To be honest, very few bankers made it past the phone interview and it had nothing to do with a salary mismatch (not discussed until later). We were open to hiring one at the right price but none of the applicants justified it. This is likely industry specific as pharma has certain characteristics that makes industry knowledge more valuable/relevant than financial modeling ability.
Depending on where the product(s) falls in its lifecycle, it's impossible for one to evaluate the commercial attractiveness of the opportunity if one isn't familiar with certain variables: channel/payer mix dynamics, patent/litigation landscape, uptake curves, generic sub rates, etc. This stuff takes much longer to understand than, for example modeling an SPV (and that's only required at the very tail end of a transaction).
I don't want to get into too much detail but very weak on technicals as well, particularly related to financial statement analysis. For those out there that may be applying to pharma corp dev, be sure to know how a profit share arrangement would show up on the financial statements and how to forecast working capital at the product level. Also, be sure to know something about the company before you interview. Your 1 year experience at STRH's financial sponsors group is interesting and all, but know something about our portfolio comp and our strategy (it's on the company website).
Thanks for doing this, +1 SB.
Also in CD, albeit I landed here as an associate after a rotational program and am in Med Tech now. You mentioned that your firm is more interested in de-risked mature assets. That's extremely expensive place to play in....
1) what's the deal flow like, even the big boys are hesitant to do a lot of activity on mature (thinking post POC)?
2) How do you guys naturally structure your transactions? I've seen a lot of co-development agreements with options to in-license based on trial results in my eyes, but curious to your thoughts.
Also, how do you like it compared to your expectations? Do you have a desire to go into to the operations side one day?
These are great questions, I'll try to answer them as best as I can
Our deal pipeline is pretty robust. Our team usually looks at anywhere from 5-10 deals at a time. My words earlier about de-risked assets were a bit misleading. We generally only consider assets that have some sort of proof of concept (P2, P3 or commercial stage), but that does not mean that they're completely de-risked. They may still have some clinical risk or commercial risk (e.g. awaiting results from a confirmatory trial, asset is in an indication that may have many failures before, competitive market with lots of existing assets or potential future competition)
Generally our deals are structured with an upfront payment and a few commercial and development milestones. I've also been on a few deals where we split the cost of developing the drug, EBITDA splits and option agreements to in-license based on trial results.
I've been enjoying my time in this position so far, but to be completely honest, I'm not 100% sure if I want to stay in pharmaceuticals. My life and work experience thus far have been really great and I'm in no rush to leave. Although this may be challenge, I have a desire to look at investments from the perspective of a financial acquirer vs. a strategic acquirer.
Let me know if you have any follow-ups to this.
Re: (1) - of the 5-10 deals you look at a time...or rather, of the deals you look at during an entire year, how many of these deals are completed? And then, how many are M&A vs in-license/out-license partnerships?
Thanks!
Are you from a finance background or a science background and what kind of background does your team come from as well? Would love to get into healthcare/pharma/bio tech however I come from a finance background.
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