Q&A - Corporate Development & Strategy

Hi everyone. There have been some recent threads on corporate development and strategy, and I thought I would share my own experience through a Q&A and give back to the community. My background is fairly mixed, and I graduated with a technical degree from a non-target/semi-target three years ago and cumulatively gained esoteric investing, PE, and corporate development and strategy experience at a large bank and a lower middle market PE firm. Currently, I'm working in New York at a large private company on a corporate development and strategy team whose scope also includes partnerships and financing. I'll be happy to answer any questions outside of my background.

Comments (40)

 
Jan 6, 2019 - 5:28am

If you don't mind, what order did you go through these roles and what kind of factors influenced each of these transitions?

Array
 
Jan 9, 2019 - 3:18pm

autism_is_good:

If you don't mind, what order did you go through these roles and what kind of factors influenced each of these transitions?

I'd rather not say the order as I don't know anyone else with my experience. I started out wanting to invest and was lucky to land a relevant job. I moved to my current role because while I like investing, I wanted to try something different and gain product experience and exposure to entrepreneurship while maintaining a finance scope. In addition to M&A and executive and board level business cases, I work on commercializing products and service offerings. The entrepreneurship aspect of my job refers to the fact that my team supports partnerships and joint ventures with startups.

 
Jan 7, 2019 - 11:33am

Have you ever put together a 3-statement model, from scratch, for a live deal? Also, what metrics have you relied upon to evaluate the attractiveness of a deal? Do you consider NPV? If so, how do you estimate discount rates?

“Elections are a futures market for stolen property”
 
Jan 9, 2019 - 11:41am

Not OP, but worked in Corp Dev for a couple of years.

Never put together a 3-statement model. Not much value in a standalone balance sheet. Closest would be forecasting NWC for unlevered DCF. If the deal was material enough, we'd show proforma impacts: EPS, CFPS, ROCE accretion / dilution analysis, capital schedule changes, etc.

Metrics varied widely depending on the type of deal, but the ones mentioned above were certainly used for larger deals. Smaller tuck ins were often evaluated in a similar way to large capex requests (minimum internal IRR hurdle) with an added emphasis on strategic rationale and long term business plan.

We did show NPV. I can't say it was ever a make or break metric, though. Discount rate came from the Treasury department.

 
Jan 9, 2019 - 12:24pm

Sounds like you were at a large public company and had access to pretty good resources. I wonder how different the OPs experience is at a private. I know my experience was pretty different from what you described (though we align on not using 3-statement models).

“Elections are a futures market for stolen property”
 
Jan 7, 2019 - 10:04pm
  1. Why did you decide to go into corp dev/strat instead of staying in PE?
  2. Was it challenging to move from LMM PE to corp dev (vs. being at a large well known fund)?
  3. Given banking and PE experience, what kind of title (manager, director) were you most recruited for and what does comp look like?
 
Jan 10, 2019 - 12:59am

jobless123:

1. Why did you decide to go into corp dev/strat instead of staying in PE?
2. Was it challenging to move from LMM PE to corp dev (vs. being at a large well known fund)?
3. Given banking and PE experience, what kind of title (manager, director) were you most recruited for and what does comp look like?

1) LMM PE can be a great job. However, my firm's politics were such that it became a toxic place to work. We also could not close many great deals because of this dynamic. I ended up securing a more lucrative and interesting opportunity where I could have jumped back to PE if I wanted to. Lower middle market PE didn't necessarily support my long term goals either. See my my first couple replies for more details.

2) My experience was always looked upon favorably. Now if you are only targeting the hottest tech companies or something like Disney, then it would pose more of a problem if that's the only experience you possess. And I actually don't know if my background would have hindered me from those roles either as I had experience at a name brand bank as well.

3) See a previous comment about title and comp. However, I have to mention that I didn't do traditional investment banking.

 
Jan 7, 2019 - 10:38pm

I'll ask the same question I ask everyone, just to get different perspectives. I work in FDD and want to get into corp dev or strategic finance. How highly do you recommend doing a stint in IB? Is there a chance of moving into corp dev with 4-5 years of experience in the non-IBdeals space, or is it better to cut my losses, go for IB, and move after 2 years there?

 
Jan 8, 2019 - 9:56am

what's FDD?

IB experience is not necessarily a prereq. i've seen CD folks who've come from FP&A, capital markets, Big 4 backgrounds etc. Key here is to focus on companies outside of F500, likely doing deals in mid to lower mid market. Not as sexy but can still be a great experience.

 
Jan 9, 2019 - 10:51am

How do you perceive the major differences between your role and a role with an in-house VC at a large tech company (e.g. GV/G-Capital, M12)?

Life's is a tale told by an idiot, full of sound and fury, signifying nothing.
 
Jan 9, 2019 - 3:31pm

The Stranger:

How do you perceive the major differences between your role and a role with an in-house VC at a large tech company (e.g. GV/G-Capital, M12)?

Well I would say we don't have a major VC manadate and we prefer to partner with firms and assess their capabilities before acquiring them rather than do minority investments. I can't comment on in-house teams at tech firms.

 
Jan 9, 2019 - 6:35pm

Sorry, I wasn't sure how often you run into those types in auctions/networking - thought you have a view on how much overlap your role has with that.

Life's is a tale told by an idiot, full of sound and fury, signifying nothing.
 
Jan 10, 2019 - 2:18am

Abhizzy:

What kinds of skills would someone need acquire to get into CD/CS for 1-3 years of experience?
-Vertical/Horizontal M&A?
-CAPEX & IRR type reports on projects/deals?
-Capital buybacks/SEO (Could fall under Treasury, but have also seen CD responsible for this)

Thanks OP or doing this!

Personally, I would hire a smart person who is passionate about my industry. That's not how it works, though. The most important attributes we look for are fit, intelligence/critical thinking abilities, general business knowledge, executive presence, and technical skills. All of these attributes can be found within many backgrounds but banking and consulting have been successful fields to hire from in the past, so that's what we focus on.

Any M&A experience would be helpful. Business case and commercialization experience would be beneficial as well.

 
Jan 10, 2019 - 12:38pm

For someone like myself, who would consider a transition from a Credit AM Fund and exploring new opportunities. How I would I go about selling myself for a CD position? Who would I have to network to get my foot in the door for possible interviews/phone discussions?

Thanks again!

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