The rise of business development roles in the industry

Tonixity
Rank: Orangutan | banana points 269

Hello,

Just trying to pick up your brain because I'm going to interview with another small cap private equity firm for a business development role. I was wondering what internal/exit opportunities are to be expected. Is there room for qualitative strategy work in that role or its the Associate/VP that perform all the quantitative and qualitative work by themselves?

Would you have any insight on the job itself (travel to conferences or to prospective companies' sites)?

Highly appreciate it!

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Comments (62)

Sep 19, 2017

I asked the same question at a $100M AUM PE shop a few years ago. The GP said that if I was good at BD he'd want me to do more BD, rather than eventually getting exposure to investment analysis. It'll probably vary by shop, but his logic holds water.

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Sep 19, 2017

Thanks for the info. It indeed makes sense.

When you say investment analysis you solely refer to quantitative work (financial modeling) or also the more qualitative strategy work?

Sep 19, 2017

Definitely both. Effectively the job would have been to front load the deal funnel with companies that passed a basic screen, and let the investment team do the real thinking.

Sep 19, 2017

Thanks for all the info that's very helpful. I will ask questions tomorrow and circle back with you here

Sep 20, 2017

The other replies are correct. When you're a BD guy, you're a BD guy. The good news is that BD is becoming a more important and respected role as the industry gets more competitive.

Being able to deliver new (and potentially less competitive) deals is very valuable.

    • 1
Sep 20, 2017

If you do BD, you'll get pigeon-holed there.

Sep 21, 2017

Yeah, my MD is pigeon holed bringing in deals - I feel bad for the guy

    • 5
Sep 21, 2017

Any ideas on how much should I been asking for a entry level role (I have two years of experience but on the client side, market research related)?

Sep 21, 2017

BD analysts / associates make anywhere from $55-80k. You have to have a sales mindset and will likely be pigeonholed in that role. As you get promoted, of course depending on your performance (and the fund's performance), being a BD guy can potentially be a very lucrative career, with similar compensation investment professionals and carry allocation.

Sep 21, 2017

hmmm you can get carry from BD? Really?

Sep 21, 2017

Yeah - depending on how good you are... if you're bringing in off market deals that hit the firm's criteria, that's more valuable than an investment professional.

Sep 21, 2017

lol

"Well, you know, I was a human being before I became a businessman." -- George Soros

Sep 22, 2017

Yes, I mean if you're at a MF, its likely de minimis. But at a LMM or MM shop who's sourcing strategy relies heavily on a MD of BD, yes. I know one BD MD at a MM shop who has 20%+ pts of carry.

Jan 30, 2018

I know TA Associates and Summit Partners (if they are still around) paid more than this (think $100 base -100k bonus about ~10yrs ago) and I'd say a heavy portion of the job for those associates is business dev

Sep 21, 2017

Yeah, it's a terrible position.

Sep 21, 2017

its a sales job.

Im guessing you are the person who is vetting transactions. And as the person said, if you are good at it, they will keep you there.

Best Response
Sep 21, 2017

People are terribly single minded. I personally think BD is awesome. I mean your job is contacting and meeting entrepreneurs all day. I also consider it to be one of the most important roles in a team. No deals = no analysis to be done = no closing deals = no carry.

The industry is insanely competitive now and for funds to outperform their peers they need to bring in proprietary deal flow, hence why I believe these types of roles will be more and more common and respected. LPs jerk off to proprietary deal flow.

    • 9
Sep 21, 2017

At the PE firm I was with and pretty much every other PE firm I know, the BD team is considerably lower than the Investment team in the hierarchy. No sh*t, it's important to bring in deals. You know what else is important? Knowing how to evaluate deals, how to close deals, and then how to manage portfolio companies into an eventual exit for the firm.

Don't be fooled into thinking that investment partners don't have their own networks and contacts and deals that they bring in as well.

    • 1
Sep 21, 2017

Lol that moment when you suggest that getting paid 50% of whatever the investment team gets paid -- and staying there -- is "awesome."

"Well, you know, I was a human being before I became a businessman." -- George Soros

Sep 21, 2017
Futures Trader Man:

Lol that moment when you suggest that getting paid 50% of whatever the investment team gets paid -- and staying there -- is "awesome."

Thats if you're terrible. You do know that some funds pay very hefty finders fee for deals. If you are bringing in deals, they will pay you accordingly.

Also, note that there is a difference between an actual Associate/VP of BD role vs some shops hiring kids of out undergrads to just send out cold emails all day (e.g. Summit Partners). The latter does indeed suck.

Sep 22, 2017

Agreed, good points here. But even in this case, you have to want to do this in the long run. You can't and shouldn't enter these roles hoping to hop over to the investment team at some point. It's unlikely, and will constitute a huge waste of both your own time and the firm that hired you.

"Well, you know, I was a human being before I became a businessman." -- George Soros

    • 1
Sep 22, 2017
Futures Trader Man:

Agreed, good points here. But even in this case, you have to want to do this in the long run. You can't and shouldn't enter these roles hoping to hop over to the investment team at some point. It's unlikely, and will constitute a huge waste of both your own time and the firm that hired you.

Very fair point indeed. If they want an investment professional, they will hire an investment professional.

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Sep 21, 2017

Private Equity BD is a different animal than working on strictly deal execution. Most shops with heavy proprietary deal flow (TA, Insight, JMI, etc) have small armies of analysts and associates making outbounds all day. Work is all about "touches"...or how many outbounds you send a day (emails, phone calls, etc). Usually you want to aim to connect for ~20 quality touches a day (CEOs or people of importance), taking into mind that you almost certainly won't reach someone of importance in one touch. Success on the other hand is measured by converting quality touches to term sheets (VPs, Principals and MDs will take the wheel at this point). BD roles are important because you are keeping the deal funnel wide open as well pitching your firms value proposition to these CEOs/founders before they even speak to your bosses. Not saying you can close a deal by yourself but you can certainly fuck it up.

Pretty rewarding if you have a competitive mindset. Just know there will be times where weeks go by and you'll have nothing to show for your work.

    • 1
Sep 22, 2017

Lots of good points in this thread.

Having worked on this side of things, I can give you some first hand experience given that I've been responsible for a lot of the sourcing/BD efforts at my firm.

Proprietary deal flow is the name of the game; if you want one way to stand out at your firm, this is it. PE guys are crazy about finding deals that aren't competitive/widely auctioned, so if you can generate value via sourcing, expect to be well compensated and recognized for it. BD is increasingly becoming an integral part of PE, because not everyone can sell/develop relationships naturally. I was fortunate in my role (due to the lean team structure), in that I was exposed to many facets of PE (BD, execution, and the investment process), so I got a lot of experience and was able to travel/attend board meetings, do conferences, etc. Culture/team layout matters tremendously for what you do, so keep that in mind.

Keep in mind that BD is also a double edged sword; as others here have said, the better you are at sourcing, the more likely the higher ups will want to keep you in this role. From an internal perspective, the most likely path for you would be up to director/MD of business development. While this isn't necessarily a bad thing, assess whether its aligned with your career. While I firmly believe that sales is an invaluable skill to have (period), it does pigeon-hole you from a career perspective. However, it's definitely feasible to get on the investment side of things.

  1. Network, network, network. Build relationships with other PE guys, meet for lunches/coffees/dinners, and once you have a year or two of experience under your belt, start actively speaking to recruiters, applying for jobs, and cold-emailing. I can't stress how effective a well written cold email can be.
  2. Further your education. Learn financial modeling so that you can keep up with the associates at your firm. Pick up a Masters/MBA on the side while you work, so that you have credentials to your name. Once you have something tangible on your resume (and a compelling story) that says "hey, I'm not just a BD guy", people will take note. Two other BD guys I know pursued their MBAs (executive) at an elite school while they worked, and one is working for a hedge fund as an analyst, while the other is high in the corporate structure at a financial firm.
  3. Have a plan of action. Don't just sit around and hope to transition into the investment side of things. I've seen many people become complacent with sourcing (after all, it can be lucrative), and before they know it, they're fired/questioning their career. Know that in 2 years you're going to do an MBA on the side, know in 3 years you'll have all the modeling skills required for a PE investment role, and execute.

Happy to answer any other questions you might have.

    • 3
Feb 4, 2018

inboxed you. thank you so much for such a response.

Jan 25, 2018

Business development is a good role because you would be representing the company not just as a Sales & Marketing person but as an Ambassador. You don't just close sales but you develop the organization by developing business. In fact, the future of the organization is on your shoulder. Managers, Directors & CEOs are just behind your back. You are the one who lead. Even though very less attention is being paid to Business Development Professionals. It is a great role if you have the aptitude and skills to perform these activities. It has good prospects and you will rise rapidly in the company if you perform well.

Jan 30, 2018

Recently interviewed for a Business Development role at a PE shop. It was the most confusing fucking thing I've had to suffer.

"Loser terrorists" & "bad hombres"

"Typical candidates are those who attended a top-tier academic institution"
-Most job applications

Mar 3, 2018

Business development is the life blood of EVERY business - financial or otherwise. It still surprises me how this industry continues to recruit/hire talented finance professionals for BD positions when most don't know the first about sales and marketing, and ultimately end of being coached, instructed, and managed by other talented financial professionals who really don't know anything about sales and marketing either. And you wonder why there is a so much dry powder sitting on the sidelines.

Mar 3, 2018

Hey TheQuizzicalOne -

BD can be a lot of things. At my firm (F50 industrial) the BD folks are typically senior level people who have deep experience with our customers.

They are pretty highly paid (higher than finance for the same experience level). These individuals typically work with customers to craft product and service offerings that are responsive to customer needs and values, then they champion these offerings through all the hoops and approvals required by a large/bureaucratic organization.

In my experience it's a mix between sales, strategy, technical accumen, and customer relationship management.

Hope that helps.

Mar 3, 2018

bump

Mar 3, 2018

Here are some of the resources which I specifically use:

HardcoreCloser.com - It's like the rugged side of sales, but the blog has some motivational and great gems hidden in there.
Saleshacker.com - This is the premiere blog which is sales focused, tech, but still has applicability to practically all sales.
Salesforce.com - Their sales blog is A+ work and great read.
Quora.com - This is an answer/question type format area which has some of the brightest minds in sales and business development all throughout it. Worth sifting through the answers you want questions to and asking them.

Some books which are imperative:
How to Make Friends and Influence People
Persuasion (Cialdini)
SPIN Selling
The Presentation Secrets of Steve Jobs: How to Be Insanely Great in Front of Any Audience
The Fifth Discipline: The Art & The Practice of the Learning Organization

Also watch as much as you can on YouTube from top sales people and some of their tips and tricks. Look up a view names and sales, and you'll be able to get a ton of information.

Grant Cardone - very slimy, and very rugged, but good gems.
Guy Kawasaki - self explanatroy
Robert Herjavek and Barbara Concoran - both Sharks, both sales focused
The Victor Antonio series on YouTube

Just some stuff I would recommend. Some of its focused on motivation and hustle, some on the actual presentation and proposal skills, and others is just general sales psychology.

Good luck, and have fun selling.

"It is better to have a friendship based on business, than a business based on friendship." - Rockefeller.

"Live fast, die hard. Leave a good looking body." - Navy SEAL

    • 1
Mar 3, 2018

I am also interested in this, if anyone has anything to say about it.

Mar 3, 2018

My internship this summer is actually in BD. The company that I will be working for has done considerable expansion in the past few years through acquisitions and divestitures. I believe the number was $14B in deals in a month. The reason why I choose this is you actually get an in depth look on the synergies of the company; unlike a banker your there during all the stages of the deal from targeting to actually incorporating the company into the fold. Think it of a mix between M&A and strategic planning. The compensation may not be as high as banking but the work is thoroughly engaging because once your higher up you are actually helping in deciding the course of the company and becoming a dealmaker yourself. Also the hours are considerably better. From my perspective this would give me views into what it is like being a consultant through the planning experience and what it is like to be a banker when I actually go through the deal execution. The way I was recruited is I leveraged my previous work experience with the company, manager recommendations, and I got to know some of the team. If there is anybody who has done BD for FT I would like to hear from their experiences.

Mar 3, 2018

If you go into Corp. Development after a two year stint, what kind of hours and compensation are you looking at? Ballpark anyways.

Also, do you have to be in NY or are the companies' CD offices all over?

Mar 3, 2018

bump

I'm making it up as I go along.

Mar 3, 2018

bump

Mar 3, 2018

I too would like to know about this. What kinds of questions come up in interviews for these positions?

Mar 3, 2018

Usually..a few ways.

2 yrs at McKinsey, HBS, 2 more years at McKinsey then corp dev for ur client

2 yrs as a banking analyst then straight into internal M&A / corp dev or MBA and then corp dev

i understand your in a graduate program. i did banking and then interviewed for a generalist financial analyst program and was placed in corp dev as an analyst.

i have two senior managers both from Mckinsey >> HBS >> McKinsey >> Corp dev.

There are two junior associates (senior to me) both worked at the company in general corporate finance and ended up here.

Mar 3, 2018

...

Mar 3, 2018

I would recomend trying to get a corporate finance, consulting, or IB internship while you're in school. If you don't have relevent experience this will help.

Usually what I see is they're looking for people who know how to model, vaule company's, pull together research, etc. So focus on building these skills, through course work, internships, etc.

I don't agree that you need to work in consulting to get into corp dev.

Mar 3, 2018

Spent a year and a half in business development before going back to m&a.
Happy to answer your questions if I can.

Mar 3, 2018

why are you going back ?

Mar 3, 2018

I went back to m&a because I thought my BD job was extremely boring.
Was really missing the fast paced IB environment.

Mar 3, 2018
EuropeanBob:

I went back to m&a because I thought my BD job was extremely boring.
Was really missing the fast paced IB environment.

How possible is it to go back from corp dev?

Mar 3, 2018

Depends on seniority (probs easier if you are very senior or very junior) and industry knowledge you've built up.
I would guess its most difficult to move back at associate/vp level as you are really focussed more on process.
I've seen it happen in the tech and healthcare space.
Its not common but possible.

Mar 3, 2018
EuropeanBob:

Depends on seniority (probs easier if you are very senior or very junior) and industry knowledge you've built up.
I would guess its most difficult to move back at associate/vp level as you are really focussed more on process.
I've seen it happen in the tech and healthcare space.
Its not common but possible.

So, right now im a corp dev analyst, and honestly its my second week on the job and its almost EXACTLY like IBD lol...weird right? But, I may still want to move back to the sell side, how long should i wait until i can make a move or if a move is possible do you think?

Mar 3, 2018

Why would a Business Development role have to do with RFPs? Seems strange. For Corporate Development in general (not necessarily in AM) be sure to check out this thread: //www.wallstreetoasis.com/forums/the-other-road-corp...

Mar 3, 2018
Loki777:

How are you all generally approaching business development for companies under $50 million in revenue? Are you typically just cold calling, attending relevant conferences, joining relevant clubs, and cold emailing?

Just wondering, I work at a small boutique and our main MD is wanting me to start doing business development to hopefully schedule meetings for him to be able to meet with owners in our target industry. What is the best approach you all have found for this?

We don't pitch and we just generally do sell-side M&A (small deals). Btw, I am an entry level analyst without much training, so all advice is certainly welcomed.

If you are going to M&A business development and are cold sourcing your prospects, you are going to need to pitch. That's just a fact of life.

Here's a few ideas:
1. Produce sector/industry research. A lot of smaller businesses do a poor job staying abreast of M&A activity in their sector, major financings, PE funds entering the landscape, roll up strategies, valuation multiples, etc. Provide value and you will be one of their first calls. Along the same lines, produce a deck that you would use to walk an 8th grader through the M&A process. Provide this to the entrepreneur/family owned businesses you are reaching out to that have likely been part of a sale process.
2. Industry conferences - kind of a standard one here. Send out research a couple weeks before the conference (attendees are usually listed somewhere on the conference website). Try to set up a bunch of meetings with follow up calls/emails after sending out the report. If you can, do some pre-screening on the meetings so only bonafide client prospects are included. After meetings, make a list of the potential clients and pool them into proper categories based on their readiness/willingness to pursue a transaction.
3. Boutique service providers - certain accountants, consultants, etc will focus on highly specific industry sectors. If you cover one of these sectors, start building relationships with these people. Send them referrals when possible. They will reciprocate.
4. Wealth management - we source a lot of our clients from the major wealth management groups. It's a long process to build relationships with FAs and get yourself on the referral list. This is something that should be the responsibility of your senior guys.
5. Cold calling - make sure you are targeted in your prospects and can speak intelligently about their business/industry. Know what your firm can offer (including who you can refer them to). Again, provide some value and you will be their first call come sale time.
6. PE funds - this one is kind of obvious, but make sure you stay in touch with funds that have holdings in your industry sectors and size range. Know who is looking to liquidate in the near future.

There are other avenues, but these are just some ideas.

"For I am a sinner in the hands of an angry God. Bloody Mary full of vodka, blessed are you among cocktails. Pray for me now and at the hour of my death, which I hope is soon. Amen."

Mar 3, 2018

Thanks for your insights! I will have to double check with my director on our pitchbook status. I believe the firm has some templates they use, but our Director had chosen not to use them, but maybe he will begin using them if I can convince him of their value. We have a few tombstones, and I suggested that we pursue some of the small competitors since we have deal experience with their exact niche competitor (ie sold an Italian pizza franchise, so target other small Italian pizza franchises). I mentioned this to my Director and he kind of brushed it off, but said he liked the idea. My main goal of course is to provide value to the team.

Unfortunately, most small mid market PE funds seek at least $2M EBITDA, which most of our deals are barely within range. In regards to the wealth managers, are you generally getting a feel for what type of businesses some of their clients may potentially seek? I am guessing a good way to start the interaction would be to send an introductory email talking about our team, and mentioning that we occasionally get small (usually local) businesses in the pipeline, and wondering if any of their clients would potentially be interested in buying businesses for their portfolio? Of course, I will talk this over with my MD, as I am sure he will be able to give me some pointers on the wording.

Mar 3, 2018
Loki777:

In regards to the wealth managers, are you generally getting a feel for what type of businesses some of their clients may potentially seek? I am guessing a good way to start the interaction would be to send an introductory email talking about our team, and mentioning that we occasionally get small (usually local) businesses in the pipeline, and wondering if any of their clients would potentially be interested in buying businesses for their portfolio? Of course, I will talk this over with my MD, as I am sure he will be able to give me some pointers on the wording.

To clarify on the financial advisors - they refer us their high net worth clients who might be looking to retire or diversify their net worth by recap-ing their business. So if Old Man CEO is a client of UBS WM and is looking to retire, his financial advisor might refer him to us to sell the business. In exchange they receive a referral fee (upon deal completion).

As for PE funds - if they have portfolio companies that are doing sub 2mm EBITDA and their typical investment criteria is over $2mm EBITDA - there's a decent shot they are looking to get liquidity on that holding (if they are nearing their typical holding period on the asset). By developing that relationship, what you are hoping to do is represent their port co on the sell side.

"For I am a sinner in the hands of an angry God. Bloody Mary full of vodka, blessed are you among cocktails. Pray for me now and at the hour of my death, which I hope is soon. Amen."

Mar 3, 2018

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