01 Feb Career Spotlight: Corporate Development
I created the Career Spotlight series to share my experience and the experiences of other women in the finance industry. My hope is that by highlighting various career paths in the industry and sharing our experiences, we can demystify these career paths, learn from each other, and expand what we view as options for ourselves.
Today, I’m highlighting what a career in corporate development looks like. I’m sharing my own experience working in a corporate development department at a FinTech (financial technology) company. If you’ve never heard of corporate development, get ready to learn! And even if you have heard of it, I hope sharing my experience as a woman in the industry will still be enlightening for you.
Let’s start with the basics: what is corporate development?
While the scope of a corporate development department can vary company to company, generally speaking, corporate development teams are focused on M&A (mergers and acquisitions) activity. The corporate development team is typically focused on finding and buying other companies that will advance the strategic initiatives of their own company.
How did I become interested in corporate development?
I became interested in M&A towards the end of my undergraduate career at the College of Charleston. My advisor suggested I look into graduate school at Wake Forest because they had a Master of Accountancy program that offered Financial Transactions as a concentration. This seemed like a perfect continuation of my undergraduate finance studies and a good way to learn more about M&A. Wake Forest led me to my first job out of school, which was a rotational program between Valuation Services and Financial Due Diligence Services at a large accounting and consulting firm.
I enjoyed my time there and while it was a great way to hone my technical financial skills, I felt like I wasn’t able to see an M&A transaction all the way through. Our firm was hired to perform one piece of the puzzle and then it was on to the next client. That’s when I started doing more research on corporate development and realized it could be a good way for me to see transactions from start to finish and be involved every step of the way.
What are my key responsibilities?
My day-to-day responsibilities vary greatly depending on which projects we’re working on. This is good for people who like to switch things up every so often, which I do. I can bucket my responsibilities into three general categories. Of course, this is only my own experience, and every corporate development team operates slightly differently, but these are usually pretty common.
I call the first category Pre-Deal Responsibilities. In my department, these are the activities that happen once our team has identified that a target company might be interesting, but more work is required to determine if a deal makes sense.
The first pre-deal task is Discovery. Typically, both parties will sign an NDA (non-disclosure agreement) before information sharing begins. Once the NDA is signed, our team will ask questions to learn more about the business. The target company usually also has questions about our team and our business. A lot can be learned from these initial meetings or calls. Besides just learning about the business side, assessing the potential cultural fit can be an important aspect of an acquisition as well.
The next pre-deal task is Financial Analysis. A huge part of determining if an acquisition makes sense is to perform heavy financial analysis. Our team needs to decide how much the target company is worth by performing a valuation analysis. Additionally, we need to determine what the finances of a combined company will look like. This includes determining synergy opportunities, which are often a key reason for completing an acquisition. Synergy means that the combined company can produce more together than the sum of each company’s standalone production.
The last pre-deal activity is Securing Internal Buy-In. This step can vary in difficulty depending on the corporate political climate in an organization. Since my team is closest to the details, it’s often our responsibility to convince the executive team (and then the board of directors) that the proposed deal is a good idea. Our board of directors has to officially approve any transaction.
The second general category is Diligence. These are the tasks that happen once both parties decide they want to move forward with an acquisition. This is typically when an LOI (Letter of Intent) is signed, which is a letter expressing that the company intends to acquire the target company, as long as there are no big issues discovered during the diligence process. That last piece is important because it means the agreement does not legally bind the company to complete the acquisition. An LOI can vary in length and complexity, but it usually states a purchase price and a timeline for completing due diligence.
The overarching responsibility during the diligence phase is Process Management. There are several different types of due diligence that need to be performed to analyze a deal: financial due diligence, legal due diligence, technology due diligence, and even regulatory due diligence. We usually hire accounting consultants for financial due diligence, lawyers for legal due diligence, technology specialists for technology due diligence, and regulatory experts for regulatory due diligence.
Each of these third-party experts have tons of information requests for the target. It’s my team’s job to keep them organized and streamline the process so that the target doesn’t feel overwhelmed. In addition to the third-party requests, there are plenty of internal requests that also need to be managed. Strong organizational skills are key for this process.
In addition to managing the diligence process, I often get to do a lot of travel during this phase. Each of the diligence workstreams appreciates getting some face-to-face meetings with the target. Besides the third-party diligence providers, there are also plenty of internal constituents who benefit from face time with the target. Thankfully, I enjoy traveling to break up the typical office routine every once in a while!
The last pieces of the diligence process are Internal Presentations and Status Updates. As I mentioned before, our team is closest to the details. This makes us best-equipped to distill all of those details into the higher-level particulars. Before taking this role, I definitely didn’t know how many presentations I’d be making! However, I do enjoy using my creative side in between all of the regular, daily financial analysis.
Lastly, when there are No Active Deals our team is pursuing, our team focuses on other initiatives:
One thing we do when there aren’t active deals is Pipeline Development. Our team has a database of companies in our pipeline and we categorize them in stages depending on how much interaction we’ve had with them. We also organize the companies based on how well they align to our company’s M&A strategy. Each quarter, we report these changes to the board of directors.
In an ideal world, we would have time for Industry Research all year round. However, when we get busy with deals, this can be something that gets put on the back burner. So when we don’t have active deals, we like to dive deep into industry reports. And when we don’t have time for extensive research, we at least keep up with industry newsletters and put Google alerts on our pipeline companies.
Our team also helps the company with other Corporate Initiatives when we don’t have active deals, such as assisting with capital raises (convincing investors to invest in our company), financial modeling projects outside of Corporate Development, and other strategic projects.
What are my favorite parts about the role?
Currently, my favorite part of the role is Deal Analysis. I love applying my technical finance skills to determine if a deal makes financial sense. I’ve had roles before where I didn’t feel like my analysis made a real impact. But in this role, I know that any deal our company executes is likely to have a huge financial impact on the business. And without proper financial analysis, decisions could be made based on inaccurate assumptions of success.
Another favorite part about my role is learning about a new industry. When I was a consultant, I would spend a few weeks working on one client and then switch to a new project. I ended up learning a little bit about a lot of industries, but was never an expert. Now, I spend all of my time focusing on one industry and I’ve learned so much. Not everyone has this luxury, but I was able to find a role in an industry I was already interested in, FinTech. I love that the industry is always changing and focused on innovation.
What are my least favorite parts about the role?
My least favorite part about my role is Corporate Politics. I would guess this is a common complaint within any role, but I’ve found politics to be especially demotivating in my position. When I spend so much time analyzing a deal, I tend to get very invested. So when I encounter pushback from internal parties who don’t see the opportunity that I do, I sometimes get frustrated. On the other end of the spectrum, sometimes people above me want to do a deal that doesn’t make financial sense. When I do get frustrated, I try to focus on what I can control, which is my attitude and the quality of my work product.
Another part of my role I sometimes dislike is Pipeline Sourcing. I’m not going to lie, finding new companies to add to the pipeline is tedious work. It involves a lot of research and can be mind-numbing at times. Thankfully, this work is typically done on an ad-hoc basis and we rarely have to spend entire days at a time doing this research. When it does become our main task for the day or week, we make sure to up our caffeine intake ahead of time.
What advice would I give to someone interested in Corporate Development?
First off, do your research. Research the role and the industry. Like I said, you’ll be learning a lot about your industry so it helps if you already have an interest in that field. Talk to as many people as you can to learn about the company because company culture (and company politics) can have a big impact on your experience.
Also, I would suggest getting some relevant deal experience before moving into corporate development. In my experience, it has been helpful to have some technical skills under my belt so that I could start adding value quickly.
In my case, my boss does not have a finance background and he relies on me for that sort of analysis. Without my previous experience, I would be at a disadvantage.
Is the corporate development field welcoming to women?
The short answer is no. The people I interact with on a daily basis (executives, lawyers, consultants, and entrepreneurs) are almost exclusively men. It is hard to feel welcome in a space where there is no one like you. However, I do think my boss is supportive of my career and encourages me to find female mentorship in other departments.
What can be done to increase female leadership in the industry?
This is the eternal question. I don’t pretend to have a “magic bullet” answer here, I think it is going to take a concerted effort from all angles to increase diversity in the industry. First, I think teachers and professors should do more to encourage their female and/or minority students to consider finance careers early on. I also think recruiters need to work harder to seek out diverse talent at all levels. It’s too easy for people to hire people who look like themselves. And when diverse talent is found, nurturing and retaining that talent is key.
If women don’t see other female leaders and aren’t being encouraged to develop their leadership skills, they will likely leave. And lastly, understanding that increasing diversity in the industry is a mass structural and cultural change that will not happen overnight and can’t be fixed quickly with a few “token” hires.
I hope this gives you some insight into what a job in corporate development is like. Even though it can be challenging and frustrating at times, it is definitely my favorite job thus far.