What is Corporate Development?

1. What is Corporate Development?

Currently, the demand for corporate development is higher than ever due to its important impacts on business performance. It evaluates key internal linkages within a company, potential projects, along with associated risks and responsibilities. Meanwhile, the formation of joint ventures and M&A deals have the benefit of reducing risks related to being the sole wolf as well as reducing investment burdens and failing rates. Without corporate development, the company finds it increasingly difficult to consider an M&A deal. 

The scope of work varies depending on different companies. For example, if you join a company in Fortune 100, you will spend most of your time on M&A deals. You will hardly work on deal sourcing or strategic work streams since deal sourcing at large companies is difficult, which junior levels can’t handle. However, working at smaller firms gives you more opportunities to get involved in sourcing profitable deals and other strategic work. 

Differences in scales and demands determine the corporate development team structures within companies. Typically, there will be three models:

2. What Does Corporate Development Do?

Typically, there are five main responsibilities of a corporate development team: deal sourcing, deal analysis, financial modeling & valuation, deal integration, and miscellaneous tasks.

2.1. Deal sourcing

Deal sourcing refers to discovering, evaluating, and selecting potential investment opportunities in the market and seeing who wants to do a deal, including generating leads, pitching buyers, and maintaining relationships with the intermediaries. The work streams include:

• Identify new M&A opportunities
• Screen potential M&A targets through idea generation, industry research and screening of inbounds
• Evaluate potential acquisition/partner targets for strategic and financial fit with a focus on market size, competitive landscape and valuations

Juniors will have less exposure to deal sourcing workstreams at big firms, since it’s difficult. You are much likely to do deal sourcing at smaller firms where deals are smaller and simpler. 

2.2. Deal analysis

Deal analysis is to analyse markets and potential partner’s customer and supplier relationships and agreements by doing investigations, auditing and reviewing financial records before entering into a proposed transaction with another party, however, excluding the financial modeling & valuation. The work includes: 

• Perform due diligence and all related workstreams
• Prepare documents utilized to deliver regular updates to leadership teams regarding deal progress, key issues/risks, and next steps

2.3. Financial modeling & valuation

financial modeling & valuation allows firms to project revenue, expenses, cash flow, and value the firm, estimating the worth of that business, hence making financial decisions. It includes:

• Distil large data sets and key assumptions into dynamic financial models
• Develop and maintain financial models supporting corporate development initiatives
• Provide valuation recommendations based on financial returns analysis (e.g., DCF, IRR, ROIC) 
• Update and maintain financial models based on new facts or changes in underlying assumptions

To learn about the fundamentals of Financial Modeling & Valuation and hands-on practice with Excel or Spreadsheet, check out our Financial Modeling Program.

2.4. Deal integration

Deal integration means integrating the acquired company’s system with your company’s system to your company, reporting financial performance, and connecting key people to ensure the acquisition does well. Specifically, you have to:

• Coordinate with cross-functional internal stakeholders, ensuring alignment across the enterprise
• Develop and socialize key deal summaries and integration/separation considerations
• Liaise with internal stakeholders with respect to interpreting transaction terms
• Actively participate in integration planning, ensuring proper knowledge transfer from deal/partnership team to key internal stakeholders
• Monitor financial performance of acquired assets and new partnerships, including key performance indicators and a qualitative assessment of strategic factors
• Engage in analyses around whether to buy/build/partner in pursuit of a given strategic objective

2.5. Miscellaneous tasks

Miscellaneous tasks are other work streams not directly involved in deal management, but help to ensure the transactions are well executed.

• Develop C-Suite/Board level presentations highlighting the progress of key corporate development initiatives
• Prepare documents utilized to provide regular corporate development pipeline updates to vertical leaders, COO/CEO, and Board
• Prepare documents and recommendations in support of investment committee meetings
• Doing internal meetings/calls with other divisions within the company

Depending on different types of the company, the time allocation for each role varies.

3. Corporate Development Career Path and Progression

The corporate development career path starts at the analyst, then progresses to associate, to manager, to director. Highest on the hierarchy is vice president or head of CD. It takes around 7 – 10 years to move up from analyst to head of CD. Most CD associates are ex-investment bankers, who can be promoted to director within 5 – 7 years given excellent performance.   

At smaller companies, the structure may be cut down into Associate – Manager – Director. While at larger corporations, more management levels may be needed with Executive VP or Senior VP.

The turnover rate in the corporate development division is low, so you should expect the career progression will be time-consuming, taking at least 5-7 years to reach Director level if you are lucky enough. 

If you desire to reach a higher level, lateral transferring to other functions within the company is highly recommended, for example, the marketing product function. Meanwhile, it is difficult to become a CFO or CEO as a corporate development professional, because these C-level positions require broader skill sets and leadership.

4. Corporate Development Salary – 2021 Updated

Corporate development professionals earn a decent amount of compensation at $100,000 on average. As the salaries and bonuses vary widely at different companies and titles, the table below only represents the compensation rate at large companies in a major financial centre.

Corporate development does offer stock-based compensation, including 4 types: stock grants (designed to keep employees working for the company for a period of time), stock options (giving employees the right to buy/sell a stock at an agreed-upon price and date), stock awards (given as compensation but have to wait for a certain period before fully own), and restricted stock units (similar to normal stock grants but with restrictions on transferring/selling).

However, there are some points needed to clarify:

• Compared to Investment Banking, the corporate development director level earns the same as an IB Associate after just 3-4 years into the industry. Obviously, you can see: greater effort for the same amount of pay. 
• If you do not work in big city centres, these numbers will be lower.
• Stock-based compensation contributes significantly to those figures, so be sure to understand the equity you’re getting and the company’s valuation.

If you want to learn more about salaries in different industries, referencing our articles: Investment Banking Salary, Private Equity Salary, Hedge Fund Salary.

5. Corporate Development Work/Life Balance

Corporate development offers a good work-life balance within 50-60 hours per week. With their crunch-culture of 100 hours/week, corporate development is
quite attractive as they do a similar scope of work but much fewer hours. In deals weeks, the working hours can extend up to 80 hours, but will not go any higher than that. Of course, this number can vary depending on job titles, office geography, and how well they can utilize given resources.

The working culture is also more relaxed with less pressure, less grunt work, and a more diverse and sociable environment. Working in corporate development division, you have no pressure to do deals constantly like those investment bankers or equity managers; less grunt work as you will create more simple materials for internal meetings instead of 200-slide pitchbooks; and more diverse working environment as there will be a wide range of age and varied backgrounds in terms of education and work experience.

6. Why Corporate Development?

Corporate development would be an excellent career if you prefer a good work-life balance with reasonable compensation, a wide variety of work and a relaxed culture, and want to pursue a financial career without the required traditional background (i.e. major in Finance or Business). The work in corporate development is singularly focused on building a company over the long term and includes exposure to group heads and CEOs, which is great for networking, referencing, and even business school.

However, several factors should be considered before choosing corporate development, such as less deal ownership, a small industry with relatively few job openings, and slow career advancement. If none of those above are your concerns, then corporate development is a great option.

7. How to Get Into Corporate Development?

7.1. Two common pathways to corporate development

Joining corporate development as an undergraduate is quite out of reach. There will be several challenges as you barely find on-campus recruiting or networking sessions, and interns are not common for this role. 

The best pathway is to join a corporate development company training program upon your graduation, or lateral transferring within the company with referrals from senior staff in your group. Corporate development recruiting is more like off-cycle recruiting: no specific timeline and initial interviews often come from internal recruiting or referrals.

• The recruiting schedule is quite random, and successful applicants can start their job in corporate development after several months
• Corporate development prefers internal candidates within their company or those with referrals from the team. That’s why headhunters won’t have much impact on corporate development recruiting like private equity.

7.2. Requirements to work in corporate development

• Financial skills: An entry analyst in corporate development must have at least 1-3 years of experience in a top-tier M&A consulting firm, investment bank, private equity or within an equivalent corporate development group. Specifically, direct experience with executing corporate development initiatives (e.g., acquisitions, divestitures, joint ventures, partnerships) and conducting a hands-on analysis of target companies, including developing detailed financial models from scratch is a big plus.
• Analysing skills: Superior quantitative and qualitative analytical skills combined with outstanding project management abilities, ability to apply good judgment and sense as appropriate are required of all corporate development analysts.
• Business intuition: Since corporate development focus is to develop business strategies on growth, strong business acumen and first-principles thinking is required to understand the overall competitive landscape as well as tackle business problems.
• Office skills: Proficient in Excel, Powerpoint, and secondary research skills are key to handling numerous Excel spreadsheets and doing Capital IQ, PitchBook.

7.3. Corporate development recruitment process

The recruiting process goes from Resume to Initial Interview and Final Interview. However, to maximise the acceptance rate, the preparation to get into corporate development will include 4 steps:

• Step 1: Network and find mentors
• Step 2: Have an internship or relevant accounting/finance experience
• Step 3: Prepare Resume & Cover Letter
• Step 4: Pass the Initial Interview & Final Interview 

7.4. Network for corporate development offer

As corporate development recruiting relies majorly on internal candidates and referrals, networking is always the cannot-go-without part to successfully win the position. There are two common ways to network:

• Networking through the alumni community: Usually the most effective method. You start with acquaintances who are alumni of your university or peers from your banking clubs, contact them and ask for mentorship and referrals.

• Cold-emailing/Cold-calling: You find them through LinkedIn or similar means, send emails to establish contact and request for an informational interview. It involves gathering information about a particular company or career path from people who are already working in the field. The ultimate goal is to impress the information interviewee enough that he or she will offer you an internship or a job, or, at least, connect you with others at the company whom you can talk to and try to impress. Most of the time, you will be rejected, but if you play the cards right, you will get someone on your side.

The sooner you start networking, the better. Ideally, it should be at least 6 – 12 months before the application begins. We have a comprehensive networking guide that can help do wonders to your relationship settings, please check it out!

7.5. Corporate development resume

Sell yourself with a paper, through two factors:

• Record of past achievements: They could be your GPA/ test scores, awards and honours, leadership experience, high-profile work experiences.
• Passion for Accounting/Finance: This can be shown through your chosen major, extra coursework, past internships, etc.

However, many of you out there still have not figured out a way to differentiate yourself from the heavy crowd with many common mistakes made. We are here to help. Check out our resume to make you shine with your dream employers.

7.6. Corporate development interview

This is the toughest element of the recruitment process, as the recruiter now looks at you in a more detailed way. You and the company now also have the chance to understand each other better, to know whether you two are a match!

The interview process may include multiple rounds, depending on the company and your aimed position, but can be divided into 2 solid rounds: Initial Interview and Final Interview.

• Initial Interview is a one-hour phone interview you take if you win a referral to a corporate development team, testing your finance-related knowledge experience, including your deal experience, technical questions, industry knowledge and ideas for acquisitions and joint ventures, case studies and modeling. Your work is to keep abreast of news about markets, imminent IPO, bond issuances, and mergers & acquisitions on a daily basis. 
• Final Interview is more like a Fit/Behavioural Interview, assessing how you fit the company and the role. The questions always surround: (1) Walk me through your resume (introduce a little bit about yourself), (2) Your strengths and weaknesses, (3) Your achievements and failures, (4) Future plan and why corporate development. The tips are: craft your own stories and back them up with data-driven evidence.

To win that corporate development interview, let us help you with our comprehensive guide on banking interview, including both fit interview and technical interview preparation.