Navigating the Corp Dev and M&A Landscape in Private Equity: Similarities and Differences Between These Roles

by: Kay Francoeur

 

In practice, “Corp Dev” and “M&A” are titles that are used more or less interchangeably. You might also hear the term “Business Development” used to describe a role with similar responsibilities, though this title comes with stronger sales connotations than the other two. While these terms are interrelated and the specific distinctions among them may vary from firm to firm, it is useful to parse their differences by bucketing where each fall in the three main stages of the deals process: deals sourcing, due diligence, and integration.

 

Corp dev and business dev roles tend to focus more on the earlier stages of the deals process, such as identifying potential acquisitions. They are critical to the deals sourcing stage, using a lot of market research, due diligence, and networking, among other things, to find targets that meet a carefully defined criteria and successfully negotiate their acquisition.

 

M&A roles, in contrast, tend to focus more on the latter stages of the deals process. M&A professionals provide transaction support that really gets into the financial weeds to assist the purchase (including conducting tons of due diligence, tech analysis, etc.) and especially integration support, which is one of the most crucial parts of the deals process. Post-merger integration (PMI) is critical to the success of a deal: about half of M&A deals fail or underperform due to poor execution at the PMI stage.

 

We can also compare these roles by examining their relative scope. Corp dev roles tend to be broader. These roles frequently encompass M&A, and it’s not uncommon for corp dev specialists to mostly do M&A related activities if that’s the core strategy for the business. But corp dev also includes broader responsibilities such as overseeing divestitures, carve outs, and joint ventures.

 

Another useful way of differentiating these roles would be to examine how their functions vary somewhat across companies of different sizes. Corp Dev roles – especially at larger companies – generally see much slower volume (perhaps 1-3 deals per year), whereas PE add-ons tend to be more frequent because of the smaller scale of those transactions. As such, these M&A roles are going to involve more on the sourcing and transaction side. The corp dev roles, in contrast, are going to spend more effort making sure that the acquisitions that have gone through are really working, since there is far more at stake with each of these deals.

 

Given the interrelated nature of corp dev and M&A in the deals process, it’s unsurprising that candidates who succeed in these roles share similar backgrounds and functional expertise, for example a strong understanding of financial analysis and modeling.

 

 

In our next installment of this series – coming tomorrow – we’ll be discussing core attributes of ideal candidates and some common pathways to getting hired in corp dev and M&A functions in private equity.

 

Be sure to check out this video, where we discuss differences between these roles and why demand for Corp Dev and M&A roles is on the rise in private equity.

 

 

Kay Francoeur is a Project Manager at ECA Partners. She can be reached at [email protected]

 

 

Kay Francoeur
Project Manager

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