Introduction to Corporate Development
Corporate development (corp dev) is a function within a company that is responsible for identifying and executing strategic initiatives that drive growth and enhance the value of the organization.
Corp dev teams are involved with analyzing and evaluating potential mergers and acquisitions, joint ventures, partnerships, divestitures, and other strategic opportunities that align with the company's long-term objectives.
Corporate development professionals work closely with other departments within their company. They work closely with sales, customer success/service, and product teams to identify competitors and collaborators in their space. They work with the finance, legal, and operations teams to conduct due diligence, negotiate deals, and integrate newly acquired businesses or partnerships into the organization.
In addition to M&A, corporate development may also involve corporate strategy, business development, and innovation initiatives. The ultimate goal of corporate development is to help the company grow and evolve in a way that creates long-term value for its shareholders and stakeholders.
Corporate Development Functions and Responsibilities
Corporate development M&A typically involves a number of different steps, including the following:
- Strategy development: The corporate development team works with the executive leadership team to identify key strategic objectives and potential growth opportunities. This can include analyzing market trends, assessing competitive threats, and evaluating the company's core competencies.
- Opportunity identification: The corporate development team conducts research and analysis to identify potential acquisition targets, joint venture partners, or other strategic opportunities that align with the company's strategic objectives.
- Due diligence: The corporate development team conducts a thorough analysis of potential targets or partners to assess their financial health, operational capabilities, market position, and strategic fit.
- Negotiation and deal structuring: The corporate development team works with legal and financial advisors to negotiate deal terms and structure the transaction in a way that maximizes value for the company.
- Integration: Once a deal has been completed, the corporate development team is responsible for managing the integration process to ensure a smooth transition and the realization of expected synergies.
Corporate Development Strategies and Processes
How Does Corp Dev Work With a Firm’s Strategic Focus?
Corporate development teams are typically found in larger companies that have a strategic focus on growth and expansion. This can include companies in a wide range of industries, such as:
- Technology: Technology companies, such as Google, Apple, and Microsoft, often have corporate development teams that focus on acquiring new technology, talent, or intellectual property to enhance their product offerings.
- Financial Services: Banks, investment firms, and other financial services companies often have corporate development teams that focus on expanding their service offerings, acquiring new businesses, and exploring new markets.
- Consumer Goods: Consumer goods companies, such as Procter & Gamble, Nestle, and Unilever, often have corporate development teams that focus on acquiring new brands, expanding into new markets, and exploring new product categories.
- Healthcare: Healthcare companies, such as pharmaceuticals, biotech, and medical device companies, often have corporate development teams that focus on acquiring new technology, products, or companies that complement their existing offerings.
- Energy: Energy companies, such as oil and gas companies, often have corporate development teams that focus on exploring new sources of energy, acquiring new assets, and expanding into new markets.
In general, any company that has a focus on growth and expansion can benefit from having a corporate development team.
Executing Corp Dev Strategies
M&A
Larger companies often acquire smaller organizations because they have expertise, clients, or cash flow that could strengthen the acquirer’s business. Other times, companies acquire to help smaller organizations improve their business models and become profitable.
In either case, corporate development teams are responsible for sourcing, negotiating, and executing on the deal. This process involves the following steps:
- Setting the acquisition strategy and M&A search criteria. This is where the team aligns on what they expect their firm will gain from the acquisition, such as expanding their market footprint or strengthening their product.
- Identifying and connecting with targets. Corp dev teams then find potential acquisition targets based on key criteria they’ve defined, which can include profit margins, location, or clientele. Tech-driven platforms like Grata can help corp dev teams discover acquisition targets in any market based on specific filters they set. Dealmakers can save companies of interest to lists to easily track them in Grata’s platform. If they decide they want to reach out to target companies, Grata’s platform provides up-to-date contact information for company executives.
- Due diligence. As the dealmaking process progresses, the acquiring company will thoroughly evaluate the target’s financials to determine if it’s the right fit. During due diligence, the acquirer analyzes comparable transactions in the market to determine the value of the deal. Grata’s Market Research tool provides precise public and private comps data to help dealmakers accurately benchmark the right price for their deal based on relevant transactions in their market.
Partnerships and Joint Ventures
Corporate development teams may also seek out strategic partnerships to bolster their firm’s growth, innovation, and competitive edge. This track is typically less capital-intensive than acquiring a company.
When establishing a strategic partnership, corp dev teams must set clear goals and intended outcomes that align with their firm’s high-level objectives. This way, they can establish partnerships that play on complementary areas of expertise and strong suits.
Divestitures
Another corp dev function that helps firms keep their portfolios capital-efficient is divestitures, also known as divestments. When a firm divests from a company, it removes that company’s assets from its portfolio through a sale, exchange, or closure.
Firms can sell an individual asset, business unit, or the whole company to eliminate redundancies in the business, to increase cash flow, to up resale value, or to ensure stability, among other reasons.
Corporate Development vs. Related Fields
Corp Dev vs. Business Development
Both corporate development and business development (BD) aim to help their firms grow and become more competitive. Both divisions also focus on relationships with other organizations to achieve firm goals.
The main difference between the two is that corporate development focuses on strategy while business development focuses on operations. As discussed above, corp dev teams are responsible for initiatives like M&A and divestitures, while BD teams own expanding relationships through strategic partnerships and clients. Ultimately, business development teams aim to increase sales.
Other BD functions include:
- Client acquisitions, i.e. sales
- Market researchsome text
- Establishing and understanding the target audience through surveys, interviews, and focus groups
- Identifying key market trends to pinpoint business opportunities and customer demand
- Competitive analysis
- Product development some text
- Applying the findings from market research to build out new product capabilities and capture new customer demographics
- Company promotion and marketing
Corporate Development and Corporate Strategy
While corporate development and corporate strategy are related — and sometimes used interchangeably — they are distinct features of an organization.
Corporate strategy refers to a firm’s high-level objectives, which inform how the team makes decisions. Corporate development is how teams go about executing on those goals through actions such as M&A, partnerships, etc.
So to summarize, corporate strategy sets the company’s North Star; corp dev decides how to navigate accordingly.
Tools and Resources for Corporate Development
Grata’s AI-powered, end-to-end dealmaking platform helps corp dev teams streamline their search and find high-potential M&A deals.
Users can quickly discover over 100 million data points across 12 million middle market companies that are extremely difficult to find elsewhere.
Equipped with deep search capabilities and accurate, relevant market comps, corp dev teams can find the right targets to pitch to their firms — before their competitors.
To unlock seamless company search, market research, pipeline management, and more, schedule a Grata demo today.
