Last month, I wrote an article called “When It Comes to Tech, Corporate Development Teams Are Playing Catch Up.” Consider this Part 2 in an epic saga.
PE firms continue to lead the way on M&A technology, but there are corporate development leaders rising to the challenge. And thanks to our friends at Office Hours, a research tool connecting professionals through on-demand, expert interviews, we had the chance to talk to some of the pioneers of corporate dealmaking.
Through our interviews, we quickly discovered that a corp dev professional’s greatest fear is being approached by an executive or board member inquiring about a company they’ve never heard of: the dreaded, “Hey, we saw Company X acquired Company Y. Why weren’t we bidding on it?”
Quelling this fear requires extensive knowledge of the market and the right tools in the sourcing toolkit. The most common deal origination tools mentioned in our interviews were Pitchbook, Grata, Crunchbase, LinkedIn Pro and CapIQ.
For the large teams, consulting becomes a bigger part of the budget. The toolkit expanded to include Gartner, 451 Research, Forrester, GLG and Coleman Research.
All the corp dev experts we interviewed used some combination of these resources, but we found technology use was expanding to solve three major problems felt by corp dev teams:
1. Making the most of limited resources. George Gould, senior vice president of corporate development and partner alliances at Azul, initially thought sourcing would require a dedicated person—someone to take lists of 800 or more companies and manually apply them to the organization’s ideal company profile.
But with Grata, Gould didn’t need another employee. The process that he anticipated taking days took hours instead.
“You need to be diligent in refining your targeted list, which requires continuous filtering and refinement at the top of your sourcing funnel. Vetting new companies can impact our greater organization from our executive team to our product managers. Sourcing efficiency is everything,” says Gould.
2. Maintaining a single source of truth. When you’re no longer a team of one, logging the stages of each deal’s life cycle becomes essential—a single source of truth that answers: Who’s been contacted? Who signed an NDA? Which deals fell through and why?
Sixty percent of corp dev teams are tracking this through Excel, but a growing number of teams can no longer ignore that Excel doesn’t offer reporting (on an individual and team level) or automatic notifications.
To solve this problem, teams have leaned on non-industry-specific project management tools like Smartsheet or Airtable, or more expensive, but M&A-specific, deal flow trackers like Midaxo.
From our interviews, there was no clear answer as to which platform was most helpful to corp dev project management. One of the corp dev vice presidents at a large tech company put it best: “Your tool is only as good as your team. The biggest problem with tech tools is the data entry. There has to be a carrot-and-stick approach to new technology to make sure you’re getting the most out of it.”
3. Establishing communication between departments. Maintaining communication between corp dev teams and their counterparts in sales, product and customer service is crucial. They are the boots on the ground, hearing about the organization’s competitors and collaborators directly from clients. For a small team, the occasional Slack message or email from a coworker is manageable; for larger teams, it is much more common to see a Google, Smartsheet or Asana form where coworkers submit company recommendations in a more structured way.
The forms vary in detail: Some are as simple as “Company Name” and “Company URL”; others are more in-depth, including questions around why the suggested company fits into the parent company’s overall strategy.
Having this kind of form allows all internal requests to live in one place where they can quickly be found, prioritized and deduplicated against the organization’s sourcing efforts.
Shreyans Parekh, director of strategic initiatives and corporate development at a Fortune 200 commercial real estate firm, strives to strike the right balance between two extremes he’s seen during his years of working in investment banking and corporate development: “One side is too much technology, with no strategy for how to use it,” he says. “The other, a resourceful team with too little technology to analyze the larger market picture.”
Here’s how to walk the line:
Break down your budget by deal stage. Understand where you’re spending the most and how it’s contributing to your deal flow.
Give your entire team a voice. Take a collaborative approach to adopting new technology. Develop processes for evaluating tools and allowing feedback to come from the bottom-up as well as top-down.
Excel spreadsheets can’t convey all the information corp dev teams need to make informed decisions. M&A tech is no longer just nice to have, and the leaders embracing it will come out on top.
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