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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 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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

Corporate Development Functions

Corporate development M&A typically involves a number of different steps, including the following:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

Throughout the entire process, the corporate development team works closely with other departments within the company, such as finance, legal, operations, and marketing, to ensure that the strategic objectives are aligned and the transaction is executed in a way that creates value for the company and its stakeholders.

Benefits of Inorganic Growth

Inorganic growth, the growth achieved through mergers and acquisitions (M&A) or other strategic partnerships, can provide a number of benefits to companies.

Increased market share: By acquiring another company or merging with a competitor, a company can increase its market share and potentially gain a competitive advantage.

Diversification: Inorganic growth can help companies diversify their product offerings, customer base, and revenue streams, reducing their reliance on any one product or market.

Access to new markets: By acquiring a company with a presence in a new geographic or product market, a company can quickly expand its reach and gain access to new customers.

Talent acquisition: Acquiring a company can also provide access to new talent and expertise, which can help drive innovation and growth.

Synergies and cost savings: By merging with another company or acquiring a business, a company may be able to realize cost savings through synergies, such as shared resources or operational efficiencies.

Overall, inorganic growth can be an effective way for companies to quickly expand their business, gain a competitive advantage, and create long-term value for shareholders. But it does come with some risks.

Risks of inorganic growth

While inorganic growth can provide many benefits to companies, there are also several risks that should be considered.

Integration challenges: Mergers and acquisitions can be complex and challenging to integrate, particularly when it comes to aligning cultures, systems, and processes.

Financial risks: Acquiring a company can be expensive, and there is always the risk that the expected financial benefits, such as cost savings and revenue growth, may not materialize as expected.

Dilution of focus: Pursuing inorganic growth opportunities can be a distraction from a company's core business, leading to a loss of focus and potentially eroding the company's competitive position.

Regulatory and legal risks: Mergers and acquisitions can be subject to regulatory and legal challenges, which can lead to delays, additional costs, or even the cancellation of the deal.

Reputation risks: Acquiring a company with a poor reputation or a history of ethical or legal issues can damage the acquiring company's reputation and brand.

For each M&A target, it’s important to ensure that they align with the company's strategic objectives and risk appetite. How? The due diligence process and careful integration planning can help mitigate many of the risks associated with M&A.

Technology Used by Corp Dev Teams

In 2022, Grata interviewed VPs and directors of corp dev teams who’s deal count per year varied from 1-10. We created snapshots of their tech stacks. This list does not include company-wide software like Slack or Microsoft Teams--we've focused specifically on M&A tools that help increase deal flow.

Sourcing Software

  • CB Pro (early stage startups)
  • Grata (middle market)
  • Pitchbook (PE backed)
  • CapitalIQ (public companies)
  • Preqin (fund data)
  • FactSet (public companies)

Pipeline Management Software

  • Salesforce
  • LinkedIn Premium 
  • Midaxo
  • Smartsheet
  • Atlassian 
  • Asana
  • Jira
  • Confluence

How Do Corporate Development Teams Find Deals?

Corporate development teams use a variety of methods to find best targets for their inorganic growth goals. They will collaborate with teams internally and lean on experts outside of their company as well to find the right deals.

  1. Market research: Corporate development teams may conduct market research to identify emerging trends, market opportunities, and potential acquisition targets. This can include analyzing industry reports, tracking competitors, and gathering information on potential targets through online research.
  2. Networking: Corporate development teams may attend industry conferences and events, join industry associations, and network with other professionals in their industry to identify potential acquisition targets and strategic partners.
  3. Investment banks and brokers: Investment banks and brokers often have knowledge of companies that are interested in selling or seeking investment, and may provide leads to corporate development teams.
  4. Inbound inquiries: Companies interested in being acquired may approach the corporate development team directly through inquiries or proposals.
  5. Business brokers: Corporate development teams may work with business brokers who specialize in facilitating mergers and acquisitions to identify potential acquisition targets.
  6. Proprietary sourcing: Some corporate development teams may develop their own proprietary deal sourcing strategies, such as building relationships with early-stage companies, identifying targets through their own industry expertise, or using a deal sourcing platform to find companies within their thesis that are not for sale currently.

Increase Corp Dev Deal Flow

To build an effective proprietary deal flow, you need accurate and extensive private company data. Here at Grata, our mission revolves around giving dealmakers a competitive edge. Market-wide visibility is a few short clicks away. 

Grata is a deal sourcing platform that helps you find, research, and engage with middle market companies built for innovative corp devs who want a competitive edge in finding previously undiscoverable companies.

Unlike company databases, Grata doesn’t just give you flat information. Grata is an intuitive, dynamic search engine powered by ML and NLP technology that provides the most comprehensive, up-to-date information you need to get deals done.

To learn how Grata can help you close more deals and increase your returns in half the time, request a demo today.

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