How to Break into Corporate Development at a Fortune 100 Company without Investment Banking Experience
How much can you ignore the requirements for a job?
Based on this site, your answer might be: “A lot; look at all those stories of students from non-target schools getting into investment banking!”
It’s true that many readers have pounded the pavement into investment banking, but those stories were all for entry-level roles.
Is it possible to do the same thing for a role like corporate development that normally “requires” previous full-time M&A experience?
The answer is yes, as our reader today can tell you:
How to Recruit for Investment Banking and End Up in Corporate Development
Q: Can you summarize your story?
A: Sure! I am originally from “an Asian country” and moved to the U.S. for high school.
I went to a target university, majored in a STEM subject, and was drawn to option pricing and statistics.
I liked some of it, but I felt limited because my desk was all about the pure numbers and algorithms; I wanted to use math in a broader context.
I won a full-time return offer from my bank but decided to turn it down and move to a Fortune 100 company doing data science for my full-time role instead.
I still worked with numbers, but the scope was broader: We used math to predict customer behavior and the market segments to target with certain offers.
That was closer to what I wanted, but I still felt detached from the decision-making process at the firm.
My roommate at the time was an ex-bulge-bracket banker who had left for PE, and I became interested in M&A by hearing about it from him all the time.
I knew I might have too much experience to be an Analyst and not enough to be an Associate, and that I clearly missed the bus for the standard recruiting schedule.
But I decided to go through a hardcore networking effort to get into banking anyway. I knew it would be an uphill battle.
Despite my unusual profile, I managed to win interviews at a couple of banks and made it through several rounds, but I did not win offers.
Then, a corporate development role opened up at my company, and I applied for that, interviewed with the group, and won an offer there.
Q: OK. I’m going to dig into each part of that story, but let’s start with the IB recruiting process.
How did you approach it, and why did you not receive offers?
A: When I started, I gave myself six months to learn everything.
I completed several modeling courses, including yours, in three months, and learned everything from accounting through LBO models in that time.
I made sure I could do all the work in my sleep, and then I started networking, reaching out to alumni, family, friends, and everyone imaginable.
I received a terrible response rate at first: Maybe one response for every 100 calls or emails.
But my tactics improved, and after 4-5 months, I had met with over 50 bankers for informational interviews.
I also won interviews at several elite-boutique and middle-market banks, and I often made it through 3-4 rounds before dropping off.
The main problems were:
- They didn’t know where to put me since I had ~2 years of full-time experience.
- They didn’t care about how much financial modeling I had learned on my own.
- Some banks weren’t willing to sponsor my work visa.
Q: OK. And then this corporate development role just fell into your lap?
A: I saw an internal posting for it, and I did a bit of networking with people in the group to learn more about it before I applied.
For these roles, you always have a big advantage as an internal candidate – even if you don’t have the exact experience they want.
Q: And what was the corporate development team looking for in candidates?
A: Most people (maybe ~80%) come from investment banking; 10% come from corporate development at other companies, and another 10% are “weird cases” like me who get in randomly.
Many internal candidates apply to corporate development roles but are horribly prepared and know nothing about M&A.
Since I had already been through the recruiting process at multiple banks, I could explain M&A deals and financial modeling in-depth, and I knew what the role would entail.
Corporate development teams want candidates who:
- Have deal experience working on joint ventures and acquisitions.
- Know about the industry and the specific company in-depth so that they can come up with meaningful acquisition and investment ideas.
- Can run deals by themselves.
Q: But how did you meet those criteria?
You had no deal experience, and you had never run a deal by yourself.
A: No, but I had run projects across the entire company before.
Data science ties into all the other departments, so I said, “While I may not have run M&A deals before, I’ve done something similar with Projects X, Y, and Z, where I had to disseminate information, work with senior executives, and speak with all departments at the company to win project approval.”
I argued that “deals” were similar to the “projects” I had been working on; in both, you act as the central communicator.
And since I had performed well at the company already, the corporate development team had more faith in my technical skills than banks.
Q: OK. What about the process itself?
A: I spoke with two Associates, three VPs, and one MD, all on the same day. It took about 3-4 hours total.
We have a pretty big deal team – over 15 people – since this is a Fortune 100 company. So, I spoke with ~1/3 of the team during interviews.
They asked me:
- Technical questions similar to the ones you might receive in IB interviews – depending on the interviewer.
- Pitches for acquisition or joint-venture ideas for the company, which took a lot of time to research.
- Questions about why I wanted to move into corporate development and how much I knew about the deal process.
They also gave me a 30-minute written test at the end, but it was pretty simple: They showed me a potential acquisition target, presented the synergies, and asked how much I would recommend paying for the company.
If you’ve ever built a merger model or valuation, it was not difficult to answer.
On the Job: Data Scientist to Corporate Developer
Q: You make it sound so easy… but let’s move on.
You work at a fairly large company – bigger than the ones covered in previous interviews.
How does that affect the job?
A: The biggest difference is that I spend almost no time on sourcing.
But it’s not just me; even the VPs and MDs in the group barely spend any time sourcing because the C-level executives are responsible for that.
The senior executives have a good idea of each group’s needs from their day-to-day business, or an operating agreement they already have, so they’ll speak with their industry contacts, introduce companies to us, and see what deals we can negotiate.
Also, bankers come in to pitch deals all the time. Sometimes it even gets repetitive since many banks present the same companies over and over again.
Q: I see. What is your time split for different tasks like?
A: I spend about 25-30% of my time on financial modeling: Valuation, merger models, LBO valuation, and anything else that might be relevant, such as liquidation valuation for divestitures.
On many deals, we skip bankers altogether since our internal team is relatively large and consists of former bankers.
I spend another 25-30% of my time on industry landscaping: Creating “market maps” of companies operating in different areas and researching which markets we want to enter.
Finally, I spend around 40-50% of my time on deal execution: Everything from divestitures and carve-outs to acquisitions large and small.
We focus a bit more on M&A deals than joint ventures because our company is large and someone always wants to buy or sell something.
At smaller companies, you might spend less time on deal execution and more time on sourcing since there’s less inbound deal flow.
Q: OK. You’re also in a “highly regulated industry,” though I don’t want to identify it by name.
Do the number and scope of regulations make a difference in your activities?
We have to be careful with the percentage of revenue that comes from different activities, as well as the countries we’re operating in and the activities of our subsidiaries there.
Sometimes we can’t acquire entire companies because of regulatory restrictions, so the deals become minority-stake investments instead.
We even hire external counsel to perform due diligence for us and make sure we comply with all the local and international regulations.
The regulatory environment also makes it harder to close deals because some targets that would otherwise be interested get scared off in the middle of due diligence.
As a result, we end up acquiring many companies that are close to our core business rather than companies in new markets that we want to enter.
Q: Thanks for that explanation. Regulations are tough.
How difficult is it to advance at such a large company?
A: If you want to stay in corporate development for your entire career, it’s hard.
You can go from Associate to VP to lower-level Director without too much trouble, but reaching the Partner or MD level is a different story.
One guy has been here for 15 years, and some team members think he’ll stay for another 15 years.
The problem is that the hours are very manageable relative to banking (~60 hours per week during quieter times, with bouts of sprints during live deals), and the pay is still decent for those hours.
Also, colleagues are more flexible and understanding of non-work obligations.
As a result, a lot of ex-bankers who want families but still like M&A come here and have no reason to leave.
If you want to advance, it’s easier to transfer to a different division and move up the ladder there.
Q: Yeah, that matches almost every other account I’ve heard.
On that note, what is the compensation like, and how long does it take to reach the higher levels?
A: Associates earn base salaries of $100K – $120K, with bonuses of 20-30% of that.
So, your likely all-in compensation will be $120K – $160K at the Associate level.
VPs earn base salaries of $150K with bonuses worth 35-50% of that, for total compensation of $200K – $225K.
At the Director level, right above that, team members earn more like $350K+ all-in.
But you’ll need 10+ years of total work experience to reach that level if you start as an Associate, and even more than that to reach the MD or Partner level.
(NOTE: These figures are based on a Fortune 100 company in a major financial center; compensation is likely lower at smaller companies and in smaller cities.)
(NOTE 2: All compensation figures as of 2017.)
Q: From your description, I take it that you’re not planning to stay there for the long term.
A: Right. I like this role a lot, but the advancement opportunities don’t appeal to me.
I’ve never seen anyone leave voluntarily, which is good for company culture but bad if you want to move up.
A lot of headhunters have contacted me about corporate development roles elsewhere, but I would only leave for an IB or PE role.
I plan to recruit for those roles from my current position, and if that doesn’t work, I’ll go for an MBA and use on-campus recruiting at business school instead.
Q: Yeah, that seems to be a common plan.
How would you summarize the trade-offs of corporate development at large companies like yours?
A: There’s great work/life balance, interesting work, good compensation, and motivated people all around you.
It’s good if you’re career-oriented but you want a bit more of a relaxed life, i.e. you want to do something fun on weekends occasionally.
Some people here take an entire month of vacation over the course of a year, which would be unheard of in other finance roles in the U.S.
And senior people often leave by 7 or 8 PM, or even earlier, and then work from home.
Corporate development is also good if you want to stay at one company and advance up the ladder in different divisions since we have frequent access to the most senior management.
It may not always be top-of-the-house, but the senior folks will help you to transfer almost anywhere within the company, often with a promotion opportunity.
The main downside is the slowness of advancement if you stay in the group.
Also, if your main goal is the highest compensation possible, you’ll earn more in private equity, hedge funds, and investment banking.
I would not recommend this role for undergraduates or recent graduates.
We’ve hired a few Analysts out of university before, but they didn’t work out too well.
Especially at a big company, you need experience coordinating different groups and extracting information from key individuals.
If you haven’t done that on a larger scale, corporate development will be tough.
Finally, if you’re serious about working in the finance industry, the “standard route” – starting out in investment banking – will give you more structured training and a better resume for the typical exit opportunities.
Q: Great. Thanks for that summary, and for your time.
A: My pleasure. I hope your readers find this helpful!
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