How to Break into Corporate Development Straight Out of Undergrad
Do you always believe the consensus?
I’ve become skeptical over time, but there are a few topics where I’m on board:
- No matter what your background is, it’s extremely difficult to get into private equity;
- It’s not a great idea to join a specialized group in banking unless you’re really certain you want to be in that industry; and
- It’s almost impossible to get into corporate development without prior full-time experience.
But then I recently heard from a reader who proved #3 false and broke into corporate development straight out of undergrad, and I started doubting myself all over again.
Here’s the full story:
Defying the Consensus to Break In
Q: So, how did you win this role despite having no full-time work experience?
A: Networking and accidents!
I went to a non-target school and networked my way into several internships, including investment banking and venture capital ones.
I also started two of my own ventures, including a social retail website.
I enjoyed my VC internship at a local fund, but I realized that I would need an MBA or startup/finance experience to get ahead in the industry; it didn’t seem like a great idea to join directly out of undergrad.
So, I started leaning toward IB or PE roles, and I interviewed at a lot of smaller firms in my area for full-time jobs.
I interviewed at a boutique private equity firm and didn’t get an offer, but formed a close relationship with one of the MDs there.
He told me to pursue corporate development because “I had the right personality for it,” as well as enough technical knowledge to do it.
His PE firm had just acquired a high-growth insurance and financial services company that was trying to disrupt the industry, and he referred me to their very small corporate development team (fewer than five people).
I went through interviews there, met everyone, including the CEO (it was a small company), and won an offer.
Q: But your story seems incredible.
Don’t you need full-time deal experience for corporate development?
A: Yes. Almost every entry-level corporate development position requires full-time banking, consulting, or other deal experience.
However, smaller, higher-growth firms, especially ones in industries that are going through upheaval, sometimes want recent graduates for their “fresh mindset” and unbiased views.
These firms are often in unglamorous industries, like insurance, and so they probe you on whether or not you’re truly interested.
They also focus heavily on fit and behavioral questions since the teams are so small (often 3-5 people, which is even smaller than the usual corporate development team).
Q: OK. So, you got in because you had a strong personal referral, several finance internships, experience working on your own startups, and… interest in insurance?
How did you demonstrate that?
A: That was harder to show, but I framed it as “an interest in financial services” since I had worked at a bank and a venture capital firm.
Also, they liked my involvement with the startups and how I had hustled to win customers and market the products – they almost cared about that more than my knowledge of finance.
Q: And what did they ask about in interviews?
A: I went through three rounds of interviews and had to answer a few technical questions about accounting, valuation, and merger models, but they viewed that knowledge as more of a “bonus.”
They also gave me a few brain teasers and case studies and asked about my ideas for interesting companies to acquire and how I thought about deals.
In the last round, I went out to lunch with each person on the team individually and met with the CEO and CFO for one hour each (again, it was a small company).
Those meetings were 100% about fit, and I won an offer after meeting everyone.
Q: You’ve mentioned that this company was “small” a few times, but how big was it?
A 50-person company couldn’t even have a corporate development team, so…
A: It had between 300 and 500 people when I interviewed there.
You’re right that the company has to be in “the sweet spot”: If it’s too small, it won’t have a corporate development team, and if it’s too big, you’ll need full-time experience to get in.
You’ll have the best chance if you can find teams of fewer than five people at companies with a few hundred employees total.
On the Job in Insurance Corporate Development
Q: OK, fair enough. You had mentioned before we started that there’s a lot of M&A activity in the insurance industry right now.
Why has there been so much M&A activity, and how has it impacted your role?
A: The industry is consolidating very quickly, and that has made my company into a “mini-PE fund” of sorts.
In my first six months on the job, I worked on three acquisitions, which would be unusual even at a large company.
We’ve been buying up many regional brokers, so the deals are smaller, but it’s still great experience.
The main M&A drivers are:
- An Abundance of Capital – Insurers and reinsurers have a lot of cash as a result of solid underwriting results and higher capital requirements.
- The Desire for Growth – This one explains why Asian insurance companies have been so active in acquiring U.S. and European firms. In many markets, companies believe that organic growth is limited, so they default to M&A for growth.
- Economies of Scale – Regulations such as Solvency II in Europe and Dodd-Frank in the U.S. have led large insurers to spin off divisions to avoid being classified as “systemically important” (and, therefore, facing a higher regulatory burden).
Q: I see. And have you been working on acquisitions non-stop since you started?
A: When I first started, we focused on internal growth, so I spent around 40% of my time on strategy planning, 20% on corporate restructuring, 20% working with existing investors, and 20% on “business development.”
“Business development” in this context means “Using big data analytics to identify new growth opportunities,” which is unique to the financial services/fintech space.
After my first year on the job, that shifted because M&A activity in the sector picked up.
Currently, I spend around 30% of my time looking for partnerships and acquisitions (“sourcing”), 20% on networking with brokers and smaller firms we might want to acquire (more sourcing), 40% on M&A deal analysis (modeling and due diligence), and 10% on strategy.
But each day is different, which is what makes the role exciting.
If we’re busy with a deal that’s about to close, I’ll spend all my time on that. But I could also spend the day calling smaller companies and learning more about their businesses.
Q: It seems like the culture in corporate development varies widely based on the company – what is yours like?
A: The culture here is relaxed, and everyone focuses on work/life balance even though we’re a “high-growth company” (though not exactly a startup).
Since there are only a few people on our team, there isn’t much hierarchy. The CEO even gets involved with bigger deals and personally leads the team if he can be useful.
On average, I work from 9 AM to 7-8 PM each day, but the hours can spike if we’re in the middle of an active deal.
One difference is that we’re owned by a private equity firm, and so they handle a good amount of the legwork on deals, especially on the financing side.
Also, we often hire investment banks to advise on deals, so the bankers tend to respond to the late-night fire drills.
Q: Yeah, that matches what we’ve heard from others in corporate development at PE-owned portfolio companies.
What are your long-term plans?
A: Although I like my current role, it’s almost impossible to move up without an MBA or more finance experience at a bigger company.
Advancement in corporate development is quite difficult, and it’s even more difficult at a small firm when you join right out of undergrad.
So, I expect that I’ll eventually move into corporate development at a bigger company or into investment banking (possibly in the FIG team since it matches my experience so well).
I want to work in venture capital in the long term, and recruiters do reach out to me about VC roles occasionally, but I’d rather get more deal experience first.
Q: Great. Thanks for your time!
A: My pleasure.
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