by Brian DeChesare Comments (98)

How to Break Into Corporate Development and Make Bank Without Selling Your Soul

How to Break Into Corporate Development and Make Bank Without Selling Your Soul

While other exit opportunities get more attention – it is hard to pass up moving into PE or hedge funds and buying your own country, after all – corporate development presents many attractive benefits, such as having a life and building value for customers rather than destroying the world.

Today we’re going to speak with a reader who works in corporate development at a pre-IPO tech startup (yes, you would know the name) on the West Coast of the US.

Inside, you’ll learn:

  • What the recruiting process is like for corporate/business development and related fields.
  • What types of people go to work at normal companies, and how to move in from banking/consulting.
  • How recruiting might differ at larger companies and non-tech companies.
  • How to ask your MD to hook you up with a job without getting fired.

Walk Me Through Your Resume

Q: Can you tell us about your background and how you got into corporate development?

A: Sure. I was from a non-target university and worked at a middle-market investment bank after graduation, focusing on Internet companies there.

I was promoted to stay on for a 3rd year, but around that time I was also getting interested in moving on – I stuck around mostly because the economy was in a nosedive and we were just entering a recession at the time.

A few months after that, a company we had worked with before came to my MD and said they were looking for a corporate development Associate, so the MD referred me, I went through the recruiting process there, and had an offer a few weeks later.

I didn’t want to follow the typical PE or HF path, and at this startup I would have a chance to work directly with the CEO and other senior executives and get a much better work-life balance, so I decided to take the offer.

Q: Right, sounds like a good move – you were actually employed throughout an entire recession, which didn’t happen to too many other bankers.

You mentioned “corporate development” just now – terms like “business development,” “corporate strategy,” “corporate development,” and “corporate finance” are lumped in the same category, but how are they different? What do you focus on?

A: It depends on the company, but here’s how I think about the differences:

  • Corporate Development: You focus on M&A and acquiring other companies as well as setting up joint venture deals.
  • Business Development: It’s less about M&A and acquiring companies / stakes of companies and more about setting up partnerships.
  • Corporate Strategy: This is like management consulting, only internal to the company. You focus on planning their big-picture strategy, solving specific operational problems, and competitive analysis.
  • Corporate Finance: This is more like FP&A (Financial Planning & Analysis) – you maintain the company’s finances, plan their budget, and make sure all the right controls are in place.

Of those, corporate development is most similar to banking/PE, and corporate strategy is most similar to consulting; corporate finance is closer to accounting or auditing work and you don’t need to understand deals to do it.

My job is a combination of corporate development, business development, and corporate strategy – since it’s a startup you have to do a bit of everything.

Q: Sounds like a good deal, you get to acquire companies and advise the CEO while avoiding all that boring internal budget stuff. Why did you want to do corporate development rather than PE or HF?

A: A couple reasons:

  1. I wanted to go to a top business school one day and I could set myself apart by doing something other than the typical “track.”
  2. Since I was from a non-target school and didn’t work at a bulge bracket bank, I had almost no chance of getting into the top private equity firms and hedge funds.
  3. Corporate development offered a better lifestyle and more responsibility than what you’d get at a typical PE firm or hedge fund – at a lot of those places you’re still an Excel jockey pulling all-nighters.

Even though it’s a startup, the company itself is very well-known and so I also received the benefit of branding by working there.

The downside is that you don’t get paid as well and bonuses are much lower, so if you’re 100% focused on making as much money as possible, you’re better off following the traditional path.

Recruiting

Q: What’s the recruiting process like for corporate development?

A: As I mentioned, my MD recommended me to the VP of Corporate Development at my company and so I got interviews right away without having to go through a resume screen.

Here’s what I went through:

  1. After my MD recommended me, the VP of Corporate Development called me to chat and find out more about my background.
  2. I did 3 phone interviews before I flew in to meet with the company.
  3. On the interview day itself, I met with 10 people across all divisions at the company, from managers and VPs all the way up to the CEO himself.
  4. Right after meeting in-person, I heard back fairly quickly and accepted the offer.

They focused on my deal experience in interviews but did not go into extremely technical questions as you would get in some IB/PE interviews – they cared more about what the rationale behind each deal was, how I contributed, and the main issues we confronted.

They also asked more general questions such as what companies I admire, what I like about them, and what I thought about the strategies different companies were using.

There were a lot of questions on why corporate development over the typical PE/HF choices, so you need to have a good answer there (hint: don’t say “lifestyle,” say that you want to build value over the long-term and spend your time contributing to a single company’s growth).

They tried to gauge my maturity and see how well I could think independently, because the perception is that banking analysts follow the herd and do what they’re told – which is a big problem at a startup, or any normal company for that matter.

Q: I guess that’s not too difficult if you follow the news and have your own investment / strategy ideas, though.

Are they mostly looking for former bankers and consultants, or can undergraduates and people from different industries break in as well?

A: It’s very rare for undergraduates or people in other industries to get into corporate development, unless they’re already working in a similar role at a similar company.

When the VP of Corporate Development here began searching for someone to fill this position, he was only interested in investment bankers and management consultants.

I guess theoretically an undergraduate might be able to break in if he had previous internships in the field, but if they weren’t even open to it at a startup I doubt it would be easier at Fortune 500 companies.

Q: What about if you start out at the post-MBA level in banking or consulting? Can you still move into corporate development?

A: Honestly I am not 100% certain since our hiring process is more random than what you see at big companies.

But I have seen post-MBA bankers and consultants move in – it’s certainly more possible than getting into PE or HF, since they’re looking for younger candidates.

It’s still more difficult if you already have an MBA and you’re moving into corporate development because you’ll have higher salary expectations, but it is possible – you just have to be more discreet because you don’t exactly want to go around telling senior bankers that you’re leaving.

Q: Right, that makes sense and confirms some of the other stories from readers who completed MBAs.

Are there any differences in resumes compared to banking/PE, and do you need to talk about your deal experience differently?

A: Not really, just use the investment banker applying to buy-side resume template on this site and that works equally well for corporate development jobs.

Talking about deal experience is the same – focus on how you saved money, earned money, or improved a process – and follow everything in the PE interview guide here.

Making the Ask

Q: Most people would be afraid to approach their MD and ask for a recommendation – how did you do it and how much pull did he have?

A: A lot of it depends on your bank and the group you’re in. At most bulge bracket and middle-market banks, they are used to analysts moving on after 2 or 3 years so it’s not awkward at all to bring up the topic.

I would just shoot a quick email to your MD or whichever senior banker knows, likes, and trusts you the most and ask for 5 minutes to chat about the next steps in your career.

When you work with headhunters, specificity helps and they will be able to help you much more effectively if you can say exactly what you’re looking for (e.g. “$500MM – $1B PE funds that invest in Asian real estate assets”). But with MDs and other senior bankers, you shouldn’t be quite as specific – just say generally what you’re looking for (“corporate development”) and see if he knows of anything.

Headhunters have hundreds of opportunities coming in all the time, whereas bankers hear about far fewer job openings – if you’re too specific they might not be able to help you at all.

A lot of analysts are scared to ask senior bankers for buy-side referrals, but it’s silly because senior bankers benefit by helping out their analysts – if they help the analyst get a job at a normal company or PE/HF, their chances of getting business from that firm are higher in the future.

You could even ask MDs if their friends at other firms know of anything – if they like you, they will help you out.

Q: OK, but let’s say you have an MD who’s more like Patrick Bateman. He doesn’t like you, everyone in your group sucks, and it’s an awful work environment. What do you do then? Go to headhunters?

A: No. Unlike private equity and hedge funds, headhunters are extremely rare in corporate development.

I actually talked to some headhunters when I was getting ready to recruit, and no one had any opportunities in corporate development.

At normal companies, recruiting happens via connections, networking, and even via job board postings.

There are far fewer corporate development jobs than PE/HF jobs – to even have a corporate development division, a company has to be fairly large. You don’t see 10-person small businesses recruiting for corporate development roles.

Whereas an analyst or associate would be critical even at a 5-person startup hedge fund, he would be completely useless at a 5-person Internet startup until the company got big enough to make acquisitions.

If your group is not helpful and there’s an awkward culture there, network yourself and contact alumni, friends at other banks and firms, and even former clients to see what’s out there.

If you don’t know anyone, you can go to LinkedIn, Doostang, and other job boards online and apply there – that’s less effective and you shouldn’t spend all day doing it, but sometimes it does work.

Q: What about the timing for all of this? If you start out as an investment banking analyst or associate, when should you start recruiting for corporate development roles?

A: Unlike private equity and hedge fund recruiting, which follows a specific schedule and can finish more than a year in advance of when you start, corporate development recruiting is much more random.

If you’re set on moving on after your 2nd year, you don’t necessarily need to start 18 months in advance as you would for PE – you can wait until you get your first year bonus and then start recruiting in the fall. You definitely want to start 6 months or so in advance at the minimum, but normal companies hire year-round and job openings don’t follow a set schedule.

So I don’t think there’s an “ideal time” to recruit – just make sure you get your bonus before bouncing, and that you start looking well in-advance of when you’ll be leaving.

The Road Not Taken

Q: We’ve been discussing the recruiting process at a pre-IPO tech startup – how do you think it would be different at a much larger company, or a non-tech company?

A: I have a friend who just started in corporate development at a Fortune 500 company – his team there is more like 7-10 people rather than the 2-person team we have here, and he interviewed with everyone on the team but did not speak with executives in other divisions.

They still ask the same types of questions, but interviews may be more technical and formal and your job description would be narrower – at a company with tens of thousands of employees, they don’t need you to do corporate strategy and business development and corporate development.

So your role would be more focused on one area such as just M&A deals, and you wouldn’t be interviewing with the CEO and all the senior executives as I did.

Q: That CEO interview must have been tough – what did he ask you about?

A: It was actually one of my easier interviews, because it was very high-level – similar to interviewing with Managing Directors in banking.

He spent a lot of time asking about my career vision, why I was interested in corporate development rather than investment banking, and what ties I had to the local area.

They wanted people with connections to the city I’m in, because they want you to commit to living here for an extended period – it’s not like being sent overseas with the expectation of returning home after a few months to a year.

He also asked about the main challenges of corporate development compared to investment banking, because they wanted to assess if I understood how growing a company is different from working with clients, finishing, and moving onto new clients.

Q: On that note, let’s say that you have a change of heart and want to go back to making bank or trying to buy bottles with Starwood points. Can you move back into banking or consulting FROM corporate development?

A: I don’t know anyone who has done that – just like moving from PE into banking, it’s rare because the perception is that the exit opportunity is always “better” than where you started, so you need a good story to justify your move.

If you wanted to do that, you might be able to pull it off if you have lengthier experience in banking, went to corporate development for only a year or two, and are OK moving back into IB but receiving a “demotion” for the time you spent away.

Business school may be a better idea if you want to move back into finance or consulting.

Q: That’s your secret plan, right? What are your next steps after this?

A: Wait, don’t we cover that in part 2 of this interview?

Q: Right, I forgot. Need to give everyone reading something to look forward to.

A: Agreed.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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by Brian DeChesare Comments (153)

Why Private Equity?

Why Private Equity?
Man in white and question marks above head..

So you’ve made it through your first 6 months in banking alive. Your waist is bigger from all those tiramisu desserts, but luckily your bank account has gotten even fatter than your stomach.

And your bank account is set to get even fatter in the future – if you can successfully break into private equity.

While you know about the case studies and modeling tests you’ll get and the deals you’ll have to discuss, you haven’t put any thought into the “Why private equity?” question.

Which is a problem – because the last thing PE guys want is a banker or consultant who wants to do PE simply because he/she hates banking or consulting or because everyone else doing it.

Why Does This Matter?

While PE firms want people who are technically proficient (one reason why consultants face a more difficult time getting in, at least in the US), fit is even more important than in banking because firms are an order of magnitude smaller.

Whereas the top banks have tens of thousands to hundreds of thousands of employees, the biggest PE firms in the world only have a few hundred – and there are thousands of PE firms with fewer than 10.

Unlike banks, private equity firms have no need to hire an army of analysts to do grunt work: they’re not creating pitch books and competing for sell-side, buy-side, and financing mandates all day, and if they’re understaffed they can say “no” to potential investments.

The interview process can also be much more of an extended affair in PE, with many firms below the mega-fund level conducting interviews over months rather than the days or weeks you see in banking (the mega-funds do it much more quickly).

As a result, fit is critical and if the Partners doubt your motivations for wanting to do PE, they won’t give you an offer.

What NOT to Say

As with some other interview questions, there’s a temptation to say something stupid in response to “Why private equity?”:

  • “I don’t like the hours in banking, and I want a better lifestyle.”
  • “You can make much more money in PE because you’re an investor rather than an advisor!”
  • “Well… all my friends are doing it!”
  • “I want to control companies rather than taking orders from my MD all day.”

I doubt you would say anything this bad in a real interview, but your actual answer may not be significantly better, either.

All the reasons above are bad answers, for different reasons:

  • While the lifestyle may be a bit better at smaller firms, it’s still far from a 9-5 job. And at mega-funds it’s banking all over again.
  • The pay is also not that much better, especially when you first start. Yes, Steve Schwarzman makes more than any MD in banking but he’s also the Co-Founder of the best-known and oldest PE firm in the world, with 30+ years of experience.
  • If you want to become an investor, you want to demonstrate independent thought as opposed to following what all your friends are doing.
  • You don’t “control” companies as an analyst or associate, you manipulate spreadsheets.

In short, any variant of “I don’t like my current job and PE would be better because [Insert Reason Here]” is bad because it’s too negative.

And anything where you sound like you expect to conquer the world and become a trillionaire also sounds bad because it shows that you don’t have a clue about how the industry works.

PE: The Promised Land? Fact and Fiction…

You might have had dreams of becoming a baller at KKR or Blackstone making $100 million per year, but you should pinch yourself and wake up since that will never happen.

I often group IB and PE together on this site because the work is not much different.

If you don’t like Excel, if you think EBITDA is boring, or if you have no interest in analyzing financial statements or reading about different companies, you should stop right now and do something more creative like advertising instead (I hear Don Draper is hiring…).

There are advantages and your role differs from what you do in banking, but if you fundamentally do not like analyzing and valuing companies, you’re going to hate it.

You do get more responsibility at certain firms, sometimes you’ll get to observe Boards of Directors and sit in on meetings, and you don’t get the stupid fix-the-printer-and-fetch-coffee tasks that you see in banking.

But please do not assume that it’s a night-and-day difference just because a bunch of 22-year old students in your finance club say it is.

Better Answers to “Why PE?”

To answer this question successfully, you need to avoid the clichés above and point out positive differences between PE and banking or between PE and whatever you’re moving in from (consulting, corporate development, etc.).

But you need to do that by highlighting what you’re looking for rather than what you don’t like about your current job.

Examples of solid reasons:

  • You want to work with companies over the long-term instead of just on a single deal.
  • You want to get exposed to the operations of companies and understand all aspects rather than just the financial ones (note: “exposed to,” not “control” or “improve”).
  • You want to contribute to companies’ growth by looking at add-on acquisitions and other expansion opportunities that only an investor would be able to execute.
  • You see yourself as an investor in the long-term, and want to learn all aspects of the process and how to evaluate whether a company can deliver solid returns.

It’s not “wrong” to make a direct comparison between PE and other fields (see the first 2 reasons) but you always want to downplay the negative part.

Ideally, you’ll tie the investments a PE firm makes to what you’ve done previously in school or work:

  • The engineer-turned-banker has a much better story to tell if he recruits for a tech PE firm or growth equity firm and explains how he’s interested in applying his knowledge of IT and finance to investing in IT companies.
  • If you’ve worked in Restructuring or Distressed M&A, you have a much better story if you recruit for a firm that specializes in turnarounds or distressed investments.
  • If you’ve done consulting for restaurants or food chains, you’ll have a much better story to tell when you recruit for a PE firm that specializes in those types of investments, or even in the consumer sector as a whole.
  • If you’ve done corporate development at a media or broadcasting company, you’ll have a much better story to tell when you interview with Bono at Elevation Partners.

The exact reasons depend on your background and where you’ve worked before, but you should combine these points – industry / company / deal focus + investing and working with companies in the long-term – to frame your answer:

  • The banker would talk about how he wants to work with companies over the long-term and learn how to assess whether they can deliver solid returns so that he can become an investor in the future.
  • The consultant would talk about how he wants to learn both the financial and the operational aspects of companies, and how he wants to be involved with decisions that a company implements rather than just recommendations.
  • The corporate development guy/girl would talk about how he/she wants the opportunity to work with all different types of companies in the market rather than just one.

It’s not rocket science: highlight the positive differences between PE and your current field and why you’re interested in pursuing them as you transition into becoming an investor yourself.

If you’re coming from a banking or consulting background, you may get questions about PE vs. other exit opportunities:

Why PE Over VC?

If the PE firm you’re interviewing with asks you this one, say that VC is too far in the operational direction for you, and how you feel it’s more about predicting the next Google/Facebook/Zynga than analytical reasoning.

You prefer PE because it’s a blend of both operations and finance and because you can help Founders with well-established businesses make them even better via solid analysis and research rather than just guesswork.

And, of course, if you’re interviewing for VC you want to take the opposite position and say that PE is all about financial engineering with little value-add and that you can truly help early-stage companies take off because they’re more in need of help than established ones.

Why PE Over Hedge Funds?

This one is harder to answer because there are so many types of hedge funds and the strategies used and the fund sizes can make for completely different experiences.

But the main difference between most hedge funds and most PE firms is that in PE you invest in entire companies (at least, in developed markets) whereas at hedge funds you make much smaller investments and it’s often closer to trading.

You prefer PE because you want to understand how entire businesses work – at a hedge fund you would only get the financial aspect and your skill set would be more limited.

Why PE Over Corporate Development?

This one also has a more subtle distinction: the main difference is that in PE you look at all sorts of different investment opportunities and companies, whereas in corporate development the scope is more limited and you’re always looking at deals and partnerships for your own company.

So that’s exactly what you say in your answer: you want to gain a broader horizon and work in industries and sub-industries outside your own.

You’re more likely to get this type of question if you’re already in a corporate development role and you’re moving into PE – as a banker or consultant it’s not terribly likely unless you say you’re also interviewing for corporate development jobs (um, don’t do that).

Is Any of This True?

I mentioned above that many of the myths about PE (becoming a baller making $100M USD at age 25, buying countries, and surpassing deities) are untrue.

For all these “Why PE” examples I’ve been referencing the mix of operational and financial work and working with companies over the long-haul – so you might rightfully wonder if any of that is true.

It’s somewhere in between: some firms do focus more on add-on acquisitions and operational improvements, whereas others really are just about financial engineering and using as much debt as possible to boost returns.

Even if the firm you’re interviewing with is more focused on finance, though, you will still learn more about operations because you do a ton of due diligence before you actually invest (in banking you mostly just send these documents to other parties).

Unless you start or work at a real company, you’ll never learn the ins and outs of how it “really” works, but you will at least learn more than you would as a banker – so it’s more true than the bad “Why PE?” answers in the beginning.

Why PE?

Hopefully not because you have delusions of grandeur and you’re planning out which beach in Thailand you’ll buy with your first $10 million.

Focus on the positive differences, link your reasons to your background and long-term goals (just like with the “Why investment banking?” question), and don’t fall prey to any of the bad answers about pay or lifestyle.

For Further Reading

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

Break Into Investment Banking

Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews

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