Challenges Facing Corporate Development Officers

When asked what challenges are you facing with your M&A strategies: 39% of corporate development officers responded “sourcing deals,” 35% responded “achieving integration success,” 14% responded “executing cross border deals” and 12% responded “executing divestitures” (source: Ernst & Young, 2008 Business Development Conference - Summary Report). I had the privilege of attending the E&Y conference several months ago that produced the results for this report. The two-day event featured panel discussions on 12 topics critical to corporate development officers (CDO) and several hundred CDO’s were in attendance.


So let’s discuss how some companies are overcoming these challenges beginning with “sourcing.” Companies such as ICF International, a leading professional services firm providing information technology services to the government, maintains a pipeline database of potential targets, records all interactions with prospective acquisition targets, retains key metrics important to ICF on each target and ultimately performs a comparative analysis on the various targets they hope to review in more detail. Additionally, maintaining open lines of communication with potential targets and the investment banking community, and properly managing the deal pipeline, contribute to their successful sourcing of deals. ICF is not alone, many companies have gone beyond spreadsheets and folders when tracking their deal pipeline.

Health insurance giant Aetna Inc. has mastered the art of “achieving integration success.” Early planning and closely managing the integration process with business process management software has allowed them to put their post merger integration process on autopilot. By documenting and vetting the various processes and leveraging technology to track progress, Aetna’s integration management office, stays on course. If delays or issues occur, the team is alerted immediately giving them the necessary information and time to take corrective action. Aetna, like many other world class acquirers, does not fear the post merger integration process since they have taken preparedness to the highest level by leveraging technology to stay on task and put all deal information at their finger tips through the use of deal dashboards.

When “executing cross border deals,” printed circuit board manufacturer Merix Corporation knows the power of collaboration. Collaborating and keeping everyone on the same page is the key to their success when they do deals abroad in places such as China. The time difference is eliminated (figuratively speaking) because the extended deal team collaborates closely through the use of a secure portal that allows them to follow their process templates for executing their cross border transactions. When Merix Corporation acquired Eastern Pacific Circuits in China, Merix retained consulting firm Tatum Partners to help manage the deal process and leveraged secure portal technology to foster collaboration amongst the various teams.

Many companies executing divestitures use virtual data room technology to facilitate the document review and auction process. Beyond the actual sale, the divestiture gets complicated when you actually begin decoupling the sold business unit that is most likely dependent on shared services from the previous parent organization. In essence, the operation of divesting a business unit is the reverse of an acquisition integration. The selling company is not nearly as taxed for performing the divestiture but managing your end of the deal is as important as any acquisition. Companies that make the divestiture as painless as possible for the acquirer leverage similar process templates and best practice playbooks in order to make the handoff as smooth as possible for the acquirer.

Today’s CDO’s face many challenges throughout the M&A lifecycle. CDO’s are directly or indirectly responsible for the success or failure of any M&A transaction involving their company. Top CDO’s have a plan in the form of a vetted M&A playbook and they have the proper mechanisms for executing on their strategy. Whether CDO’s are sourcing deals, performing integrations or divestitures or managing the additional complexities with a cross-border transaction, CDO’s with the proper tools and M&A framework have a distinct strategic advantage for overcoming challenges when executing their company’s M&A strategy.