by Ari Salonen
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This isn’t your typical “how-to” guide. At Midaxo, we talk to Heads of Corporate Development every day. We’ve found that the profile of your average Vice President of Corp Dev runs the gamut from seasoned professionals who are resistant to change, to eager, forward-thinking folks who embrace change. Although no two individuals are alike, we have noticed some consistent pitfalls that all Heads of Corp Dev should avoid. These are the types of behaviors and oversights that get people fired. So, if you hate your job and want to lose it, please follow this guide:
1. Lose Lots of Money
This is obvious and unfortunately happens more often than businesses would prefer. The question is: How does this happen? According to studies conducted by Harvard Business Review, about 70% of acquisitions fail. However, a common thread in many “failed acquisitions” can be tracked back to deal oversight, and an inability to link due diligence findings to integration. Most M&A processes run in silos where the teams sourcing deals have little accountability to what actually happens during the due diligence process. The same is true for due diligence teams who have little accountability to what actually happens during the post-merger integration. This lack of accountability in the handoff between teams is broken, but change appears to be on the horizon. Many new-age VPs of Corp Dev have created one holistic process where findings, issues, and opportunities uncovered early on are captured and communicated all the way through integration.
2. Hire New People without a Solid Process
Hiring is extremely difficult. In my opinion, it’s one of the most challenging parts of any managerial role. In my view, there are three buckets that all corporate development responsibilities fall into:
- “Out of my control” – the market, a target's readiness to sell, etc
- “Mostly controllable” – hiring, forecasting, etc
- “Highly controllable” – your M&A process, tools and technology, etc
You can’t control the market. A number of factors are at play when determining conditions that are either favorable, or unfavorable, and as a Head of Corp Dev, you really cannot control those. You can mostly control hiring, but you will likely make hiring mistakes at some point. No matter what pieces you put in place to objectively rank a candidate, a lot of the decision relies on judgement. When it comes to processes, though, you can absolutely control what is put in place for your team. Having a standardized, repeatable process, which M&A software can facilitate, is crucial to the success of deal teams, and that is something within your direct control! Even if you make a mistake hiring someone that is less competent than you originally thought, it won’t impact the business as much if they have an effective, proven due diligence checklist or post-merger integration checklist to follow.
3. Overlook When to Hold’em, and When to Fold’em
This is a classic mistake in corporate development. Someone gets excited about a potential target early in the deal process, and then fails to see the red flags along the way. Building guardrails and fail-safes into your process is the best way to avoid this common misstep. Decision points need to be formally built into your M&A pipeline management process so that you can recognize when a deal no longer aligns with your strategic goals and initiatives.
4. Fail to Engage ALL Stakeholders in the M&A process
I’ve often heard Heads of Corp Dev compare this part of their job to “herding cats." How do I get people whose day job is XYZ to prioritize the tasks I need them to complete? Your job is to make this process as painless and efficient as possible. By reducing inefficiencies in your process and having standardized M&A playbooks for them to follow, life is easier for everybody involved. Here are a few ways effective Corp Dev leads have improved the engagement of internal and external stakeholders:
- Provide an easy way to complete tasks. If completing a task requires multiple log-ins or tools, then you’re asking too much.
- Implement a consistent cadence of automated (if possible) reminders to complete tasks. This will save you from having to pick up the phone or send yet another gentle reminder email.
- Ask all players involved in a deal to rate your process 1-10 after the deal is finished. Listen to their feedback and suggestions for improvement! Each deal process should improve and become more efficient over time. If you find that deals are not getting easier - or worse, becoming more difficult - then you’re doing something wrong. You can only ask for so many favors before people will start to question you or your team's competence.
Hopefully as you were reading along, you weren’t relating to too much to this reverse guide on what NOT to do. But if you were, that’s ok! Focus on what you can control, and start building a repeatable M&A process playbook today.