As corporations need to anticipate new growth opportunities and diversify into new businesses, many have established Corporate Development departments that focus primarily on strategic transactions such as mergers, acquisitions and joint ventures. Some companies, such as BP and Google, also maintain internal departments that resemble independent private equity and/or venture capital firms. In either case, the goal is to isolate business professionals from the day-to-day functions associated with maintaining a successful enterprise and allow them to focus on pursuing strategic transactions or investments that create value for the firm.
A typical candidate for a Corporate Development position has both industry experience and deal experience. As a result, it is very common for professionals who have spent time at an investment bank to successfully transition to a Corporate Development department. The professional may land a position with an existing client or a corporation in his or her coverage area.
Other departments are populated with professionals from other areas in the corporation. These professionals may not have any deal experience, but have held positions in operations, engineering or other areas that have provided them with a strong understanding of the business. These professionals add tremendous value because they understand the critical issues that need to be addressed when negotiating transactions. In some cases, corporations have such a large in-house Corporate Development team that they do not need to solicit advise from investment banks or other financial advisors. For professionals who are currently working in large corporations, it may be beneficial to take an assignment in its Corporate Development department, as this is a sure way to increase your exposure and gain experience in transactions that have a direct impact on the firm.
As mentioned, BP is an excellent example of a corporation that has a stand-alone division that resembles an independent private equity firm. BP has a division called “Emerging Business & Ventures” that identifies, tests and supports new ventures and businesses. Google is another example of a corporation that houses an internal venture capital fund. “Google Ventures” is Google’s venture capital arm that invests in start-up companies in virtually every sector imaginable. In both cases, in addition to funding, the portfolio companies have access to the tremendous resources accessible to the larger corporation. For professionals who are looking to gain experience in investing in portfolio companies, similar in-house departments may serve as excellent alternatives to the highly sought-after position with private equity and venture capital firms.
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