Ryan Klinefelter

Hidden River Ventures
Managing Director

Corp Dev as a Service (CDaaS)

Most growing companies want to buy, buy, buy other companies — but sometimes they should rent their M&A team instead

Speaking from 12 years of experience in leading Corporate Development (“Corp. Dev.”) groups in San Francisco, there is no quicker way to grow a company than to buy your competitors or supply chain by implementing a horizontal or vertical M&A strategy. There are some exceptions with astronomical organic growth, but eventually, everyone consolidates — Uber, Apple, Google, Paypal, Square — or gets consolidated.

What the heck is Corp Dev anyways

It is the often-overlooked internal position or small group working alongside the CFO or CEO that leads the mergers & acquisitions, or M&A, at a growing company. Whereas an investment banker will sell your company or help you get sold (sell-side), the Corp. Dev. function at a company helps buy other companies (buy-side) and works with the balance sheet (cash, debt, and equity) to acquire other businesses that fit a company’s corporate strategy. The work is project-based, the projects being M&A deals. The type of work can be very exciting and rewarding, as it intersects investment banking, management consulting, and executive leadership — you need to execute like an investment banker, think and manage like a consultant, and provide long-term value to shareholders like you are part of the C-Suite.

But many leaders at growth companies that are ready to buy other companies are blindly in love with the idea of Corporate Development and M&A when what they really want are instant results — complete a handful of deals and do it fast and now. Especially in 2021, when the growing economy is firing on all cylinders — just wire the money and let’s go, go, go!

FTE for Corp Dev is Cyclical

Recruiting, hiring, and then keeping a Corp. Dev. team hungry and ready can be a challenge even when there is a myriad of companies to acquire. Sometimes when the economy and M&A slows, the Corp. Dev. team and function can morph into a strategy or partnership team, or even turn to operational roles at the company. Personally, I’ve become a Chief Strategy Officer when I “graduated” from my Corp. Dev. role in a company that was cycling from an acquisitive stretch to a strategic planning phase. Often, a Corp. Dev. team ends up departing in three or four years because a company is no longer acquisitive. But why take the retention and cyclical risk — why not use Corporate Development consultants or Corp. Dev. as a Service (CDaaS) and get results now?

When an organization can’t support a long-term Corp. Dev. function, or doesn’t want to invest many years and HR capital into standing up and developing a full-time internal M&A team, there is another option.

There are a small number of former Corp. Dev. leaders and teams that can parachute into a company as a short-term, 60–120 day team, to implement or stand up an M&A strategy, create or manage a deal pipeline, structure a deal, execute and manage a deal team, and even help with an eventual company integration plan. And then when they are done, or you are done with the deal, they move on to their next project. This is the service model for Corporate Development.

CDaaS as a M&A Differentiator

Anything as a service often works because it can be instant, it is binary — on or off, and it is more affordable to rent versus buy in the short term. In 2021, and hopefully, in 2022, M&A markets have been at a record level of activity (financings and exits) and valuation (pricing is high). Speed is a buyer’s differentiator, as well as their instant expertise to navigate and execute against competitive buyers and sellers. When CDaaS is the route you pursue as a company or Board, you get both instant speed and expertise. M&A becomes a weapon and not a tool in that it is something you are actively doing versus actively tinkering with or building.