Most large companies have a dedicated corporate development officer (CDO), an executive charged with maintaining a vigilant and disciplined eye on a broad menu of strategic opportunities and initiatives. The purpose? To identify, analyze, present, and as needed, execute on strategic initiatives designed to build company value.
CDOs are tasked with viewing the world differently than the CEO, who need the CDO’s rigorous and objective eye, skill set, and fresh insight to generate future growth and increased company value. By allowing other executives to focus on the day-to-day, especially in the middle of a complicated transaction, the CDO skill set is leveraged to address the specific challenges associated with making sure the transaction is negotiated, structured and closes as anticipated.
If you’re a mid- to small-market business, you need a CDO, but probably not on a full-time basis. By outsourcing the function on an “as needed basis”, you gain forward-thinking objectivity and innovation that can help you remain competitive and deliver attractive returns on capital for your stakeholders—affordably. It’s time for companies of every size to embrace the notion of corporate development.
Once the Board agrees on an initiative, the CDO typically takes the lead (tailored to the skill set resident within the organization) in executing it and achieving the desired outcome without disrupting other functional areas of your business. This requires a broad and seasoned skillset that I like to describe as “multi-lingual” business expertise, not bounded by any single discipline.
Culture is Significant
It is both awkward and difficult to approach competitors regarding either selling or buying. An in-house department in small and mid-sized companies is typically expensive and is rarely equipped to serve as objectively as an outsourced CDO. I adapt my involvement around the skill set and bandwidth resident in any specific company.
Together, we chart a development strategy and course and I own the process while collaborating with the talent available in each unique client relationship.
Unlike most merger and acquisition firms that only handle the sale or divestiture of a company, I include a culture and fit analysis; given the relationship nature of my engagements, I participate in the longer-term execution of the integration as needed and where needed.
Menu of Options to Enhance Value
Is it recruiting or adjusting the members of your Board? Changing the executives on the management team? New financing relationships or capitalization or equity investment? Acquisition or divestiture of company divisions?
The menus of options all have one common dimension: enhancing company value over time.
That is Corporate Development.
I was drafted into a client company several years ago to manage the purchase of assets owned within a geographic region by a mega-large international company that had been a fierce competitor of my client. The competitive battle spanned four years. In the wake, much organizational anguish and depressed operating results were left.
My client persevered and ultimately won with the buy-out flag offered by the larger company. They were strong entrepreneurs that artfully and successfully competed with the larger company to force all to the negotiation table.