These are strange times for corporate development teams. Profit and cash flows are both historically high, interest rates remain stubbornly low, and entire industries are undergoing substantial transformation to cope with the evolution of the world around it, including the fallout of a COVID-dominated 2020. As all of this is happening, technology has been fundamentally changing the space: there has never been this much data and information available online to research and drive investment activity.
In this article, we discuss how to make the most of the changing trends in corporate development software to drive and manage your efforts. From public media to relationship networks to your own internal processes, we cover the best software and solutions to give you an advantage.
Successfully closing a game-changing acquisition in line with your company’s strategic initiatives starts with the deals you and your team members source. There are a few different categories of deal sourcing strategies we see utilized:
It’s not enough to be looking at the deals that everyone else is looking at. Not to mention that brokerage/marketplace websites won’t help you find businesses for other types of partnership beyond acquisition. One of the best ways to use modern technology to find other potential business development partnerships and acquisitions is by tracking the companies that are raising venture and private equity funding.
Funding announcements are valuable because they highlight the companies where exciting things are happening. Often these companies are growing quickly (e.g., startups) and will be looking for new opportunities of many different kinds. You can quickly filter through funding announcements to find the ones most relevant to you and start up a dialogue with interesting companies early.
Typically these funding announcements won’t generate immediate acquisition opportunities – but could create beneficial partnerships in the interim, while alerting you to companies worth tracking for future deals.
While funding announcements can generate great opportunities with the right follow-through, they generally aren’t proprietary. Every other M&A team is also looking at the same relatively small group of companies and making overtures for various types of partnerships or deals.
To broaden the funnel and increase the chances of finding a truly unique opportunity, you may widen your radar to all news announcements. The advantage is clear: there are many more companies in a much wider array of situations. The disadvantage can be tough to overcome though: there is so much news to filter through to find what you’re looking for. To this end, it is critical to have some kind of intelligent filtering software working through news stories for you, using rules and context to ensure that you’re only seeing announcements that are potentially relevant.
Deal making always has, and likely always will hinge on ‘who you know’, and the long-standing relationships your team builds are likely to be the predominant source of deal flow for a corporate development team. Some example relationship categories that are common deal sources:
- Sell-side investment banks – who are naturally incented to build and maintain connectivity to potential buyers like CorpDev teams.
- Private Equity funds – who may either have companies they’ve evaluated that aren’t a great fit for their thesis but might be for yours, or portfolio companies that they’re looking to exit to a strategic buyer
- Venture Capital funds – with similar logic as the Private Equity funds, except with earlier-stage, faster-growing, and likely also cash-burning startups.
- Business unit executives – operational leaders in your company likely come into contact with other companies in your space, either as competitors or offering adjacent functionality that may be complementary to yours.
It is of course vital to have good sources of unique or proprietary deal flow. But to be truly exceptional in your role as a corporate development professional, deal flow is not sufficient; you must also be doing a thorough job of tracking your deals and ensuring a healthy overall process. To achieve that, there have also been a wide variety of innovations in the deal tracking software (CRM) market.
One of the clearest innovations in corporate development software in the past few years has been that integration into email (Outlook and Gmail) is now standard. This integration enables you to automate a historically manual process of storing relevant communications you’re having with targets, bankers, and other deal participants. Instead, these systems track your interactions via email and calendar in real-time and enable you to quickly reference your historical conversations. If you are still using a deal tracking solution that doesn’t come with built-in tracking, consider taking the opportunity to evaluate more modern solutions that significantly ease the burden of interaction tracking with this integration.
One of the hallmarks of the modern evolution of technology has been the proliferation of data. That’s just as true in the corporate development world as it is everywhere else. Some of that data includes the funding announcements and news mentioned above. Many platforms build on that data, including Crunchbase, PitchBook, and CapIQ.
Other data includes social media (like Twitter or LinkedIn), user-generated content (like blog posts), and contact enrichment (work history, location, etc. driven by platforms like FullContact). The best modern CRM software suites will pull in these sources of data enrichment automatically, augmenting your deal management experience with information from across the internet.
Integrated Best-of-Breed Products
In the same vein as email integration, there are many, many different types of integrations that have become more common with modern deal tracking software. This is natural – as deal processes become more complex and digitized, more technology solutions have emerged to help streamline them.
In the face of that growing complexity, the historical path (across corporate development and many other functions) was try to adopt one system that tried to do all things. However, with the increasing connectivity that modern software has with other solutions, there’s been a shift towards adopting the best software for each distinct task.
Some of the common system integrations you see with deal sourcing and tracking include data rooms (VDR), ERP, and marketing automation. These integrations can either be specific-built for particular systems (e.g., Mailchimp for mass mailing) or may be done en-masse via a platform for integrations like Zapier.
Each of these integration types can be utilized differently depending on where you are in your deal lifecycle. For instance, you might use an integration with a marketing automation product to do periodic outreach to sell-side investment banks for sourcing purposes, a VDR as the due diligence section of your M&A process ramps up, and an ERP as you coordinate the post-merger project management process with the business unit.
Many modern CRM software also integrates into existing workflows. Just as the system may bring in email automatically, it might also have a presence that sits alongside the native mail experience: an add-in in Outlook or an extension for Gmail. Most modern solutions also have fleshed out mobile apps so that you can keep up with your deal flow while on the go.
If you haven’t looked at updating your M&A process software in a few years, you may be used to an old paradigm where essentially all reporting had to be done manually: export the data from the system, bring it into Excel, and start building custom reports.
Fortunately, there has been a push in the past five years or so to bring more and more powerful reporting capabilities into deal software natively. The result is that you can get good reports that capture key business and deal metrics (e.g., valuations) at the click of a button, and may even get some ideas for reporting best practices that you otherwise might have missed out on. For the most advanced, you can also schedule reports to be distributed regularly (e.g., a summary report to a subset of relevant business unit leaders, CFOs, or other stakeholders).
Done well, these reports also allow you to evaluate the effectiveness of your efforts and improve them accordingly. For example, being able to answer questions like ‘which bankers have sent us the most deals that have gotten to our final evaluation stage?’ can help identify where you want to double down on your business development efforts.
The most advanced corporate development software for deal management takes data enrichment to the next level, making proactive recommendations. These recommendations may take a variety of different forms and are based on what data enrichment is used and the proprietary software of any given vendor. Some examples include reminders to reach out on a deal, filtering of news alerts to those that are relevant to you, and recommending connection between deals and relevant experts and professionals who may be able to help with diligence or support.
Intelligent recommendation software is still relatively new in the market and is continuously evolving on nearly a day by day basis. It can be a true differentiator for your deal flow and deal management but takes a bit of research to understand.
4Degrees is a modern CRM solution specializing on relationship development and opportunity tracking for deal professionals, including corporate development. 4Degrees specializes in the types of advanced functionality described in this article. If this type of solution interests you, don’t hesitate to reach out to learn more.