The ideal corporate development experience

This article examines the question: Is there an ideal profile for Head of Corporate Development searches in private equity backed businesses?

While it’s generally assumed that someone who has “been there / done that” in another private equity portfolio company makes for the ideal background for Head of Corporate Development searches, the data suggests it is not the only profile that can succeed. And while it is the largest percentage-wise, only nine of the 24 Head of Corporate Development placements we made in the first six months of 2022 came from another private equity portfolio company.

Placed Candidate’s Previous Company

Furthermore, in almost all of these searches the profile that was ultimately hired was indeed our client’s ideal one (example: the placed candidate came from a public company, and that was our client’s top preference). It also became clear that there were no direct correlations between profile and industry (i.e. a certain industry preferring a certain profile) or profile and size of company (i.e. a larger company preferring public company experience, etc.).

This led us to a broader examination of the other three profiles (public, private equity firm, investment bank) we placed into these types of roles, and of some of the rationales our clients had for their preferences / search strategies:

• Public company:  With the continued increase in market compensation, there has been a significant trend of top corporate development candidates leaving public companies to go and join private equity backed businesses. And, if coming out of the right situation, this can be a very compelling profile for our clients. Someone who has come from a leading public company and has shown the ability to work in, and win in, a complex and matrixed organization, can really shine in the right private equity backed setting, with perhaps a more clear/urgent M&A strategy.
• Private equity firm: This is one of the biggest emerging talent trends in the corporate development space: Lower middle market private equity investors are leaving their firms to lead corporate development for a portfolio company of a larger private equity sponsor. This has also been made possible, in large part, by the major increases in compensation levels for these positions as a result of the competition in the marketplace. For some private equity investors, they can leave their firm, stay generally close to whole on cash (base+bonus) compensation and still have both a significant equity potential and increased work-life balance.
• Investment bank: While the percentage of our placements coming directly out of investment banking has decreased, as more of our clients have opted for candidates who have done deals in a corporate setting, there is still a subset of our private equity clients that want to “teach” corporate development in a specific way and prefer someone directly from the academy training of investment banking.

In short, while the proven M&A leader who has successfully won in a private equity setting will always be in high demand, and will likely continue to be the highest percentage of our placements, the data suggests that there is no perfect background for Head of Corporate Development roles in private equity portfolio companies.