M&A goes to Splitsville: Business development and deal execution are becoming two separate roles

In the last three years, most private equity-backed companies wanted “general athletes” to fill their corporate development ranks.

They looked for leaders who could source deals, build relationships, manage the process and support integration. Today, that picture looks different.

Instead of hiring one person to own corporate development from sourcing through close, many companies are splitting the function in two. One role focuses on business development and outreach. The other focuses on executing the resulting deals.

That shift is especially clear in private equity-backed blue-collar services, home services and industrials, where competition for quality assets has never been more intense. In these markets, the ability to connect with owners can be the difference between winning a great deal and paying a premium in a banker-led auction.

As a result, we’re seeing more sponsor-backed platforms hire leaders whose primary job is to build the pipeline, create trust with owners and get them to the table.

The evolution of corporate development

For years, the ideal corporate development hire was someone who could manage the full M&A lifecycle. Clients wanted candidates who could source opportunities, run diligence, coordinate with advisors, support negotiations and help shepherd deals through integration.

Today, many platforms are placing more weight on origination than execution. They need someone who can spend their time developing relationships.

In a competitive services market, a business owner may not be impressed by another corporate development professional in a vest talking about EBITDA multiples. But they may listen to someone who understands their business and can speak credibly about the day-to-day realities of running the company and partnering with a sponsor.

The ideal business development candidate

In many cases, clients still want an M&A professional, but they want one with more origination experience than execution experience. In other cases, clients are open to hiring directly from industry. That person may be a sales leader, commercial leader or operator with deep knowledge and a strong network within the space they’ll be building a pipeline.

In one recent search, a platform pursuing deals in pest control wanted a sales leader straight from the pest control industry. The client didn’t need that person to have deep execution experience. They needed someone who truly knew the space.

The best business development candidates can conduct business on top of a barstool and in the boardroom. At minimum, a great business development hire needs to understand the market and have the sales chops to build trust quickly. They’re comfortable with outreach, follow-up and rejection. They know how to keep a long-term relationship warm. They can sit with an owner, listen carefully and explain the opportunity without making the conversation feel overly transactional.

Broader implications for the private equity sector

In saturated markets, deal origination can no longer be treated as a side responsibility.

Platforms that rely only on banker-led processes may find themselves paying higher premiums, competing against more buyers and missing opportunities that never come to market.

For private equity firms, this means the corporate development hiring profile is changing. The best hire may not be the person with the longest list of closed transactions. It may be the person who can create the next five proprietary conversations working alongside a team more focused on execution.

That’s why business development and dealmaking are becoming two separate roles. The companies that recognize this difference will be better positioned to win deals in markets where competition is only getting tougher.