If you’re working in an investment banking division (IBD), you might be thinking of escaping to the buy-side. Maybe you want to cut your working hours? Be warned: if you move to private equity, this probably won’t happen. Shorter working hours are more likely in corporate development.
I spent just over a year working in M&A for an international bank in London. I left late last year and now work in corporate development for a building services company. This is what I've learned about leaving banking for corp dev.
Most of the time, corporate development directors are too senior to train analysts. In a bank there'll be a lot of you in your 20s and you'll all discuss valuations and modelling. In corporate development you're more likely to be the only 20- something. If you don't know your stuff, you won't get to see the interesting parts of the job such as leading M&A processes, running valuations or managing negotiations and tactics.
This probably depends a bit on the size of the corporate development team you join. A big team might resemble a class banking hierarchy, however teams in corporate development are often smaller and the hierarchy much flatter than in a bank.
Corporate development is also a lot less high pressured. Because banks are so hierarchical, managing directors will often pile on the pressure to secure the next mandate. The banking M&A team responds with permanent over-achievement and attention to detail. In corporate development you still need the same attention to detail, but the tone is less harsh.
If you work in corporate development you'll need to know your particular market in a lot of depth. If you work in an investment bank you'll get to switch between different sectors and sub-sectors as you work with different clients and you'll need to know what's happening in different markets. In corporate development it's all about one market - the market your particular corporate operates in.
If you're an analyst or associate in an investment bank, you'll be familiar with pitching. Much of your life will be spent putting together pitch decks, or pulling all-nighters before the pitch is presented to clients. Ultimately, the managing director making the pitch may simply flip a few slides. It may not even get opened in front of the client! The pitch deck is simply a door opener.
There's no pitching in corporate development and so there's less work which leads to nothing. However, you'll still have to spend a lot of time reading through all the information memoranda banks send you and assessing the valuation of target companies and the commercial rationale for buying them.
Again, this may vary by corporate but my experience is that 80-90% of the day in corporate development is about M&A (ie. managing processes and running financial models). The rest can be summarised as strategy and involves briefing notes for the CEO or CFO of the company, competitor analysis and other strategic work.
I find corporate development more analytical than working in M&A. You're closely connected to the business units and you analyse the revenue and cost synergies in a lot of detail (whereas in banking you're much more likely to simply assume that a percentage of sales are synergies). You also get to discuss your findings with the real experts in the business, which I find very rewarding.
How about pay? Well, you'll probably get a similar salary but a lower bonus. The big bonuses in banking help compensate for the long hours, night shifts and weekend work. In corporate development the work/life balance is generally better (unless you're on a deal) and so you'll get paid less. It comes down to whether you value free time and flexibility and how much this is worth to you in monetary terms.
Lastly, just because you've left M&A for corporate development now, don't suppose you'll never go back again. Moving to corporate development isn't a life time decision. You can always move back to banking later. Banks will appreciate the network you have built and the corporate perspectives you have gained.
Alex graduated from the University of Mannheim and Frankfurt School of Finance & Management. He worked as an analyst in investment banking in London and now works as an M&A professional in corporate development in London. Prior to that, he gained investment banking working experience in London and Frankfurt. Alex is now dedicating his time to sharing career advice via the ‘M&Academy’ platform, where he discusses how to get into M&A, ECM, corporate development, private equity and leveraged finance.