Corporate Development, also known as Corp Dev, refers to the group within an organization that is responsible for strategic decisions to expand and restructure the business.
You have decided you are ready to join a Corporate Development team so you can identify and execute opportunities for the company. These include helping with initiatives such as mergers and acquisitions and divestitures. You understand that your role is critical to key business objectives of:
- Improving the enterprise’s financial and operating performance.
- Outperforming company competitors.
As a unit of the enterprise intended to create and execute innovative strategies to leverage competitive advantages, Corporate Development also focuses on establishing strategic partnerships and looks for opportunities for the corporation to achieve organizational excellence.
You want to know what to expect when it comes to being chosen to join a Corporate Development group, including the types of corporate development interview questions you can expect and how best to answer them. These issues and more are discussed here.
What does a Corporate Development do?
Corporate Development operates on two levels simultaneously: internally and externally.
Internally, Corporate Development is essential to the enterprise, identifying gaps in geographic market reach and in the company’s product portfolio.
Externally, Corporate Development’s role is essential for the organization, helping to create partnerships and deals that will help the enterprise monetize and increase valuable assets. In this function, Corporate Development works to help innovate and create business partnerships and deals that can bring value to the enterprise.
While Corporate Development is most commonly known for its role in assisting with mergers and acquisitions (M&A), there is more to Corporate Development. In fact, M&As is one of the riskier tasks that Corporate Development teams handle. According to the Harvard Business Review, more than 70% of acquisitions fail.
That increases the importance of other tasks that Corporate Development teams participate in that serve the enterprise’s business objectives, including:
- Analyzing and investing in new strategic initiatives, which are not just mergers and acquisitions, but also include strategic divestitures.
- Assisting with the creation of forecast models and budgets that will determine the enterprise’s allocation of assets and maintain oversight of the company’s performance.
- Serving as the enterprise’s liaison with government and industry regulators.
- Monitoring and ensuring capital adequacy.
- Helping the enterprise achieve operational excellence.
- Taking responsibility for identifying and managing assets that are not core business assets.
- Improving the client and customer experience.
- Striving to optimize firm productivity and agility.
- Serving as a company representative in financial conferences, investor gatherings and shareholder meetings.
- Helping the company communicate its strategy to shareholders after earnings releases.
- Participating in product development, market analysis and market penetration.
- Managing the enterprise’s portfolio.
- Comprehending the main drivers of the enterprise’s revenues and expenses
- Identifying critical Key Performance Indicators (KPIs) to evaluate and measure the company’s performance.
What can I expect from a corporate development interview?
In addition to some fairly common corporate development interview questions, you can expect a discussion of your professional background as it relates to corporate development, financing, valuation, consulting and financial modeling.
Depending on whether your interviewer has a consulting or banking background, you may be asked to consider case studies or you may be asked your opinion about particular investments in business units.
Corporate Development groups seek candidates with experience working on acquisitions, joint ventures and deals. You may be asked about the size of deals you have participated in and to describe your role and experience in those deals.
Corporate Development teams also seek independent workers who can handle deals by themselves.
How do I prepare for a corporate development interview?
You can expect corporate development interview questions to include a request to detail your work experience, including projects you led or participated in previously.
Your answer should offer a brief discussion of that experience, but it also should be crafted in a way that shows you understand the industry in which the enterprise operates.
This is particularly important if you do not have prior experience in the industry or did not cover the industry if you previously served as a consultant or analyst.
The importance of modeling
Some corporate development interview questions also focus on modeling, according to Corporate Development team members who shared their experiences on the Wall Street Oasis (WSO) forums.
This is usually brought up with candidates who have advanced beyond the initial round of interviews. In some cases, you may receive a case study where you are asked to develop a financial model and a formal presentation.
When it comes to M&A cases, you may be asked to walk through how you would expect the process to unfold, from identifying merger or acquisition targets to the expected closing of the transaction. In some cases, interviewers may ask you to comment on the possibility of the enterprise acquiring a specific company.
While you should not feel as if you need to offer advice on such a transaction, be prepared to discuss hard valuation methods, particular synergies (i.e. market share and talent and cost reduction), and integration issues that may surface.
You will likely be asked by some interviewers to perform an M&A modeling test, particularly if, as a consultant, you did not appear to have a significant amount of experience with this exercise.
Do not ignore the basic decision that many corporations must ask themselves when considering M&A: Is this something that should be built or something that should be bought?
The enterprise clearly has an interest in expanding its operations and market share, but should this be done through acquisition or through internal development?
Your answer can discuss the pros and cons of these options, or at least how you would calculate these when considering the options.
Know the company and the industry
As you discuss your thinking and methodologies related to these factors, take this opportunity to show your knowledge of the industry and the company that is considering you for the position. As investor Mark Cuban says, “Know your business and industry better than anyone else in the world.”
Your answer should begin with a 30,000-foot overview of the industry and the company’s place in that industry. You can note your understanding of why the company is in the position to consider M&A in this context. Then offer some insight into how you think the target company fits into this dynamic.
More than anything, your answer relating to potential M&A must include a solid understanding of the company and its position in the market relative to top competitors. You can likely argue the case either way for or against M&A. This is because the top driver of any M&A is corporate strategy.
Any discussion about options must include a strong understanding of the corporate strategy and how M&A fits into that.
Buy or Build
Discuss the question you would pose if buying, such as, how does this purchase represent the best use of capital? Is there an argument to reinvest in the existing business?
For example, if the enterprise’s core business represents low growth and low profitability, buying a smaller competitor that is seeking to disrupt your business might make sense in that case.
You can also note some of the negatives that stem from corporate M&As, such as the potential adverse impact on shareholder value and possible conflict with ongoing integration from previous acquisitions.
It is also possible that the enterprise’s disappointing history with M&As and recently announced deals by key competitors can affect the enterprise’s decision. There are instances when M&A should not be considered, so your answer should indicate that you appreciate there are situations where that is a factor.
Know the interviewer
In addition to Corporate Development Interview Questions, you should know something about the people who are interviewing you. What is their background, consulting or banking?
If they were consultants at one point, chances are they would focus more on a case study during the interview process. They may ask for your opinion about particular investments within business units and they could ask you to develop an investment thesis around them. This is a good time to offer insights about the potential for products in the market.
If they have an investment banking background, expect more discussion about financing. That’s particularly true if you also come from an investment banking background.
Expect questions that test your knowledge of Corporate Development. For example, you could be asked, why Corporate Development? Your answer can emphasize the long-term nature of helping a company grow its business versus bouncing from client to client in investment banking.
You also may be asked about the differences between Corporate Development and investment banking when it comes to key challenges.
You can highlight the importance of aligning interests within your organization when it comes to making deals in Corporate Development, as opposed to connecting a buyer and a seller in investment banking.
You can also discuss the difficulties that integration can pose, which is a challenge you didn’t experience in investment banking.
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