January 10
M&A Science Live - The Evolution of M&A Functions
November 17, 2022

The M&A can be highly inefficient, and inefficiency can lead to failed deals. However, some practitioners have figured out how to increase deal success using new work methods. For example, some practitioners have turned to Linkedin as a different way to approach deal origination. This article will explore Linkedin’s bottoms-up deal origination model, featuring their Vice President and Head of Corporate Development, Benjamin Orthlieb.  

"We're not going to buy something cheap if it's not really what we want. We want to be focused on our priorities, and then we'll figure out what accelerates that." - Benjamin Orthlieb

The Bottoms Up Deal Origination Model

Traditionally, corporate development acts against the strategy after it's been formulated. The corporate development team often comes in later on in the deal to engage with target companies. However, the bottoms-up deal origination model involves corporate development from strategy all the way through to integration. This end-to-end process involved the following steps:

  1. Gain Market Intelligence - Understand what goes on in the market. Benjamin’s team gathers any news related to their industry and sends weekly newsletters to keep everyone up to date.

    They also follow several companies and keep track of their employee count and other related metrics. Lastly, they keep track of public companies' earnings to gain an idea of the marketplace's health.

    All of the above actions arm them with enough knowledge to formulate a solid strategy for their organization and to paint a clear picture of possible target companies. 
  1. Work with R&D leaders - Corporate development meets monthly with each line of business to discuss prioritization updates and ensure strategic alignment. Corporate development needs to ensure that everyone is having the right conversations with the right players. 
  1. Engage with the target company - After reaching an agreement on a target company, both corporate development and the business leaders engage with the founders of the business. As the deal progresses, more people get involved. 
  1. Pre-Term Sheet Diligence - Before fully committing to a deal, Benjamin’s team completes diligence (R&D focused) and ensures that the potential acquisition is aligned with the business unit's strategy. After the executive leadership team grants internal approvals, they sign a term sheet to proceed with the deal. 
  1. Integration - While the business unit leaders take over during integration, Benjamin and his team still track the deal and report it to the executive leadership. They are also involved in any strategic conversations if the integration team has to reprioritize goals. 

Cultural Fit

When looking for new potential targets, there are things to consider outside of cultural fit. Benjamin and his team are very open to adding new cultures to their existing business lines. They look for leaders who can bring new solutions and challenges into their organization. According to Benjamin, different personalities have different lenses, which allows expandability in many business aspects. 

Post Mortem

Whether the deal is a success or not, Benjamin’s team conducts post-mortems on various transaction points. His team frequently assesses if the process works for all cross-functional teams and if they need to update the questionnaires.

Every deal is different, and there will always be new learnings that can be captured in post-mortems. They have a dedicated IMO responsible for capturing lessons learned and updating the cross-functional playbook.

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