Secrets to Building an M&A Function

M&A is one of the most powerful tools to transform your business instantly. If done right, your organization will reach new heights that otherwise would not have been possible. Before you can reap its benefits, you must build a good M&A function. In this article, Bani Bedi, SVP, Head of Corporate Development, Strategy, and Monetization at Smartsheet, shares the secrets to building an M&A function. 

"Measuring Corp Dev's success comes from the impact they've had on the business both from doing the deals and influencing the direction of the build process" - Bani Bedi

Know Your Why

The first step to building your corporate development function is to understand why you are building it and what you're hoping to achieve outside of the organic business. It's important to realize that corporate development is more than just M&A. You can do many things to achieve growth, such as joint ventures, investments, partnerships, etc.  

Alignment with the Management Team

Once you have your rationale, you need to socialize it with the management team to ensure everyone is on the same page from a strategic perspective. Everyone should understand what you are trying to accomplish, from the CEO, CFO, COO, and Chief Product Officer to your Chief Engineering Officer.

Hire Your Team

Your first hire should be someone intelligent, experienced, and can serve as your right hand. You can build your team as you progress and have clarity around what you need, but the last thing you should hire is a dedicated integration person. You need to be a serial acquirer before considering hiring for integration. 

M&A Strategy

Building your M&A strategy starts with market mapping. Work with the management team to identify your core product and the customers that it serves. Then map out adjacencies that are sensible for the company to expand to so you can pinpoint target companies that are potential partners or acquisitions. 

Building Your Pipeline

Building a robust pipeline requires good relationships with everyone in the ecosystem, including investors, bankers, and corporate development. Transactions don't always start with M&A, and it always begins with relationships so that both parties can figure out if there is something that they can do to benefit each other. 

Building Corp Dev Muscle

Much education is involved when you're a company that hasn't done M&A. You need to explain to your functional team what M&A is, how it works as a process, and expectations. You can achieve this faster by using playbooks, documents, or presentations that make education more manageable for the people involved. 

IMO

Building an integration management office doesn't make sense if you are seldomly doing transactions. However, if you are doing one to two deals annually, investing in a dedicated integration function might make sense, even if it's just one person. Having someone who has retained knowledge of your integration process will significantly benefit your function. 

Maturing your Process

As you progress and mature your processes, it's best if you capture all your best practices and put them into playbooks. Avoid putting all your processes into someone's head because if you lose that person, you will once again start from scratch.

Deal Fever

No matter what stage you are in, it is very easy to get carried away with doing deals. However, everyone knows it is better to walk away from a bad deal than to do it now and fix it later. You can prevent this by ensuring your corporate development is not measured by how many deals they do but by their impact on the business.

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