Growing Beyond M&A

Corporate development is more than just doing M&A. Sometimes, acquiring a company isn't the best way to achieve the organization's growth strategy. This episode will discuss growing beyond M&A with Christina Ungaro, VP, Head of Corporate Development at Wind River.

Growing Beyond M&A

8 Sep
Christina Ungaro
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Growing Beyond M&A

Growing Beyond M&A

“Business strategy is all about finding the intersection point between what customers are asking for, where the market opportunity is, and what can be reasonably delivered." - Christina Ungaro

M&A is not the only accelerant for growth. There are many things corporate development can do to transform a company rapidly. In this interview, Christina Ungaro, VP, Head of Corporate Development at Wind River, talks about growing beyond M&A.

special guests

Christina Ungaro
VP, Head of Strategic Alliances & Corporate Development at Wind River

Hosted by

Kison Patel

Episode Transcript

When to start thinking about your approach? 

It all starts with business strategy and developing a strategic roadmap that outlines where we want to go as an organization. It comes down to finding that intersection point between: 

  • What are customers asking for?
  • Where the market opportunity is? 
  • What can we reasonably and feasibly deliver? 

Once we have the business strategy laid out, we look to determine where we have gaps and how we will solve those gaps and accelerate the strategy through a combination of build-buy and partner. So very classic build-buy partner framework and determining what the right path is. 

Common reasons to choose a partnership instead of M&A 

  • We've determined a capability we want to provide but don't want to own or need to own. 
  • It's not our core competency. 
  • The market is highly competitive and dominated by incumbents.
  • The market is commoditizing 
  • The market's early and emerging and it's too early to pick a lead horse.
  • There aren’t good actionable candidates available (incumbency, evaluation concerns, size) 
  • The ownership structure is complicated

Buy vs Build Considerations

We have to define what product or capability we're trying to deliver on. And then ask if we want to own it? Buy and build are two sides of the same coin - I need to own it. 

If we decide to try to build it, we’re going to look at the cost and the time to build it. Do we even know what we're trying to build? Because if we don't have customers yet and we don't know much about that market yet, maybe we don't understand the requirements very well. Do we have the skills in-house to build it? So there's a lot that goes into that build decision. Companies routinely underestimate the effort that's required to build a new solution. 

So it's not unusual to quickly pivot to should we partner or acquire from there if the build option looks expensive, time intensive, or insurmountable. 

Structuring the Partnership 

Do some large incumbents already dominate the market? If you're trying to gain entry into that market, it’s maybe better to partner with one of those incumbents rather than try to beat them at their own game. 

Take an inventory of what you have to bring to the table that somebody else may not have or could use more of.  If there are other things that you can bring on top of that are a little bit unique and compelling, you've got the beginnings of a win-win for a partnership. 

Start approaching companies, get to know each other, and introduce your platform. It's very much a two-way, co-selling type of discussion early on, introduce your platform and your strategy, and get insight into their platform and their strategy.

Try to get a feel for the seeds of a vision match. Can you start to develop a vision for success and envision a scenario down the road where both of you get a lot out of this partnership? What does that look like exactly?

Try to put some concrete parameters around that and then create a path to get there. Identify what you need to put in place to make that vision a reality and make sure both parties are willing to make the investments needed to get there.

Accountability and ownership from both sides are very key. And what you don't want to do is create a partnership dependent on two people in each organization. You want something that will survive people changing roles and reorganizations.

Developing metrics and performance indicators and a regular cadence to review to help the partnership. It’s important to keep things going. The biggest risk with partnerships is that people change roles, people lose focus, and things start to wither on the vine.

The First Meeting 

Chances are if they're a much larger company, they probably have done this before, and they probably have some models already that you could even leverage. 

After the introductory phase, start to sketch out what this partnership could look like and leverage preexisting constructs as much as you can because that'll help accelerate things. 

The vision is understanding first what you're looking to get out of the relationship. 

  • What capability are you looking to bring to your customers? 
  • What kind of unique positioning in the market do you have? 
  • What kind of unique audience do you have? 

You have to understand your assets first and if this partner potentially layers into that and creates something new and valuable to your customers. 

It’s a bit of an iterative process to structure that win-win scenario because you're going to go into it initially focused on your side of it. But you must continually put yourself on both sides of the table to get to that mutual outcome.

It's very gray compared to M&A. I think M&A is a lot more black and white. You already know what the outcome will be: go or no-go. And going through diligence and assessing technical and product fit and culture fit becomes fairly programmatic after a while, but with a partnership, it's an entirely different can of worms. There's no predetermined outcome.

The outcome might change continuously over time. So, it takes a much deeper understanding of both businesses and their business and an understanding, of how to get synergies out of the relationship without having control over each other's assets. 

You have to work a little harder to create that vision match and create those metrics and those outputs that you're looking to achieve. 

When you do them over and over again it becomes a little more programmatic and you develop some playbooks. So it can become more programmatic over time, but if you're doing it for the first time, it can be a little bit daunting. I would agree. 

“Ultimately, it has to come down to value. We have to define how value will gets created and how you will measure that value. - Christina Ungaro.”


It could come at any point in the process, but it's essential to define how you sell this solution. So are you simply selling a partner solution to your customer base? Or are you actually creating a new offering? And who's going to sell that? 

Is the partner involved in the go-to-market, putting the right sales incentives and training in place to make that happen? All of that needs to be thought through. And the solution itself will help guide that. Which party is best positioned to lead? But go-to-market is an essential element for sure.

There's no right or wrong point in the process when that should be addressed. It naturally starts to flow once the partnership starts to keep its shape. 

The important thing is it has to be worthwhile for the sales organization. It's okay if it's small, as long as it doesn't take up an undue amount of the salesperson's time relative to other opportunities. If it's a simple add-on, that's a little bit easier. 


The metrics won't yield anything until things are up and running. Partnerships take a little longer sometimes to yield results, so it might be 6, 12, 18 months out. 

It depends on the partnership's outcome and goals, but you can track things like partner-related revenue and profit or joint customer wins. It depends on how you've structured your success factors from the beginning. 

You have to figure out what you can measure without putting an undue burden on the business. So it's important to figure out upfront and take into account the systems that you have in place.

Just like an M&A, we love to measure synergies, but you have to be able to measure them. If everybody's doing a lot of financial gymnastics to get to certain numbers every quarter, that will not be a good use of people's time.

So you want to ensure you have the systems and infrastructure in place to get those metrics and outputs fairly easily. 

There could be other metrics like joint customer wins or pipeline activity. If things are early, the pipeline could be an indicator or backlog. So there could be other things at play, it just depends on what the outputs of the partnership are. 

How to keep people aligned

Partnerships are very relationship-driven sometimes. When people move around or move on, that's when things are at risk. So the more you can put good processes in place, the better the chances of that partnership will actually thrive and survive beyond a single individual who might be championing it. 

At the same time, you want specific individuals to have accountability over the partnership, and you want people to be on point to manage that relationship because that's important as well. 

Find the right balance between driving that systemic governance around the partnership, but also making sure you have a personal touch around it as well.  

We have alliance managers dedicated to all of our important strategic partnerships. If somebody moves on, someone else has to take on that account just like a sales model. So it's very similar to an account rep model in a sales organization. 

We might do quarterly or annual reviews with the partners to review a little bit of a state of the union to review the health of the partnership activities we've been engaged in together over the last quarter or the last year.

Having a cadence like that also helps keep people focused and on track and ensures things don't just wither. 

The steps to a formal partnership agreement

Similar to an M&A, it agrees conceptually to the right high-level terms and parameters you want the partnership to reflect and then translates that into a legal document. 

We do have partnership agreements, these are the agreements you probably see in an M&A when you're going through the diligence process, you review lots of these agreements as well. 

But you do have to translate it into paper at some point and start to get it documented. That starts to look very similar to an M&A process in terms of redlining back and forth and getting things documented to reflect the way you want the partnership to work.

From there, there's a partnership integration phase, which is enablement. If there's joint solution development, it's getting your respective development teams connected and developing the roadmap as they would for any new product developing a joint solution roadmap and executing against that.

And if there's a go-to-market component, ensure that you're doing the right training enablement with your sales force and putting the right incentives in place to make things happen. So there's a structuring phase, a negotiation phase, and then an execution, an operationalizing phase similar to what you might see with an acquisition. 

When you close on the acquisition, you integrate it, you have full control. With a partnership, you don't have full control. Those are the key. And there is no sort of endpoint, you've got to continue to make it work every quarter, every year. 


The timeframe is all over the map. I've worked on some partnerships that are based on a repeatable model, maybe that we've already done before. So those can happen very quickly in a matter of weeks. 

In other cases, you've been working on that vision match for a long time. Because there are a lot of churns and you can't quite put your finger on it yet. Sometimes it takes a long time to structure the outcomes you're looking for. So it can be weeks to months or years.

Strategic versus organic partnerships

Organic partnerships are very foundational to doing business and don't have the strategic elements that a strategic partnership would have.

Strategic partnerships are really about selecting a target and partner that you believe together and creating value and synergies that you could not otherwise get on your own, similar to an M&A, and they can be very multi-dimensional. 

A joint product or solution development, joint sales, and go-to-market could be national or global. You need to scope that upfront. And those strategic partners will be low in numbers but very high impact. So that's how I distinguish the two. 

But many of those are foundational organic partners that we need to work with on an ongoing basis to ensure our software works with theirs and vice versa. But we're not engaged in any joint solution development or go-to-market activities with those partners. On the other hand, we have a handful of strategic partners where we are. So that's how we distinguish them. 

Corporate development teams engaged in partnerships are typically focused on those high-value strategic partnerships.

The organic partnerships might be managed through a different team or program. It depends on the organization, but typically corporate development only gets involved in those more kinds of complex strategic alliances that require more creative deal structuring.

Other types of partnerships

  • Joint ventures
  • IP licensing agreements
  • Royalty agreements 
  • Sell Through
  • Sell with
  • Teaming
  • Reseller
  • White label

Joint ventures

Joint ventures come with a lot of complexity and governance and reporting requirements. Often you can maybe achieve the same outcome with a more virtual construct, but that's one model. 

There are select situations where a joint venture can make sense. If you're creating something new and both parties have something very distinct and unique to bring to the venture, and there's limited friction with your existing business, and you want to create a new brand and all that sort of thing, it can make sense.

You also have other situations where two parties contribute, maybe assets, people, or contracts. It gets messy disentangling that from your existing business and then layering all the governance and reporting on top of that.

Those can get a little bit hairy. So it just depends on what the nature of the joint venture is. But if you're going to go down that path, it can be an expensive and cumbersome path. So there have to be really good reasons for why you're going down that path. 

The other thing to think about is that I've always likened joint ventures, to entering into a marriage that you know, is going to end in a divorce at some point.

“Joint ventures is like entering into a marriage that you know is going to end up in a divorce. Very rarely do joint ventures just exist into perpetuity. So you spend a lot of your time negotiating exit terms upfront and down the road it's going to be a situation where either you're fighting over the asset or neither of you wants it at all. - Christina Ungaro.”

That can be taxing on resources and time, working through those exit terms. Some people jump to join ventures immediately as a construct. 

But I think it's important to just take a step back and try to figure out what we are trying to accomplish. Are there other ways we can accomplish this without going down the path of creating a new legal entity with a whole other set of obligations around it? That shouldn't be taken lightly.

It depends on the industry, and it depends on the market too. There are certainly some geographic markets that will lend themselves more to a joint venture structure. 

I've seen the government and defense sector where the government has a program that encourages companies to team up, big and small companies to team up together in a joint venture to deliver solutions.

They do that as a deliberate way to access innovative, cutting-edge technology from the small company, with a larger company on top of it to de-risk it. 

There are all sorts of unique situations where a joint venture might be the right path or simply necessary to win the contract. My preference is to only go down that path as a last resort. 

Minority Investments 

Most strategic corporate strategies do true minority investing with specific intent and reasons. And there's usually partnership tied to it.

Shareholders generally don't like to see corporates deploying money into just investments just for economic reasons. There should be some strategic element to it that furthers the business. 

A true minority investment can be a good solution when you're in a strategic partnership, and you've got a lot of dependency on that partner and you're worried about certain things like maybe are they going to get acquired or what if they change business direction or whatnot. 

So in situations where you're creating a healthy dependency on a partner, a minority investment might make sense to demonstrate your long-term commitment to the partner that might be important to them as a way to get access to certain rights that you otherwise wouldn't have.

You can achieve a lot of those things without the investment, that's always preferable, but typically, the company, if it's a startup or kind of a mid-stage startup, might be going through a funding round and they might bring it up proactively.

Performance Based Warrants

Performance-based warrants can drive a certain level of commitment and focus. Especially at a large company partnering with a small company and the small company is worried about being one of a hundred partners in the extensive companies program.

I've done warrants that convert based on mutual revenue achievement. So they're usually tied to revenue or some other concrete performance indicator. But as with any warrants, they're not liquid until there's a liquidity event. 

It's a fairly benign way because, for the company giving the warrants doesn't mess with your cap table too much until the liquidity event happens. And if they're tied to performance, that can be a win-win. They can be fairly effective in achieving the outcomes you're looking for if you're a startup. 

Partnership fails

It happens all the time. It could be that the joint solution is not well-defined or there isn't enough value added there. It could be that you misjudge the customer demand or how customers want to consume.

Or it could just be a function or lack of internal focus and just that incentive misalignment. You just have to dissect why that is and try to execute the next one better.

Sometimes also, the one partner starts to change directions or eventually ends up competing with each other based on the trajectories each goes in, which can bring friction down the road as well. Maybe one partner makes an acquisition that suddenly puts them into misalignment or competition with the other.

In my experience, the two biggest issues have been either the joint value proposition, which was just never well-defined from the beginning or it's a sales issue, a sales enablement issue.

The sales force just isn't focused on it because it's too small or too hard to sell relative to everything else that they've already got. 


If what you're creating is a very unique joint solution and it has to be meaningful enough, you could put dedicated sellers around that potentially, and that would help alleviate some of that friction within the sales force. But obviously, it needs to be a meaningful enough solution on its own to justify that and you've got to put a business case around that. 

But having dedicated sellers around it would help. Or it might be a solution that doesn't require any direct sales, maybe it's something you're selling through a marketplace or more of a passive sales channel or an e-commerce channel.

And in those cases, you wouldn't have those issues, then it becomes a function of effective marketing. 

Evaluating partnerships before doing an acquisition

If you talk to any strategic acquirer, I can guarantee you some percentage of their historical M&A has come through they were partners first. 

It's a very common pathway to partner first with a company before you acquire them and you'll learn a lot about them, their product, their culture fit, and synergy potential. 

You'll learn a lot about all of that before going down the acquisition path. And if they're reluctant to sell, they're obviously must be good reasons for that.

But forging a successful partnership could bring them around eventually, and things change down the road. I think that's a good strategy overall. We call it try before you buy. And it has definitely been effective in the past. I've been in many situations where the company I was acquiring was a partner, in some cases, a company that we were invested in.

Sometimes the timing's just not right right now, but things may change in the future. And some of that might have to do with where you each are in your maturity cycle, might have to do just with people who are at the helm, that can heavily impact things as well sometimes. 

Structuring teams for partnerships

M&A can be very procedural in some ways and partnerships, are a lot grayer. You need to have a much deeper understanding of the underlying business.   

While corp dev typically draws from finance or strategy. You want to draw your partnership team members from sales or support or some other areas of the organization.

People who really who've been deeper in the trenches and know the business because they might have a very fresh perspective to bring in structuring the partnership.

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