Starting Up Your Corporate Development Function

Executing acquisitions without a dedicated function is highly inefficient and results in failed deals. Companies should not purely rely on inbound opportunities, and need strategic teams dedicated to sourcing deals. In this episode of the M&A Science Podcast, Veena Ramaswamy, Head of Corporate Development at Lemonade, discusses how to create a corporate development function.

Starting Up Your Corporate Development Function

5 Jan
Veena Ramaswamy
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Starting Up Your Corporate Development Function

Starting Up Your Corporate Development Function

"Getting a deal done is not always the best thing for the business." - Veena Ramaswamy

Executing acquisitions without a dedicated function is highly inefficient and results in failed deals. Companies should not purely rely on inbound opportunities, and need strategic teams dedicated to sourcing deals. In this episode of the M&A Science Podcast, Veena Ramaswamy, Head of Corporate Development at Lemonade, discusses how to create a corporate development function.

special guests

Veena Ramaswamy
Veena Ramaswamy, Head of Corporate Development at Lemonade

Hosted by

Kison Patel

Episode Transcript

When to start building the Corporate Development function

Many early to growth-stage companies don't have a corporate development function. They typically have an ad hoc process that activates when a company executive receives an inbound from a company, and oftentimes not much materializes from these conversations.

The reason to formalize and create a corporate development function is ingrained by the founders and executives and if they view acquisitions as a valuable tool for growth in their business.

A way to figure this out is to answer three key questions as an executive: Is there a need? Do I need to hire for this? Who do I hire? 

To answer the need, it’s important to have alignment with the founders and executives around M&A as a tool. There are three ways M&A can grow a company.

  1. Accelerating - Helps achieve the current or future business goals or objectives, growth in existing products, adding adjacent products, and speed to market.
  1. Strengthening - Can add capabilities that strengthen the value of your current or future product offerings. This can be anything from tech licenses, talent, or people. 
  1. Protecting - M&A can also protect against competitive threats or market movements.

If an executive or a founder believes in one of these three things, then it's important that this function is established.

Regarding company size, there’s not necessarily a hard and fast rule of the amount of funding or number of people. 

If you have at least one established product and product market fit, achieved some semblance of scale, and then you’re thinking about growth–whether in that product, different geographies, different distribution, or additional products–that's when you can start thinking about establishing a function. 

But you have to establish that core product and have some growth and success with it. When you scaled your business and you're looking at larger companies, sometimes even larger than you, that's when you should start thinking about bringing somebody into health run and leave this process for you.

The more complicated the business that you're acquiring is, and whether or not the business is public as well, creates a lot of complexities that it's important to have somebody in-house to manage and run that process for you versus it being a part-time job for another executive.

Benefits of a Corporate Development function

The most significant benefit of standing up a function is that it allows a company to be more proactive about opportunities rather than reactive, resulting in more valuable deals.

When you're actively looking at an opportunity, that's where some of the best deals get done. It’s not necessarily when a company reaches out to you, telling you they want to be bought.

There's also a value to having this function internally versus relying on external advisors, consultants, bankers, or some venture capitalists on your board. 

No one understands the business more than the internal people, who are motivated to grow the company rather than just “getting the deal done”. 

As a former banker, I understand bankers' incentives quite well, and they're motivated to get a deal done, and that's just how their business works. 

Whereas if you have this function internally, they're motivated to drive growth for your business. Their motivators align with the broader company's goals and success.

Starting point

Typically, Corp Dev originates from a CEO or executive team member who sees inbounds come through or sees opportunities potentially being missed, realizing it can't be a part-time thing for various executives to pinch it. 

And there should be some centralizing mechanism and expertise brought in to lead these initiatives for your business. The CEO is always usually involved in the hiring process and in many acquisitions as well.

In terms of formal approval or capital allocation, it depends. Some companies might have a formal M&A strategy that the board approves. I've heard companies say they want to buy 10 companies next year, but I don't necessarily agree with that approach. 

There might be a year in which you get no deals done, and that's something that as a corporate development professional, you have to be okay with, but realize that getting a deal done is not always the best thing for the business.

In terms of the dollar allocation from a board, it also depends. Typically for M&A, that doesn't happen. Usually, you align at a high level on the currency in which you're willing and want to acquire companies with cash, stock, what the typical split will look like, and what you're comfortable with, depending on market conditions.

Typically, there are no hard and fast rules because as these M&A processes evolve, both sides need to be a bit nimble if they want to get a deal done. 

In terms of investing, there might be a bit more money allocated toward it, but for pure M&A, it's typically opportunistic.

Process of building the M&A function

There's no specific toolkit on how to stand up your Corp Dev function, but I have a little playbook on how I set up these functions and what's worked for me in the past. There are four key things that I've done. 

1. Get to know the business well – this begins with laying out the three-to-five-year strategic roadmap, playing it back to the founders and key executives, and aligning on where there might be an opportunity in the next few years to accelerate, strengthen, or protect certain parts of the business. 

Also, an important piece is getting feedback and refreshing this. This is not a one-time set-in-stone thing or exercise that happens or should happen. It should be an iterative process that evolves over time, which you keep revisiting. 

2. Establish the process – M&A deals are complicated. And many different decision points must be made along the way. Here are the most important things you can do:

• Lay out what the deal steps and the process looks like.

◦ Who are the stakeholders that need to be involved? 

◦ What does the typical timeline look like? 

◦ What approvals are needed? 

• Establish the criteria you have for both evaluating inbounds and outbounds. 

◦ What would meet your threshold to kick off that timeline and that process?

◦ Make sure people are aware of this process and how it works so that it's made clear how this works for the business.

3. Be an information hub – Be in the flow. 

• Knowing the latest about what companies in your space are doing

• What companies adjacent to your space are doing

• Talking with VCs, investors, bankers, and other industry participants

That allows you to start becoming more proactive on opportunities when you're starting to hear and develop a perspective on these companies and businesses.

It’s important to socialize this, not just with the executives but to interact with people across your organization. Various functions within a company are talking with customers and vendors and partners all day long, and they can sometimes be good sources of information or deal sourcing, sharing market color on competitors, and things like that. 

Staying plugged in with folks across your business and some of these key roles is really important. 

4. Alignment amongst stakeholders – the last piece in setting up this function is helping people realize that not every opportunity is a deal. 

People get very excited at the prospect of acquiring a business. Sometimes that excitement can lead to speeding through, bypassing some of the criteria or diligence you've established, processes that you're trying to keep in place, or that you need to have in order to move forward. 

It's the job of a corporate development lead to be that sounding board and reminder of your criteria and process and hold people to it.

Getting to know the business well

This step means coming in first to the company and engage with the executive team, business leaders, and functional leaders to understand:

  • The vision
  • The product
  • Target customer
  • Go-to-market strategy
  • How do they see themselves achieving their growth targets

Often, these stakeholders see what's out there in terms of technology development, things that make underwriting our claims more efficient, or capabilities that might enhance some of our offerings today.

Spending time with them and understanding their function and what drives their growth is really important. You have to understand your company model and how your economics work. Having a good sense of that will only enhance your thinking about opportunities that could add to your business.

Inexperienced Corp Dev

If you’re somebody coming from banking, just entering corporate development, depending on the business you're in, and if you have experience in that industry or not, you have to be a knowledge-seeker and be curious and eager to learn. 

You have to go in humble and soak in all the information from the experts in your business. There are no wrong questions. Be curious enough to ask as many questions as possible to understand how the company works. 

I didn't have insurance experience before I joined Lemonade, and I quickly ramped up to understand the ins and outs of our business. Part of the personality and background of being a corporate development professional is being intellectually curious. You want to learn and get to the bottom of how a business works and how you can optimize it. 

Learning from key conversations

Depends on the role of the person you are talking to. If it’s a GM, understand the product that they're managing. A big part of this is you go through the user experience and test the product experience online, so you know what the actual product is.

For functional leaders, it’s also important to understand what their goals and their actual product are. It's important to ask what their OKRs are for the year and what's interesting for them.

Understanding what key functionalities can be helpful for your business going forward is important. Have a learning mindset and try to learn even if you don't have experience. Get smart about it quickly, whether through internal resources or external resources.

People that could be valuable resources

You can get a lot of helpful information from the partnerships or growth teams. They're having conversations, and they're seeing certain companies take off in terms of ad spend, or they're just seeing trends in the market that I think are helpful to hear. That's helpful. 

A lot of times, people, especially those with investment banking backgrounds, will talk to the finance team and talk to other finance professionals. But I think I've found some of the most interesting conversations with our head of data science or R&D team folks that I may not have had the experience of interacting with before. 

It may be a bit daunting for folks because they don't necessarily speak the same language, but those are the most interesting and illuminating conversations you can have.


People don't necessarily know what Corp Dev means. Corporate development is a vague terminology for a function if you don't know that it means M&A. But just share with them that you joined, your mandate, and how you wanted to learn what they're doing and what's interesting for them.

Most folks will always take an intro conversation and are excited. M&A can be very exciting for companies, so I’ve never faced much pushback. People usually want to talk and share their thoughts and share their ideas.


There's no set-in-stone thing, but for me, what works is having a synthesis or a document on which I have my thoughts on, not just absorbing and understanding these conversations. What’s important is to have my perspective or point of view of where there are opportunities.

Sometimes this can manifest itself through SWOT analysis. So once you evaluate the business and talk to all the key stakeholders, playback how you see those strengths, weaknesses, opportunities and threats for the business.

That's a somewhat centralizing document you can iterate from and go from, but that's a good way for me to have synthesized this in the past.

How big of a document I end up with depends. I like to keep things very simple and efficient. No one reads hundred-page documents or hundred-page decks. So I'm usually very much a one-pager type of person in this synthesis. 

There are also supporting materials as needed. But I try to keep it as efficient as possible, especially if I'm sharing it with other folks and playing it back to them.

Establishing the M&A process

From my perspective, it's a simple one-pager. I've just outlined what the steps are to get a deal done and this is critical for folks without M&A experience.

  • Valuation
  • Letter of intent
  • Diligence
  • Alignment on pricing and negotiating
  • Various checkpoints with the board
  • Formal offer

The key to this is to have one owner, which is typically your Corp Dev Head, so that there's no information or questions flying around because it's all centralized and there's one point of contact.

Every deal has nuances to it. There are different regulatory considerations you need to think about depending on your company or the type of company you're buying. There's no hard and fast rule regarding the exact process, but it's a high-level process, and I share that back with the stakeholders to educate the company. 

Educate people on corporate development and its role in the company's growth. Share that through a town hall or lunch, so everyone knows the function, the process, and the criteria. I put that in a very simple document so that it's straightforward for folks to be a part of. 

Obviously, anyone who's done a deal knows that deals are not usually straightforward, but for the broader community to understand how it works is really helpful because when people are pitching you ideas or sharing ideas, they have some type of filter themselves too, and know what the ensuing process will look like.

Channels of communication

Both of the times I’ve set up these functions, I've done a town hall with the entire company where I'll walk through what corporate development is, what the roadmap looks like, and what's interesting to us.

In some cases, I've walked through at a high level, what are deals,  what are deals we've looked at, what are interesting to us. And so that gives people a flavor for the types of companies that are worth pursuing potentially. 

And then usually from that, it'll become a little bit ad hoc where I'll get inbounds from folks across the company, which I actually really enjoy across functions that I may not interact with typically.

Because like I said, they're interacting a lot with vendors and partners that I don't typically see sometimes. And so it's helpful to get these names even and to hear about companies that may not have passed my radar.

Teaching people

I should say there are certainly folks in any company that have not either gone through an M&A process or done a deal at their company. But people are very curious. We’ll often get questions in the office about how it works but there is no formalized training process.

And also once you start looking at opportunities and you do diligence, depending on how far you go with the target, you are involving other folks at the company. And so people will start through that process and will know what it is like and be a part of that.

So the more times you look at businesses and targets, the more that becomes part of the culture of the company and people learn. You just get better at it over time, and you develop your own processes and systems. 


What I always tell the people who are involved in the diligence process is to think about if the target company is part of our business, and we have to manage it and run it, what do you need to know in order to do that? Having that mindset will help ask good questions during diligence.

It is important that when you're doing diligence to start talking about integration planning. You have to start that when you're doing diligence even before you sign a deal. This is why people say most M&A deals fail because most corp dev sign the deal and move on to the next thing. 

When deals fail most people view it as wasted time, but it’s not. First, you can time-bound these processes, so you're not using too much time. Also when deals fall apart, that’s a win. Your people are getting better clarity around objectives and what is important for the business. 

Also, they're getting the process home for your company. It also makes you smarter in future negotiations if you have more experience doing it. 

That being said, I'm sure folks at the company that are involved in diligence might feel like it's an additional time on top of the spent on top of their day-to-day job. And so that I can understand. But I don't think it's a waste of time at all for any organization.

The goal is to have those functional leads do due diligence and integration planning at the same. You obviously can't do a ton of integration planning before a deal is signed, but you need to be arms-length with the target company. 

You can do a lot of integration planning internally, and that ramps over time between when you sign and when you close. And so when you actually do close, you have your day zero plan ready to go.

Managing the pipeline

There are a lot of inbound deals from bankers and industry participants. What's important is to remember that you don’t necessarily have to take every call or pursue every idea. 

You have to, over time, establish criteria. And you can tell pretty quickly if something at least passes your initial criteria and is worth that conversation.

Given what you know about the business and what you know about the target business, you have to triage a bit and go after the ones that make sense and fit your criteria.

I'm not a believer in having a target list and rank ordering them and having a status update on each of those. But I do believe it’s important to keep track of all the opportunities that you're looking at.

Just look under the hood of these companies and see what passes your first criteria and your second criteria and just follow what makes sense for your business.

When you are in a corporate development role just get to know the business when you reach out. Sometimes they immediately assume you wanna buy them, and that's not always the case. 

I actually don't often lead outreach myself because it can be scary for companies or exciting depending on the business. 

Become an information hub

Just be in the flow of information as much as you can. The information can be gathered through newsletters, reports, conferences, or one-on-one conversations with various stakeholders. 

And externally it's bankers, consultants, even people that are maybe adjacent to your business, those are interesting and helpful as well. 

And then I share information to folks that are relevant or interesting to our company. I don’t just provide market color that we can all read about in a newsletter. I share either using Slack or during calls. 

Alignment with stakeholders

During alignment is a really important part of the process. Everyone has to own the deal.  If the deal starts going off track, avoid pointing fingers. That's not what you want. You want people to be aligned upfront and own either the good or bad that happens post-close and take accountability for that. 

Get alignment early and do it in a group setting. Let people hear others’ doubts and concerns, so everyone can respond or react to them. 

And you can be a part of that process of either convincing people or not being able to convince people if it's the right thing to do.

It’s important to start getting that alignment early. Pretty soon you're thinking about valuation and negotiation, and you don't want to be to a point where you've aligned on a price, and you're ready to put forward a term sheet when half your team is not on board with doing a deal. 

Hiring the M&A team

So I think it really depends on the organization.

•How strong is your finance or your strategic finance team? 

•Is there an athlete in your organization? People that have financial acumen and curiosity to learn.

I think if you have those two things at your company, you don't necessarily need to go and hire immediately. In both of the instances where I've stood up this function, I've had strong strategic finance teams that have athletes on them.

It's really important to go through that process and see as you're thinking about either doing more deals or maybe being even more proactive and adding a bench for your team.

What are the skill sets you need? If you have a strong strategic finance team, you don't necessarily need five bankers on your team, but you might want them if they're good at the other things as well. 

But I think it helps you narrow in on the skillsets you're looking for that can help you either do more deals or do larger deals or do deals in different geographies. That's also a way in which you can add to your team as well. People have certain international or geographic expertise.

Biggest challenge

The most challenging part is the frequency of deals. Sometimes deals can be opportunistic and maybe infrequent or seemingly infrequent. So when you're adding people to the team and you're looking to expand, they may not always be active. 

And sometimes you get pushback on why you hired a person who you don't need at the moment. So it's important to have a road map so you have something to show regarding your plans to grow the organization.

Biggest lessons learned 

The first thing is nothing ever goes according to plan. Corporate development must be nimble and flexible. Understand the criteria and where to push or not push. 

The second thing is that a deal is never done until it's closed. Signing and announcement is only step one. Deals can always get delayed or take different paths. 

Then the final piece is to maintain perspectives at all times. Deals can get heated,  whether you're negotiating internally, or externally. You have advisors, lawyers, consultants, et cetera. It can, you can get caught up in the almost theatrics of it.

It is important to keep perspective because at the end of the day none of us are curing cancer unless you're in a healthcare company. The success of a deal does not make or break a business. M&A is just a tool and a part of the growth strategy.

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