Corporate development strategy - Deloitte US

1 Corporate development strategyThriving in your business ecosystemDeloitte s Corporate development survey, fifth editionCorporate development strategy : Thriving in your business ecosystemDeloitte AdvisoryDeloitte Advisory helps organizations turn critical and complex business issues into opportunities for growth, resilience, and long-term advantage. Our market-leading teams help clients manage strategic, financial, operational, technological, and regulatory risk to maximize enterprise value, while our experience in mergers and acquisitions helps clients move forward with s M&A Services Deloitte s Merger and Acquisition professionals advise strategic Corporate buyers and private equity investors throughout the entire M&A deal life cycle.

2 From strategy development and target screening through transaction execution, integration, and divestiture, our M&A professionals have the domain knowledge, extensive industry experience, and global reach to provide a tailored approach and help build value for clients. Chris Ruggeri is a principal with Deloitte Transactions and Business Analytics LLP and is a leader of strategy & Innovation. She has more than 25 years of experience in M&A focused on advising public and private companies, boards of directors, and special committees on negoti-ated and unsolicited transactions.

3 She helps clients understand the value of business enterprises and associated key value drivers and risk factors. Ruggeri is a principal author of Deloitte s Market Value Creation and Investor Relations point of view, and leads Deloitte s focus on Corporate development Elinson, a principal in Deloitte Transactions and Business Analytics LLP, leads the Transaction and Modeling Advisory practice within Deloitte Advisory. She focuses on helping clients achieve their strategic objectives through the use of modeling and financial analysis. She has more than 15 years of experience advising public and private company executives on M&A and other strategic investment decisions.

4 Elinson also advises boards of directors on transactions through the provision of fairness opinion Kirschner, a partner with Deloitte & Touche LLP, is the US leader for the Technology, Media & Telecommunications M&A Transaction Services practice. He has more than 27 years of public accounting experience, with almost 20 exclusively in M&A. Kirschner has led hundreds of domestic and cross-border deals and has advised leading private equity as well as Corporate buyers and sellers on the due diligence, accounting structuring, and financial reporting aspects of transactions, includ-ing related contract and financing Blanchard is a managing director with Deloitte Corporate Finance LLC, where he helps lead the industrials sector team as well as Corporate Divestiture and Strategic Growth Services initia-tives.

5 Blanchard has over 15 years of investment banking and Corporate finance advisory experience. Over this time, he has advised on more than 90 M&A transactions representing approximately $ billion in transaction value, including more than 50 cross-border transactions representing over $ billion in transaction value. Blanchard has represented both buyers and sellers of privately held companies and subsidiaries or divisions of public companies. About the authorsDeloitte s Corporate development survey, fifth editionCorporate development strategy : Thriving in your business ecosystemAcknowledgementsThe authors would like to thank Rich Rorem, Hector Calzada, and Michael Rachlin for their significant contributions and insights.

6 We would also like to thank Angela Hoidas, Sarah Long, Junko Kaji, Angie MacPhail, and Shelley Pfaendler for their guidance in helping to make this piece a reality. ContentsThe continuing evolution of Corporate development | 2 Innovation through M&A | 6 Partnering with the businessDeal origination | 12 Making yourself irresistibleShareholder activism | 18 Investors flex their musclesInvestor relations | 24 Corporate development s hidden assetAppendix | 27 Profile of survey respondentsEndnotes | 29 Contacts | 30 Deloitte s Corporate development survey, flfth edition1 Corporate development strategy .

7 Thriving in your business ecosystem2 THE recent surge in M&A activity means that Corporate development teams are working harder than ever. The catch is that hard work may not be enough. To create suc-cessful transactions, today s deal environment demands new levels of creativity and forward thinking from Corporate development pro-fessionals. Whether the question is where to find targets, how to structure terms, or when and what to communicate with shareholders about a transaction, one sure answer is that what worked yesterday may need to evolve and adapt to an increas-ingly fast-paced and ever-evolving environment to succeed tomorrow.

8 As we explore in this report, innova-tion has become a core need for just about any company in any industry. A large majority nearly two-thirds of the 357 Corporate development professionals who responded to our survey are being tapped to help fill this need. The path to succeeding in this mission starts with challenging some sacrosanct concepts embedded in traditional Corporate development processes. Instead of thinking about Corporate development as fill-ing gaps in a product portfolio or geography, for instance, it may be time to break free from conventional organizational charts and look at the enterprise as a dynamic platform of valu-able assets, where the objective is to consider a variety of transaction alternatives and business partners, some outside traditional industry norms, that can be grown and monetized in different ways, with different combinations of partners or transactions.

9 Rather than pass on an early-stage asset because it doesn t fit stan-dard transaction profiles, consider for example, creating a strategic option by incorporating it as a partnership or as a venture-capital type of investment. Conventional approaches to stimulate deal flow may not be adequate to cre-ate the types of opportunities that will leverage the value of the business platform and create competitive separation. And when it comes to negotiating, the mind-set of winning and walking away is quickly becoming pass , as the benefits of long-term partner-ships with found-ers and specialists become parallel with internal challenges to innovate, Corporate development profes-sionals should also rethink how to handle the rising tide of external pressure from increas-ingly activist shareholders.

10 Not just activist hedge funds but shareholders of all stripes who are increasingly inclined to express their views and preferences about the strategic direction of businesses they invest in and the businesses performance. As headlines suggest, and our survey respondents confirm, activist agita-tion is driving higher deal volumes and deal values. Developing constructive dialogues with investors and helping them gain confidence and understand actions Corporate executives are taking to help optimize value within the The continuing evolution of Corporate developmentInnovation has become a core need for just about any company in any portfolio of assets and businesses are becoming nearly as important as creating a robust transaction in the first place.