One of our favorite topics at Corporate Dealmaker is the
job market for corporate development professionals. Lately we've also taken to exploring a related subject: What are the
prospects in the
corporate world for investment bankers who are
contemplating a change?
For insight on both topics we checked in with Michael Frankel, a member of the CD advisory board, SVP of business development and M&A at LexisNexis and a former investment banker himself.
Despite the economic slowdown, Frankel says he and other corporate dealmakers he knows are busy. "It's a weird market dynamic," he says. "Usually in a down cycle, there's not a lot of pent-up demand for deals. But this time there is." It comes, of course, from strategic acquirers glad that, with credit so tight, private equity acquirers can no longer elbow them aside.
The demand for deals means there's also a demand for corporate dealmakers, says Frankel, who is looking to fill a couple of jobs at LexisNexis. In his view the demand is part of a longer-term trend that's seeing more companies -- including smaller ones, with market caps of $100 million to $300 million -- deciding that they need in-house transactional talent. Says Frankel: "The question has become, 'Why are we
not an acquisitive company?'"
The growing pool of corporate deal talent, in turn, has brought a growing awareness of what makes a transaction professional successful in a corporate setting, where the organizational dynamics are quite different from those an i-banker experiences. One result is that companies are less likely to bring someone in directly from an investment bank as a senior M&A exec. Investment banking is seen as a nice foundation, Frankel says, "but companies are saying, 'I want somebody who's already trained in corporate development.' "
Which reinforces a point we've made in our previous posts: It's much easier to make the transition at a junior level.
Then there's the matter of the compensation gap. Frankel says that i-bankers four years out of business school make so much more than corporate dealmakers with equivalent experience that corporate managers inevitably want to make sure that candidates are sincere about changing course. Fair or not, the explanation that a candidate wants a different lifestyle and career path will sound more plausible coming from someone making the switch during a strong market for i-bankers than from someone who has recently been laid off. In the latter case, hiring managers may fret that the candidate will return to i-banking when the cycle turns.
But that's not to deny that moving from i-banking to corporate dealmaking is possible, and for some, desirable. Indeed, if transactions are your passion, a corporation may be the best place to be in the years to come. Companies are
working without bankers on a growing number of their smaller and simpler deals, and sometimes on more ambitious ones. And at the same time that dealmakers are becoming more important within companies, M&A advisory work is becoming less important, relatively speaking, in some investment banks. -
Kenneth Klee
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