Will the turn in the M&A cycle produce a wave of layoffs among corporate dealmakers? We raised the question in October 2007 in our inaugural report on corporate development jobs. Layoffs had been the pattern during the bust in the deal market in 2000. But this time, we concluded things looked different. Not only were corporate deal teams somewhat smaller and better integrated into the companies that employed them, but those companies were also more aware of the ongoing value of such talent -- and were in many cases actually stepping up their dealmaking, taking advantage of the way the credit crunch had sidelined the private equity firms.

Nearly a year later, the credit crunch has become a crisis, PE firms are still hamstrung, investment banks are faltering and I-bankers are being laid off en masse. But as of early September, at least, our prediction was holding up well, based on reporting for this, our second annual report on corp dev jobs. We talked with more than a dozen recruiters, consultants and M&A executives. We found that in the corporate world, demand for skilled dealmakers is up. Some companies that haven't been acquisitive are looking to become so and are building the in-house expertise they need to lead the effort. Other companies are taking advantage of the I-banking talent now on the market to upgrade their deal teams.

Of course, some things haven't changed and aren't likely to. Compensation remains respectable but not overwhelming. Corporate dealmakers still come to their jobs through a variety of paths, and a majority move on to other things -- two things that become clear in the gallery of profiles we've put together, which begins on page 61. Corporate development departments are still as individual as the companies they serve, and as subject to change; notwithstanding the overall rising interest in corporate dealmaking, one corp dev chief we spoke with told us his operation went from doing dozens of deals a year to almost none, and had reduced staff accordingly.

All of which, we think, reinforces the need for an overview like this one. So on to our report on who's hiring, where they're finding talent and what they're paying.

One indication that demand is up comes from Randy Gulian, founder and president of executive recruiter InSearch Worldwide in Stamford, Conn. In 2007, Gulian did 11 searches for corp dev executives, most for senior-level positions inside large, multinational corporations. Already this year he's completed 14 similar searches, mostly in information services, telecom and financial services, and he has another three in the works. "There's a real sense among these companies that there are bargains out there and they better get someone doing corporate development full-time in the next 18 months or they're going to miss a window," he says.

Meanwhile, some acquisitive companies with established corp dev functions are maintaining staffing levels but rotating high-potential candidates through corporate development so they can gain deal expertise. Johnson & Johnson and Eaton Corp. are two examples here. Most employees who rotate through corp dev move back into the operating units and get on track to senior finance or general management positions. A few move into the corporate executive ranks. For instance, Michael Monahan, a former head of corporate development at Pitney Bowes Inc., is now the firm's CFO. But as if to confirm how varied corporate development career paths can be, we also found an example of someone making that move in reverse. At semiconductor materials supplier ATMI Inc., the CFO moved over to head a newly formalized M&A function.

Whether a candidate is new to the company or not, the varied career path seems part of the attraction. "Ninety percent of the candidates you bring in for corporate development roles want to talk about career path," says Gulian. "Of those, 99% want to run something." In fact, he adds, staying in corp dev too long -- at least if you're not running the operation -- can be a red flag to recruiters and hiring managers. "If someone's been in corporate development for eight years, 10 years, and they haven't been tapped to be involved in management at an acquired company or at the parent company, you begin to wonder if this person has the depth you would need." There are, of course, exceptions, particularly at highly acquisitive companies where the goal is to keep the deal machine humming.

Despite the demand for talent, salaries have remained relatively flat. The base median salary for a company's top M&A executive, according to Mercer LLC's 2008 accounting, finance and legal compensation survey, was $235,000 in 2007, up 4.4% from 2006. The sluggish economy may help check corporate salaries in general, says Mercer's Mick Thompson, a principal in the firm's human capital consulting business. But it could also be that many corporate development executives don't stay in the position long enough to see their salaries climb to notable heights. Their biggest paydays may come after they've gotten a different title.

What makes for a good corporate dealmaker recruit? Candidates need a wide range of skills to succeed, but the most desirable, according to the executives and recruiters interviewed for this story, are expertise in strategic planning and finance, plus operational and industry-specific know-how. Finding an outside candidate with the right mix can be tough.

"Human resources gets frustrated when I'm trying to hire someone," says Aileen Stockburger, vice president of worldwide business development for Johnson & Johnson's medical devices and diagnostics group. "They want me to say, 'I want someone with this degree and x number years of experience,' and that doesn't exist. Nobody went to school and majored in business development."

So like many other corp dev managers, Stockburger prefers to hire from inside the company. There she can find candidates who understand J&J's businesses and culture and have relationships inside one or more operating units. She's drawn from marketing, sales, purchasing, R&D, finance and other disciplines. Not that internal hires are an automatic fit, either. Stockburger tells of one recruit who had been a highly successful salesperson. "She could not stand corporate development. She said, 'I'm used to daily sales, where I can drop a coupon and see the impact every day,' " says Stockburger. "You can work on a deal for years and still have it not happen."

At the diversified industrial manufacturer Eaton Corp., internal hires make up the bulk of the 30-person corporate development team. The company rotates high-potential employees from its operating units into corp dev, typically for 18 months, then moves them back out again. One of the most recent graduates is now the controller for one of Eaton's major European businesses. Over the years, this informal program has created a deep pool of operational talent that knows how to identify promising targets and execute deals.

"Our philosophy is if you're going to have a strong acquisition program, you've always got to be in the market. You've always got to be looking," says Ken Semelsberger, Eaton's senior vice president of corporate development and treasury. "You can't always dictate the timing of transactions. Things come up all the time, and you've got to be ready. You can't afford to be hot, cold, hot, cold, because good people leave if they have nothing to do or aren't challenged."

That's certainly not been the case at Eaton. Over the past 18 months, the company has spent $4.25 billion on 14 transactions, adding $2.5 billion in revenue.

Corporate dealmaking has many different profiles. We found another at Glam Media Inc., where Michael Adair recently became vice president for corporate development and finance. Adair is working with company leadership to develop a strategy to grow this display advertising startup and building a deal team to execute it. Adair, who until July headed up North American sales finance at Google Inc., has two people on his team, both of whom moved into corp dev from other roles inside Glam. He is looking to hire a third, preferably someone with a banking or corporate finance background.

Adair went from Google to Glam by way of a professional introduction. A Google colleague just happened to be the fiancé of a principal at GLG Partners LP, a Glam investor. "I originally came in with the CFO opportunity in mind, but after talking with CEO Samir Arora, we figured out that probably the biggest short-term need was the corporate development role." Adair's experience isn't unusual. Half of the dealmakers we interviewed were introduced to their present jobs through their personal or professional network. The rest were either found by an executive recruiter or moved into the M&A group from elsewhere in the company.

Many of Gulian's clients at InSearch Worldwide aren't necessarily expanding their corporate development functions, but are rethinking growth initiatives and adjusting staff accordingly. One of Gulian's most recent placements was a head of M&A for a global financial services firm that is shifting its focus from alliances and joint ventures to acquisitions.

"Even though that dealmaker has only been there since April, we're already searching for a head of merger integration," says Gulian. "The company is thinking about deals coming in the pipeline. The dealmaker thought we'd be having this discussion six months from now, but the pace has been fast and furious." It's not unusual when a company's strategic objectives change for there to be turnover in the corporate development department -- as high as 80%, says Gulian. "You need some history and knowledge, and that involves keeping a few people in the group. But most often you're trading out the real horsepower."

If displaced staffers are well thought of, they'll find a home elsewhere in the organization. "The big question is, will they want to?" Gulian says. The best may leave for new challenges.

While these are busy times for some strategics, the opposite is true for many companies in sectors hard hit by the economy. We spoke with one senior dealmaker whose company, a major retailer, has brought deal activity to a screeching halt as it overhauls strategy.

"You had 10 people focused solely on deals. We were stunned. I went from a position where I was going to be doing dozens of deals a year and staffing up, to not doing any," says this executive, who wished to remain anonymous. "We did a 180, where deal skills went from being something the CEO thought were paramount to his success to 'If that's all you've got, then you don't have a spot in the company.' "

The dealmaker believes he only has a job today because of ties he made with other people within the company. "If I had stayed isolated as dealmaker, I'd have been fired," he says. The corporate development group is now focused mainly on finance and strategic planning. Most of the pure deal people are gone, and the handful who remain are reviewing smaller business units within the company for possible sale. The transition has been difficult and has this dealmaker reflecting on his next career move.

The good news for him, and others displaced by either market conditions or strategic changes in their organizations, is that the finance and operational skills developed in corporate development are highly marketable. And, as mentioned earlier, corporate development is often a stepping stone to other roles within an organization.

That may be one reason why compensation for senior deal executives is more on par with a company's top human resources manager than the chief financial officer. Going back to the salary data from Mercer, the median base salary for a company's top M&A executive was $235,000 in 2007, up from $225,000 in 2006. The annual median bonus was 45% of the base salary.

Bonuses based on performance in 2007 were down 13.6%. CFOs, meanwhile, earned a median base salary of $362,000 in 2007 and an annual median bonus of $218,000.

The base dealmaker salaries paid by Gulian's clients came in a bit higher. Not a huge surprise, since his sample group is small and includes several multinational firms. Of the 14 searches he's done this year, average base pay was between $275,000 and $350,000, with bonuses usually ranging from 50% to 75% of base but sometimes stretching to 100%.

The size and acquisitiveness of a company are certainly factors in compensation, and the internal pay hierarchy will probably always constrain salary increases. There's no way, for instance, that a corporate dealmaker is going to outearn the CFO, though in a few cases, of course, the corporate dealmaker is the CFO.

And linking pay to performance is difficult for corporate development executives who have little control over the long-term performance of an acquisition. It's worth noting, too, that sometimes the most valuable decision an M&A executive can make is to say no to a potentially disastrous deal. Rewarding an executive for something that didn't happen is a challenge.

But that's just one of the anomalies that will probably always come with this unusual territory. As we noted in last year's report, the role of the corporate dealmaker is not nearly so well mapped as those of the CEO, CFO or general counsel. "It's a bit of mystery," says J&J's Stockburger, who works at one of the most acquisitive companies around. "People aren't quite sure what we do."

As deals become more important to more companies, some of the mystery will surely disappear. But the jobs -- which at the most fundamental level really consist of helping companies cope with change -- will themselves be distinguished by change and variety and the promise of greater opportunity to come.

Indeed, for most corporate dealmakers, that's a big part of the appeal. - Suzanne Stevens

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