From a corporate point of view

Since we at The Deal LLC launched a quarterly journal called Corporate Dealmaker in late 2003, we've put the name on a bunch of things, including a bimonthly magazine, a series of conferences, a Web site, the Most Admired Corporate Dealmaker Awards we presented in New York in November and some excellent ballpoint pens. The pens, sadly, are now gone, as is the standalone magazine, at least for a while. On the plus side, though, we're adding another item to the list: this column, which will appear in every issue of The Deal.

It's a logical home for it. The Deal aims to make sense of the whole deal economy. So why not add a page that looks at transactions from a corporate point of view to the roster of columns you're accustomed to reading here?

And make no mistake: There is a unique corporate point of view on transactions. Decades in the making, corporate dealmaking as a distinct discipline really came of age in the M&A boom as more and more companies built deal teams and learned to apply lessons about deal sourcing, valuation, due diligence, integration and other elements of dealcraft in their own settings.

No doubt the corporate perspective on deals will further develop in the challenging economic times ahead. Whatever happens, it will be the mission of this column to present that perspective. Look for coverage of individual corporate dealmakers; of applied best practices as those dealmakers solve strategic problems for their companies; and of developments in the broader deal world as they affect corporate dealmakers.

So what distinguishes the corporate view on transactions? In a word, context. The contrast with the arbitrageurs, who work at the opposite end of the deal community, is illuminating. For the arbs (and also to some extent for advisers like bankers and lawyers) the important question about a transaction is simply: Will it close?

For corporate dealmakers, though, the closing of a particular deal is just a milestone in a strategic journey that may have begun years earlier and hopefully will stretch far into the future. They have to look more deeply into their own organizations, peer further into their industry's future, live in a longer now. Their questions are several: Where do we want to go? Is this deal the best way to get there? What must we do to make it work over time?

To a corporate dealmaker, looking at acquisitions without sufficient context is like trying to understand a football team by looking only at passing plays. In reality the team has many members, and buying is just one option in a playbook labeled "build, buy, partner."

Sometimes, to be sure, the strategic backstory inserts itself into headlines about an acquisition. That's what happened with Dow Chemical Co.'s pending (at press time) acquisition of Rohm and Haas Co. for $14.9 billion, which has been complicated by the withdrawal of Kuwait's Petrochemical Industries Co. last month from a planned joint venture with Dow. The JV, which would have brought Dow $9 billion to help fund the R&H purchase, was one of several such steps Dow CEO Andrew Liveris has taken, most of them successfully, to move Dow's commodity businesses into entities with ready access to raw materials while steering Dow into specialty products like the ones R&H makes.

But corporate dealmakers also work on strategic projects that may never include a splashy purchase. An example is the march of Milwaukee-based Johnson Controls Inc. into batteries for hybrid cars, a field currently dominated by Asian manufacturers. JCI's move began four years ago with a new R&D facility and a joint venture with Saft SA, a French maker of batteries for satellites and medical devices. The latest chapter is JCI's participation in a 14-company partnership with Argonne National Laboratory to build a plant to manufacture lithium-ion batteries.

Together, Dow's Rohm and Haas deal and JCI's role in the National Alliance for Advanced Transportation Battery Cell Manufacture, announced last month, convey the span and the depth of corporate dealmaking. Clearly, there's a lot to discuss, regardless of the climate for big acquisitions. And with the launch of this column, there's a nice new print venue for discussing it.

Now if we could just get some more of those ballpoint pens.