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Why You Should Consider Consolidating Your Corporate Development And Integration Teams

Feb. 18, 2021 8:28 PM ET
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  • Just like no two deals are the same, no two integrations are the same. Different methods of consolidation may be useful to consider for different deals.
  • Smaller companies may find it beneficial to have one designated integration leader on the corporate development team as a way to reduce costs.
  • Integration failure stems from lack of ownership. Regardless of methodology, accountability needs to be highly valued and prioritized.
  • Remember the end goal: Create a collaborative relationship between teams rather than a linear relationship in order to produce better results.

Both the corporate development team and integration teams serve important functions during mergers and acquisitions (M&A), but if they work in silos and lack open communication, sometimes more problems can arise than can be solved. The biggest of these issues are the overestimation of synergies and inadequate preparation for integration. By consolidating the two functions, you can vastly improve the fragmented relationship traditional corporate development and integration teams employ.

Consolidation can take many different forms. Whether they are a single team or two teams, critical communication points are in the deal structure, due diligence process, and integration planning. Viewing this as a continuous cycle rather than stop and go phases allows for more open communication between teams and general interaction. The goal is to have a collaborative relationship rather than a linear one. By consolidating the corporate development and integration teams, you allow for more channels of communication between the two functions and, thus, initiates a collaborative relationship.

Oftentimes, integration issues take form in a lack of ownership. To reconcile these issues, consider including your integration team in the due diligence process. By doing so, ownership gets established early on in the deal process and establishes a relationship with the rest of the deal team, including the corporate development function. Additionally, consider having your corporate development team stay aligned with the integration team for at least 100 days after day one. This will solidify the relationship between teams and ensure everyone is on the same page in terms of goals being met and if the integration plan is successful.

Another approach to consolidation is having a designated integration leader within your corporate development team. They would be used as a means to guide the business unit on a road to successful integration. This differs from previous methods in that you would not have an integration team in addition to a corporate development team, you would have only one team of corporate development professionals with a singular leadership role designated to an integration professional. This method may be beneficial for smaller companies that may not have the resources to employ two separate teams or for small scale deals in general.

There are many different roads to take when it comes to consolidating two teams. At the end of the day, the goal is to close deals quickly but also successfully. When integration success is one of the biggest implications of a deal’s outcome, it is important to consider the impact of the team and the strategy you choose to implement. Communication between teams greatly impacts integration success, which is why it is imperative to have as many lines of communication as possible between functions. Whether it makes sense to combine the two teams entirely or incorporate an integration leader into the corporate development team, it may be worthwhile for the sake of deal success to consider the possibility of consolidation of teams for the sake of improving communication.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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