4 Characteristics of a Winning M&A Pipeline 

Building a successful M&A pipeline is challenging. How do the best in the business do it?  We asked them. During our recent webinar, “4 Steps to Build a Winning M&A Pipeline,” we discussed the four characteristics that stood out. 

  1. Implement a Clear Corporate Development Strategy Aligned with Company Goals: The best Corporate Development (Corp Dev) leaders start with a clear understanding of their company’s business strategy from which they derive a clear, actionable inorganic strategy. Once they have both, Corp Dev leadership proactively ensures strong buy-in to their strategy from the executive team, other key stakeholders, and their team. The best Corp Dev leaders know that the investment of time here pays off handsomely. 
  2. Identify the Right Opportunities Aligned with the Corp Dev Strategy: Finding the right set of opportunities, as opposed to just any opportunities, is critical to any successful Pipeline program. This is hard to do. The best Corp Dev leaders take a two-pronged approach.  

    First, they set up a network of people they can rely on to become their eyes and ears on the ground. If the network knows what they are looking for, it will work for them by presenting interesting opportunities. Corp Dev leaders usually start by building and maintaining strong ties with external intermediaries (e.g., investment banks, analyst firms, strategic consultancies.). They then leverage internal people (e.g., Sales, Customer Support, Strategic Planning). These individuals can be Corp Dev’s best champions and are often the source of great ideas.

    Second, leaders rely on advanced tools as the backbone to their process. One set of tools identifies a broader range of potential targets and provides deeper market intelligence by leveraging AI and third-party data sources. A second class of tools for pipeline management ensures that M&A teams bring discipline and control to their sourcing process. This eliminates the need to rely on the chaos of local spreadsheets; now they can see the health of the pipeline in real time.
  3. Build and Maintain Strong Relationships with Targets: With the right set of opportunities identified, the best Corp Dev leaders now want to ensure their teams stay close to them. In today’s fast-paced world, things can change quickly at an individual company level, an industry level, and at a market level. Continuing to follow and assess target companies, maintaining ongoing relationships with target company executives, and checking in regularly with external advisor members will enable them to move fast when the time is right. 

    Again, tools are critical here. Leading CRM tools encourage good disciplines, increase productivity, make everything visible in real time, and improve Corp Dev’s agility and speed. AI and third-party data sources help by giving teams on-going, timely intelligence and an edge to move fast.
  4. Create and Support a Culture of Continuous Improvement: The best Corp Dev leaders embrace continuous improvement, using a holistic and proactive approach. 

    They start with setting up the disciplines and culture. For example, doing “What could we have done better?” reviews immediately after every deal, whether won or lost; and rewarding team members for their recognition of mistakes and learnings. 

    These leaders boldly embrace learnings, looking at improvements across the complete deal lifecycle of Pipeline, Due Diligence and Post-Merger Integration. They are open to a broad set of learnings: organizational (e.g., include the Integration team within their M&A team); strategic (e.g., adjusting the deal thesis/criteria); and process (e.g., adding reminders to reach out to targets). AI is a hot topic today and many of the best Corp-Dev leaders are working with their partners to maximize on AI potential and share in the learnings.

    Finally, continuous improvement requires data from which to learn, nimbleness to change, and determination to benefit from the learnings. The best leaders embrace tools to track key indicators, implement the changes efficiently, improve collaboration for all the people who support Corp Dev activities, and watch the impact with end-to-end visibility and reporting across the complete deal lifecycle.

    In summary, great Corp Dev programs focus on finding and prioritizing targets that strongly align with a clear company strategy, stay close to those targets over time, and engineer continuous improvement culture into the fabric of their activities. 

    If you would like to learn more, watch “4 Steps to Building a Winning M&A Pipeline,” or contact us to speak with our team about how we can help you optimize your own M&A pipeline process.

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