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Toward transaction excellence: The top 10 traits of successful CDOs - EY - Global

Toward transaction excellence:

The top 10 traits of successful CDOs

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Building and maintaining a good external network leads to sourcing more of the "right" deals.

Our study and supporting research provide insight into what it means to be a top-notch CDO in today’s transaction markets. Successful CDOs are those who:

1. Focus on high-impact opportunities. Dozens of transactions of varying size and scope may be presented to the business at any given time. It is the duty of a CDO to see that the organization concentrates on those deals with the highest potential.

2. Operate as highly effective leaders. Getting a deal done requires the hard work and commitment of dozens of participants — most of them outside the corporate development group. A CDO must appreciate and embrace the challenges of managing within a span of influence rather than a span of control. This requires confidence, competence, experience, an inclusive nature and strong communications skills: in short, charisma.

3. Embrace and initiate change. An effective CDO pursues continuous learning, adaptation and improvement across the entire business development process. Rather than refuting criticism, great CDOs encourage a culture of continuous refinement and learning. A CDO must welcome and initiate change, even when it may appear to conflict with institutional norms — always mindful that sound transactions can add value.

4. Possess a broad range of technical skills and experience. Competence in finance is a given. In addition, success requires rock-solid credentials across an array of disciplines including strategic planning, risk, capital markets, accounting, operations, tax — and that’s just the short list. It’s just as important that a CDO understand how to strike the right balance between any and all of these disciplines.

5. Know how to build and leverage strong relationships. An effective corporate development leader knows how to forge, maintain and derive optimum value from a network of both internal and external relationships. Within the company, it is essential to develop a good working relationship with all the executives likely to be involved in a transaction.

In addition, the CDO must cultivate external relationships with investment banks, management consultants, accounting and tax advisors, and related organizations. Building and maintaining a good external network leads to sourcing more of the "right" deals.

6. Set goals, establish realistic expectations and measure results. It is critical to work with stakeholders to define tangible objectives and time frames, then to deliver on those promises. Establishing the objectives of a transaction up front — teasing out, for instance, whether financial return or strategic access is most desired — is essential to evaluating deal performance.

Successful CDOs are also adept at proactively managing the expectations of key stakeholders and deal participants, keeping them abreast of progress as well as of potential risks at each stage of the transaction lifecycle.

7. Collaborate, communicate — and listen. If virtual members of the deal team — those outside the corporate development group — are to act collaboratively, then the CDO and staff must demonstrate collaboration. It is important to listen to business unit leaders, as those who live a given business know it best.

A CDO must possess the willingness to step out of the limelight and let others shine. Never take the credit; always pass the laurels to a coalition of contributors.

8. Document and share processes. The most effective corporate development departments define and document their workflows. What are the key tasks in commercial, market, financial, operational or other core due diligence routines? Who is responsible for what, when and under which circumstances? Which valuation tools and reporting templates are used in the process?

Having a clearly documented set of processes not only makes it easier to chart progress on any given deal, it also enables faster and more effective collaboration with the many team members for whom this deal is their first deal. In the event of an auction, those without defined processes typically lose.

9. Are fully accountable within defined responsibilities. A CDO must be willing to take full responsibility for the success of individual transactions as well as for the broader set of corporate development objectives. But in doing so, it is vital that the CDO also obtain the appropriate levels of authority, resources and senior management commitment to get it done.

10. Take responsibility for training and development. A competent CDO takes full responsibility for training his or her own team. But a leading-class CDO accepts responsibility for raising corporate development awareness and capability across the entire organization. Such training and development should be ongoing.

Once a transaction is under way, it is also a leading practice to organize an intensive workshop for members of the deal team. Such one-to-three-day "boot camps" provide an opportunity to define team members’ roles and responsibilities, along with expectations about the specific deal trajectory and timeline.

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