For founders, who often pour their blood, sweat and tears into their businesses, shutting down or selling them can be a very difficult decision.
And yet, more and more founders have had to take that call recently.
Data from market-research firm Tracxn shows that in 2022, with the first signs of a market contraction from the previous year’s highs, there were ~20% more acquisitions and ~13% more unique acquirers.
According to Rishabh Phagre, lead investment advisor to private-equity firm Beacon India, 2023 will see a significant increase in business deals. If the market conditions remain the same, Phagre said, founders may face pressure to make those difficult decisions due to economic uncertainty and an increase in interest rates, which inversely affects capital allocation for equity by investors.
Well-recognised businesses, such as Bewakoof.com, cargo services company Rivigo, online marketplace Limeroad and fintech ZestMoney have all been involved in distress sale talks in the last six months.
But what is a difficult decision for a founder is routine for a department called ‘corporate development,’ which is at the centre of all this dealmaking—mergers, acquisitions, partnerships, acqui-hiring acqui-hiring An act or instance of buying out a company primarily for the skills and expertise of its staff, rather than for the products or services it supplies. and fundraising. The function was a feature of relatively large firms until before the pandemic, such as OlaCabs, which has had a well-rounded team for years. And more often than not, the role was largely passive—typically, the leadership, with some help, evaluated incoming offers from businesses, investors or investment bankers.
Several companies have been increasingly taking to Corp Dev over the last year or so. The insurance company Acko is currently setting up its corporate development wing, according to an employee. Pine Labs, a merchant commerce platform, has been scaling the function recently.
Well-to-do businesses, including traditional ones, have also ramped up the “buy over build” approach, which drastically reduces the go-to-market time, said a former employee in Flipkart’s corporate development team. These businesses have solved for distribution, making them attractive destinations for early-stage companies to grow in a competitive environment, according to Varun Varma, head of Strategy and Corp Dev at Pine Labs.
Newer businesses have started to think about the corporate development function from an early stage, realising that understanding their product, operations, and capabilities is necessary to get partnerships or acquisitions right.
The hiring trends reflect this. “There is a demand for CFOs [chief financial officers] and senior management professionals [for this role] who have exhibited profitable growth,” said Pushkar Vadkhalkar, who heads hiring for sales and marketing functions for the technology industry at recruitment firm Michael Page in India.
